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Human Resource Practices in India

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1Human Resource Practices in India. 21Scholars have found a strong connection
Pramila Rao, Ph.D. between cultural dimensions and HR
2Learning Exercises for Module. This practices. High power-distance cultures
learning module is divided into three create: Hierarchical organizational
50-minute classes and includes the structures. Loyal and committed
following exercises (bulleted): 1. subordinate workers. Autocratic
Background information and federal Laws: A relationships between managers and
presentation from students (slide 9). Quiz subordinates. What kind of HR practices
on Class I content. 2. Culture and HR would low power-distance cultures adopt?
practices: Socrates Seminar (slide 22). 3. What staffing practices would high
Indian HR practices Quiz on Classes II and power-distance cultures encourage? 21.
III content. Article discussion (slide ©SHRM 2008.
32). 2. ©SHRM 2008. 22National Culture and HR Practices.
3Module Outline. Class 1: Welcome to High institutional-collectivism cultures
India. Quick facts. History and societal prefer: Group harmony and cooperation.
background. Business facts. Best Indian Conformity to societal norms valued. High
companies to work for (2007). Federal in-group collectivism cultures feel: A
laws. Class 2: National cultural profile very close bond with their organization
(GLOBE study). Class 3: HR practices: family, friends and relatives. What kind
Staffing. Training. Performance of HR practices would low institutional
appraisals. Compensation and benefits. 3. collectivism cultures adopt? What staffing
©SHRM 2008. practices would high in-group collectivism
4Class 1. Background and Federal Laws. cultures encourage? 22. ©SHRM 2008.
4. ©SHRM 2008. 23National Culture and HR Practices.
5Welcome to India. Namaste (pressing of High uncertainty-avoidance cultures
the palms together) is the traditional create: Formalized procedures to minimize
greeting of Indians. The Indian flag: unpredictability. Clearly defined roles
Colors have symbolic representation. 5. for employees. Focus on security and
©SHRM 2008. trust. What kind of HR practices would low
6India Quick Facts. Population: 1.1 uncertainty-avoidance cultures create?
billion. Political structure: Democratic What staffing practices would high
republic. Government: President, prime uncertainty-avoidance cultures encourage?
minister and two Houses of Parliament. The 23. ©SHRM 2008.
ruling party: Congress. Twenty-eight 24Socrates Seminar: Learning Exercise.
states and seven union territories. Ask students to read : Javidan, M., &
Seventeen distinct languages: Hindi and House, R. (2001). Cultural acumen for the
English are the official languages. global manager. Lessons from Project
Religion: Hinduism (83%), Muslim (11%), Globe. Organizational Dynamics, 29 (4),
Christian (2%), Sikh (1.9%), Other (1.8). 289-305. Conduct a Socrates Seminar where
Literacy rate: 65%. Indian currency: Rupee students ask “why,” “what for” and “so
($1= 40 rupees). 6. ©SHRM 2008. what” questions for the cultural
7History and Societal Background. dimensions listed below as well as the
British colony for 100 years. Great dimensions discussed in the previous
national leader: Mahatma Gandhi. Ghandi slides. Performance orientation.
introduced the concept of non-violence Assertiveness. Future orientation. Gender
protest. The Indian social system is egalitarianism. Humane orientation. 24.
dominated by a caste system. Four specific 25Class 3. Indian HR Practices. 25.
castes; Brahmins, Khastriyas, Vaishyas, ©SHRM 2008.
Shudras. Created distinct labor 26Staffing Practices. Resumes seek
categories. Associated status differences. strong educational background. Employee
7. ©SHRM 2008. referrals (predominantly used for middle
8Business Facts. Today, India is the and senior management). Succession
fourth largest economy in the world. Until planning (predominantly used for middle
1991, there was an import substitution and senior management). Elaborate
policy that favored domestic industries. employment tests related to the job,
After 1991, there was active foreign especially at entry level. E-recruitment:
investment with a very strong trade Naukri.com was the first e-portal
liberalization policy. Foreign direct established in 1998 (naukri means job in
investment in India increased dramatically Hindi ). 26. ©SHRM 2008.
($15.8 million in 1997 compared with 0.3 27Staffing Practices. Newspaper
million in 1991). In 2000, the Y2K advertisements are used to brand the
computer crisis required worldwide company to potential applicants. Newspaper
computer remediation provided by software advertisements will specify age and gender
engineers. Indian software engineers were requirements. Personal questions will be
found to be very dedicated and asked in interviews/resumes about: Age
hard-working (Friedman, T. 2005; “The Marital status Family plans (women
World is Flat”). 8. ©SHRM 2008. planning to start a family) Family
9Mercer’s 2006 Best Companies to Work background Caste background Photos to be
For in India. Infosys Technologies Limited included Verification of educational
(IT industry). MindTree Consulting (IT certificates. 27. ©SHRM 2008.
industry). Satyam Computer Services 28Training Practices. Training (future
Limited (IT industry). Dr. Reddy’s orientation): Education is extremely
Laboratories Limited (pharmaceutical valued, and training is an extension of
company). Sapient Corporation (business it. Entry point training programs (3 to12
and technology consulting). Agilent months of orientation). Ongoing training
Technologies (IT industry). Johnson & programs. Development programs (promotions
Johnson (consumer health care company). involve training). In-house training
Covansys India (IT industry). HCL Comnet centers are a common feature in Indian
(IT industry). HSBC; Hongkong and Banking organizations. Deductive learning style in
Corporation (banking services). 9. ©SHRM training: Known as “top-down approach”
2008. where learning principles start with
10Class Presentation Exercise. Divide general concepts and move toward specific
students into groups based on class size. application. 28. ©SHRM 2008.
The instructor will assign each group one 29Performance Appraisal. Cultural
of the best companies identified in the dimensions of collectivism and power
previous slide. As a homework assignment, distance make objective appraisals a
each group will research two best HR challenge. Supervisors and subordinates
practices from their assigned company develop close relationships.
using the Internet, academic or Organizational loyalty is as important as
practitioner journals. Each group will work performance. Employee promotions are
have 8-10 minutes during the next class frequently based on seniority. Annual
session to present their best HR performance appraisals. Supervisors
practices. 10. ©SHRM 2008. provide performance ratings that are
11Federal Employment Laws. HR began to frequently inflated due to personal
play a significant role with the early relationships. Employment at will does not
enactment of these employment-related exist in India. Employment termination
laws: The Workers’ Compensation Act of carries a social stigma. 29. ©SHRM 2008.
1923 ensured that employers compensate 30Compensation and Benefits. In addition
employees for work-related injuries. The to a base salary, compensation includes:
Trade Union Act of 1926 gave formal House rent allowance (HRA*). Medical
recognition to trade unions. The allowance. Dearness allowance (DA*). Leave
Industrial Disputes Act of 1947 led to the travel allowance (LTA*). Commuter
increased role of industrial relations allowance. * These allowances are
(employees were distinguished by the work frequently referred by their acronyms
they did such as permanent, temporary, Several categories of leave (vacation)
trainee etc.). The Factories Act of 1948 exist: Sick leave: 7 days (medical
regulated the work environment in certificate required). Casual leave: 7
factories to ensure the safety of days (for personal and family emergencies,
employees. The Employees Provident Funds requires prior permission of boss).
and Miscellaneous Provisions Act of1952 Employees can take maximum 2 days at a
required employers to provide time Annual leave: 3 weeks (after one year
contributions for retirement. 11. ©SHRM of employment). Federal holidays: About 20
2008. days. 30. ©SHRM 2008.
12Federal Employment Laws. The Minimum 31Compensation and Benefits. Retirement
Wage Act of 1948 established minimum wages age: 55-60 years (private sector);. 60
that vary from state to state. The Payment years (public sector). Retirement
of Bonus Act 1965 provides for a minimum Benefits: Employees receive two lump-sum
bonus of 8.33 percent of salary, even if payments when they retire: Provident Fund
the organization is not making any profit. (similar to 401(k)) Typical contributions:
The Persons with Disabilities Act (PWD) of 10-12 percent of base salary (employer and
1995 was landmark legislation for disabled employee). Payable on retirement,
people in India. 12. ©SHRM 2008. voluntary separation, death. Gratuity Only
13Indian HR Associations. In the 1940s employer contributes (15 days salary per
and early 1950s, two professional HR year of service). Tax-exempt for
associations were established to employees. Payable on retirement,
acknowledge the importance of HR: Indian voluntary separation, death. 31. ©SHRM
Institute of Personnel Management (IIPM). 2008.
National Institute of Labor Management 32Compensation and Benefits.
(NILM). In1980, the two associations Organizations are seen as an extension of
merged to form the National Institute of the family. Provide both short-term and
Personnel Management (NIPM). NIPM is the long-term personal loans. Personal loans
only group engaged in the advancement of for housing, car, home maintenance and
HR, industrial relations and labor family emergencies. Loan amounts vary by
welfare. NIPM has a working relationship position and level in organization. All
with HR groups in the United States, employees after their probation
Australia and the United Kingdom. 13. (confirmation) period are eligible. Many
©SHRM 2008. medium and large organizations have
14Affirmative Action. Affirmative cafeterias with subsidized lunch
Action: Based on the caste system. Federal facilities. 32. ©SHRM 2008.
jobs and admissions to colleges are 33Compensation and Benefits. Executives
strongly influenced by quotas for caste receive special benefits to reflect status
reservations. State governments can set such as: Club memberships. Overseas
aside 50 percent of jobs based on training. Company housing. Company cars.
different castes. To get increased support Provided with drivers. International cars.
from the public, some states have 75 Operational and maintenance costs. Phone
percent of job reserved. 14. ©SHRM 2008. bill reimbursements. Organizations provide
15Quiz 1. Please take the quiz on Class business and cell phones. 33. ©SHRM 2008.
1 of this module. 15. ©SHRM 2008. 34Quiz 2. There will be a quiz based on
16Class 2. Indian Culture and HR slides 13-33. 34. ©SHRM 2008.
Practices. 16. ©SHRM 2008. 35Article Discussion. Grossman, R.
17Cultural Profile (GLOBE Study). Power (2006). HR's Rising Star in India. HR
distance: India: 5.47 (rank 16). Morocco : Magazine. 46-52. Identify and discuss
5.80 (highest score). Institutional three major HR challenges in India. If you
collectivism: India : 4.38 (rank 25). were hired as the HR director for a
Sweden: 5.22 (highest score). In-group multinational corporation in India, how
collectivism: India: 5.92 (rank 4). would you overcome these HR challenges?
Philippines: 6.36 (highest score). Which two HR strategies of PPMS do you
Uncertainty avoidance: India: 4.15 (rank think are effective? 35. ©SHRM 2008.
29). Switzerland: 5.37 (highest score) . 36References. Budhwar, P., Luthar, H.,
Source: Chhokar, J., Brodbeck, F., & Bhatnagar, J. (2006). The dynamics of HRM
House, R (Eds) .(2007). Culture and systems in Indian BPO firms. Journal of
leadership across the world. The GLOBE Labor Research, 27(3), 339-360. Babu, V.
book of in-depth studies of 25 societies. (2006). Infosys: Incredible Infy; What's
Lawrence Erlbaum Associates. Mahwah, New the secret sauce that makes Infosys the
Jersey. 17. ©SHRM 2008. best company to work for, year after year?
18Definition of Cultural Dimensions Business Today, pp 88. Budhwar, P., &
(GLOBE Study). Power distance: The degree Khatri, N. (2001). A comparative study of
to which organizations and societies HR practices in Britain and India.
accept power. Institutional collectivism: International Journal of Human Resource
The degree to which organizational and Management, 12(5), 800-826. Challapalli,
institutional practices encourage S. (2005). Those grand jobs. The Hindu,
collective action. In-group collectivism: Business line. Retrieved from
The degree to which individuals in http://www.thehindubusinessline.com/cataly
societies reflect collectivist behavior. t/2005/03/31/stories/2005033100070100.htm.
Uncertainty avoidance: The degree to which 36. ©SHRM 2008.
organizations and societies avoid 37References. Chhokar, J., Brodbeck, F.,
uncertainty by relying on practices and & House, R. (Eds). (2007). Culture and
procedures. Performance orientation: The leadership across the world. The GLOBE
degree to which upper management in book of in-depth studies of 25 societies.
organizations and leaders in societies Lawrence Erlbaum Associates. Mahwah, New
reward group members for performance Jersey. Deshpande, S. (1992). Compensation
excellence. 18. ©SHRM 2008. Legislation in India. What US investors
19Cultural Profile (GLOBE Study). need to know. Compensation & Benefits
Performance orientation: India: 4.25 (rank Review, 24(5), 57-60. Grossman, R. (2006).
9). Switzerland : 4.94 (highest score). HR's Rising Star in India. HR Magazine,
Assertiveness: India: 3.73 (rank 53). 46-52. 37. ©SHRM 2008.
Albania : 5.80 (highest score). Future 38References. World Flag.
orientation: India : 4.19 (rank 15). http://www.worldflags101.com/i/india-flag.
Singapore: 5.07 (highest score). Gender spx.
egalitarianism: India: 2.90 (rank 55). http://www.disabilityindia.org/pwdacts.cfm
Hungary: 4.08 (highest score). Humane Klie, S. (2006). HR around the world.
orientation: India: 4.57 (Rank 9). Zambia: Canadian HR Reporter, 7-8. Merchant, K.
5.23 (highest score). 19. ©SHRM 2008. (2006). Companies in India offer a taste
20Definition of Cultural Dimensions of the sweet life. Financial Times (Asia
(GLOBE Study). Assertiveness: The degree edition), 23-24. Ratnam, V., &
to which individuals in organizations or Chandra, V, (1996). Sources of diversity
societies are assertive in social and the challenge before human resource
relationships. Future orientation: The management in India. International Journal
degree to which individuals in of Manpower, 17, (4/5), 76-96. Tyler, K.
organizations or societies plan for the (2006). Infosys Technologies Ltd. HR
future. Gender egalitarianism: The degree Magazine, 56–60. 38. ©SHRM 2008.
to which organizations or society promote 39References. Saini, D., & Budhwar,
gender equality. Humane orientation: The P. (2004). HRM in India. In Managing Human
degree to which individuals in Resources in Asia-Pacific. Routledge.
organizations or societies reward London and New York. Srinivasan, N.
individuals for positive behavior. 20. (2002). Flawed Law. India Together. 39.
©SHRM 2008. ©SHRM 2008.
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