Innovative HRM Response by Corporates during India's Liberalization and Globalization

Ashok Som Assistant Professor Strategy and Management Area ESSEC Business School, Paris Avenue Bernard Hirsch - B.P. 105 95021 Cergy-Pontoise Cedex France Tel: + 33 (0)1 34 43 30 73 / 3309 (O) Fax: + 33 1 34 43 30 01 Mail: SOM@essec.fr

Topic: Human Resource Management

Innovative HRM Response by Corporates during India's Liberalization and Globalization

Abstract Indian liberalization has caused the creation of hyper-competitive environments in national and regional markets. To face this challenge Indian organizations have initiated adoption of strategic human resource management practices both critically and constructively with increasing competition, Indian corporates have realised the need to make employees more creative, innovative and keep them motivated. With eleven in-depth case studies this article tries to understand how innovative HRM practices are being adopted by Indian firms to brace competition in the post liberalization scenario.

Key words: liberalization, competition, innovative HRM practices, India

Introduction The decades of 1980s and 1990s witnessed an upheaval in economic thinking and brought about major societal changes. Firms enter a more dynamic world of international business with globalization of world markets, marked by the emergence of new international business blocs and economic liberalization of most developed and emerging economies. The dramatic surge in market reforms throughout the developing world meant that more than seventy-five developing and postsocialist economies, with a combined population of more than three billion people aimed at integrating themselves into the global market system. Dozens of these economies like in Asia, Latin America and central Europe have succeeded in attracting large flows of capital, and, most strikingly, more than thirty countries have succeeded in establishing stock markets capable of attracting international portfolio investments. These changes have had profound implications for the entire world economy and are leading to a reallocation of global savings and investment. These changes have propelled the most dynamic of the reforming countries into unprecedented levels of sustained economic growth and reshaped global capital markets by introducing new opportunities for both portfolio and direct foreign investment. As one of the most important emerging markets in the world, India with a tremendous potential for sustained high rates of economic growth is increasingly becoming a key player in the world economy. The liberalization of the Indian economy has created a dynamic business environment that has resulted in hyper-competition. To face this hyper-competitive environment, organizational adaptation and alternative adaptations of innovative practices have been utilized by firms for survival and for sustainable corporate performance. This paper attempts to examine how Indian firms have braced competition through creative and innovative human resource management (HRM) strategies and practices in the aftermath of liberalization of the Indian economy in 1991 and the kind of HRM adaptations that have been relatively more effective in this dynamic context. This article presents a theoretical framework of aligning effective innovative HRM strategies and practices for effective corporate coping in a competitive market. For the purpose of this article

innovative HRM strategies and practices are defined as Any intentional introduction of HRM program, policy, practice or system designed to influence or adapt employee attitudes and behaviors that is perceived to be new and creates current capabilities and competencies"[1]. Also, in this article HRM strategies and practices indicates a proactive process that has been well accepted and recognized in the western literature is being used only recently by Indian corporates as part of their overall business strategy[2]. The Indian context provides an excellent illustration of the phenomenon of large-scale entry of multinational corporations (MNCs) and the repercussions on the competitive structure of the markets where more creative, innovative HR strategies and practices keep them motivated[3]. This article presents evidence from eleven different in-depth case studies that have dealt with the various facets of HRM strategies. The findings reveal how Indian firms are adopting, aligning and integrating their strategic initiatives with innovative HRM strategies in order to be competitive in a new, dynamic business environment.

The Indian Economy India has been identified as one of the largest emerging markets with an immense economic potential for sustained economic growth[5]. It has a billion customers and one of the worlds largest pool of technical, scientific, managerial and entrepreneurial manpower. It is one of the worlds leaders in the areas of research and development in information technology, nuclear, space, rocket technologies. It is among the first three countries in the world that have built supercomputers, the fourth generation PARAM on its own, US and Japan being the other two. India is among the six countries in the world that has launched its own satellites. It has the largest set of remote sensing satellites, the INSAT. It is also one of the worlds largest diamond cutting and polishing destinations. India is among the six largest industrial economies and five largest agricultural economies. It has been growing for the past 20 years at an average growth rate of about 6% per annum, the rate exceeding 8% in 2003. Yet it has a long way to go. The journey of Indias liberalisation of macroeconomic policies started in earnest in 1991 to modernise the economy and

actualise its economic potential. It began moving away from a closed, regulated licensed economy to a dynamic market economy. Liberalisation of the Indian economy The 1980s in India witnessed a rather limited deregulation in industries such as cement. By contrast, the reforms of the 1990s in the industrial, trade, and financial areas, among others, were much wider and deeper. The most significant steps in the liberalization process were rationalization of taxes, selective and phased lowering of excise duties, setting up of national stock exchange with electronic operations, opening up the insurance petroleum and retail sector, reform of India's labor laws, de-reservation of small scale industry products. As a consequence, they have contributed more meaningfully to higher productivity in the economy. Real GDP growth, which had dipped to 0.9 percent in 1991-92, recovered to 5.1 percent during 1992-1993, thereby representing one of the fastest recoveries from a macro economic crisis. Growth rates have risen considerably since then. Foreign currency reserves, which had fallen to almost $1 billion in mid-1991 recovered swiftly and stood at US$6.4 billion in March 1993, US$42 billion in March 2000 and US$104 billion at the end of 2003. The proportion living below the poverty line has fallen from 36 per cent to 27 per cent. These results and possibilities have generated considerable interest in the Indian economy on the part of the international business community, international institutions and scholars. A decade of opening of the economy has produced new dynamism, most dramatically in the information technology sector, as in others. The new technologies, especially information technology and biotechnology, have provided fresh opportunities for economic and social development. The current positive trend has been witnessed in most sectors of the economy such as manufacturing sectors as automobile, auto-components, textiles, building-materials, white goods, foods, cosmetics, the service sectors as IT software, business processing, banking, insurance, consulting, merchandising, retailing and R&D intensive sectors as pharmaceuticals and software development. Demographic trends, especially a slowing population growth rate and a rising share of

people of working age are contributing to rising income. The world is waking up to India's crucial position as the largest democracy and as a dynamic economy, if still a low-income one. Indian economys response to liberalisation The Indian economys response to liberalisation appears, by and large, to be effective. Critics of the liberalisation process were convinced that by opening the economy before giving it a chance to become competitive, was parallel to throwing the industry to the wolves. Results show a quite the opposite what sceptics believed. The success in exports, in fields such as information technology in which competition is fierce and technological change is rapid and success in autocomponents, pharmaceuticals shows that the industry overall has responded positively to the intensified competitive pressures. The vast opportunities thrown open by liberalisation has attracted many MNCs to India. The entry of more and more MNCs to tap into this vast market has changed the dynamics of doing business. Consequently, the environment has become hyper-competitive and turbulent for Indian organisations, which operated in protective environment before. India has slowly become a competitive battleground for more than fifteen thousand MNCs. In order to face this competition, several Indian firms undertook significant organisational changes during the late 1990s. They tried to adopt new strategies to cope with the ever changing and turbulent environment. These firms were able to successfully adapt to the dynamic corporate scenario because of their foresightedness, technical expertise and marketing abilities[6]. For example, Hero Honda is the largest manufacturer of motorcycles in the worldwith an output of 1.7 million motorcycles a year. Hundred thousand Indica cars of the Tata are marketed in Europe by Rover, one of the United Kingdoms automanufacturers under Rovers brand name. Tata Indica has been designed, developed and produced ingeniously in India. It has been acclaimed abroad, and found to be up to international standards. Bharat Forge has the worlds largest single-location forging facility. Its clients list includes Toyota, Honda, Volvo, Cummins, Daimler Chrysler. It has been chosen as a supplier of small forging parts for Toyotas global transmission parts sourcing hub in Bangalore. Hindustan Inks has the worlds

largest single stream, fully integrated ink plant, of 100,000 tonnes per annum capacity, at Vapi, Gujarat. It has a manufacturing plant and a 100 per cent subsidiary in the US. It has another 100 per cent subsidiary in Austria. For the past two years, General Motors has awarded Sundaram Clayton its Best Supplier Award; the volumes it sources from India are growing every year. Essel Propack is the worlds largest laminated tube manufacturer. It has a manufacturing presence in 11 countries including China, a global manufacturing share of 25 per cent, and caters to all of P&Gs laminated tube requirements in the US, and 40 per cent of Unilevers. Maruti has been the preferred supplier of small cars under the Suzuki brand for Europe. Suzuki has now decided to make India its manufacturing, export and research hub outside Japan. Tata Iron and Steel Company is today the lowest cost producer of hot-rolled steel in the world. TVS Motor Company has been awarded the coveted Deming Prize for Total Quality Management. Indias pharmaceutical industry has earned worldwide reputation like the infotech industry. It is already worth $ 6.5 billion and has been growing at 8-10 per cent a year. It is the fourth largest pharmaceutical industry in terms of volumes and 13th in value. Its exports have crossed $2 billion, and have increased by 30 per cent in the past five years. India is among the top five manufacturers of bulk drugs. Indias liberalisation have had two major implications for the corporate world, creation of hyper-competitive environment by lowering barriers to entry and opening up of opportunities for growth through the removal of regulations. However, very little work in general has been done on the response of Indian corporates to the liberalization process and practically none on how they are bracing MNC competition through innovative HRM strategies and practices. In the west and other developed nations aligning and adopting HRM strategy for competitive advantage is common[7] but not so in emerging countries such as India. In the light of the progress made by India's reforms and the growing worldwide interest in India, this article tries to bridge this gap with an analysis of eleven corporates (Table 1 summarizes the demographics of the eleven firms) that are believed to be leaders in their business sectors. It is envisaged that this article will go a long way for both

managers and academicians towards developing a deeper understanding of the recent developments in Indian and of the innovative HRM strategies practiced by Indian firms for superior performance. Table 1. Demographics of the eleven firms
Company Industry Company Activity No. of MNC competitors Turnover (Operating income in employees mn Euro1) 1999 2003 3455 7851 5600 Shell, BP, Amoco, TotalElfFina, Caltex 630 821 17000 Ford, Mitsubishi, Renault

Bharat Petroleum Petroleum: Refining, Corporation Limited Retailing, LPG, Aviation Fuel Mahindra & Automobile/Tractor: Mahindra Ltd Manufacturing Jeep, industrial engines Maruti Udyog Ltd. Automobile: Owned by Suzuki Utility-car segment Motors Ltd., Japan manufacturer Mehta Group Diversified, international trade, sugar, packaging, engineering, cement etc State Bank of India Largest Government owned Bank with 20% market share Arvind Mills Garments & Textiles: Denim, cotton shirtings, blends and voiles, others Clariant (I) Ltd. Chemicals: agro/textile chemical, dyestuff Wipro Corporation Diversified (medical systems, vegetable ghee, oils) and IT/Software Infosys Software development in form of services, turnkey projects Pharmaceutical: Manufacturers of drugs, medicines, cosmetics and chemical products Steel: Manufacturers of rails, fish-plates, bars, light & heavy structural, galvanized sheets

1084

1344

3355

Ford, Mitsubishi, Hundai, Daweoo, Honda Lafarge, Ciment Franais

15000

30735

53840

200000

171

269

11000

Citibank, ABN-Amro, ANZ Grindlays, HSBC, Deutsch Bank Levis, Wrangler, Crocodile, Diesel, Arrow

43 324

58 733

Varied in different segments 30000 R&D Sites in India of: IT Services: Microsoft, Oracle, IBM, 17600 Intel, Sun Micro Systems 23000

~ 400

93

659

Ranbaxy

194

503

~ 5000

TISCO

1141

1781

46,000

Abott, SmithKline Beecham, Glaxo, Novartis, Bayer, EMerck, Roche Local competitors: Essar Steel, Ispat, Jindal, Kalyani Steel, SAIL, MNC: Sesa Goa, Ugine,

Theoretical Framework In order to pursue this study, a contingency based theoretical framework was adopted which required to take into account the contextual factors while and measuring the impact of those. The

1 Euro = 55 Indian Rupees

core adaptations to liberalisation by Indian corporates represented a strategic choice. The adaptations cover both strategic and systemic organisational responses. Strategic responses relate to vision, mission, goals, values and business strategy of the organisation. Systemic responses are those of structures, functions, cultures and processes. This study focuses on the main systemic responses i.e., innovative HRM strategies and practices that Indian organisations have adopted to face competition in the Indian market place. Figure 1 summarises the theoretical model. The details of the research design, methodology and data are provided in the Appendix. Figure 1: Contingency model of adaptation of innovative HRM practices by Indian corporates in response to Indias economic liberalisation Liberalisation and Globalisation of Indian Economy Dynamic hyper-competitive, turbulent business environment - Opportunities for growth due to deregulation of industries

Innovative HRM Practices HR synergising with changing business strategies, creating social networks by playing the role of strategic partner, change agent, employee champion - Professionalized recruitment, selection, career development practices to prepare a knowledge workforce which develops, coaches and harbor leaders for tomorrow - Proactive performance management systems to build, retain, retrain and redeploy talent - Rightsizing, de-layering, decentralising for increasing organisational effectiveness -

Reverse causality

Relatively Superior Corporate Performance 9

Discussion and Findings The findings from the eleven case studies are discussed with reference to the theoretical model. Hypothesis 1: The more HRM practices synergise with changing business strategies the more will be creation of social networks within the organization which will probably necessitate expanding the role of HR departments role from administrative experts to strategic partners, change agents and employee champions As firms debate on the role of HRM as being a change agent, strategic partner, administrative expert or employee champion it is clear that HR professionals must become key players in the design, development and delivery of a companys strategy[8]. Organisations still debate on the measurable worth of the HR department. They often treat this function as secondary and on several occasions, redundant. Several companies while trying to rationalise their work force do away with the HR department, on the premise of outsourcing non-essential functions. In today's environment where the need of human capital has been recognized as precious and which needs to be carefully nurtured, this decision might be to the detriment of the company. An example supporting this point is that of Maruti Udyog Ltd, a leading company in the Indian automobile industry, which started as a joint venture with Suzuki of Japan. Maruti revolutionised the automobile and components industry in India and had set high standards for its products and services. With the deregulation of the automobile industry in India, Maruti, from being the undisputed leader, controlling about 84% of the market till 1998, saw its market share reduce drastically with increasing competition from both the local players like Telco, Hindustan Motors, Mahindra & Mahindra and the foreign players like Daweoo, PAL, Toyota, Ford, Mitsubishi, GM. The industry structure changed dramatically during 1998-2002. To face this intense competition, the company launched new models that could cater to different market segments. Maruti also shifted its business focus from a production oriented company to that of a customer caring, service oriented company prioritising aggressive marketing. During the same time a change in leadership

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took place. Prior to this change when there was negligible competition and Maruti sold what it produced, HRM was considered as paper pusher and time keeper. It played a marginal role, was given no targets and was not accountable to the top management. HRM department was not included during strategic decisions and there were times when there was no head of the HRM Department. Managers considered a posting in the HR Department as punishment. The new Managing Director however decided to professionalize the HRM function and to link the HRM strategies to the business strategy of the whole organisation. As a result professional HR managers were hired. New initiatives in performance appraisals, competency mapping and job rotations were undertaken. HRM was made responsible for the clarity and transparency in the communication within the organisation and for negotiations with the Union. The role of the HR Department was reactivated and they were held accountable for defining job profiles, simplifying procedures. The significant improvements implemented by the HRM department, has led Maruti to develop excellent teamwork and its compensation system was recognised as the best in the industry. Turnover, employee morale, commitment, job satisfaction increased within the organisation. Synergising distinctive HRM strategies help to create unique competencies that differentiates products and services and, in turn, drive competitiveness[9]. Senior managers remain aloof to the fact that HRM practices extends to nearly all the activities of an organization and that it is not just restricted to one or few departments. Well-organized HRM practices is a prerequisite for successful strategic changes. HRM plays a pivotal role in redefining new strategies so that they can suit the changing environment. At times HRM not only compliments the new strategy, but also becomes the deciding and defining factor of pursuing a particular strategy. To keep abreast with the dynamic business conditions, Indian firms have revamped their HRM strategies and now incorporate part-time work, outsourcing and temporary workers. This represents a drastic shift from the traditional personnel management polices. However, implementing such modern HRM strategies is not an easy task for senior management since changing the mindset and motivating workers to agree to the change process is an uphill task by itself. An interesting example of this case

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was Mahindra and Mahindra's Ltd., the flagship company of the Mahindra Group. The Mahindra and Mahindra (M&M) Limited (Tractor Division) was suffering from manufacturing inefficiencies, low productivity, over stretched production cycle and poor output. The primary reason behind this inefficiency was the under productive and excessively unionized labour force. The situation was further aggravated by the changes taking place in the external environment due to the modifications in the business and government policies. The company had to adopt a new strategy in order to survive. In 1995, the company introduced a Business Process Reengineering (BPR), focussing on a total overhaul of the style in which the company was organized. Instead of improving or changing procedures, the scheme focused on reformulating the way the company carried out its business. This initiated several changes in the organization structure, which enabled the company to realign itself with the BPR mechanism. The introduction of BPR was opposed by the labor unions. Prior to BPR, HRM department was not part of the strategy making process at M&M Ltd. BPR adopted innovative HRM practices, such as group work in the process organization, that used the churning effect to change the traditional mindset of the employees and enforced concrete HRM policies and practices. Firstly, from a multi-layered structure, the company adopted a flat structure, which reduced the disparities existing in the different levels. It brought people from different departments that encouraged cross-functional team work. Regular meetings with workers were encouraged to enhance the company's belief that HR cannot function in cabins. Furthermore, the company repositioned existing people in key positions and placed emphasis on training programs. It followed a simple recruitment philosophy by refusing to hire highly qualified people who had a history of leaving the organization for a competitor MNC. Instead, it believed in hiring professional consultants to take care of advanced work practices and simultaneously capitalized on its existing employee talent through intensive retraining and redeployment strategies. The company also began outsourcing non-core manufacturing activities. After eight years, in 2003 the results of implementing BPR in synergy with new, innovative HRM practices within the organizations were spectacular as it allowed the company to maintain steady profits, reduce working capital levels, and

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rationalize the manufacturing processes. Redesigning innovative HRM strategies, expanding the notion of HRM to be an effective method to reengineer the firm's plants, creating a social network within the organization and to make them viable in the competitive scenario. Competency-based strategies are dependent on people and when people are regarded as a key strategic resource the creation of social networks within the organization could be an effective way of managing people. HRM policies differ depending on the rapport an employee shares with the company and how this rapport are co-opted with other stakeholders of the organization. Hiring of external consultants can play a key role in implementing the strategies decided upon by the company as they try to strengthen the networks within the organization by providing tools to adopt innovation. The example of Tata Iron and Steel Company (TISCO), a Tata flagship company, India's most cost effective steel plant provides an example. TISCO undertook a management restructuring program with the objective of transforming TISCO into a high performing and growing organization. The key strategic drivers to achieve this goal was to focus on current growth, enhance degree of profit and accountability, provide exciting career opportunities and build a team of high-performing professionals. McKinsey & Co. was appointed to assist the company in achieving these objectives. Mckinsey started with an organizational restructuring program by creating a lean and flat strategic business unit structure with enriched jobs, greater accountability and autonomy. Accordingly unit teams were formed comprising of unit leaders and facilitators. At the start, McKinsey provided with facilitators who coordinated the unit's performance. Each team had to set targets and had to work towards achieving them. Performance Ethic Program (PEP) was introduced to promote young dynamic personnel to higher positions to replace policy of seniority based promotions and to create new social vibrant networks. The PEP institutionalized and tailored the management development programs for officers. A new Performance Management System (PMS) was institutionalized to support the new innovative practices that McKinsey implemented. The PMS included alignment of key result areas (KRAs) with business strategy at all levels and clear career paths to enable the company to identify and reward the strong performers and provide

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them with growth opportunities. The compensation and rewards were linked to performance and pegged to the market. This program made the performance and reward system transparent and fair within the organization, boosting the employees' initiative to succeed. Hypothesis 2: The more the organizations follow professionalized and innovative HR practices (recruitment, selection, career development), the more the development of a pool of knowledge workforce, the more are the creation of coaches and leaders for tomorrow within the organization With the demand for knowledge workers increasing in a very competitive market, enhancement of profitability depends on the recruitment, selection and retaining them in the organisation. Until recently access to technology was considered as the prime area of focus for many Indian firms. With increasing competition for knowledge workforce people have become competitive differentiators[10]. The HR executives are under pressure to stretch their capabilities and provide value-added services by professionalizing the HRM practices. Organisations are recruiting and selecting professionals who can comprehend a complex organisation structure and the requirements of the company in a dynamic business environment. A remarkable example is that of a internationally renowned IT company, Infosys Technology Limited. Infosys is one of the biggest Indian exporters of software and offers information technology consulting and software services to Fortune 1000 companies. The determination and effective management skills of the Chairman, Mr. Narayan Murthy were the driving force behind the success of the company. His strong belief that Indian professionals have the capability to handle complex projects led the company to establish a name for itself in the foreign markets. He implemented the best reward system in the industry to ensure that his employees were taken care of. According to him, they represented the company's most powerful wealth. He encouraged them to communicate with each other and to interact with the management through bulletin boards and meetings. He set up a Leadership Institute in Mysore to prepare the Infosys' employees to face the challenges of the dynamic market scenario and to groom them to be

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efficient leaders. The CEO's profound faith that human resource is the most valuable asset of the company certainly motivated the employees to strive for excellence. The rapid expansion of this software export and information technology company from 42 in 1987 to 23,000 in 2003 called for redefining and innovating its recruitment, selection and career development practices. For about 700 advertised positions in 2003 the number of applicants exceeded 160,000. This explains the severe recruitment process followed at Infosys Technologies Ltd. Infosys carries out a rigorous interview process for selecting candidates, the priority selection criteria being the capacity to learn. After minutely scanning the curriculum vitae's of the potential candidates, Infosys selected a small number of applicants further for tests. These tests included a set of puzzles and math algorithms in order to evaluate candidates learnability. The exact skills required are not tested for during the screening process as Infosys trains employees for them. The candidates that pass the test stage have to further undergo an interview round which determine their jobs at Infosys. Prospective candidates thus are tested primarily for analytical and problem solving and communication skills to help a dynamic learning environment, the key to success in an industry where the state-of-the-art is changes rapidly. This strict and thorough selection process ensured that the company had managed to attract the most skilled people available in the job market. The Chariman of Infosys, Mr. Narayana Murthy is confident that as long as the company innovates, it will survive and succeed. In his words the biggest challenge is to build a first class company in a third world country. To become a global firm, we need not only the art of selling internationally but also the art of recruitment, compensation, training and the art of teamwork across borders. The quality of people is a survival imperative A similar philosophy was followed at Wipro Corporation, the other leading IT firm in India. Wipro Corporation is a large diversified family owned business, with business interests in many unrelated businesses. One of the most profitable of them is the Wipro Systems, a company dedicated to computers, information technology and software developing. Wipro believes in employing the best people and investing for their career development. Wipro prides itself by saying

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that they are in People Business, Business People. Wipro recruited from the leading Indian educational institutes, such as the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs) through the campus placement programmes. For any new business it entered, the first chance for promotion was always given to its own employees. If internal talent was not found, the company recruited the best from the competitive labour market. Each employee is meticulously trained and groomed to respond effectively to the business' requirements. In the words of the Chairman, Mr. Azim Premji, the key to success in all our efforts, as always, is our people. Wipro believes that they are in the business of leadership and the real worth of an organisation is powered by people who work for it. Mr. Premji believes that in todays dynamic environment the leaders that they nurture will lead them into the future. The attitude to nurture the potential capabilities of employees, coupled with sensitive and innovative people practices has resulted in a deep pool of talent in the organisation. It is this depth of leadership that has fuelled Wipros sustained growth and success. Many Indian companies that perform well the domestic market have not yet expanded to the international arena. Several factors such as lack of confidence, technical know how and resources inhibit leading Indian groups to expand their area of activities to other parts of the world. Innovative HRM strategies and practices can play a crucial role in changing the attitude of the company and its employees in order to facilitate entry and presence in the foreign markets. This is effectively illustrated in the case of the Indian pharmaceutical giant Ranbaxy, which succeeded in expanding its business internationally due to the single-handed determination of its past CEO, Dr. Parvinder Singh, and the manner in which he strived to change the mindset of his employees. Ranbaxy found itself at the bottom of the pharmaceutical curve[11] inspite of being active in the export market for 18 years. Foreign markets had stringent quality requirements in terms of raw materials, packaging and physical properties of pharmaceutical substances. This implied heavy costs in research and development and careful organization of distribution and marketing activities. Despite entering the foreign markets at the bottom rung of the value chain, Ranbaxy inched upwards because the

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employees shared their CEO's beliefs and dreams that they were in a position to harness their resources and capabilities to be successful in foreign markets. Together they developed continual cross border learning programs to enrich their ways of working and functioning. Their board attracted managers from different parts of the world. This step enabled them to catalyze their globalization process. Moreover, the CEO lead the company to integrate backwards, to enter new markets and to develop novel drugs. This provided Ranbaxy with the edge to succeed in the global marketplace. In this age of intense competition, the examples of Infosys, Wipro and Ranbaxy show that Indian companies realise that the differentiator for superior performance is people and the ways of managing and coaching people to build leaders of tomorrow. Intelligent and skilled employees are a prerequisite for companies that wish to climb the ladder of success. As more companies acknowledge the worth of employees in India, the competition for the limited and precious human resource is getting fierce. The challenge is not just to attract human capital and enhance its skills and competencies to suit to a company's needs; but also able to retain it within the company. This is certainly not an easy task given the increasing mobility and flexibility of the work force. As the battle to win and retain talented and knowledge workforce intensifies, the HRM department has to step in to play an important role in the conception, formulation and execution of the company's strategy. Hypothesis 3: The more organizations practice proactive performance management systems, the relatively easier it is to build, retain, retrain and redeploy talent. Organisations need to incorporate country-specific, institutional factors affecting patterns of organisational practices in general and HRM practices in particular as national institutional embeddedness of firms plays an important role in shaping HRM practices[12].With competition, the responsibilities and the domain of the personnel management need to expand to proactive and innovative HRM strategies and practices. The HR department not only has to develop new skills regarding recruitment and selection procedures but also has to craft innovative compensation and

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integration schemes for the employees to retain talent. An interesting example is that of Arvind Mills. Arvind Mills, which belongs to the Lalbhai Group of companies, is a family owned business producing textiles, ready to wear apparel, agro-chemicals and dyestuff. In the late 1990s it was the third largest producer of denim in the world. However, with the change in fashion trend from denim to gabardine and corduroy, the company was adversely affected. The threat from powerlooms, the need to increase exports and the growing demands of consumers lead the company to introduce a new strategy. HRM played a crucial role in this business plan. The company created a Manpower Planning and Resource Group to take charge of the selection and recruitment procedure, to organize the job structure and to define the task description of the various employees. The group absorbed fresh talent from top management and technical schools and established a compensation system that would match the industry standards. Innovative new methods of recruiting were adopted such as the Selection Information System (an online recruitment system) that provided facilities from generating call letters, fixing interviews to evaluating the on-line interviews. This program was linked to the Compensation Information System and the Training Information System. A Management and Organizational Development Group was incorporated to look into the training of the employees. It provided three kinds of training programs: functional, behavioral and global. Another innovative concept (in the Indian context) developed at Arvind Mills was the Management by Objectives (MBO) which focused on producing results desired by the management in keeping with the satisfaction of the employees. Arvind Mills succeeded in finding a harmonious balance between the top management and the industry workers. Udaan, a kite flying competition between the management team and the operations team is a perfect example of building healthy relations between the two. In addition, programs such as Booboos (rock show) and Umang (forum) were introduced to create synergies among workers. These were some of the ways that Arvind Mills adopted to build and retain talent. Most Indian companies still follow age old practices and customs. Consequently their HRM strategies are also based on the traditional "industrial model" which involves several factors like

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seniority based promotions, powerful union influence and strict job classifications. With the advent of a new wave of thinking, several firms have decided to break away from the conservative model and adopt new and dynamic methods from western counterparts that were more in sync with the changing industry standards. Clariant (India) Ltd is one such example. With the demerger of Sandoz (I) Ltd, a new autonomous company called Clariant was born. Clariant develops, manufactures and markets dyes, pigments, chemicals for textiles, leather, plastic, paints and inks. A new company meant that managers now had novel responsibilities to handle. A special program called Clariant Participation to improve Profitability through Performance and People (CLAP) was put into place to efficiently guide the transition. The unique feature of this program was that managers who had handled multidivisional responsibilities were able to remarkably unlearn the past and adapt to the new activities. The program aspired to "change the mental process" by introducing several changes in the company's way of functioning. The company moved from "Top Down Close Communication" to "Up Down Open Communication", from "We and They" to "Do it Together", from "Control" to "Leading and Managing". All these efforts enhanced communication among the workers. Task forces and cross-functional teams increased employee participation and involvement. Furthermore, the company introduced a "Goal Setting" program that increased motivation among the employees. The Personnel Department of Sandoz, which was mostly involved with only administration activities, expanded its role as a catalyzer, supplier of information, facilitator and developer thus trying to develop and retain talent. In the words of the Chairman, Mr. Narayan Murthy of Infosys, if there is one challenge that Indian software industry faces, it is how to recruit, enable, empower and retain the best and the brightest professionals. Infosys, for example, designed their performance management system to build, retain, retrain and redeploy talent. Since employees are considered as the prime assets at Infosys, the HRM strategies and practices arose from the belief that the employees stayed with Infosys because the management was able to satisfy the three fold needs of the work force: learning value added, financial value added and emotional value added services. On the learning aspect,

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Infosys provided its employees with an opportunity to accept responsibilities at an early stage in the career. On the financial side, Infosys provided stock options and low interest and zero interest loans. On the emotional angle, the friendly, open and transparent atmosphere within the company kept the employees involved with their job. As a consequence, Infosys developed an ambience that would foster the overall growth and wellbeing of its employees. Infosys built a campus which was a set of multi-floored buildings constructed on a sprawling five acre land that provided banking facilities, ATM, volleyball and basketball courts, shower rooms, bus facilities and housing if employees needed to work overtime. The respect for people enabled the company to create a leading position for itself in the Indian market and to gain respect in the international arena. Same is the story of Mr. Azim Premji, CEO of Wipro Corporation who managed to exploit the talent of his employees. The biggest challenge faced by his company was holding on to its skilled employees. For new local entrants and MNCs like IBM, Microsoft, Oracle, Texas Instruments which wanted to recruit talented people from well managed Indian companies, Wipro became a prime target. Azim Premji realised this problem and took necessary steps to retain his skilled work force. Human resource managers considered employees as "talent investors" and treated them as partners to be rewarded as other investors are. Wipro, as Infosys was one of the first Indian companies to launch the employee stock ownership called Wipro Equity Linked Reward Programme. Hypothesis 4: Innovative HRM practices ( in general and those affecting rightsizing, de-layering, decentralizing in particular) will be positively related to organizational effectiveness and relatively superior performance The new concept of HRM calls for segmenting the work force according to different criteria like age, educational background and business background. Policies need to be tailor made according to the needs of each group, in order to optimally utilize the resources offered by each segment. In the wake of liberalization, the State Bank of India (SBI), India's largest public sector bank decided to undertake an intensive restructuring program. With the entry of foreign and private

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sector banks, it needed to trace competition from both the Indian private as well as foreign banks. It turned to business consultants, McKinsey & Co. for suggestions and improvements. Accordingly the business was divided into eight major functions, Personnel and HRM being one of the five most important divisions. HRM department was divided into four branches in order to serve the varied needs of the organization. The four levels included, Corporate Office, Local Head Office, Zonal Branch and Individual Branch. The Corporate Office handled most of the HRM activities, each branch was delegated specific responsibilities which made the management and decision making process in the bank, simpler and effective. The HRM strategy placed special attention on the policies carved by the top management which were subsequently implemented by the middle managers. Care was taken to ensure that the new strategies that were designed for the middle managers correspond to their needs. But the implementation of the restructuring program had its share of difficulties. When a company is undergoing a restructuring phase, it is likely to uncover many problematic areas that hinder its smooth functioning. At such times, innovative HRM strategies and practices enable the company to improve its efficiency. This was the situation encountered by the SBI, when it introduced the Voluntary Retirement Scheme or the 'Golden Handshake' system. With the advent of new technologies like ATM and Internet banking, the dynamics of banking had changed dramatically in the late nineties, SBI found itself faced with the problem of redundant work force. The vast work force that was once regarded as one of SBI's strongest assets became a liability following the computerization of the bank. In order to protect its dealings and to remain profitable, SBI realised that it would have to undertake rigorous cost cuttings and the VRS. The VRS deal proposed 60 days' salary for every year of service or the salary to be drawn by the employee for the remaining period of service, whichever was less. When the VRS was offered a large number of able employees accepted the offer and joined competitor banks. SBI was in danger of losing most of its talented employees and be left with less efficient employees. The introduction of this scheme lead to strong protests from the unions who claimed that the bank had taken a hasty

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decision without undertaking correct manpower planning measures. Unions and media strongly criticised SBI's VRS on the grounds that it was arbitrary and discriminatory. At this crucial moment, SBI needed to implement the right HRM practices in order to retain its talented workers and to do away with the excess unskilled work force. A similar story is that of Mehta Group and its innovative HRM strategies. Mehta Group is a leading conglomerate that houses two cement companies Sidhee Cement and Saurashtra Cement in Western India. Sidhee has been declared as a sick unit and is under the Board of Industrial and Financial Reconstruction (BIFR) while Saurashtra is a loss making firm. The Group wanted to synergise the operation of the two companies in order to reduce competition and declining market share. A strategy to develop 'synergy' between the two companies was devised in which strong emphasis was laid on innovative HRM strategies and practices. There was a complete redefinition of the organisation structure. Job roles and work descriptions were revised, new positions were created and competency exercises for the employees were effectuated. Instead of pursuing a retrenchment and recruitment philosophy, the group followed a redeployment policy. It reorganised its employees into technical experts, industry experts and market research personnel. By enhancing human resource development within the company Mehta Group was able to record significant improvement in performances and was able to optimally utilise its resources. Liberalization forced domestic firms to adapt new changes to face foreign competition. Innovation became paramount as it was the only way to satisfy the rising consumer needs and requirements. Companies began reorganizing their organization structure and their business model. HRM became an essential element in this restructuring phase in order to enable companies to improve the recruitment procedures, hire skilled workers and enhance their potential by devising distinct career paths. A striking example of this situation is the case of Bharat Petroleum Corporation Limited. BPCL is a public sector organization which is one of the leading companies in the Indian petroleum industry. BPCL had benefited immensely as the petroleum sector was a monopolistic market enjoying administered prices fixed by the government. In 2002 when the

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industry was deregulated it led to a significant loss of market share for both multi-national oil companies and Indian firms. The challenge faced by BPCL was to retain its market share and to continue to be profitable. The company decided to redesign the organization whereby HRM strategies were regarded as important support services (along with Finance and Information Technology). Three kinds of services embedded support service, shared support service and corporate service were developed and each contributed to the successful turnaround of the company. BPCL used the HRM services to cushion their main stream of business with respect to refining and retailing. Since BPCL is a "public enterprise" it could not downsize the labor force. Instead, BPCL undertook a strong retraining and redeployment program to efficiently use the excess manpower within the organization. Consequently its sales force was increased by 50% without hiring any new manpower. Competency mapping was introduced and new people were hired for only specialized positions. The performance management system of the company was revamped and made more customer oriented. Moreover, BPCL introduced a creative learning experience program for its employees called the Foundation of Learning Plan that encouraged the development of an employee's ability to work in high performing cross functional teams. The introduction of this program lead to a boost in the competencies of the employees and their motivation to excel. The example of BPCL illustrates how innovative HRM strategies can not only respond to traditional personnel problems but can also improve and sustain superior performance. Table 2 provides a summary of the strategic initiatives and the innovative HRM practices of the eleven firms. Conclusion and Implications This article focused on understanding some of the innovative HRM strategies and practices that stem from functionally logical strategic initiatives in response to a hyper-competitive, complex but opportunity-rich environment that had opened up due to the economic liberalisation in India. These innovative HRM strategies and practices are not a random collection but practices which may be called best practices that has yielded performance excellence.

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Table 2. Innovative HRM Practices Adopted By Indian Companies

Company Industry Petroleum Bharat Petroleum Corporation Limited Mahindra & Automobile Mahindra Tractor Ltd Maruti Udyog Ltd. Automobile Utility-car segment Arvind Mills Textiles Pharmaceutical Strategic Initiatives Faced deregulation of petroleum industry Retain customers Maintain profitability Creation of productive labour force Rationalize manufacturing process Launch new models for diverse markets Increase dealer network Reduce costs and increase operating efficiencies Curtail competition between the two companies belonging to the Group Develop 'synergy' in terms of structure, manpower and resources Competition from foreign and private banks Trim the size of its work force to rationalize costs Recover from the change in fashion in the apparel industry Increase exports Transition from Sandoz to Clariant Sustaining the wealth of their human capital Accept the challenges of globalisation Powered by intellect and driven by values Culture of ethics, performance, meritocracy Creation and sharing of wealth Climb up the curve of globalisation Focus on current growth and profitability Enhance accountability Cost reduction Adoption of innovative HRM practices Redeployment and retraining of employees HRM regarded as an important support service Revamped Performance Appraisal System BPR scheme to reinvent business process Flat structure that encourages team work Outsourcing workforce for advanced and non-core activities Hire professional HR managers Make HR responsible for internal communication and relations with Union Creation of an excellent compensation policy. Redefinition of organization structure Redeployment policy to optimally utilize human resources

Mehta Group

Cement

State Bank of India

Bank

Segmenting the HR department into SBUs with specific duties Introduce VRS to cope with automation. Implementation of innovative recruitment, compensation, training procedures Development of synergies between top management and workers Introduction of the CLAP program Change the mindset of the employees through communication and goal setting Introducing employee stock option schemes Talent investors, people business Employee driven campus programs like "Infosys Toastmasters Club" to provide support to the employees Construction of a Leadership Institute to foster the qualities of leadership within the employees Leadership through INSTEP program where 3-6 months internships are given to students from across the globe CEOs belief and dream-cross border learning programs Backward integration, new drugs invention Building cross functional teams of highperforming professionals with clear career paths for individuals Started PEP and revamped its PMS by aligning KRAs with strategy at all levels Institutionalized tailored management development program for officers

Clariant (I) Ltd.

Chemicals

Wipro IT Corporation Infosys IT

Ranbaxy

TISCO

Steel

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How universal are these innovative HRM practices? How are they important to MNCs? The economic reforms have attracted foreign direct investments and as a result MNCs have become more interested in managing their investments through cost, quality or innovation. A number of challenges are faced by Indian organisations, one of them being to make the best use of their existing human resources and compete on the basis of innovative HRM strategies and practices. These challenges have a direct implication for the HRM function. Literature and text books on HRM suggests that the practices or their close versions seem to have applicability both in economically developed countries and in an emerging economy like India, and therefore may be relevant to most sectors and industries anywhere in the world wherever there is a competitive market economy. Taken together, the wealth of different HRM policies incorporates many strengths. The adoption of the different innovative HRM strategies in some of the successful Indian companies have improved business performance and provided MNCs two important lessons. In constantly changing environments, first mover advantage is critically important. But Indian corporate have been late movers but are fast bracing to competitive pressures. MNCs must manage their organisation efficiently and effectively to brace this renewed competitive challenge from Indian firms. Second, Indian firms have now more resources to invest in developing innovative HRM strategies (see reverse causality in Figure 1) which has accrued from cost reduction mechanisms, integration of support functions such as information technology in their work process, boosting morale of employees and by high retention of skilled employees. Though MNCs have deep pockets, which is an important driver in the labour market, this study of eleven firms indicate that Indian firms are relentlessly trying to reduce employee turnover by innovative HRM strategies. For those MNCs, which understand this challenge of doing business in India, the ultimate benefit is not to fall into the trap as their predecessors, but to leap towards an integrated and innovative HRM strategy that can attract, develop, excite and retain key talent. MNCs such as Castrol, Shell, Exxon (petroleum sector), Renault Tractor, Ford, Mitsubishi (automobile sector), Lafarge, Italcementi (cement industry), Citibank, American Express (banking sector), Levis, Pepe (textiles), IBM,

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Microsoft, HP-Compaq, Oracle (IT sector), and Bayer, Roche (pharmaceutical) and not to mention of Coke, KFC, McDonald, Procter & Gamble, which have learned or are trying to learn the hard way of doing business in India. How generalizable are the implications and insights? The study of the eleven Indian organisations, who are leaders in their field of expertise, may have insights regarding similar processes occurring in other emerging markets such as East Asia, Latin America and Eastern Europe. In countries like Argentina, Brazil, China, Mexico, Hungary, Israel, Poland, Slovenia numerous MNCs are investing and affecting local economies and changing the dynamics of business environment. While the MNCs contribute to the economic growth of these countries they also pose a threat to local competitors. Local companies in similar environments will have to adjust to the new rules of the game and assist practice innovative human resource management (HRM) strategies. The study has its limitations because of its small sample size, and is restricted to nine industry sectors. However, within the limitations it contributes to the field of HRM in general and specifically to academicians and practitioners who are interested in emerging country environments. This article might encourage academics to conduct future research exploring the different modes of adaptations by local companies to environmental changes. Growing importance of research has already been reported not only in international HRM but also in comparative HRM studies. Researchers might want to look at the differences, if any, in the adoption of innovative HRM strategies and practices from a developed and emerging market perspectives. From a managerial perspective this study has three distinct implications. Although the sample is small and the definition of innovative HRM strategies and practices broad, it may be worthwhile for managers to look into their own organisations and ask whether there is a need to redefine, redesign and innovate their HRM strategies and practices. There might be issues which may be trivial at first sight but may be a precursor to long term competitive advantage and superior performance. Secondly, managers might look at how top management teams oversee innovation

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efforts at the workplace in general and the HRM issues in the organisation in particular and try to strike a balance between guiding and adopting atleast some of those efforts which transcend politics, embedded interests. Finally, understanding the wealth of different HRM strategies and practices is relatively easy, managing and adopting them within the cultural heritage of the organisation is the difficult part. Competitive advantage through people processes is difficult to achieve and even more difficult to sustain, but once achieved, it is not easy to duplicate. References 1. For a detailed discussion see Kossek, E, Human Resources Management Innovation, Human Resource Management, 26(1): 71-92 (1987); Som. A and Bouchikhi, H, What drives the adoption of SHRM in Indian Companies?, ESSEC Working Paper, DR-03009 (41 pages) (April 2003) 2. For a detailed review of the growing proactive nature of HRM function, see Lengnick-Hall, C.A. and see Lengnick-Hall, M.L., Strategic Human Resource Management: A review of literature and proposed typology, Academy of Management Review, 13: 454-470 (1988); Schuler. R and Jackson. S, Strategic Human Resource Management, London: Blackwell (1999); 3. Although the field of strategic HRM has been discussed and debated in great details in western literature, it seems from existing Indian HRM literature that there is a time-lag of about 8-10 years regarding development of personnel functions. For example the shift from personnel management (industrial relations, administrative role of personnel function) to a more proactive strategic role of HRM function started in the west in the mid-eighties while in India the debate started in the nineties with the adoption of the concept of human resource development (HRD). Only as a response to the liberalisation of the Indian economy, both academicians and practitioners started to notice the direct implications of strategic HRM as a tool bring about large-scale structural changes in organisations in order to cope with the challenges brought by the structural adjustments. The difference between personnel management and HRM strategies and practices, creation of creative and innovative HRM processes both in academic institutions and industries and role of HRM in managing the change process have started been discussing from mid-nineties. In Budhwar. P, Indian and British personnel specialists understanding of the dynamics of their function: an empirical study, International Business Review, 9: 727-753 (2000), the author has reported that 70.80% respondents agreed that because of liberalisation of the Indian economy there is increased competition and therefore there is a need to make employees more creative, innovative and keep them motivated. Also 29.16% of the respondents that there is a gradual shift towards taking care of people and emphasising on behavioural skills and group activities i.e., realisation of importance of HRs (page 735). For more detailed discussion, see Budhwar. P and Sparrow. P, Evaluating levels of strategic integration and development of human resource management in India, The International Journal of Human Resource Management, 8(4): 476-494 (1997); Budhwar. P and Sparrow. P, Strategic HRM through the Cultural looking glass: Mapping the cognition of British and Indian managers, 23(4): 599-638 (2002). 4. For a detailed discussion of liberalisation, redesigning and restructuring of organisations see Som, A, Role of Human Resource Management in organisational redesign, Unpublished Doctoral Thesis, Indian Institute of Management: Ahmedabad, India (2002); Som, A. Building 27

sustainable organisations through restructuring: Role of organisational character in France and India, International Journal of Human Resource Development and Management, 3(1):2-16 (2003).; Som. A, Redesigning the Human Resource Function at Lafarge, Human Resource Management, 42(3): 271-288 (2003); Som, A, Mahut Group: A failed case of organisational restructuring, Asia Case Research Journal. (Forthcoming, 2004); Som, A, Strategic organisational response of an Indo-Japanese joint venture to India's economic liberalisation, Keio Business Forum. (Forthcoming, 2004) 5. For a discussion, see C. K. Prahalad and K. Liberthal, The end of corporate imperialism, Harvard Business Review 76: 68-79 (1998); C. K. Prahalad and S. L. Hart, The fortune at the bottom of the pyramid, Strategy + Business, 26: 1-14. 6. For detailed discussion see Khandwalla, P, Effective organisational response by corporates to Indias liberalisation and globalisation, Asia Pacific Journal of Management, 19: 423-448 (2002); Virmani, A, Potential Growth Stars of the 21st Century: India, China and the Asian Century, Chintan Occasional Paper, (October, 1999). Varied business press articles from Indian business journals such as Business Today, Business India, Business World, India Today, Fortune India, Outlook and articles by Arun Shourie, Honorable Minister of Divestment, Government of India. 7. See Randall S. S, Linking the People with the Strategic Needs of the Business, Organisational Dynamics, 21(1):18-32 (1992); Randall S. S. and James W. W, Human Resource Strategy: Focusing on Issues and Actions". Organisational Dynamics, 19(1):5-19 (1990); Pfeffer. J, Competitive advantage through people, California Management Review (Winter): 9-28 (1994). Ulrich. D, Human Resource Champions: The next agenda for adding value and delivering results. Boston Mass : Harvard University School Press (1997). 8. For a richer discussion see Ulrich. D, A new mandate for Human Resources. Harvard Business Review, 124-134 (1998) 9. Cappelli, P and Crocker-Hefter. A. Distinctive Human Resources Are Firms Core Competencies. Organisational Dynamics. 24(3):7-22 (1996). 10. For example see Bartlett.C and Ghoshal. S, Building Competitive Advantage Through People. MIT Sloan Management Review, 34-41 (2002). 11. For example see Bartlett, C.A and Ghoshal, S, Going Global: Lessons from Late Movers? Harvard Business Review, 70(5): 132 142 (2000); and Khanna, T and Palepu, K, Why Focused Strategies May be Wrong for Emerging Markets, Harvard Business Review, JulyAugust, 3-10. (1997). 12. Gooderham. P.N., Nordhaug. O, and Ringdal. K, Institutional and Rational Determinants of Organisational Practices: Human Resource Management in European Firms, Administrative Science Quarterly, 44(3): 507-532 (1999). 13. Yin, R. K, Case Study Research: Design and Methods. California: Sage Publications (1994); Becker, E.B and Huselid, A.M, Overview: Strategic Human Resource Management in five leading firms". Human Resource Management, 38(4):287301(1999); Eisenhardt, K.M, Building theories from case study research, Academy of Management Review, 14: 532 550, (1989).

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Table 3. Semi-structured, open-ended questionnaire protocol 1. What are the recent changes in your organisation? 2. What are the business challenges? What are the strategies did you adopt to fight this challenges? 3. Describe the structure and role of HR? (No. of personnel, employees, workers). Are there a defined HR policy, values, goals and philosophy? 4. Was the HR Strategy related to the overall business strategy? If yes, why and how, if not why do you think it is not? How would you think you would you achieve you is strategy without people being involved? 5. Tell me some milestones, current activities and new HR strategies and practices? How were these activities operationalised and implemented? 6. Tell me the practices of the HR Subsystems that you follow in your organisation: (a) recruitment, selection, career planning (b) performance management system (c) retraining & redeployment (d) retaining and rightsizing 7. These are the some of the HR practices that effective Western organisations adopt with people. Which of them do you follow: (a) financial incentives for excellent performance (b) rigorous selection and selectivity in recruiting (c) higher than average wages (d) Employee Stock Option Scheme (ESOP) (e) external and internal communication (f) decentralisation of decision making and empowerment (f) use of cross-functional teams (g) high investment in training, skill development and implementing multiple jobs and job rotation (h) comprehensive performance management system (i) a coherent view of employment relation (j) long term perspective 8. Did the change in HR practices have an effect on : (a) commitment to organization, customer and quality (b) opportunities to develop new skills (c) vision & values (d) recognition for contribution (e) job security (f) job satisfaction (g) pressure to work and working hours (h) team work (i) career opportunities (j) peoples morale (k) working conditions Figure 2. Research design

Literature review Data Collection Protocol Exploratory field Theory development Multiple Cases

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Appendix: Research design, methodology and data collection The aim of this paper is to examine the impact of liberalisation in the Indian corporate sector and the focus is to understand the innovative HRM strategies and practices which can help Indian corporates to improve performance during a hyper-competitive environment. The research questions are three fold: 1. What has the been the impact of economic liberalisation on Indian corporates? 2. What are the innovative HRM strategies and practices that Indian organisations have adopted to brace competition from MNCs? 3. Were they successful? If yes, how were they implemented? If not, what were the difficulties? This study is based on a sample of eleven Indian organisations which are leaders in their respective nine sectors. These nine sectors represented the most dynamic business environment where phased deregulation had started and the sectors were witnessing multi-sided competition and were undertaking organisational restructuring as reported widely in the Indian business press. The eleven firms were chosen due to two specific reasons: (a) access and willingness of the organisation to participate in the study and (b) all the firms were leaders in their respective sectors and perhaps could show the way forward to other Indian firms. Research Design Given the primary objective of the present study to examine the relevance and applicability of the contingency theory of organisations and the exploratory nature of the main linkages in the model, an exploratory research was conducted. Within the exploratory framework, qualitative method as the case studies gave a thorough grounding and a feel for the real life situation. Case method has also found to be appropriate in instances where theory development and research are in early stages[13]. The research setting involving linkage with innovative usage of HRM strategies and practices is still in the early process in the Indian context. Hence, to develop a clear understanding of the innovative usage of HRM practices and strategies that were adopted for superior performance, there was a need to look at varied data from multiple sources and study the phenomenon in its own context. The case method permitted a holistic analysis of a wide range of variables within a research setting. Qualitative research has been recommended for studying process-related issues and also when the phenomenon being studied is not to be de-linked from its context. Furthermore, it allows for open-ended and descriptive data, multiple data sources and data collection techniques. Figure 2 depicts in brief the research design. Methodology The methodological approach in this study was to focus in-depth on a limited number of organisations across varied industries and observe the innovative HR strategies and practices that they were practising to compete, grow and perform sustainably in the aftermath of the Indian economic liberalisation. Within the research setting a holistic approach and multiple case design was used as it provided more scope for attempting generalisation. A deliberate choice was made to focus on depth rather than breadth and keeping in mind that it would have been unrealistic to try to attempt both detailed, in-depth analyses of organisations and look at a large sample of firms at the same time. The exploratory methodology provided a means to study the process of HRM strategies and practices and their linkages between context, process and outcome of the contextual variables. Becker and Huselid (1999) orchestrated the study of five firms to provide insight into the state of the practice by case study methodology describing HR strategies employed by firms known to be leaders in the management of people. Data collection and analysis Data were collected to study how economic liberalisation in the Indian context affected Indian corporates and how innovative HRM strategies and practices were adopted to brace 30

competition and for superior performance. Information was sought on the above issues over a period of time (1998-2003), right from the beginning of necessity to change, the change process and the post change results. Longitudinal data were necessary to capture changes in the context, to observe the process change, the reinforcement, if any, of HRM strategies and practices and the time-line of events with respect to the major decisions taken and actual implementation in the organisation. The data required during this study called for top-management involvement. This is because the information needed are of strategic decisions taken by the organisation and only the top management team were able to do justice to the information sought. The data required were mostly post-hoc. To re-construct an accurate account of the strategies the informant was also needed to have good knowledge of the events and also be either a participant in the change process or should have observed it closely. This research necessitated a wide array of informants from both HRM as well as functional departments. By interviewing a range of informants as it enabled cross-checking of the data. Use of multiple informants also identified multiple perspectives and any differences of opinions within the organisation. There were two primary data sources used in the case study research: interviews with informants and archival data from organisations. Archival data were collected from different databases, academic journals, published cases, business press, and news items. Company documents, organisational records, circulars, appraisal forms, employee manuals, consultant reports, press releases and other documents were collected and to gather new insights for the interviews and to cross-check the details during interviews. This gave a more holistic picture of what was reported in the business press and academic journals about the organisations and how it matched with the real data. Constant effort was undertaken to increase the reliability and validity of the study. Multiple respondents across functions and hierarchy together with HRM heads, professionals and executives provided the required reliability and validity. They provided insights about the evolution of the organisation during the economic liberalisation process and verified the details in the subsequent interviews. The study took several measures to increase the chances of getting accurate and actual information. First, complete anonymity was assured to the respondents giving the information. Second, trust was built with some organisations and executives through multiple visits and by keeping in constant touch during the course of the research project. Third, information was sought informally outside the organisational premises where the respondent executives were more comfortable talking sensitive issues. Fourth, old-boy network of my alumni institutions, who are working for those companies, was contacted for further data. Finally, information was sought through indirect ways rather than posing direct questions. It is my belief that the data received using the above-mentioned ways reflects information as truthful as was possible to obtain. Ninety-one executives were interviewed in multiple rounds during the period. The interviews with executives lasted between thirty minutes to three hours depending on the availability and the willingness to share information. Wherever necessary follow-up interviews were conducted. During the first round of interviews an overall pattern emerged of the organisations. The open-ended nature of questions gave the informants leeway in giving their responses. Before starting the fieldwork, an interview protocol was prepared which was improved and revised after discussion with experienced academicians, redesign and HRM professionals. This was followed by a historical count of the change process as documented and informed by the respondents. The interview protocol was strictly followed at all times and no constraints was imposed on the choice of responses. Table 3 provides with some of important questions that were asked during the interview process.

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