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Human Resource Management Practices in Indian Companies


Concepts associated with the resource-based view of the organization are increasingly finding their way into the strategic HRM debate. Human Resource consists of all the individual employees who contribute to the operations of an organization, whether they are employed fulltime, part-time, on a temporary or permanent basis. Human resource Management is more concerned with the people aspect in management.

Since management involves getting activities completed well with the help of other people and every organization is made up of people, acquiring their services, developing their skills, motivating them to high levels of performance, and ensuring that they continue to maintain their commitments to the organization are essential to achieving organization are essential to achieving organizational objectives.

This study examines how a developing country, and in particular, some selected Indian companies, construe Human Resource Management and whether it is used as a strategy in managing their organizations. It reflects on how organizations in India are influenced by variables that are different from those of their Western counterpart. In the process, this study analyses the meaning of Human Resource Management, the important of corporate culture and corporate strategy in shaping the organization.

A questionnaire analysis of selected Indian companies was carried out, enlightening patterns of similarity and differences arising in its organizations. Following analysis, it was found that India. Is still on the verge of change and is still not capable of fully motivating its people. The process of liberalization and globalization necessitates for focus on the big population and means to utilize it to its fullest potential.

Therefore, unless development agencies, government and non-government organizations are involved to penetrate the human resource development strategies, its real benefits will not build up. Consequently, the execution of human resource management requires an insight in to the understanding of its importance to Indian organizations. Hence, the evolution of Indian approach to human resource management will depend on an increase in the applicability of the American, European and Japanese approach to human resource management implemented in these organizations.


Chapter 1: Introduction

1. Introduction

1.1 Main Theme of The Topic

The birth of the “Strategic Human Resource Management” (Strategic HRM) possibly took place less than 20 years ago with an article titled “Human Resources Management: A Strategic Perspective” (Devanna, Fombrum, & Tichy 1981). In such a short time, however, an explosion has occurred in writing and research on Strategic HRM. In 1996 both Academy of Management Journal and Industrial Relations devote special issues to the topic of HRM practices and firm performance and in 1997 International Journal of Human Resource Management presented a special issue on Strategic HRM and firm performance.

‘The almost exponential growth of interest in understanding the strategic role that HRM can play in firm performance implies a mindset of “more, more, more” with regard to research on Strategic HRM. However, before we observe the basic call for more, more, more, perhaps we need to step back and reflect on where we’ve been, where we are, and where we need to be. Human Resource Management (HRM) is a term that, throughout the 1980’s and into the 1990’s has become more and more known to managers and management students. But a decade of getting used to has done too little to clarify exactly what HRM is, where it differs from traditional Personnel Management, and how important it will be for the future.

The growth of HRM as a body of management thought in the 1980’s can be connected to a combination of socio-economic factors, in particular, changes in international contest, the reform of industrial sectors and organizations, and the rise of a improved confidence in the power of managers to manage. Under these conditions the contribution of human resources to the success of organizations has been emphasize through the champion of doctrines of ‘brilliance’, ‘quality’, ‘innovation’ and ‘entrepreneurship’. These developments placed the management of people firmly on the agenda and created the conditions for the emergence of a new-style theory of Personnel Management, bearing the brand HRM.

Perhaps, there is an clear uncertainty that HRM can, or ever could, live up to the wider claims of its power to so totally transform the employment relationship that some of the intrinsic problems of managing a unstable set of employee issues can be resolved more satisfactorily than by approaches that have grown out of the historical development of Personnel Management. In large part such a reaction can be explained in terms of the gulf that appears to be between Personnel Management ‘on the ground’ and the rather more theoretical ‘strategic’ nature of a great deal of the discussion surrounding Human Resource Management.

For Managers, already worn out by the ‘waves of change’, coping with technical innovation and economic shifts, there is a need to develop the contest necessary to manage their working futures (Morgan, 1988). Not only do they need to understand the nature of these changes, but they need also to make on an international perspective in order to manage in different cultures and with different customs. For many years there has been a general interest in the different production systems and management strategies adopted in Japan, the USA and Europe. Increasingly now attention is also focused on the people management systems, attempting to explain the differences in management technique and policies (Mansfield and Poole, 1981; Jacobs et al., 1987).

There is therefore a need to understand how different cultures undertake Human Resource Management for what Doeringer (1981) calls ‘pragmatic’ reasons. That is, because there are lessons to be learned from other cultures and we need to control for cultural influences when examining solutions. To this can be added the further realistic and critical reasons that managers must now carry out their skills and technique in multicultural context, and achieve objectives internationally.

In advanced economies like the United Kingdom and the USA companies, confronted by the Japanese competition and employment strategies coupled with recession and search for excellence have tended to change from Personnel to Human Resource Management or better still strategic Human resource Management. However, there are questions regarding the extent to which this has happened in the developing countries. In answering this question, one must consider the fact that Human Resource Management methods in developing countries will be highly influenced by psycho-economic variables which are considerably different from western countries.

Workers are not forced enough and there is not enough stress put on their training, development, participation and the like. Resources are usually directed to serve the ruling best, then to be unfocused towards finding means and methods for better education, health, and safety for the work force. Women in most developing countries are still treated improperly and there is a lot of power distance between the employer and employee. But the future of Human Resource in developing countries is not miserable, as countries like India have started reallocating their resources towards this department and structures and systems are being set up to facilitate this. The biggest challenge for the developing world is therefore, to convert its vast human resource into chance and take them along in their march into the future.

1.2 Aims and objectives;


To critically evaluate strategic Human Resource Management practices In Indian Companies.


Critically assess and evaluate theories, concepts and models of SHRM given in the literature. To examine the nature of the context of HRM, the problematical nature of organizations in a developing country (like India). To examine the background to the growth of interest in India to HRM and the extent of HRM practice among Indian employers. To analyze the nature of the context of HRM, the problematical nature of organizations in a developing country (like India).

Chapter 2: Research Methodology

Research Design and Methodology

As I have used a survey-questionnaire approach to gather data. The study is based on two stage sampling design. In the first step, Indian organizations were chosen randomly from the national capital region of India. In the second step, the organizations, top, middle and senior level managers in HR or who were line managers were randomly selected to fill in the questionnaires. From this sample of 40 managers a total of 12 questionnaires were filled in.

A total of 28 questionnaires returned were either incomplete or the managers refused to oblige. The scope of the study has been limited to managers from the industries in the national capital region of India. The organizations from which the managers responded spanned the multinational companies. Research instruments Human Role Assessment Survey Questionnaire (Conner and Ulrich, 1996) was administered on the sample. Participants were asked to refer to the HR professionals in their business entity and rate the current quality of each activity.

This study discusses the methodology and the approach that the researcher followed for the completion of this study. In order for the aims of the project to be fulfilled it is necessary to acquire knowledge of the practices of Human Resource Management within Indian Companies. The research was done with a phenomenological approach. It is so called because it is based on the way people experience social phenomena in the world that they live. This method has its own merits and demerits.

On one hand it facilitate the understanding of how and why, it make possible for the researcher to be alive to the changes that occur during the research process, and this method is good for understanding social processes. On the other hand there are certain limitations such as, data collection can be time consuming, data analysis is difficult, and the research has to live with the hesitation that clear patterns may not emerge (Saunders, Lewis & Thornhill, 1997). The snapshot view was taken for the companies being analyzed through questionnaires and the literature looked into the development of the HRM techniques through time in the developing countries with special emphasis on India.

In order to talk to the objectives of the research, secondary information was collected from books, journals, magazines and newspapers, etc. the research tries to consider the performing areas upon which any form of strategic HRM depends, it describes the current state of the Human Resource Management and Personnel Management in India and tries to evaluate its level of operation to determine whether it is a strategic tool for shaping corporate strategy. This study is thus, descriptive as well as exploratory and concentrates more on qualitative approach. Basically there are two types of research methods, quantitative and qualitative.

Quantitative research uses technique based on the principles of physical sciences. Statistical methods are used then to test fixed theory. Quantitative research is also prepared to provide a linear progress from problem to solution. According to Smith (1988) the scientist spends time observing the actions and groups of people. Thus the researchers simply observe without making and value judgments after which the researcher explains the observed behavior.

The qualitative data is based on meanings expressed through word. . It results in collection of non-standardized data that requires classification, and is analyzed through the use of conceptualization. Quantitative research then goes from observation to theory, then to testing. However, according to motley (1986) this order is often violated and studies are attacked because they do not follow the conventional chain of events.

He goes on further to criticize studies for lacking a strong theoretical basis from which to operate. Yet, quantitative researchers fail to realize the position they put themselves in when they do this. Quantitative research however comes with advantages and disadvantages. Its main advantage is that it gives out quantifiable data, which needs to be generalized sometimes. Also, its greater weakness is that it does not account for human behavior, which is not quantifiable, but significant to find the objectives of the research.

In compare, qualitative methods are entirely different, reluctant to more on analysis and are less prone to try and measure every aspect of the study. Qualitative research tends to produce rich intense data, relating to small numbers of people, as opposed to vast standardized data relating to large numbers. Qualitative studies are mainly about people’s subjective interpretations of complex situations. Burrell and Morgan (1979) call this the “interpretive paradigm”. There is little need to quantifying every detail in qualitative research because it’s not worried about prediction and control (Lindlof, 1995).

Nonetheless, this does not mean that qualitative research is not practical. It includes the understanding of the researcher and the subjects of the research. Researchers using the qualitative approach make systematic observations and work to say something meaningful about their chosen topic doing it in a particular way (Buttny, 1993). However, it’s arguable that qualitative methods are more effective when trying to research relationships between people in organizations (Walker, 1985 p.3)

There was a limitation as qualitative data analysis is very monotonous and conclusion from such data is subject to debate and might be unfair by individual’s viewpoint (Gill and Johnson, 1997). Questionnaires (appendix 1) were used for collecting the primary data from the companies. The company were selected in India random and questionnaires were sent to them to identify the extent to which Human Resource Management is practiced and its perceived usefulness in improving the efficiency of organizations.

Despite, their difference research approaches qualitative and quantitative research seen to share similar characteristics. Both of them use a structure which allows researchers to make performance. Furthermore, they both use interpretation to observe initial results of a course of research. However, qualitative differs greatly in relation to data gathering. Nevertheless, the analysis of qualitative data is highly personalized. Obviously the analysis of the researcher is extremely likely personalized. Obviously the analysis of the researcher is extremely likely to affect the outcome of the researcher. This raises the question of validity and reliability in qualitative research.

The basis for these differences lies in the purpose of the research. Quantitative research is intended to be in charge of the topic being studied enabling the researcher to know the content of his or her data before it is even collected.

Researchers undergoing qualitative approach of research do not worry with every measurable detail. “Fundamentally, qualitative researchers seek to preserve the form and content of human behavior and analyze its qualities, rather than subject it to mathematical or formal transformation’s (Lindlof, 1995). Basically, qualitative researchers strive for an agreement on phenomenon.

According to Kaplan and Maxwell (1994) the goal for understanding a phenomenon from the point of view of the participants is largely lost when textual data is quantified. Thus its come be seen that qualitative methods rise above most of the shortcomings of quantitative methods. Qualitative research strives to bring depth to a phenomenon that quantitative methods lack.

Collection of Data

Secondary Data

In order to address the objectives of the research, secondary data was collected from books, journals, magazines, newspapers, embassies etc. Secondary data is information which has been collected, collated and analyzed by others for other purposes, while primary data is information collected as part of a particular research because it is considered relevant to the study and research problem (Ghauri et al, 1995:54-57, Riley et al 2000:107).

In addition, the following secondary sources that can also be important for any kind of research including the researcher’s study can also come in the form of: Central and local government studies and reports, census reports, State budgets, rules on international trade regarding imports and exports, and policies on the foreign direct investment.

Studies and reports of institutions and departments such as the central bureau of statistics, universities, telecommunications departments, marketing and other research institutes, chambers of commerce and foreign missions such as embassies, trade centers and consulates.

Academic as well as organizational journals and newsletters pertinent to the problem area. In many countries, different branch organizations publish journals on statistics regarding their own industry, the development of a particular discipline or problem area. Textbooks and other published material directly or indirectly related to the problem area.

And lastly, theses and reports written by other students in our own university and in other schools and universities are the best guide line for the student. Many schools keep an up-to-date record of all these written in different disciplines. This is perhaps the most important secondary source at the earlier stages of our research process. They provide us with insight not only into our problem area, but also into the other sources mentioned above.

The reason for using secondary data is because it’s very advantageous in terms of saving time and money. It also not only helps me to prepare and understand the research problem better, but it also extends the base for which scientific conclusions can be drawn. Another advantage of consulting secondary data is that it suggests suitable methods or data to handle a particular research problem. According to Churchill (1987:181) ‘Do not bypass secondary data. Begin with secondary data, and only when the secondary data exhausted or show retreating returns, proceeds to primary data.”

In addition to secondary data, primary data is equally essential for more insight into the company being researched on. There are several choices regarding the means of collecting primary data. Usually, this includes observations which entails listening and watching other people’s behavior in a way that allows some type of analytical interpretation used to collect first-hand information in a natural setting to interpret and understand the observed behavior or situation more accurately; surveys (questionnaires) and interviews which are the most popular data collection method in business studies.

Primary Data

The researcher also collected primary data in addition to the secondary data in forms of case studies, unstructured interviews, and participant observation with few respondents. Other includes observations, surveys (questionnaires) and interviews by mail, phone, and personal contact. Surveys and questionnaires are the most popular data collection method in business studies.

The most valid research method for the major part of the study was considered to be the interview. Interviews can be differentiated according to the level of structure and standardization adopted: a structured interview being one where a predetermined and standardized or a formal set of questions is adhered to, an unstructured interview does not follow any prearranged process; a semi-structured interview will normally contain an element of both.

The advantage of a semi-structured interview is that it enables a disciplined approach to be taken without constraining or inhibiting the responses by the rigidity imposed by a totally structured interview (Elliott and Christopher 1973). Chisnall (1986) stressed that the interaction between the interviewer and the respondent contributes greatly to the success of the interviewer. ‘The intellectual atmosphere of an interview is at least as important as the mechanics of the interview processes.

However with this study, the researchers also focused on using questionnaires which are said to be descriptive and analytical as my form of primary data to gain information related to India , initially in Indian organization to identify the extent of which Human Resource Management is practiced and its perceived usefulness in improving the efficiency of Keane and other related organizations. An experience survey approach which is a qualitative information collection technique used in marketing was is a qualitative information collection technique used in marketing was in attempts to tap the knowledge and experience survey approach which is a qualitative information collection technique used in marketing was used in attempts to tap the knowledge and experience of those familiar with the general subject being investigated in addition to identifying the current phenomena.

Surveys involve questions of some sort and are important for collecting people’s opinions and needs. It also helped the researcher acquire information quickly with relatively minimal expense and effort from a relatively large number of respondents. The qualitative research is often focused on social process. It is thus common in social and behavioral sciences and those who want to understand human behaviors and functions suitable for studying organizations, groups and individuals (Strauss and Corbin, 1990). Furthermore, descriptive surveys are often used to obtain consumer attitudes towards a certain product and to ascertain views and opinion of employees in an organization (Reeves and Harper, 1981).

These surveys will thus help researchers understand the behavior of employees in regards to motivation, job satisfaction and grievances in relation to how human resource management is acknowledged in their company and their view towards HRM practices in India generally. However, in addition to helping the researcher with their study, surveys also help these various organizations understand the expectations and requirements of their customers as well as employees, develop service or product based on the standards as well as employees, develop service or product based on the standards of their required findings: determine how well the organization are satisfying requirements both within the company and outside and finally establish goals and access how well to meet these goals.

Special care was taken for designing the questionnaire: questionnaire focus, questionnaire phraseology, the form of response, and question sequencing and overall presentation. Questionnaire were designed in order to gain an in depth knowledge of Human Resource activities in organizations and for a remedy of reality.

There are factors which have limited to be unaware about the real meaning of Human resource Management and so most were not very co-operative, as they thought that allowing this type of research would identify some of their weaknesses, which would in turn threaten their competitiveness. The results of the questionnaire survey will be analyzed in depth, but it is important to first point some of the methodological problems that were faced during the course of this study.

However, it is safe to note that the greatest drawback under the exploratory study lies where the findings may seem credible enough to be released incorrectly as conclusions. Further downside includes the tendency to extend the exploratory phase, and inadequate representation of diversity.

A few problems arose during this research due to time and distance limit. As all the questionnaires were sent to various parts of India, the time was too short and limited for data gathering, the result of which led to the waiting for more replies from such companies. The distance makes it difficult to keep in touch with the companies in order to get a response, in terms of phone calls, which would be very expensive, and the postal questionnaires are very time consuming.

Similarly, there were many companies which did not respond to the questionnaires, probably since they did not see Human Resource Management as an integral issue in organizational building and strategy. Thus was quite discouraging for study being carried out. Another probable reason could have been that the companies did not bother posting the questionnaire back at their own expense, or they might not have been able to understand the purpose of the study clearly just by looking at the questionnaire and thus they did not feel like responding.

In order to minimize problems of this sort, it is important for the leaders of developing countries, like India, to become more involved and encourages managers of companies to contribute to the betterment of the Human Resource Management by actively participating in the studies like this. This is important as the research is not only academically viable but also potentially useful to them. It may also be necessary to extend the time allotted for this type of study.

At the time of writing up this study, there was in fact a response from only companies, and thus the results from these companies can only be analyzed. The companies that responded were from small size, thus the result of this study may possibly be gender, at the companies were selected at random.

Chapter 3: Literature Review – Background Theory

Literature Review

Background Theory

3.1 Introduction

Nowadays, it is a common belief in both the business and the academic world that “the human resources of an organization can be a source of competitive advantage”, provided that the policies for managing people are integrated with strategic business planning and organizational culture (Beer, Spector, Lawrence, Quinn, Mills, & Walton, 1985).There is a incredible pressure to an organization to perform their duties properly with the rate of the rapid changes taking place. Accordingly organization change such as association, new ways of handing over works, high changing rate in workforce and employee’s capabilities and priorities is observe in the past.

Human resource management has become a invasive and influential approach to the management of employment in a wide range of market economies. As a result, the analysis and evaluation of HRM have become major themes in academic, policy and practitioner literatures. Good human resource management entails recruiting and hiring the best employees and getting the most out of them through effective training and supervision. Human resource management helps in identifying key skills sets, knowledge and valued required in the employee. Through manpower planning the management determines its human resource needs and implements plans to address them.

Any assessment of the emergence of Human Resource Management has, at least, to take account of this changing context of employment and provide some explanations as to the relationships that exits between the contribution HRM has made to some of these changes on the one hand and, on the other hand, the impact that such changes have had on the theory and practice of HRM itself. (Beardwell and Holden, 1994: 5). An analysis of data relating to the question of a link between Strategic Human Resource Management (SHRM) and performance reveals there is uncertainty as to the direction of the link.

Can better performing organizations attribute their good performance to the quality of their HRM or is the standard of their performance due to other factors? The quality of HRM might be an outcome of performance rather than a contributing factor to that performance. There are questions about the meaning of a strategic approach to HRM. What makes an organization’s approach to HRM ‘strategic’ and is there a satisfactory method of differentiating between an approach to HRM that might be considered strategic or one that is not seen to be strategic?

As organization restructure, human resources tend to decrease in quantities but increase in quality and in their value to organizational effectiveness. Investing in the development of these valued resources make sense. Most of the companies in developing countries invest in new technology, new machinery, new plant to increase productivity because better models have been developed but we need to develop our own ‘better models’ in human resource area

A strategy is a course of action. It shows how the enterprise will move from the business it is now to the business it wants to be in, given its opportunities and threats and its internal strength and weaknesses. Strategic human resource management means formulating and executing HR systems that produce the employee competencies and behaviors the company requires to achieve its strategic aims. The high-performance work system is designed to maximize the overall quality of human capital throughout the organization, and provides a set of benchmarks against which today’s HR manager can compare the structure, content, and efficiency and effectiveness of his or her HR system.

Increased in international competition due to newly emerging multinationals and divisional organization has given new scope of management particularly Human Resource Management .India has also woken up to the reality that human resources management is key factor for the better performance of an organization . Its is an ultimate goal an ambition to organization to perform their duty perfectly can only seen in developed countries like UK and USA . The organizational change and development have become a part of working life.

3.2 Meaning of Human Resource Management

HR include all the individual employees who contribute to the operations of an organization in any means of form either temporary or permanent basis. (Thompson and Mabey ,1994) It process of getting work done with help of people in efficient manner . It includes planning ,organizing, leading and controlling to make work done till the end task. To manage an organization the common factor taken in consider are goal, limited resource and people.

The basic infrastructure of any business is the human capital. Human resource management, therefore, is one of the most important and recognized functions in the industry today. There is more pressure on HR to deliver, develop, and retain employees recognizing the importance of human capital. In today’s world of technological advancement, human resource is the only factors, which differentiate the true potential of an organization.

Human resource management is the process of coordinating an organization’s human resources, or employees to meet organizational goals. Some of the challenges today in human resource management are maintaining a diverse workforce, dealing with major technological changes, keeping up the government regulations, and handling corporate restructuring, and downsizing, Human resource professional deals with areas such as:

  • Employee recruitment and selection
  • Performance evaluation
  • Compensation and benefits
  • Professional development
  • Safety and health
  • Forecasting
  • labor relations

The smooth version of HRM emphasizes the importance of high commitment, workplace learning and enlightened leadership. Most normative HRM models, whether US or British, assert that the organization’s Human Resource are valued assets, not a variable cost, and emphasize the commitment of employees as a source of competitive advantage (Legge, 1989) By contrast, the difficult version of HRM emphasizes the calculative, quantitative and strategic management aspects of managing the workforce in a balanced way (Store

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