Hrm Practices in IT Industry

INTERNATIONAL HUMAN RESOURCE MANAGEMENT PAPER NO. 543

HRM PRACTICES IN IT INDUSTRY

SUBMITTED BY: JATIN GAMBHIR (10) LALIT KAIN (14) NIMA LAMA (21) PARUL PATAWARI (26)

International Human Resource Management

CONTENTS CHAPTER 1: INTRODUCTION 1.1 Human Resource Management....................................................3 1.2 Need of Human Resource...........................................................3 1.3 Examples of Good Practices........................................................4 1.4 Key Functions of HRM................................................................5

CHAPTER 2: MANAGEMENT OF HUMAN RESOURCES AT INFOSYS 2.1 Introduction.............................................................................6 2.2 Overview.................................................................................7 2.3 History....................................................................................7 2.4 Leadership and Culture..............................................................9 2.5 Management of the HR Assets....................................................11 2.6 Selection.................................................................................13 2.7 Training and Development.........................................................13 2.8 Careers...................................................................................15 2.9 Performance Appraisal...............................................................17 2.10 Compensation........................................................................18 2.11 Infosys Overseas HRM.............................................................19 2.12 Future Plans...........................................................................21

CHAPTER 3: MANAGEMENT OF HUMAN RESOURCE AT TCS 3.1 Introduction.............................................................................23 3.2 Background..............................................................................24 3.3 Overview of HR in TCS...............................................................25 3.3.1. Diversity in Workplace...........................................................25 3.3.2. Learning and Development.....................................................26 3.3.3. Initial Learning Program (ILP).................................................27 3.3.4. Continuous Learning Program (CLP).........................................27 3.3.5. Leadership Development Program (LDP)..................................28 3.3.6. Foreign Language Initiative (FLI)............................................28 3.3.7. Workplace Learnings.............................................................28 3.3.8. EVA & Compensation Management..........................................28 3.4 The EVA Model.........................................................................29 3.4.1. Strategic Benefits of EVA.......................................................30 3.4.2. Incentive Scheme.................................................................30 3.4.3. Separation...........................................................................31 3.5 Journey Ahead.........................................................................32 3.6 Exhibits...................................................................................35 3.7 Bibliography...........................................................................39

Submitted to : - Prof. Gauri Shankar

Page 2


CHAPTER 1: INTRODUCTION 1.1 HUMAN RESOURCE MANAGEMENT Human

Resour ource

Management

(HR (HRM)

is

the

functi ction

within

an

orga organi niza zati tion on that that focu focuse ses s on recr recrui uitm tmen entt of, of, ma mana nage geme ment nt of, of, and and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers. Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance mana ma nage geme ment nt,,

orga organi niza zati tion on

deve develop lopme ment nt,,

safe sa fety ty,,

well wellne ness, ss,

bene benefi fits, ts,

employee motivation, communication, administration, and training. 1.2 WHY IS HUMAN RESOURCE MANAGEMENT NEEDED? Effe Effect ctiv ive e HRM HRM at a strat strateg egic ic leve levell is a crucia cruciall sourc source e of sust sustai aini ning ng an Inst Instit itu ute’s te’s

comp co mpet etit itiv ive e

advan dvanta tage ge

and and

cont co ntin inu uous ous

impr im prov ovem eme ent

particularly When it enables the following outcomes: •

Employees to contribute more fully to organisational objectives and

•

Organisations to respond more positively and creatively to changes in their environment.

It is a truism that nothing happens without people making it happen and syst system ems, s,

too oolls

and

tech techni niqu que es

are are

beco becom ming ing

incr increa easi sing ngly ly

more ore

sophisticated and useful. However, these systems cannot operate at all unle unless ss peop people le use use them them by prov provid idin ing g appr approp opri riat ate e inpu inputs ts and and ma make ke interpretations and decisions based on the information available. Human Human resour resources, ces, people people,, are THE critic critical al ingred ingredien ientt in organi organisat sation ional al success. For companies, people are an integral part of that ‘competitive edge’ that lies between a community that is engaged with learning and a community that is not. They are critical in building the respect and value that the Submitted to : - Prof. Gauri Shankar

Page 3


community has to have for companies to become the knowledge provider of choice. Mana Manage geme ment nt pract practice ice has has evolv evolved ed to a poin pointt wher where e HRM HRM is a dist distin inct ct function that must be aligned with other strategic functions and directly affects the performance and sustainability of an Institute.

1.3 EXAMPLES OF GOOD PRACTICE Key Elements of HRM Plans include: •

A

well

desig signed

integrated

organisa sattional

str structu cture,

and

commentary on how it aligns with the Institute’s strategic objectives •

Modern employment relations practices linked to strategic objectives

•

A perf perfor orma manc nce e ma mana nage geme ment nt syste system m that that inclu include des s a syst system em for for matching an individual’s development to the organisation’s strategic needs

•

A program to achieve workforce productivity and flexibility

•

Valuable Enterprise Agreements and processes

•

Documen Documented ted recruit recruitmen mentt and selecti selection on processe processes, s, based based on job analysis and core competencies

•

A Succession Plan

•

A

doc ocu ume men nted ted

HR

stra strate tegy gy

which hich

spec specif ifie ies s

that that

wor workfor kforce ce

development will facilitate the achievement of business objectives and bring about the changes required •

Regular review and assessment of HRM implementation, including an

annu annua al

revi review ew

of

workf orkfor orce ce

devel evelop opme men nt

objec bjecti tiv ves

and and

achievements •

Processes

and

practices

that

enable

clear

and

genuine

communication between staff members and their managers.

1.4 KEY FUNCTIONS OF HRM Submitted to : - Prof. Gauri Shankar

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HUMAN RESOURCE PLANNING

RECRUITMEN T AND SELECTION

TRAINING AND DEVELOPMEN T FUNCTIONS

COMPENSATI ON AND BENEFIT

PERFORMANC E APPRAISALS

CHAPTER 2


Page 5


MANAGEMENT OF HUMAN ASSETS AT INFOSYS “Our assets walk out of the door each evening. We have to make sure that they come back the next morning” - Narayana Murthy, Former CEO Infosys I nfosys 2.1 INTRODUCTION Infosy Infosys, s, a consul consultin ting g and softwa software re servic services es organi organisat sation ion,, includ includes es its human resources on its Balance Sheet to affirm their asset value. Investors examine financial and non-financial parameters that determine long-t long-term erm success success of a com compan pany. y. These These new non-fi non-finan nancia ciall parame parameter ters s challe challenge nge the useful usefulnes ness s of evalua evaluatin ting g com compan panies ies solely solely on tradit tradition ional al measures as they appear in a typical financial report. Human Human resources resources represent represent the collective collective expertise, expertise, innovatio innovation, n, leadership, entrepreneurial and managerial skills endowed in the employees of an organization. As a knowledge-intensive company, Infosys recognizes the value of its human assets in maintaining and increasing its competitive position. At the same time, Infosys realises that these assets can easily “walk away”, as competitors competitors in India and abroad covet its IT talent. Consequently, Consequently, the challenge facing Infosys is: “How can it attract, retain and develop its human assets in a highly competitive and dynamic environment?” The answer to this question may lie in the management of the 9,000 plus Infocians (as the employees are referred to), and that of many more to be hired in the future.

2.2 OVERVIEW Submitted to : - Prof. Gauri Shankar

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Infosys, one of the India’s leading information technology (“IT”) services companies, uses an extensive non-US based (“offshore”) infrastructure to provide provide managed managed software software solutions solutions to clients clients worldwide. worldwide. Headquartered Headquartered in

Bang Ba ngal alor ore, e,

Indi India, a,

Info Infosy sys s

has has

seve sevent ntee een n

stat statee-of of-a -art rt

soft so ftwa ware re

development facilities throughout India and one development center in Canada Canada.. These These enable enable it to provid provide e qualit quality, y, cost-ef cost-effect fective ive service services s to clients in a resource constrained environment. Throug Through h its worldw worldwide ide sales sales headqu headquart arters ers in Fremon Fremont, t, Califo Californi rnia a (and (and ninete nineteen en other other sales sales offices offices locate located d in the Un Unite ited d States States,, Canada Canada,, the United Kingdom, Belgium, Sweden, Germany, Australia, Japan and India), Infosys markets its services to large IT-intensive businesses.

2.3 HISTORY Seven software professionals founded Infosys in 1981 with the goals of levera leveragin ging g sweat sweat equity equity and creati creating ng wealth wealth leagal leagally ly and ethica ethically lly in India. This was a daunting task in a country like where the government was allegedly more concerned with redistributing wealth han creating it. Most of India’s commerce was owned and controlled by an oligarchy of families to which Infosys had no ties. Infosys’s competitive advantage has historically been derived from low wage costs in India relative to service providers in the United States and Europe. Their initial foray into the U.D market was through a company call ca lled ed DA DATA TA BA BASI SICS CS CORP CORP.. as a “bod “bodyy-sh shop op”” or on-si on-site te deve develo lope perr of softw softwar are e for for U. U.S. S. cust custom omer ers. s. Late Later, r, in 1987 1987,, Info Infosys sys form formed ed a join jointt ventur venture e with with Kurt Kurt Salmon Salmon Associa Associates tes to handle handle market marketing ing in the U.S. Thes These e init initia iall entr entrie ies s in to the the U. U.S. S. ma mark rket et were were a step steppi ping ng ston stone e for for Infosys’s growth in later years. In 1991, partly from International Monetary Fund pressure and shrinking currency reserves, the Indian government began liberalising the economy. Submitted to : - Prof. Gauri Shankar

Page 7


The office through which an IPO was valued was abolished and the market was allowed to decide what the stock premium would be. The government also abolished duty on all imports brought in for exports purposes and foreign foreign investment investment was allowed. allowed. This government governmental al change change brought brought both new opport opportuni unitie ties s and new threat threats s to Infosy Infosys, s, opport opportuni unitie ties s to raise raise capital and threats from increased competition. In 1993, Infosys went public on the Indian stock exchange with a market capita capitaliz lizati ation on of $10 millio million. n. Infosy Infosys’s s’s IPO raised raised approx approxima imatel tely y $4.4 $4.4 mill mi llio ion n in gros gross s aggr aggreg egat ate e proc procee eeds. ds. In 1999 1999 Info Infosy sys s was was list listed ed on NASDAQ with a market capitalisation of $10 billion. A NASDAQ listing was significant for Infosys in many ways. As Nandan Nilekani, co-founder of Infosys explained, “We wanted to be recognised as a global company, and it was imperative that we were listed on the largest and deepest capital markets in the world.” A NASDAQ listing also helps Infosys in other ways. For example, it helps it build brand equity that enhances the company’s visibility beyond India. It also enables Infosys to offer employees stock options overseas. This will enable Infosys to attract top-notch talent globally. The libera liberalis lisati ation on of the Indian Indian economy economy also also brough broughtt unprec unprecede edente nted d comp co mpet etit itio ion n to Indi India. a. Such Such mult multin inat atio iona nall corpo corpora rati tion ons s as IBM, IBM, Sun Sun Microsystems, and Motorola could leverage their vast financial resources to compete for India’s most valuable resources, its people. MNCs could provi provide de the the Indi Indian an peop people le with with neve neverr befo before re avai availa labl ble e sa sala lari ries es and and compensation competitive on a global scale. Competition for IT talent was further aggravated in 2000 by the increase in the quota of H-1 visas that allow organisations to hire professionals overseas.

2.4 LEADERSHIP AND CULTURE


Page 8


Most of the current human resource practices at Infosys result from the vision of the leaders and the culture that they have created. Narayana Murt Murthy hy,, know known n for for his his lead leader ershi ship p and and visi vision on,, is the the publ public ic im imag age e of Info Infosy sys. s. His His lead leader ersh ship ip style style is humb humble le and and stra straig ight ht-f -for orwa ward rd,, quit quite e uncommon in the world of Indian business. Narayana Murthy believes in shar sharin ing g weal wealth th with with his his em empl ploye oyees es and and in lead leadin ing g by exam exampl ple. e. In a know knowle ledg dgee-ba base sed d busi busine ness ss like like Info Infosy sys, s, he sees sees the the im impo port rtan ance ce of consistency in rhetoric and action in empowering employees. Narayana Murthy is credited with creating a culture of closeness and empowerment at Infosys. His management style, rare among Indian business leaders, is based on Western management. The other founding members of Infosys contribute their own specialities. Though less known, they each play a critical part in shaping the culture and running the operations at Infosys. These unique personalities, with their particular strengths, create the basis for an uncommon culture at Info Infosy sys. s. Info Infosy sys s was was vote voted d India’ India’s s most most admire admired d compan company y by a Janu Januar ary y 2005 2005 surve survey y in The Econom Economic ic Times. Times. Accordi According ng to Naraya Narayana na Murthy, what Infosys has on its side is “youth, speed and imagination and and

they hey

are are

const nstantl antly y

inn innovatin ating g

in eve every area rea

of

thei their r

operation”. operation”. The founder’s efforts have been paying-off. According to a California-based management consultant working in India, “ Infosys has been critical in changing the mind-set of India.” Transparency is one of the important values held by Infosys. A practice illustrative of this value is its very early decision to adopt the U.S. GAAP standards, the most stringent standards, for reporting its financial results. Hema Hema Ravich Ravichand andar, ar, the Senior Senior VP of Human Human Resour Resources, ces, sums up the characteristics of the culture that distinguish Infosys from its competitors: c ompetitors:

“Our emphasis on transparency and communication sets us apart from prevalent family owned businesses operating in India. Our emphasis on Submitted to : - Prof. Gauri Shankar

Page 9


getting the employees’ emotional buy-in into the company distinguishes us from the MNCs that have recently entered the Indian business scene.”

The attempt to ensure motional buy-in is evident in their effort to provide a

self self-s -suf uffi fici cien entt

work ork

envi enviro ronm nmen entt

for for

thei theirr

empl em ploy oyee ees. s.

Info Infosy sys s

inaugurated its facilities in Bangalore under the name of “Infosys City” in November 2000. Spread over 44,225 acres, it is claimed to be largest software services campus in the world. It has the largest “video wall” in Asia which which allows allows for video video confer conferenc encing ing simult simultane aneous ously ly from from multi multiple ple centers. The existing buildings also form part of the Infosys City. The City contains food courts that serve Chinese, North Indian, South Indian and Western cuisine. A state-of-the-art gym, golf course, pool tables, table tennis tables and dance floor are already in place. The sauna, grocery store, an Infosys Store, 50,000 square feet swimming pool, and a lake with paddling boats. The eco-friendly campus includes beautiful landscape as well. Besides the enticing work environment, Infosys provides state of the art technology its employees. For example, PCs used by Infocians are upgraded every two years.

2.5 MANAGEMENT OF THE HUMAN RESOURCE ASSETS


Page 10


As of March 31, 2008, Infosys had approximately 15,400 employees. The curren currentt employ employee ee streng strength th repres represent ents s a growth growth rate rate betwee between n 40-50% 40-50% since 1996. Of these about 86% are engaged in software development (including trainees) and the other 14% are in support services. Info Infosy sys s inve invest sts s heav heavil ily y in its its prog progra rams ms to recr recrui uit, t, trai train, n, and and reta retain in qualif qualified ied employ employees. ees. Furthe Further, r, manage managemen mentt believ believes es that that Infosy Infosys s has estab establi lish shed ed a repu reputa tati tion on as one one of the the mo most st pref prefer erre red d em empl ploye oyers rs for for software engineers in India. Elsewhere in the software industry, employee attrition rate is around 30%; Infosys boasts an employee attrition rate of only 9.8%.

2.6 SELECTION The The first first step step in the strat strateg egic ic manage manageme ment nt of

a com compa pany ny’s ’s huma human n

resources is selection of assets with skills and potential consistent with its business requirements. Infosys’s business requirements are flexibility and innovation. Accordingly, it has developed clear selection criteria consistent with this business need. Selection is based on an individual’s ability to learn, learn, academ academies ies achiev achieveme ement nt and and concep conceptua tuall knowle knowledge dge,, as well well as temp temper eram amen entt

for for

Info Infosy sys’ s’s s

cult cultur ure. e.

Furt Furthe her, r,

beca becaus use e

of

Info Infosy sys’ s’s s

repu reputa tati tion on as a prem premie ierr em empl ploy oyer er,, it ca can n sele select ct from from a larg large e pool pool of qualified applicants within India. Competition among applicants is intense. One selection criteria in particular stand out: the learnability. At Infosys, learnability is define defined d as the ability ability of an indivi individua duall to derive derive genera generall conc co nclu lusi sion ons s from from spec specif ific ic situ situat atio ions ns and and then then appl apply y them them to a new new unstructured situation.

P.S Srivat Srivathsa hsa,, the Senior Senior Manage Managerr of Human Human Resourc Resource e Develo Developme pment, nt, adds: Submitted to : - Prof. Gauri Shankar

Page 11


“Learnability is considered an important criterion because the project life cycle is short and technology is changing rapidly- so the ability of the person to take the concept learnt in one setting and to apply it to another is very important. At Infosys learnability is assessed through written tests that include analytical questions geared towards assessing the aptitude of a person to derive generic patterns from a situation.” For its its entr entry-l y-lev evel el posit position ions, s, Info Infosy sys s focus focuses es its its recru recruit itin ing g effor efforts ts on stud studen ents ts

wit with

exce excell llen entt

aca cad dem emic ic

back backgr grou ound nd

from from

engi engin neeri eerin ng

depart departmen ments ts of Indian Indian schools. schools. The first step in the hiring hiring process process is manpower planning, where the numbers are determined. This planning usually takes place 20 months ahead of the hiring process. Recruitment incl includ udes es ca camp mpus us inte interv rvie iews, ws, as well well as invi inviti ting ng appl applica icati tion ons s over over the the Internet, newspaper ads, through job fairs, and HR consultants. The initial screening is based on such criteria as academics and experience. The The test test com compr prise ises s two two ma main in co comp mpon onen ents ts:: arit arithm hmet etic ic reaso reasoni ning ng and and logical reasoning. Because of time pressures involved in testing the large volume volume of candid candidate ates s across across the countr country, y, the readin reading g com compre prehen hension sion section has been eliminated, cutting down the testing time to one hour, Tutorials or coaching classes offered by third parties are popular among individuals who wish to prepare for these competitive tests. Infosys has a question bank system from which questions are picked randomly for each test center. Those who score above the cut-off in the selection test are called for an interview. Interviews are conducted jointly by the human resource managers and the technical manager. At the interview stage, screening criteria used are aspirations,

expecta ctations ons,

flexibility,

presentation

skills

and

communication skills. Rejected candidates may reapply after nine months. People do come back and, if they have picked up the necessary skills, they are hires.


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2.7 TRAINING AND DEVELOPMENT At Infosys, training and development constitute the next step in building its human assets where the objective is to match the available skills and abilities to its business requirements. In the headquarters at Bagalore, the education and research center in a building that can train 1,000 software engineers engineers simultaneo simultaneously. usly. It comprises comprises fully equipped classrooms, labs with with vide video-c o-con onfe fere renc ncin ing g unit units, s, indi indivi vidu dual al facu facult lty y room rooms, s, and and 30,0 30,000 00 square foot library with a capacity for 10,000 books. In addition, under const constru ruct ctio ion n are are a ma mana nage geme ment nt deve develo lopm pmen entt trai traini ning ng cente centerr and and a Wire Wirele less ss Cent Center er for for Exce Excell llen ence ce to be buil builtt by Nort Nortel el Netw Networ orks ks.. The The Wireless Center is expected to be the e-commerce research center with a capa ca paci city ty for for 650 650 peop people le work workin ing g on rese resear arch ch in wire wirele less ss Inte Intern rnet et capabilities. The The educa educati tion on and and resea research rch depa depart rtme ment nt of Info Infosys sys offe offers rs over over 400 400 cour co urse ses, s, incl includ udin ing g

cour co urse ses s

in busi busine ness ss,,

data databa base se ma mana nage geme ment nt,,

e-

commerce, commerce, quality quality systems, systems, programmi programming ng language language (e.g., Java, C++), networ networkin king g concep concepts, ts, softwa software re develo developme pment, nt, langua languages ges (e.g., (e.g., French French,, Japane Japanese), se), interp interpers ersona onall skills skills (e.g., (e.g., com commun munica icatio tion), n), and manage manageria riall skills skills (leade (leadersh rship, ip, team team manage managemen ment, t, negoti negotiati ation) on).. Full-t Full-time ime facult faculty y teaches 75% of these courses; professionals teach 10% of the courses and the outside vendors offer rest of the courses. All fresh technology entrants receive 14.5 weeks of training: 3 days of orient orientati ation on (e.g. (e.g. corpor corporate ate cultur culture, e, custom customers ers), ), 5 week week of founda foundatio tion n courses (e.g. programming, systems development, interpersonal skolls), 7 weeks weeks of techno technolog logy y course courses s (e.g. (e.g. C++,UN C++,UNIX, IX,HTM HTML), L), and 2 weeks weeks of group project. In addition, training is provided as a part of the continuing education.


Page 13


Beyond Beyond entry-l entry-leve evell traini training, ng, people people may nomina nominate te themse themselve lves s for the scheduled courses. Close to 100 courses are offered each quarter, with duration from 1 day to 6 days. Most courses are presented in classrooms, some in labs. In addition, course may be offered on request. Training needs are assessed through various mechanisms; the objective is to fine-t fine-tune une them them to busine business ss needs. needs. First First the corpor corporate ate ma manag nageme ement nt determines determines segment-wi segment-wise se technology technology requiremen requirements. ts. These expectation expectations s are com commun municat icated ed to the educat education ion and and researc research h depart departmen ment. t. So, for instance, the education and research department may be informed of the requirement for 500 people with knowledge in Internet technology in the near future. Specific skill needs such as interfacing with Microsoft or Java may ma y be dete determ rmin ined ed thro throug ugh h a deep deeper er anal analys ysis. is. Typi Typica call lly, y, abou aboutt 3-6 months advance notice is provided. Trai Traini ning ng need needs s ma may y also also be as asse sesse ssed d thro throug ugh h the the regu regula larr plan planni ning ng meetings. In these meetings, the expected projects for the coming year are forecasted. These projects determine skill requirements (e.g., 300400 project managers for 500 projects). Based on current skill availability and skill skill demand demand,, traini training ng needs needs are determ determine ined. d. The The educat education ion and resear research ch depart departmen mentt also also tracks tracks specifi specific c techno technolog logies ies;; the number number of requ request ests s for for the the tech techno nolo logy gy from from clie client nts s ma may y also also dete determ rmin ine e co cour urse se offerings. Info Infosy sys s also also offe offers rs trai traini ning ng and and deve develo lopm pmen entt supp suppor ortt to aca cade demi mic c institutions by providing exposure to industry, in the form of sabbaticals at Infosys, training programs, and sharing courseware.

2.8 CAREERS


Page 14


Charge Charged d with with the respon responsibi sibilit lity y of develo developin ping g human human assets assets in a fast paced environment, career management at Infosys faces two challenges: a shift from a focus on technical expertise in the career to a focus on management expertise, and the speed with which this refocusing must be accomplished. Nandita Gurjar, the Corporate Development Manager describes the first challenge as follows: “Man “Manag agem emen entt skil skills ls have have beco become me incr increa easi sing ngly ly rele releva vant nt for for Info Infosy sys s because of its ever-increasing volume of business as well as its shift towards consulting business. As the number of projects to be handled has increa increases ses,, the demand demand for projec projectt manag manageme ement nt skills skills in goal goal settin setting, g, commu co mmunic nicati ation, on, coa coachi ching, ng, delega delegatio tion n and team team manage managemen mentt has also also increased. Invariably the technical personnel are chosen to move to a management track. This choice is ironic in some ways because the better an individual is in technical skills (such as writing code) the more likely he/she is to be moved away from using the technical expertise into a management track requiring management expertise. Technical expertise provides provides an individual individual legitimacy legitimacy and respect respect from co-workers co-workers making them a natural choice as a team leader. Within a short time span the team leaders are required to manage projects, clients and the people workin working g on these these projec projects. ts. It, theref therefore ore,, become becomes s necess necessary ary for the individual to abandon their technical expertise- something that has been very salient to their identity in the course of education and early career, when they aspire to be smart “techies”, and start collecting a repertoire of managerial capabilities. While hile

deve develo lopi pin ng

man manage agement ment

skil skillls

by

atte attend ndin ing g

manag anagem emen ent t

development programs 2-3 years ago was one of the “nice things to do”, it has now become a business necessity. The nature of management skills required is further complicated by the fact that at Infosys, managers are also also requ requir ired ed to mana manage ge from from remo remote te.. Team Team memb member ers s are are apre apread ad Submitted to : - Prof. Gauri Shankar

Page 15


geographically and may not meet each other or the team leader for a year year or perh perhap aps s neve never. r. As hiri hiring ng ov over erse seas as gath gather ers s mome moment ntum um,, the the demands may be further exacerbated by the fact that team members may belong to different backgrounds and may not completely understand the organization and the country culture.” The second challenge facing career management is “compression” in career, an effect of the speed at which employees must move from one stage in their career to another. The new hires are very young (22 years old) and they are put under managers who are 24 years old. At 30 these employees are managers of managers. At 35 an individual can potentially become a vice-preside vice-president. nt. Management Management skills skills become necessary at a very earlt stage in life and career of an individual at Infosys. Rapid change is a constant challenge. It is a challenge to teach a 24-year old to become a manager. The young individual believes, “I have not yet grown,” but you are saying, “you have to do it.” Just when you become used to something you are pulled out of it and it is time to move on to something else. Those who can cope with this change emerge as leaders (perhaps at the age of 32); others fall back and become comfortable where they are. The whole career development progr progress ess in Info Infosy sys s is ther theref efore ore co comp mpar arat ativ ivel ely y shor shorte terr than than in othe otherr companies. To address the pressing need for management development, Infosys has put in place some training programs. These include: •

This is a 5-da 5-day y prog progra ram m for for new new First First time time manage manager r progra program: m: This man ma nager agers, s, desi design gned ed to cha change nge a ma mana nag ger’s er’s mind ind-set -set from from an individual to a more managerial one, where the focus has to shift from managing individual performance to managing team performance.


Page 16


•

The The mana manage ger r of mana manage gers rs prog program ram:: The The prog progra ram m is gear geared ed towa toward rds s

tea teachin ching g

manag anager eria iall

skil skills ls

(su (such

as

dele delega gati tion on,,

team team

management) to more senior managers. •

Infosys leadership program: The program emphasizes the dynamic environment outside of Infosys and the adaptation to its environment. Once again, the objective is to create a “mind-shift” for the senior managers, from looking inward at the internal operations to become aware of external change factors.

Comp Compre ress ssed ed ca care reer ers s brin bring g with with them them othe otherr chal challe leng nges es:: stre stress ss and and burnou burnout. t. With With technol technology ogy-ass -assist isted ed com commun munica icatio tion n device devices s (e.g., (e.g., Palm Palm Pilots Pilots,, cell cell phones phones and home home com comput puters ers)) employ employees ees are multi multi-ta -taskin sking, g, even in meetings. The potential for stress is enormous, intensified by the time zones differences that make the employees accessible around the clock. Thus, working around the clock, coupled with extensive travel and mini mi nima mall time time to ma mana nage ge work work and and nonnon-wo work rk need needs s ma may y ca caus use e ma many ny employees in the future to burnout.

2.9 PERFORMANCE APPRAISAL Performance appraisal is a rigorous comprehensive process at Infosys, tied to the future development of the individual’s skills and capabilities. First First,, an eval evalua uati tion on of perf perfor orma manc nce e skil skills ls is ca carr rrie ied d out out for for the the task tasks s assigned to an individual during the appraisal period. The criteria used to evaluate performance on tasks are derived from the business goals and includ include; e; timeli timeliness ness,, qualit quality y of work, work, custom customer er satisf satisfact action ion,, develo developin ping g others, knowledge dissemination, peer satisfaction in the team, increased business potential, and developing optimal task solutions. The evaluation of personal skills and abilities is carried out for the following: learning and analytical ability, decision making, team leadership, change management, commun com munica icatio tion n skills, skills, teamwo teamwork, rk, planni planning, ng, and organi organisin sing g skills skills.. Each Each Submitted to : - Prof. Gauri Shankar

Page 17


criterion is described and measured on a 5-point scale. Further, each of the scale points are anchored to descriptions of expected behaviour. Performance appraisal is carried out semi-annually, in July and January. A 360-degree appraisal is carried out for all employees. Appraisals are sought sought from from peers, peers, direct direct superv supervisor isors, s, subord subordina inates tes,, and custome customers. rs. A minimum of 6 to 7 appraisal reports are collected for each employee. All appraisal forms are completed online and the data is maintained in a central database. The appraisal information is used to identify training courses and other developmental interventions. Future objectives for both task accomplishment and individual skills development are based on the results of the semi-annual evaluation.

COMPENSATION “We compensate out human assets in three ways. We add learning value thro throug ugh h trai traini ning ng and and deve develo lopm pmen entt and and appr apprai aisa sall prac practi tice ces. s. We add add emot emotio iona nall

valu value e

thro throug ugh h

init initia iati tive ves s

dire direct cted ed

towa toward rds s

supp suppor orti ting ng

employees with their work and personal needs, and we add financial value through monetary compensation.” - Hema Ravichandar, Senior VP, HRM Although Infosys faces strong domestic and international competition for its its

huma uman

ass sset ets, s,

thr through ough

enti entici cin ng

offe offerrs

from from

comp co mpet etit itor ors, s,

the the

compensation level at Infosys equals the average industry level for each country. It is neither above market nor below the market level. The belief is that financial value, when combined with learning and emotional values, yields a total compensation greater than that offered elsewhere in the industry.


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Infosys is one of the first Indian companies to offer stock option plans to their employees. Currently Infosys offers three option plans that cover all Infosys employees. In additi addition on to such such statut statutory ory benefi benefits ts as pension pension,, medica medicall and leave, leave, Infosys also offers a loan program that employees find very attractive. Loans may be taken for pursuing a degree program such as an MBA, or to meet such personal needs as purchasing a car or a house. The interest rate varies (4% for a car purchase and 0-4% for a house purchase). To date, almost all loans have been repaid.

2.11 INFOSYS OVERSEAS HRM Overseas, the main thrust of HRM at Infosys has come from its Global Delivery Model. The objective of this model is to support customers using virtual teams that span geographic locations. Recently, however, the the focu focus s has has shif shifte ted d from from prod produc ucin ing g at lowe lowest st co cost st and and sell sellin ing g at maximum maximum price to producing at locations locations that provide provide other benefits. benefits. For example, production demands arising from customer needs in Canada, London, or the USA may require that production be carried out in that specific country. Or, in another instance, the “dot com” customers require the latest technical expertise that may not be available in India, so that development must be hired from Silicon Valley in California. Currently, the greatest need at Infosys is to hire people at all overseas locations, with about 1,000 hires in the next year in the U.S. and 100 in Canada. Before the NASDAQ listing, Infosys could not pay overseas hires, becaus because e Indian Indian stock stock option options s are not fungib fungible. le. Howeve However, r, since since 1999, 1999, Infosys has been recruiting actively in North America (including Canada). A drawback that Infosys faces in attracting candidates is that it has very low brand equity for Infosys in its own immediate market, but to most people it is still relatively unknown. Submitted to : - Prof. Gauri Shankar

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The recruitment strategies being used at the campuses in the U.S are similar to those used by all other companies. These include lobbying with campus campus career career center centers, s, giving giving talks talks to studen studentt group groups, s, sending sending email email campai campaigns gns,, partici participat pating ing in career career fairs, fairs, and so on. Howeve However, r, certai certain n aspe as pect cts s of the the recr recrui uitm tmen entt uniq unique ue to Info Infosy sys s offe offerr are are a recr recrui uiti ting ng advantage. They offer extensive training, which few other companies will offer. The training includes classroom training and mock projects. After a year our employees are as good as the best Bachelor of Computer Science in the world. world. Subseq Subsequen uently tly,, employ employees ees have have the opport opportuni unity ty to sign sign up any course as a part of their continuous learning process. With an increasing hiring rate, Infosys plans to set up training facilities in U.S itself. The other aspect of recruitment that provides an advantage to Infosys is our willi illing ngn ness ess

to hire ire

back backgr grou ound nd (for (for

anyon nyone e

exam exampl ple, e,

with ith any any reaso eason nable able ma math th or sc scie ien nce econ econom omic ics, s,

math ma th,,

stat statis isti tics cs,,

phys physic ics s

or

chemistry). This is a departure from the hiring practices of other firms that focus on the traditional computer science, computer engineering and electrical engineering backgrounds. This approach to hiring is attracting a lot of attention. Given our proven track record of training non-computer background people in India, we can do it again here, as long as there is some degree of analytical background in the curriculum and the person has a good GPA. Although learnability is an important criterion for hiring even in North America, the written test used in India to screen out applicants cannot be used used in the the US USA. A. Inste Instead ad the the scree screeni ning ng crit criter erio ion n is GPA GPA of 3.0. 3.0. This This comp co mpar ares es to a 70% 70% cuto cutoff ff used used by Info Infosys sys for for stud studen ents ts from from Indi Indian an Univ Un iver ersi siti ties es..

The The

othe otherr

char charac acte teri rist stic ics s

cons co nsid ider ered ed

impo im port rtan antt

are are

inte interp rper erson sonal al skil skills ls and and com commu muni nicat cation ion abil abilit ity, y, abil abilit ity y to work work unde underr pressure, and to travel extensively. While hiring in North America, Infosys particularly emphasizes communication and interpersonal skills, because of their experience that candidates in north America possess these more Submitted to : - Prof. Gauri Shankar

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than than ca cand ndid idat ates es in Indi India. a. In co cont ntra rast st em empl ploy oyee ees s hire hired d in Indi India a are are stronger in technical skills. A team compromising both skills is therefore very advantageous, and can potentially create learning from each other’s skills. Subject knowledge is a distant third or fourth level criterion, based on a assumption that, if the person has applied his/her mind to understand a concept in his/her own discipline, then it is very probably not difficult to teach the person software s oftware programming. Overseas, Infosys maintains the same compensation strategy as in India, namely, that they are not industry leaders in pay. To attract candidates they emphasise the entire employment package. Features of the package includ include e career career advan advanceme cement nt opport opportuni unitie ties, s, autonom autonomy, y, and more more early early career responsibility compared to competitors. Culture has so far not been a major barrier in Infosys’s ability to do business in India.

2.12 FUTURE PLANS Infosys plans to maintain its growth rate in India and to expand overseas. It has already set up a software development center in Toronto and plans to set up more centers soon. It plans to hire a substantial number of employees over the next few years in its overseas offices. As a part of its growth strategy, Infosys is exploring possible candidates for for ac acqu quisi isiti tion ons s in the the US US.. Info Infosy sys s beli believ eves es that that purs pursui uing ng sele selecti ctive ve acquisitions of IT services and software applications firms could expand its techni technical cal expert expertise ise,, facili facilitat tate e expans expansion ion into into new vertica verticall market markets, s, anf increase its clients base. As part of its business strategy Infosys is gearing to move up the “value chain” and provide end-to-end solutions to clients. Submitted to : - Prof. Gauri Shankar

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Info Infosy sys s will will have have to ac achi hiev eve e thes these e obje object ctiv ives es in the the face face of ma many ny challenges. These include increased global competition and labour cost, rapid rapid growth growth,, and increa increased sed employ employee ee divers diversity ity.. As Infosy Infosys s expand expands s over overse seas as,, it will will expe experi rien ence ce incr increa ease sed d co comp mpet etit itio ion n from from firm firms s with with pote potent ntia iall lly y lowe lowerr labo labour ur co cost sts s and and with with grea greate terr abil abilit ity y to resp respon ond d to changing client IT preferences. Historically, Infosys’s labour costs have been been lowe lowerr than than those those of serv service ice prov provid ider ers s in the the Un Unit ited ed Stat States es and and Europe. However, because wages in India are currently increasing at a faster rate than in the US, Infosys will experience shrinking profit margins in the future. The rapid growth of Infosys challenges its ability to attract and retain skilled personnel. Overseas hires and acquisitions will result in Infosys experiencing increased employee diversity of cultures. Increased diversity will also come from a different set of skills required for expansion into consulting business.

CHAPTER 3

MANAGEMENT OF HUMAN ASSETS AT TCS Submitted to : - Prof. Gauri Shankar

Page 22


“TCS plans to recruit 30,000 persons in this financial year up to March 2007." - S. Padmanabhan , Executive VP, Global HR, TCS 3.1 INTRODUCTION India's largest tech company is also its best IT employer. It is not the pay alone. What is the key to the ever-complicated HR management puzzle? Well Well,, as aski king ng the the brai brains ns at TCS TCS co coul uld d help help.. When When an abov above e 70,0 70,000 00 employee-strong organization emerges as the best employer, one cannot help but wonder what it really takes to keep such a huge workforce added both organically and inorganically-really satisfied in these trying times. The company hogs the limelight when it is managing to maintain the lowest attrition rate in the industry. The figure is around 10% when the industry average hovers around 20%. Currently, 7.5% of TCS' workforce belongs to other nationalities and are spr spread ead ac acrros oss s the the glob globe. e. True True to the the char charac actteris eristtics ics of a glob globa al organization, TCS has added a local flavor to all its existing HR policies. S. Padmanabhan, Executive VP, Global HR, further asserts that, "The DNA of the company is to create an easy work environment and this has been built over years of effort." Not considered the best paymaster in the industry, TCS' compensation structure is also based on a simple philosophy - it is not sufficient to give a lot, but give it to the right people. Managing the people, revenues and the customers constitutes an ideal organization. TCS seems to be the perfect perfect depiction, depiction, at least in the Indian Indian IT scenario. scenario. What is there in TCS' HR practices that make it the best and biggest? Can it keep its head above water, in its efforts to grow even bigger?


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3.2 BACKGROUND Stick Stickin ing g on to the the test tested ed and and trie tried d proce procedu dure res s does does not not qual qualif ify y the the existence of a company in the present environment, which is never the same sa me on two two co cons nsecu ecuti tive ve days days.. It take takes s time timely ly alte altera rati tion ons s in its its HR practices to keep it abreast with the others in the race. When it comes to TCS, not just being in par is key, but leaping forward at a staggering pace ahead of its competitors holds the key. The company should effectively effectively harness harness its human capital by making making the necessary modifications in its HR practices from time to time. The HR practices should be in alignment with the overall strategy and processes for the company to keep going in the rat and mouse game. TCS has been thriving for this many years in a big way, and it becomes evident that HRM is in line with the strategy. In fact, TCS was the 'live case ca se stud study' y' that that ca capp pped ed off off a sixsix-da day y 'stra 'strate tegi gic c lead leader ersh ship ip-t -tra rain inin ing g prog progra ram' m' orga organi nize zed d

by the the

AllAll-In Indi dia a

Mana Manage geme ment nt As Asso soci ciat atio ion n

and and

condu conducte cted d by facu facult lty y from from the the Harv Harvar ard d Busin Busines ess s School School at the the Tata Tata Management Training Centre, Pune. The strategists speak volumes about the company. Appreciating the fact that, TCS was a role model, how about the torrential times ahead? The company is getting bigger and the competition more heated up. Hats off to TCS HR strategies till date. It is not the past but the future that counts. The company is assured of a bright future if it frames the HR strategies that is really becoming, as it has done in the past. Keeping the tempo going, but modifications and interventions at the right time in the proper way will keep its position intact. Easier said than done. The big H - HOW? Thus Thus stra strate tegi gic c HRM HRM co come mes s to the the fore forefr fron ontt subm submer ergi ging ng HRM. HRM. The The following discussion sheds light into the techniques of HRM adopted by TCS that enabled smooth functioning and growth in the global scenario.


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3.3 OVERVIEW OF HR IN TCS 3.3.1 Diversity in Workplace According to Anjali Prayag, "For Indian companies’, managing a diverse workforce is no longer a choice but an imperative." TCS is an equalopport opportuni unity ty employ employer er and TCSers TCSers com come e from from many many nation nationali alitie ties s and speak speak many many langua languages ges.. TCS has the cultur culture e of celebr celebrati ating ng everyt everythin hing g under the sun, singing carols at Christmas and doing the dandiya dance at Navrathri with equal enthusiasm. Tata Consultancy Services (TCS) will recruit 4,000 foreign nationals in the forthc forthcomi oming ng fiscal fiscal,, includ including ing 800 people people in the US and 1,000 in Latin Latin America and the rest in China and Eastern Europe, according to Mr. S. Padm Pa dman anab abha han, n, Exec Execut utiv ive e ViceVice-Pr Presi eside dent nt of Glob Global al HR. HR. The The co comp mpan any y intend intends s to build build a workfo workforce rce with with over over 7.5% 7.5% represe representa ntatio tion n of foreig foreign n nationals. It is noteworthy that more than 25% of the employees are females. The company has adopted the diversified workforce approach in order to create a comfortable environment for clients and employees who work along with it on specific projects. The HR practioners who make a large hue and cry about bringing out the best using a diverse workforce can really quote TCS as an example. One of the chief reasons for the diversity drive was the 9/11 disaster. The move was initiated as a risk mitigating mechanism wherein, the company does not have to take the risk of losing its entire workforce due to a single catastrophe. The far sightedness of the company in this regard is further revealed by the strategy they plan to recruit the diverse workforce. In I n order to do this, the company is looking looking to implement implement the campus campus recruitmen recruitmentt framework framework that it has in India in foreign countries. The company has established Submitted to : - Prof. Gauri Shankar

Page 25


relationships with 180 campuses in India where it held recruitments and made 8,000 offers in the first quarter of 2006-07. Abroad, it is still in the process of building relationships with universities and colleges such as Nanyang Nanyang Technologica Technologicall University, University, Singapore, Singapore, and some universitie universities s in China. Acquisitions of Australia-based Financial Network Services, a 200-people strong strong com compan pany y that that offers offers retail retail-ba -banki nking ng soluti solutions ons,, and and ChileChile-bas based ed Comicrom, banking and pensions BPO that has about 930 people on its rolls, was also done as an effort to widen the foreign employee base of the company. The Indian IT scenario as such is transforming. Infosys has also announced announced an intake intake of 300 graduates graduates from universitie universities s in the US in 2006 and about 25 from universities in the UK in 2007 as part of its commit com mitmen mentt to create create a divers diversifi ified ed workfo workforce rce.. Though Though com compan panies ies like like Infosys and Wipro also go for the same, they are not successful with respect to TCS. Wipro is finding it a real challenge to manage the diverse workforce. TCS is fitting in the present. 3.3.2 Learning & Development (L&D) L&D Mission - "To enhance the competency capital of TCS, through cocreation of learning experience continuously and consistently, so as to facil facilit itat ate e deli delive very ry of worl worldd-cla class ss huma human n ca capa pabi bili lity ty to the the cust custom omer er,, enabling the company to achieve its vision." TCS TCS inve invest sts s abou aboutt 4 per per cent cent of its its annu annual al reve revenu nues es in Lear Learni ning ng and and Development, to build competency capital within the company in cutting edge edge techno technolog logies, ies, domain domain and functio functional nal areas. areas. Special Special emphas emphasis is is placed on providing necessary learning interventions to associates with potential of being leaders in the company. Thus Thus,, it is evid eviden entt that that focu focus s is divi divide ded d equa equall lly y betw betwee een n the the regu regula larr employees and managerial employees alike. All the learning programs are Submitted to : - Prof. Gauri Shankar

Page 26


mapp ma pped ed to co comp mpet eten enci cies es and and addr addres ess s lear learni ning ng need needs s at diff differ eren entt proficiency levels. Learning and Development managers closely work with business to develop and deliver programs that will make our associates deliver value-for-money to our customers. Assessment centers are also being used by TCS. Inarguably, TCS is one of the real pioneers in the training. The state-of-the-art center in Thiruvanantapuram is by far the best than its adversaries. Several levels of learning are provided in TCS. Each Each of the leve levels ls is uni unique, que, aim imed ed wit with varyi aryin ng obje object ctiv ives es.. The The proactivity of the company comes to light, with the inclusion of newer modules as per the requirement. 3.3.3 Initial Learning Program (ILP) TCS Initial Learning Program is designed to provide a smooth transition from from Campus Campus to Corpor Corporate ate enviro environme nment. nt. The progra program m is design designed ed to transform transform graduate graduate engineers into IT Consultant Consultants s with global mindset. mindset. The participants are put through a rigorous 47-day program that has good mix of technical skills and soft skills. 3.3.4 Continuous Learning Program (CLP) Continuous Learning Program (CLP) is a manifestation of the company's commitment commitment to the continuous continuous growth growth of associates, associates, in line with the core value of Learning & Sharing. Programs under the CLP umbrella arise out of business strategies, project needs, technology and business directions and and indi indivi vidu dual al as aspi pira rati tion ons, s, and and span span ac acro ross ss Tech Techno nolo logi gies, es, Do Doma main ins, s, Processes and Soft-skills. This lay emphasis on long-term, short-term and medium-term needs of the organization alike. 3.3.5 Leadership Development Program (LDP) The The prog progra ram m is to chur churn n out out the the futu future re lead leader ers s for for the the co comp mpan any. y. Associates are carefully assessed for leadership potential and then put


Page 27


through rigorous branded programs. TCS also encourages associates to attend various programs at premier B-schools across the globe. 3.3.6 Foreign Language Initiative (FLI) Foreig Foreign n Langua Language ge Initia Initiativ tive e is to help help the associa associates tes to com commun municat icate e effe effecti ctive vely ly with with the the custo custome mers. rs. Un Unde derr this this init initia iati tive ve,, as asso socia ciate tes s are are encouraged to learn one or more foreign languages. This initiative also helps associates to use English effectively for business communication. This is highly beneficial in a company with a diverse workforce. The crosscultural issues are curtailed with the proper use of communication. 3.3.7 Workplace Learning Apart Apart from from all these these initia initiativ tives es TCS encour encourage ages s "workp "workplace lace learni learning" ng".. Associates are encouraged to learn while at work. To facilitate this, TCS has subscribed a huge library of e-Learning courses and online books. The classroom session and e-Learning materials complement each other. 3.3.8 EVA & Compensation Management Management An extremely competitive compensation scale, is rendered solidarity by a highly effective 'economic value added' (EVA) model, first of its kind to adopt the practice in India. It is a basis for measuring performance and bonus, and is measured at the enterprise and department levels. The EVA system system calcul calculate ates s profit profits s after after consid consideri ering ng all costs, costs, includ including ing that that of capital. If the revenues are in excess of the costs, including operating expenses, costs of developing and investing in the people, products and business, then value has been created. 3.4 THE EVA MODEL In giving shape to the EVA model, an organization needs to keep its focus towards towards the ultimate goal of aligning aligning its people to the corporate mission, mission, Submitted to : - Prof. Gauri Shankar

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creating an entrepreneurial culture through an empowered work force, and building ownership with accountability. TCS TCS work worked ed out out an EVA EVA fram framew ewor ork k to alig align n corpo corpora rate te valu value e with with the the performance of the constituent business units and the individuals who comp co mpri rise sed d these these.. It tran transla slate ted d to a co comp mpen ensat sation ion mo mode del, l, wher where e the the employee had a share in the corporate pie with add-ons from the profits of the the Busin Busines ess s Un Unit it and and the the Indi Indivi vidu dual al Perf Perfor orma manc nce e Facto Factor. r. At the the indi indivi vidu dual al leve level, l, an em empl ploy oyee ee need needs s to know know the the driv driver ers s to twea tweak k to enhance the EVA of the company, of the business unit, and his own contribution towards all these. There are three basic drivers - revenue, cost, and capital charge. Revenue is driven by the rate or license price put into the product, sales, billable hours, response time, and domain skills. The individual works towards the impr im prov ovem emen entt of the the bene benefi fitt

pack packag age, e, whic which h esse essent ntia iall lly y has has

thre three e

comp co mpon onen ents ts - the the Corp Corpor orat ate e EVA, EVA, the the Busi Busine ness ss Un Unit it EVA, EVA, and and the the Individual Performance Factor. Out of the total EVA payment, a certain perc percen enta tage ge goes goes to each each em empl ploy oyee ee on the the basi basis s of co corp rpor orat ate e EVA EVA improv improveme ement. nt. Second Secondly, ly, if your your busine business ss unit unit did better better than than anoth another er business unit, then automatically you got more than the other business unit. Again it is a team reward concept. The third one depends on the evaluation of individual performance.

3.4.1 Strategic Benefits of EVA With the introduction of EVA, yet another plank has fallen into place in the systemic efforts towards optimization. With the introduction of EVA, the company has to take a fresh look at the integrated system in a holistic perspective, and evolve ways and means of optimizing it.


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Implementation of EVA requires the integration of the planning and the tracking process. TCS sought to achieve this through a home grown tool called e-Pilot, which essentially drills down from strategy to day-to-day activity. This facilitates the integrated planning approach, in defining the corporate EVA, linking it to the business unit/cell, and further to various components down the line, all the way to the drivers connected to each activity. 3.4.2 Incentive Scheme A comprehensive EVA-based Incentive Compensation Plan is designed for the employees. Building the incentive scheme requires a detailed exercise in arriving at the target EVA. The TCS model was defined backed by a market analysis and a study of 24 competitors, largely outside India. The framework had specifications for target EVA, with carefully defined EVA intervals and provision for the positioning of zero EVA. The gradation continued through incentives corresponding target attainment, the double incentive. TCS is also implementing the bonus bank at the individual level. This exercise begins with a target bonus being ear-marked for allocation on corpo corpora rate te targ target et real realiz izat atio ion, n, with with a buil builtt in mult multip ipli lica cati tion on facto factorr for for exceeding the targeted EVA. When the corporate target is exceeded, a 'pot 'poten enti tial al bonu bonus' s' is decla declare red. d. This This ac accru crues es to the the bonu bonus s bank bank of the the individual as two components: Component A, the result of the share in the corporate pie; Component B, a composite factor depending on the busine business ss unit unit and indivi individua duall perfor performan mance. ce. The accrua accruals ls are cumula cumulated ted over the years and the pay out each year is decided as a portion of this cumulative balance, leaving a surplus in the bonus bank. This concept of bonus bank allows an unlimited multi-year decision horizon, replacing the tradit tradition ional al thresh threshold olds s and caps. caps. It deman demands ds sustain sustainabl able e perfor performan mance ce


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improv improveme ements nts,, and and mainta maintain ins s the import important ant cumula cumulativ tive e relati relationsh onship ip between pay and performance.

3.4.3 Separation Following steps as part of my separation/ exit process : •

1 months notice period has to be given.

•

Fill formal forms to get NOC from HR( for not owing any money to tcs, and for not being leggaly bound in anyway for any contract penalty).

•

NOC for IT (laptop phone etc)

•

NOC for library.

•

Transit Transition ioning ing of the project project after after a backup backup// replac replaceme ement nt guy is recommended by the person leaving the organization.

•

Also the approval of the client is important for the backup personal.

•

Transfer Transfer of knowledge knowledge and training of the team for the expertise expertise of the person leaving the oraganization.

•

This is achieved achieved by HR HR creating creating some sort of backup backup or or succession succession plan for each team member ahead of time and have regular training and and know knowle lege ge tran transf sfer er as well well as rota rotati tion ons s with within in the the team team..

3.5 JOURNEY AHEAD TCS seemed to have done everything right till now. Their HR practices are so unique and they do rely on the buzz word of the era "knowledge capital". They ascribe such importance to training and learning to tap the potentials embedded in their workforce. EVA seems to be a concept that is Submitted to : - Prof. Gauri Shankar

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well-implemented that extracts optimum performance. Synergy is brought to the the fore fore by the the inte interp rpla lay y of work workfo forc rce e ac acro ross ss the the globe globe.. They They are are providing different kinds of benefits to its employees to keep them intact. Above all, they were able to rightly mould their procedures in a way it matched with the changing requirements of the environment. Does all this provide room for complacency? The answer would be no. It would be casuistry to assume that it will be able able to fit fit in the the envi enviro ronm nmen entt in the the turb turbul ulen entt year years s to foll follow ow.. The The company is sitting pretty comfortably as their attrition rate is way below the industry average. They seem to underplay the fact that these figures are on the rise and have climbed to two figures from 6.1% in 2003-04. The gap between TCS and others are threateningly closing up. TCS cannot affo afforrd

to

rela relax x

and

dwel dwelll

on

the

prev previo ious us

stat statiistic stics. s.

Inno Innova vati tive ve

interventions, as they have done in the past, are the real need of the hour hour.. The The big big H-Ho H-How w is left left to the the stra strate tegi gist sts s of the the co comp mpan any. y. The The message is transparent - curb the attrition rates. Too many cooks spoil the broth is an old saying that has its complete essen essence ce in the the co cont ntex extt of TCS. TCS. The The co comp mpan any y is wide widely ly prac practi ticin cing g the the concept of diversity and believes to generate the best out of it. So far so good, but how long it can be sustained? An unprecedented rise in the number of foreign nationals to increase the diversity in all probability will froth the cross-cultural issues and will start to be dysfunctional. Incidents related to diversity problems are being reported. A diverse organization is shaped or influenced by the basic corporate culture, geographical culture and personal culture of the people at various levels in the organization, which in turn is affected by the client culture. Thus, the cultural implication implications s of diversity in an area that is to be looked into. TCS, known to have a good work culture can it maintain the status quo? Diversity management is not just managing gender diversity and Submitted to : - Prof. Gauri Shankar

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ethnicity. The art, if not mastered, can impede the smooth functioning. It also means revising the retention strategies. "No two countries have the same same retire retiremen mentt benefi benefits," ts," asserts asserts Padman Padmanabh abhan. an. So are the reward reward stra strate tegi gies es and and othe otherr para parame mete ters rs.. It take takes s effo effort rts s to ma mana nage ge thes these e effectively. Padmanabhan himself admits, "We have been dealing with and are used to working working with foreigners foreigners as clients or business business associates, but certainly not as team members." The chief factors causing problems between onshore and offshore workers were different communication styles (76 per cent of the times), different approaches to completing talks (53 per cent), different attitudes toward conflict (44 per cent) and different decision-making styles (44 per cent). The company should work out the threshold regarding diversity as they are bounded by capabilities. Daring to cross or accidentally crossing it would result in a debacle. TCS should be able to cut the line. The limiting point is again left in the hands of strategists. TCS is considered as one of the real aces when it comes to training and learning. But the modes of training might again prove to be obsolete tomorrow. They have to adopt newer modes of training, in a scenario when the competitors with Infosys in particular are picking up real pace. With reference to the effective learning and training approach as given in Exhibit 2 2,, how the company can cope? Unless it is taken care of, it might prove detrimental for their growth. EVA has got its own inherent dangers. EVA was done with a view to inculcate long-term orientation in the minds of the employees. employees. Effective Effective implementa implementation tion demands demands short-term short-term targets. targets. This reverse impact was unanticipated by the think-tanks of TCS. It all converges to the same point. What does the future has in store for TCS? There is no other side for the argument that it has to change to seal their secured future. The discussion unfolds here. Which path to opt? The tools and techniques that the company has to adopt, especially when it is Submitted to : - Prof. Gauri Shankar

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in a growing mood. The company is the biggest and best but how can it reta retain in the the sa same me stat status us in its its futu future re effo effort rts s to grow grow.. Neit Neithe herr of the the attributes (big or best) can be compromised. An HR strategy in alignment with with the future future strate strategie gies s of the com compan pany, y, address addressing ing qualit quality, y, client clients, s, innovation and global outlook is the panacea. But How?

3.6 EXHIBITS Exhibit 1

Exhibit 2


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Exhibit 3


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Exhibit 3


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International Human Resource Management Exhibit 4

3.7 BIBLIOGRAPHY BIBLIOGRAPHY Submitted to : - Prof. Gauri Shankar

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www.infosys.com

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www.tcs.com

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www.coolavenues.com

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www.managementhelp.org

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www.humanresources.about.com

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www.icmrindia.org/casestudies

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www.ecch.com/caseresearch.results


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Hrm Practices in IT Industry

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