HRM PROJECT

On
STRATEGIC HUMAN RESOURCE
MANAGEMENT

Submitted By:
Saumya Aggarwal
026/Cse/2k5
(B.Tech-MBA Dual Degree)

ACKNOWLEDGEMENT

I express heartfelt thanks to Ms. Sona Vikas, our respected faculty member, who has been
my constant guide throughout the work on this project. Our work could not have gained
its present shape but for her constant guidance.

Also, I would like to thank Ms. Bhawna Sikka, Food Services and Vending Executive of
Nestle Connaught Place Branch Office and Mr. P.K.Sinha, Deputy General Manager of
Human Resource Department of NTPC office at SCOPE building, CGO complex, Lodhi
Road, New Delhi for their wholehearted efforts. The project would not have taken its
present shape without their valuable insight. I express my gratitude to them for providing
me their valuable time and helping me in interacting with the employees.

I also express our gratitude to all those people who allowed me to work with them.
Lastly, we would like to extend our sincere thanks to all those who have directly or
indirectly helped us in the completion of this project.

INDEX
Serial no.
Chapter no.
Description
Page no.

1.
Chapter 1
Introduction
5

2.

Chapter 2
Book Reviews
10

3.
Chapter 3
Article Reviews
14

4.
Chapter 4
SHRM at Nestle
26

5.
Chapter 5
SHRM at NTPC
33

6.
Chapter 6
Analysis & Conclusion
39

10.

Annexure
41

CHAPTER 1
INTRODUCTION

1.1 WHAT IS STRATEGIC HRM?-

The linking of human resources with strategic goals and objectives in order to improve
business performance and develop an organizational culture that fosters innovation,
flexibility and sustainable competitive advantage is called STRATEGIC HUMAN
RESOURCE MANAGEMENT.

In the case of Strategic human resource management, the HR function is a strategic

partner in the formulation and implementation of the companys strategies through HR
activities.

1.2 A VISUAL DEPICTION OF THE SHRM PROCESS-

KEY FACTORS OF SHRM PROCESS-

The external environment which is very dynamic in the current global business
scenario.

The business strategy - it affects and is affected by the SHRM process and which gives
the organization a well thought of direction.

The internal environment the organisational context and the general culture which is
prevalent in the organization.

The outcomes of the SHRM process which should be evaluated both quantitatively as
well as qualitatively.

PRACTICAL ROLE OF SHRM-

Build a Strategic Framework: Mission Statement, Vision, Values.

Help in goal setting. Look Beyond Traditional Goals.

Create Leadership Vision and culture of innovation.

Support Company's Brand (employees as customers approach).

Manage a cross cultural work-force.

Manage the young, overambitious recruits.

Manage continuous competitiveness in a changing business environment and technology

and product delivery systems.

Keep HR cost to minimum possible.

Create employee loyalty programmes.

Design and utilize assessment metrics for evaluation of SHRM process.

1.5 AN EXAMPLE OF A QUANTITATIVE TECHNIQUE FOR ASSESSMENT OF THE

EFFECTIVENESS OF THE SHRM PROCESS:

THE SELECT TO PROFIT LOOP-

SELECT

PROFITS

SALES
COSTS
PRODUCTI
MOTIVATE

ENROLL

REWARD

TRAIN

EVALUATE

V-ITY

THE SELECT TO PROFIT LOOP is a quantitative technique which organizations employ to

ascertain whether an employee is a profit centre or a cost centre. Right from the time of
selection, there are certain activities which are carried out vis--vis the employee which incur
some costs; and certain activities undertaken by the employee generate revenues for the
company. Now, by evaluating all these activities, it can be found out whether the revenue
generated by the employee outweighs the costs incurred on him or not. Thus, organizations
can directly link the selection of a candidate to the net profit he/she expected to generate.

1.6 STEPS IN STRATEGIC HRM PROCESS-

The analysis of the Strategic HRM process has been done from the point of view of a
new business strategy being adopted by an organization:

New Business Strategy.

SWOT Analysis done to ascertain the strengths, weaknesses, opportunities and threats
of the current human capital of the organization.

Assess HR Capacity whether the current capacity is sufficient or whether more human
capital is required.

Develop Core Competencies assimilate the best practices from the organizations earlier
strategy into the new strategy.

Test and Evaluate evaluate the new strategy and the proposed HR integration with it for
fissures.

Initiate HR Practices this should be done in line with the new strategy.

Recruit, Orient, Train and Develop.

Evaluate Performance check whether the new strategys implementation is on course or

not and whether the HR is an intrinsic part of the implementation process.

Establish Career, Succession Plans; Set Total Reward System this would help in
motivation and fostering loyalty in the employees.

COMPETENCIES OF AN HR EXECUTIVE-

Strategist Knows the business inside out. Helps align the personal goals of employees
with strategic goals of the organization.

Administrator Deliver the Basics like recruitment, training, retention etc.

Peoples Champion champions the cause of employees in the organization.

Change Agent helps bring about change in the organization by convincing employees
the change is good for their as well as for the organizations growth.

NEED FOR SHRM-

Increase competition in both local and global markets requires organizations to involve
their people in developing the strategy for a sustainable competitive advantage.

Maintaining a competitive advantage by becoming a low cost leader or a differentiator is

possible through good HR practices, as best practices in terms of the working of human
capital within an organization are hard to replicate.

ADVANTAGES OF SHRM-

Each employee becomes a profit centre.

Accountability at all levels in the organizational hierarchy increases.

Business can meet ever increasing customer demands.

Employees become pro-active; align their personal goals with the goals of the
organization.

AND THE BOTTOM-LINE IS.

Good HRM = Good financial results

HRM

Financial results

CHAPTER 2
BOOK REVIEWS

2.1 BOOK 1-

Roadmap To Strategic HR- Turning a Great Idea into a Business Reality

By Ralph Christensen

The book illustrates a practical approach for turning Human Resource into a crucial
component of success. For decades now, human resources professionals have sounded the
drumbeat of change: HR must transform itself from an administrative function into a
strategic business partner. But it has been said so often, for so long, and with so little
concrete, real-life information on how to actually achieve this new mission, that the
message often sounds like a wouldn't-it-be-nice scenario.

But it isn't. More and more traditional HR activities are being farmed out to service
centers, external vendors, and line managers. The work of HR is changing, and more and
more professionals realize that to succeed in the future they must be part of the team that
makes important business decisions.

Roadmap to Strategic HR is a sorely needed prescription for achieving strategic focus in

complex organizations. Drawn from the author's more than 25 years of experience and
insights as an HR practitioner at Hallmark and other companies, the book outlines a 10step, results-oriented plan for making the transition. It helps one integrate top-quality
tactical work with innovative internal systemstalent systems, training systems, reward

systems, or work processesthat will meet the strategic business demands of your
organization.

10

This book helps one:

Understand the business realities that are driving change, including employees afraid for
their jobs, and demanding and scarce customers.

Compress the multitude of HR activities into five fundamental processes: workforce

planning and staffing, learning and development, organization development, performance
management, and employee relations.

Examine each of the five processes through a powerful strategic lens.

Resolve the tensions between HR specialists and HR generalists.

Build a real partnership between the frontline managers and HR staff.

Identify the competencies required of HR professionals who assume the crucial role of
"organizational architect."

Recognize the roadblocks and political landmines that might lurk along the way.

The connection between people issues and business success is irrefutable. As the author
so aptly puts it: "Talent is the engine behind the creation of all value." Roadmap to
Strategic HR is a practical book which strengthens the link between people and value
for building a department that drives excellence throughout the organizationand for
honing ones department's focus so that it stays locked on the marketplace and the
business strategy.

11

2.2 BOOK 2-

Human Capital Management-Achieving Added Value Through People

By Angela Barron & Michael Armstrong

The book provides a planned & proactive process of partnership with top management to
achieve desired long term organizational growth and direction while satisfying the
individual objectives and growth of best employees.

Strategic HRM discusses that every employee has a right and looks forward to both
horizontal and vertical growth with room for experimenting with ideas and testing
entrepreneurial spirit within and organization have to continuously adapt to this
requirement by changing and expanding. No one likes to work with stagnant organization
or organization without sharing growth with employees-Promotions, participations and
financial rewards.

Thus, organizations have to continuously adapt by changing and expanding and must
look after the following processes-

Careful and extensive systems for recruitment selection and training (RST).

Formal system for sharing information with employees.

Clear job design; High level participation processes; monitoring of attitudes.

Performance appraisals (self-appraisal system should be followed for all executive

positions in my view).

Properly functioning grievance procedures (with both procedural and technical justice
visible).

Promotion and compensation schemes that provide for the recognition and reward of
high- performing employees.

12

The changing profile of New Age young workers has to be built in HR policies like
flexibility of work time, freedom for experimenting, quick growth and sense of identity
with projects of company.

It is also seen that Top management/owners in Indian companies still have commodity
approach underpaying, disallowing delegation, curbing enterprise and failing to
communicate organizational goals. Such organizations have little chances of growth or
survival for long in new environment. Here role of HR leadership is most crucial to
transform the organizations into innovative, learning and flexible organization where
employees find it exciting to work with lot of room with all round positive environment
within the organization.

13

CHAPTER 3
ARTCLE REVIEWS

3.1 ARTICLE NO.1-

Strategic Human Resource Management-Three Stage Process & Influencing

Organizational Factors

By Sandeep Krishnan (IIM-A) and Manjari Singh (IIM-A)

3.1.1 INTRODUCTION-

A three-stage model for the process of strategic human resource management has been
developed in this paper. The three stages cover strategy formulation, implementation and
evaluation.

3.1.2 SIGNIFICANCE OF THE ARTICLE-

The literature in the field of SHRM prior to this research had been developed up to the
two-stage process till concepts like the Two Way Vertical Fit and the Horizontal Fit. The
third stage developed in this paper has not been explicitly taken up in existing literature
till now

The two-stage model does not explicitly clarify how the fit will be assessed and achieved.
In order to assess both vertical and horizontal fit, the evaluation and feedback stage is
vital for any process of SHRM. It will also help in maintaining a better fit between the
intended and actual strategy. It will also help in demonstrating HR successes and increase
the credibility of the HR department.

14

3.1.3 LITERATURE REVIEW IN THE ARTICLE-

Devanna et al. (1981) put forth a number of reasons why strategic orientation may lack in
the HR function. A major one is that the top management does not perceive it important
to include the HR department in the decision making process.

HR departments must develop competencies in dealing with strategic issues, business

awareness and the ability to quantify its own the contributions/ significance.

Tony Rucci states that the three significant barriers to HR playing a more proactive role
in the next ten years are a) Lack of basic economic literacy among HR professionals, b)
Lack of comfort among HR professionals to take risks and c) HR professionals who do
not demonstrate courage of conviction about their principles (Huselid and Becker, 1999:
362).

3.1.4 BASIC CONCEPTS ON WHICH THE MODEL IS DEVELOPED-One-way

Vertical Fit-

It talks about aligning HRM systems to the business strategy and the partnering role of
HR where HR is highly integrated with business processes.

Two-way Vertical Fit-

In this particular scenario the HRM systems not only align to the business strategy, but
also contribute in the strategy formulation the HR departments role as a strategic partner
emerges in the two-way vertical fit. This includes activities like creating a culture change,
identifying mergers and acquisition possibilities, tracking the market and proactively
making changes.

Horizontal Fit-

It refers to the alignment of various HRM systems to each other and the alignment of key
HR systems and processes with for bringing out desired behaviors and culture in the
organization.

15

This model follows the concept of interactive business and HR strategy so that each

contributes to the formulation of other.

Elements of HR like acquiring, managing and developing the competencies are important
for the success of strategy implementation.

Issues like high turnover of employees, lack of morale and motivation, low employee
satisfaction, undesirable work-place politics etc. are looked into and their likely impact
on strategy implementation are examined.

Various HRM systems like recruitment and selection, performance management,

compensation, training and development, career management, etc. need to be aligned
with the HR strategy. Policies and practices of various HRM systems are set or modified
according to the strategy implementation needs. Based on the concept of horizontal
linkage, HRM systems also need to be aligned to each other.

16

The second stage has a two-way link with the first stage. Not only are HRM systems
aligned with the HR strategy, but HRM systems and their outcomes also provide
information pertaining to organizational context for the formulation of business strategy.
This two-way link strengthens the role of HR department as a strategic partner. In the
evaluation metric of this model, defining and measuring goal achievements or outcomes
of various HRM practices and activities is the first step.

Also there are factors that act as enablers/ deterrents for the effectiveness of the
evaluation and feedback stage. The factors that influence this stage may be categorized
into structural, operational, and behavioral factors.

The structural factors include the scope of the evaluation and feedback process, level of
Formalization of the evaluation and feedback process, proper selection of assessors, and
Periodicity of evaluation and feedback.

The operational factors are the availability of required data, proper measurement
techniques, required analytical skill, and technological support for data collection and
analysis. Evaluating the impact of HRM systems is a challenge for measurement
techniques because the effects of environmental and personal factors are inter-mixed with
it (Gordon, 1972). Valid interpretation may not be obtained because of faulty measures or
lack of appropriate measures. HR professionals may not have required analytical skill for
the evaluation process so they either need to be given special training or provided help of
experts (Gordon, 1972).

The behavioral factors include the purported use of the evaluation results, transparency in
the evaluation process, perceived and real fairness of the process, extent of
implementation of the suggestions/feedback, man-hours spent on evaluation and
feedback, importance given to the process, and incentives for various stakeholders.

17

3.1.5 CONCLUSION-

Anything less than the complete process described in the model increases the possibility
of failure. Organisations can no longer ignore the necessity of an integrated three-stage
process for SHRM that should at least include:

Efficient and inter-linked HRM systems linked to business strategy and

Monitoring mechanisms to identify and correct any sort of misalignment.

The enablers/deterrents for each stage is another important contribution of this paper.

18

3.2 ARTICLE NO. 2-

Maximizing Your Return On People

By Laurie Bassi and Daniel Mc Currer (Harvard Business Review March 2007)

3.2.1 INTRODUCTION-

This article explains the various innovative tools to show which investments in
employees are driving company performance and which one should emphasize upon to
advance strategic goals. for every company its people are the only source of long term
competitive advantage and companies that fail to invest in employees jeopardize their
own success and even survival.

According to the authors investment in Human capital management can be directly linked
to organizational performance. They have explained methods for measuring bottom line
contributions of investment in human capital management (HCM)-like leadership
development, job design etc.

3.2.2 HCM DRIVERS-

The authors with the help of various Employee and management surveys have identified
a core set of HCM drivers that predicts performance across a broad array of organizations
and operations.

These drivers are as follows:

Leadership practices

Employee engagement

Knowledge accessibility

Workforce optimization

Learning capacity

In each of these categories HCM practices are further sub divided into groups such as
under leadership practices: communication, supervisory skills etc.

19

3.2.3 MATURITY SCORES-

These surveys are effective in gauging and improving organizations capability across 23
HCM practices based on maturity scores ranging from 1 to 5 with 1 indicating low
performance and 5 high performances. It helps in benchmarking organizational HCM
capabilities, identifying HCM strengths and weakness and linking improvements or
backsliding in specific HRM practices with improvements or shortcomings in
organizational performance. Also multiple surveys over time can reveal progress or
regression in each of the HCM practices and help a company decide where to focus
improvement efforts that will have a direct impact on performance.

3.2.4 CONCLUSION-

Thus with these HCM tools HR can start gauging how well people are managed and
developed throughout the organization. In this role HR department can take a strategic
responsibility, acting as coaching, mentoring and monitoring agencies to ensure that
superior management of human capital becomes a central part of the organizations
culture.

20

3.3 ARTICLE NO. 3-

Transforming HR Function from Reactive to Proactive

By Jaclyn Lee

3.3.1 CISCO-

CISCO is an armed security business, became a private and commercial business after
takeover by Temasek Holdings Pte Ltd in June 2005.It came to be known as CISCO
Security Pvt. Ltd. All 4200 employees were transferred to the new company.

3.3.2 THE EARLIER SCENARIO AT CISCO-

It was merely administrative in nature, HR practices were irrelevant to the business

resulting in very high staff turnover and uncompetitive salaries. All Business unit heads
crafted their own people policies to cope up with increasing competition. The HR an
obstacle to change and hinged onto bureaucratic practices that effected business and
people practices.

3.3.3 THE CHANGE PROCESS-

However when the company was in the process of transition, HR function was
completely overhauled and transformed to a strategic function to facilitate the transition
of the company to a private company. HR aligned itself with the critical needs of
business. The objective of the new HR team was to shape the CISCO manpower and
talent to support the new philosophy and the mission of its business to deliver high
quality services to its clients.Major considerations for the new HR transformation were:

Understanding the business strategy and aligning HR strategy with it.

Understanding the needs of the business units and their unique challenges.

Identifying the key factors causing the high attrition.

Identifying the key factors causing the loss of key talents.

Building key HR pillars to deliver core HR services.

Building the employer brand positioning of CISCO to attract talents.

Building a strong human capital development program to strengthen key competencies

needed for the business.

21

3.3.4 THE HR PILLARS-

To achieve the above objective the following key HR pillars were formed-

Manpower Planning and Recruitment

Aligning human capital development

Strategic compensation and benefits

Employee engagement

HR systems and service delivery

3.3.5 THE KEY CHALLENGES-

HR transformation to a commercial enterprise was a challenging task. The Toughest job

was to convince existing staff to transform from a back end function to a front line area.
However Effective communication played an important role in overcoming these
challenges.

3.3.6 CONCLUSION-

To conclude the new role of HR was to shape the CISCO manpower and talent to support
the new philosophy and the mission of its business to deliver high quality services to its
clients thereby reflecting the strategic role of HR function.

22

3.4 ARTICLE NO. 4-

Thinking Integrated Space-TQM and HRM

By P. Vijayan

3.4.1 TQM-

TQM refers to a set of principles and practices whose core ideas include understanding
customer needs, doing things right the first time, and striving for continuous
improvement. TQM approach emphasizes a prevention, rather than a detection approach
to work. Traditionally, TQM was on the agenda of Manufacturing, Operations and SCM.
(Detection approach).

3.4.2 TQM SELECTION PROCESS-

As opposed to what was believed traditionally by the HR Department, generation of more

number of CVs is generally not good. Instead, firms should filter the applications and
spend more time with few candidates.

3.4.3 EMPLOYEE SATISFACTION-

It is as important as Customer Satisfaction because satisfied employees can add value

towards enhancing customer satisfaction. It also bridges the gap between what senior
leaders feel is necessary to improve employee satisfaction & their real need.

3.4.4 PERFORMANCE APPRAISAL & JOB PERFORMANCE-

These practices can cause managers to ignore system factors and cause employees to
compete instead of cooperate as:

In sharp contrast to the TQM performance assumption, the field of human resource
management (HRM) assumes that performance is largely due to the worker and not the
system/process.

Both person and system factors can directly influence work performance. Moreover,
system factors can enhance or constrain the influence of person factors on work
performance.

23

3.5 ARTICLE NO. 5-

Redefine The HR AgendaThe TCS Model

By Dilip K. Mohapatra

3.5.1 INTRODUCTION-

This article shows how HR can emerge as a strategic partner with the business and be
recognized as a source of competitive advantage with a focus on the TCS model.

According to the article, in this whole process, HR alignment with the mission, vision
and values is very important. TCS VISION is of Being global top 10 by 2010 in the IT
industry is supported by its MISSION to ensure Customer delight by providing best in
class consulting, IT solutions and services and delivering value and joy to all
stakeholders. TCS has incorporated 5 VALUES -Integrity, Leading change, Excellence,
Respect for individual, Learning and sharing, that supports its mission and vision .TCS
has a robust HR alignment framework starting from the vision and mission which drives
the strategic objectives and business plans. It uses extensively BALANCED
SCORECARD (BSC) for aligning all HR and Other Departments activities across
geographies, industry practices, service practices and its delivery centres.

3.5.2 ROUTES TO ENHANCE SHAREHOLDERS VALUE-

TCS considers its workforce capabilities as its principal offering to its customers. The
delivery routes to enhancement of shareholders value are-

Through enhancement of customer delight through delivery excellence of world class

services and successful management of customer relationship and

By enhancing employee delight through effective management of their operating

efficiency. All these add up to the companys human resource efficiency and human
capital effectiveness.

24

3.5.3 HR DELIVERY ALIGNMENT AT TCS-

According to the author another important aspect is HR delivery alignment with the
business objective. TCS considers its EVA as the main driver of its business objective.
EVA has two components: revenue and cost. Revenue is driven by realization rates and
the number of people engaged in client delivery. On the cost side, the performance
management group ensures optimum utilization of the budget to structure compensation
packages to attract, retain and recognize talent within the organization. Thus human
resource efficiency and human capital effectiveness affects the EVA and hence plays a
strategic role. At TCS alignment is done through a cascading balanced score card. It is an
effective instrument for linking the HR strategies and the HR delivery with the
organizations vision, mission and strategies.

3.5.4 BALANCED SCORECARD-

It gives managers the opportunity to look at the Co. from the perspective of internal &
external customers, employees & shareholders. It is a performance measurement tool for
strategic planning and management including feedback. It should be used to:

Link HRM activities to the Cos business strategy.

Evaluate the extent to which the HR function is helping the Co meet its strategic
objectives.

25

CHAPTER 4
SHRM AT NESTLE

4.1 AN OVERVIEW OF NESTLE-

Nestl is a multinational packaged food company founded and headquartered in Vevey,

Switzerland. It resulted from a merger in 1905 between the Anglo-Swiss Milk Company
for milk products established by the Page Brothers in Cham, Switzerland, in 1866 and the
Farine Lacte Henri Nestl Company set up in 1867 by Henri Nestl to provide an infant
food product. Nestls trademark of birds in a nest, derived from Henri Nestls personal
coat of arms, evokes the values upon which he founded his Company. Several of Nestl's
brands are globally renowned, which has made the company a global market leader in
many product lines, including milk, chocolate, confectionery, bottled water & pet food.

BRANDS UNDER NESTLE-

Milk & Nutrition

Beverages

Prepared dishes & cooking aids

Chocolates & confectioneries

WHY NESTLE?-

We have chosen Nestle because it is an appropriate company to study both open culture
and values of a company. Nestle believes in adaptation to a changing world, but its basic
foundation is unchanged from the time of the origins of the Company, and reflects the
basic ideas of fairness, honesty, and a general concern for people.

METHODOLOGY ADOPTED-

Primary Data collected by way of Interview schedule with Ms. Bhawna Sikka ( Food
Services and Vending Executive, Cannaught Place, New Delhi) and Questionnaire
answered by 9 employees of different departments.

Secondary data collected by way of companys website and other sources.

26

BUSINESS OBJECTIVES OF NESTLE-

Nestl's business objective is to manufacture and market the Company's products in such
a way as to create value that can be sustained over the long term for shareholders,
employees, consumers, and business partners.

Nestl does not favor short-term profit at the expense of successful long-term business
development.

Nestl recognizes that its consumers have a sincere and legitimate interest in the
behavior, beliefs and actions of the Company behind brands in which they place their
trust, and that without its consumers the Company would not exist.

Nestl believes that, as a general rule, legislation is the most effective safeguard of
responsible conduct, although in certain areas, additional guidance to staff in the form of
voluntary business principles is beneficial in order to ensure that the highest standards are
met throughout the organization.

Nestl is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and the responsible attitude of its management and employees.
Therefore recruitment of the right people and ongoing training and development are
crucial.

Nestl continues to maintain its commitment to follow and respect all applicable local

laws in each of its markets.

CORE VALUES-

A prerequisite for dealing with people is respect and trust.

Transparency and honesty in dealing with people are a sine qua non for efficient
communication.This is complemented by open dialogue with the purpose of sharing
competencies and boosting creativity.

To communicate is not only to inform; it is also to listen and to engage in dialogue.

The willingness to cooperate, to help others and to learn is a required basis for
advancement and promotion within our company.

27

4.7 A HUMAN COMPANY-

Nestl is a human Company providing a response to individual human needs throughout

the world with specific concern for the wellbeing of both its consumers and its
employees. This is reflected in its attitude and its sense of responsibility towards people.

We have analyzed Nestle to follow all three models -

High Performance,

High Involvement &

High Commitment.

This is because Nestl aims to increase sales and profits but, at the same time, to raise the
standard of living everywhere it is active and the quality of life for everyone. Nestl is
also convinced that it is the people who form the strength of the Company and that
nothing can be achieved without their commitment and their energy, which makes people
its most important asset. Involvement of people at all levels starts with appropriate
information on the Companys activities and on the specific aspects of their work.
Through open communication and active co-operation, everyone is invited to contribute
to improvements enhancing Company results and personal development.

4.8 HR PRACTICES-4.8.1 RECRUITMENT-

The recruitment process at Nestle is clearly defined. People with qualities like dynamism,
realism, pragmatism, hard work, honesty and trustworthiness.

Match between candidates values & companys culture.

Recruitment for management levels takes place in the head office and all others at the
branch level. The existing employees are promoted to higher posts as per the
requirements. There are no lateral recruitments. Another source of recruitment is campus
placements and human resource consultancies.

Decision to hire only by HR staff, no external consultant.

28

People management policies, basic values & principles elaborated in-

Nestle management & leadership principles- The Nestl Management and Leadership
Principles describe the management style and the corporate values of the Nestl Group,
specifically in the area of interpersonal relations.

Nestle human resources policy- This policy encompasses those guidelines which
constitute a sound basis for efficient and effective HR Management in the Nestl Group
around the world.

Nestle people development review-this policy throws light on Nestles culture and core
values, different training programs and life of employees after work.

4.8.2 TRAINING-

From the factory floor to the top management, training at Nestl is continuous. And
because it is mainly given by Nestl people, it is always relevant to the professional life.

Throughout the world, each country runs its own training programmes (e-Learning,
classroom courses, external courses), and it has five training centers in France, UK,
Spain, Mexico and Brazil.

Nestle provides the following-

Literacy training-to upgrade essential literacy skills, especially for workers who operate
new equipment (Mission-directed Work Team Approach). Employees are also sent
abroad to study markets, consumer tastes etc.

Nestle Apprenticeship Programmes.

Local Training Programmes-on issues ranging from technical, leadership, and

communication and business economics. Employees are also sent abroad to study
markets, consumer tastes etc.

Rive-Reine, their International Training and Conference Centre in Switzerland is where

Nestl people from all over the world meet to exchange information and ideas in
seminars and training courses.

29

4.8.3 PERFORMANCE MANAGEMENT-

Formal assessment by Line Managers and HR once a year with feedback.

Subordinate can question an unfair evaluation.

Specific Key Performance Indicators have been enlisted by the HR department.

One of the important key performance indicators is achievement following the

Nestle management and leadership principles.

Remuneration structure and promotion criteria take into account individual performance.

4.8.4 JOB DESIGN-

Selection-Combination of written test, GD & interview (Interviews for top management

posts).

The company incorporates practices like Job Enrichment and Job Enlargement, to
motivate employees and to break the monotony of their job tasks. The correspondent
herself works in both sales and brand management departments, which is an example of
job enlargement.

4.8.5 PAY STRUCTURE-

Nestle strives to offer fair remuneration. Remuneration level is above the average in
industry.

The variable component of the salary is comparatively big to reward individual

performance.

In case of higher management level, the variable part is linked to individual & team target
achievements.

4.8.6 REWARDS & INCENTIVES-

Passion To Win awards- These quarterly awards have been institutionalized to reward
those who over-achieve their targets.

Long-service Awards- To recognize employees who have been with the company for
more than 30 years.

30

Nestle Idea Award- It was found from the correspondent that the company institutes
Nestle Idea Award every quarter to recognize and award employees who come up with
relevant and innovative ideas which have the potential of being implemented at Nestle.

4.8.7 BENEFITS-

The following benefits are provided to all employees, with no discrimination-

Leave-Personal & Medical (fixed no. per year)

Children Education Assistance Scheme

Provident fund

Retirement Gratuity Scheme

Group Insurance & Accidental Insurance Scheme

Conveyance Reimbursements

Residential Accommodation

Monthly health check-ups & free consultation for self & family etc.

4.8.8 EMPLOYEE RELATIONS-

Nestle provides a very healthy working environment which is one of the reasons why
Nestles employees state their commitment level to be very high.

Employee turnover is less than 5%., which is considered to be very low for a
multinational corporation.

Nestle has a open culture & upward communication especially in case of grievance
redressal is encouraged.

Work/Life balance is given importance, as illustrated in the Nestle Human Resource

Policy document.

Nestle Family annual events are organized by their HR department whereby employees
alongwith their families are invited.

Emphasis is laid on safety of employees (Nestle Policy on Health and Safety at Work).

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4.8.9 CHANGE MANAGEMENT-

Nestle has adjusted to the ever-changing external environment for the last 140 years since
its inception 1866 without losing its fundamental beliefs and core values. It manages
Change and drives sustainable profitable growth by following the policy of making
gradual changes instead of making drastic and risky changes.

ERP implementation- In June 2000, Nestle SA signed a much publicized $200 million
contract with SAP and additional $80 to install an ERP system for its global enterprise to
help centralize a conglomerate that owns 200 operating companies and subsidiaries in 80
countries. While the ERP system was likely to have long-term benefits, the project
touched the corporate structure and culture. The structure was decentralized, and it tried
to centralize it. This was initially opposed by employees but with subsequent measures
taken by the HR like training etc., this has been successfully implemented.

4.8.10 SAFETY & HEALTH-

The Nestle Operational Safety, Health and Risk-Management Strategy document

illustrates that:

Nestle is dedicated to safe & healthy work environment.

Regular safety assessments & audits take place by internal & external bodies.

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CHAPTER 5
SHRM AT NTPC

5.1 AN OVERVIEW OF NTPC-

NTPC Limited is the largest thermal power generating company of India. A public sector
company, it was incorporated in the year 1975 to accelerate power development in the
country as a wholly owned company of the Government of India.

At present, Government of India holds 89.5% of the total equity shares of the company
and the balance 10.5% is held by FIIs, Domestic Banks, Public and others.

Within a span of 31 years, NTPC has emerged as a truly national power company, with
power generating facilities in all the major regions of the country.

NTPCs CORE BUSINESSES-

Engineering

Construction

Operation of power generating plants

Consultancy in the area of power plant constructions and power generation to companies
in India and abroad.

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NTPC has set new benchmarks for the power industry both in the area of power plant
construction and operations. It is providing power at the cheapest average tariff in the
country. With its experience and expertise in the power sector, NTPC is extending
consultancy services to various organisations in the power business.

Recognizing its excellent performance and vast potential, Government of the India has
identified NTPC as one of the jewels of Public Sector Navratnas- a potential global
giant. Inspired by its glorious past and vibrant present, NTPC is well on its way to realise
its vision of being A world class integrated power major, powering Indias growth, with
increasing global presence.

5.3 WHY NTPC?-

NTPC was chosen to study strategic HRM as it is a public sector enterprise but has been
able to achieve excellence in its field by incorporating appropriate HR practices in
employees daily life, which reflect the organizations business goals as well. NTPC has
been able to satisfy its employees by adapting its internal environment to the everchanging external environment.

METHODOLOGY ADOPTED-

Primary data was collected as follows-

Visited NTPC office at SCOPE building, CGO complex,Lodhi Road , New Delhi and met
Mr. P. K. Sinha. ( DGM HR )

Data collected by way of Interview

Secondary data was collected from companys website.

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5.5 HUMAN RESOURCES-

NTPC believes in achieving organizational excellence through Human Resources and

follows "People First" approach to leverage the potential of its 23,500 employees to
fulfill its business plans. Human Resources Function has formulated an integrated HR
strategy which rests on four building blocks of HR viz. Competence building,
Commitment building, Culture building and Systems building. All HR initiatives are
undertaken within this broad framework to actualize the HR Vision of "enabling the
employees to be a family of committed world class professionals making NTPC a
learning organization.

Prior To 1997 , NTPCc HR department was known as the personnel department and
basically all their work was restricted to the administration and all.

NTPCS human resource department work on the following model-1.) Competence

building

2.) Commitment building

3.) Culture building

4.) Systems building

Where the systems building include identifying the manpower and looking for these
talent who are apt for the particular project work.

5.6 HR PRACTICES-5.6.1 RECRUITMENT-

For the recruitment process the company conduct the all India written test,

It also goes to the various IITs and NITs for the campus recruitment.

To induct talent and groom them into a dedicated cadre of power professionals
"Executive Trainee" Scheme was introduced in the year 1977 for recruitment in the
disciplines of Mechanical, Electrical, Civil, Control & Instrumentation and now
encompasses Computer Science, Chemistry, HR and Finance disciplines also.

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5.6.2 TRAINING & DEVELOPMENT-

A comprehensive one-year training comprising theoretical inputs as well as on-the-job

training.

The new recruits are also attached with senior executives under a systematic and formal
'Mentoring System' of the company to integrate them into the Culture of the company.

As part of post employment training and development opportunities, a systematic

Training plan has been formulated for ensuring minimum seven man days training per
employee per year and includes level-wise planned intervention designed to groom
people for assuming positions of higher responsibility, as well as specific need-based
interventions based on scientific Training Needs Analysis.

NTPC has set up 15 project training centres, 2 simulator training centres and an apex
institute namely 'Power Management Institute' (PMI). While the project training centres
(Employee Development Centres) have specialized in imparting technical skills and
knowledge, PMI places emphasis on management development. Besides opportunities for
long term education are also provided through tie ups with reputed Institutions like IIT,
Delhi, (M.Tech in Power Generation Technology), MDI, Gurgaon (Executive MBA
programme), BITS, Pilani (B.Tech) etc.

5.6.3 JOB EVALUATION-

In NTPC all the roles are uniquely defined and they have role directories. Every
individual in the company is evaluated every year on the following parameters-

KPA

FUNCTIONAL COMPETENCIES

MANAGERIAL COMPETENCIES

CORE VALUES

KPA includes the key performance areas of every employee.

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This process is done every year and every individual are judged on the mark of 100
wherein 70% of weight age is given to the KPA. And rest 30% is distributed equally
amongst the various parameters. (this percentage may vary year wise).

5.6.4 JOB ANALYSIS-

NTPC has the provision for the job rotation policy also. Every 10% of the employee are
rotated in various areas of a department to avoid the monotony of the work. This also
works as the one of the most important factor for the retention of the employee in the
company.

All the employees are encouraged to come up with the creative and the innovative ideas.

The overall-working environment of the NTPC is employee friendly which works as the
driver to the motivation of the employees.

5.6.5 REWARDS, INCENTIVES & BENEFITS-

Incentives scheme It is group performance based (no individual incentives) which

illustrates that the company encourages effective and efficient teamwork.

Retention strategies they include giving Mediclaim to all employees, various monetary
incentives and a favorable work environment.

5.6.6 PERFORMANCE MANAGEMENT SYSTEM (PMS)-

PMS started in 2004 for the alignment of companys and employees goals. Prior to the
implementation of this system, in 2002 each and every employee was sensitized about
this system. It is a 3-stage process-

Target study

Mid term appraisal

Final review

A target is set in the beginning of the project or the year and after that in the middle of it
the project is reviewed for the appraisal and being checked whether if there is any flaw or
lagging in the project so that it can be upgraded accordingly. And then finally the final

37

review is done. The shorter the span of the project the higher the frequency of the review

being done.

Open system - Individual evaluation (marks out of 100 given to each employee) is done
at the end of the year.

5.6.7 EMPLOYEE RELATIONS-

Demonstrating its high concern for people, NTPC has developed strong employee
welfare, health & well-being and social security systems leading to high level of
commitment.

The attrition rate in this company is less than 1%.

NTPC offers best quality-of-life through beautiful townships with all amenities such as
educational, medical and recreational opportunities for employees and their family
members. The motivation to perform and excel is further enhanced through a
comprehensive NTPC Rewards and Recognition system.

Employee satisfaction survey- done by Shriram centre every 2-3 years along with edarpan online survey.

TOTAL QUALITY MANAGEMENT (TQM)-

All the total quality management tools are used In NTPC except six sigma.

"Professional Circles" have been formed department-wise where Executives of the

department meet every fortnight to share their knowledge and experiences and discuss
topical issues.

In order to tap the latent talent among non-executives and make use of their potential for
creativity and innovation, Quality Circles have been set up in various units/offices in
NTPC.

Besides a management journal called "Horizon" is published quarterly to enable

employees to share their ideas and experiences across the organization.

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CHAPTER 6
ANALYSIS AND CONCLUSION

The Model employed by Nestle is one of High Performance, High involvement and high
commitment due to reasons illustrated in chapter 4.

Nestle is unique in the sense that it has been able to successfully inculcate its business
objective as well as its core values, consistently in its employees day-to-day activities
starting from recruitment till continuous performance appraisals. Like, open and flexible
culture is ensured by way of providing training programs to employees at all the levels.
This kind of culture is also supported by decentralized structure of Nestle. Transparent
performance appraisal systems and the freedom given to them to question their seniors
benefits not only the employees but even the organization as a whole. Nestles emphasis
on individual achievement is evident from the kind of pay structure HR has designed for
its employees.

Nestl, over its long historical development from a small village operation to the worlds
leading food Company, has demonstrated an enviable capability to adjust to an ever
changing

external environment, without losing its fundamental beliefs and core values, so
important for long-term success. Over the years to come, this capability of using HR as a
strategic partner in implementation of companys activities will continue to be challenged
even more as Nestl is growing in size and complexity up to a dimension which demands
a continuous evolution of its organization and of the way in which it is run. Its motivation
based on willingness to learn and to question what it is doing and why it is doing it,
combined with its long standing respect for Nestl values, will assure its success.

39

The Model employed by NTPC is one of High involvement and high commitment due to
reasons illustrated in chapter 5.

NTPCs HR vision of enabling employees to become a family of committed world-class

professionals is depicted by the companys People First approach. Unique features
illustrated by its Human Resource Department like the 10% Job Rotation Policy, giving
same benefits to all employees, TQM practices of Quality and Professional Circles and
development of superior Townships provide a healthy work environment for the
employees. Such strategic HRM activities at SHRM ensure high productivity as well as
low attrition rates at NTPC.

The above SHRM practices help both companies to harmonize it's HR policies with the
business strategy leading to Competitive Advantage, Distinctive Capabilities and
Strategic Fit .As a result enabling them to become India's one of the biggest organizations
in their own fields and to grow further.

40

ANNEXURE
Below is the Questionnaire given to five employees of Nestle India working at the
Branch Office located in Connaught Place, New Delhi. It has been organized chapter
wise to facilitate easy reading.

What are the achievements of Nestle?

What are the various Corporate Social Responsibility initiatives being carried out by
Nestle?

What is the hierarchy at Nestle? Kindly illustrate it with an organizational chart.

What structure does your organization have?

What degree of formalization exists in the organization?

What kind of training programmes are conducted for the employees and what are the role
requirements for the employees?

Is there centralization in the organization?

Is the span of control narrow or broad?

Is there flexibility in the organization?

What is the degree to which Nestle creates clear objectives and performance
expectations?

What is the degree to which units within the organization are encouraged to operate in a
coordinated method?

What is the degree to which managers provide clear communication, assistance, and
support to their subordinates?

What is the degree to which employees identify themselves with the organization as a
whole rather than their particular workgroup or field of professional expertise?

41

What is the degree to which employees are encouraged to air conflicts and criticisms
openly?

What is the degree to which communication patterns are restricted to the formal
hierarchy of authority?

How many rules and regulations and how much direct supervision is used to oversee
and control employee behavior?

What is the degree to which reward allocations are based on employee performance.
What is the mechanism of Performance Appraisal?

What is the degree to which employees are encouraged to be aggressive,Innovative

and risk seeking?

What is the degree of responsibility, freedom, and independence that employees

have?

How does Nestle reward achievement and good work?

What are the initiatives carried out by Nestle to facilitate interaction and cohesiveness
within its employees?

What are the factors that can cause change?

What are the possible consequences of various changes for the organization?

How does Nestle deal with change given that it produces 10000 products which are
marketed in 130 countries?

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