Investment and collaboration: the Indian model for “best” HRM practices
| Pages | 125-147 |
| Date | 03 May 2016 |
| Published date | 03 May 2016 |
| DOI | https://doi.org/10.1108/JABS-03-2015-0033 |
| Author | Pramila Rao |
| Subject Matter | Strategy,International business |
Investment and collaboration: the Indian
model for “best” HRM practices
Pramila Rao
Pramila Rao is Associate
Professor at the School of
Business, Marymount
University, Arlington,
Virginia, USA.
Abstract
Purpose –The purpose of this paper is to examine human resource management (HRM) practices of
the top 25 companies identified as “best” in India in 2011. This paper provides insights into HRM
practices of a leading country in Asia that is playing a very important role in the global economy.
Design/methodology/approach –This conceptual paper will use for its research analysis the
business reports of the Outlook Business Magazine and AON Hewitt. AON Hewitt is a global human
resource consulting company and is an established authority in identifying “best” companies in India
since 2004. A qualitative content analysis was done of the business report to identify predominant
themes.
Findings –The analysis identified how the “best” 25 Indian companies offer progressive HRM
practices that required careful investment and collaboration. This research showcases seven specific
HRM themes that include elaborate staffing, investment in learning, work–life balance, egalitarian
practices, developmental performance culture, generous benefits and engagement initiatives.
Practical implications –This paper provides preliminary guidelines for global practitioners who may
be interested in doing business in India. It also provides a model of “best” HRM practices adopted by
25 companies that could help other organizations identify successful HRM practices in India. Among
the 25 companies, 16 are Indian companies and 9 are subsidiaries of multinationals.
Originality/value –This paper outlines HRM “best” practices of organizations in an emerging Asian
economy that has not been addressed before. This paper hopes to bridge this paucity in the extant
literature by showcasing the “best” HRM practices from 25 “best” companies in India. It also provides
an Indian model of “best” HRM practices that can be tested by other scholars for future studies.
Keywords Emerging markets, Human resource management
Paper type Conceptual paper
1. Introduction
The BRIC (Brazil, Russia, India and China) economies have become key participants in the
global economy showcasing excellent gross domestic product (GDP) rates. These nations
have specialized resources that attract varied foreign direct investments (FDIs) (Yang et al.,
2008). India is considered a strong player with several of its industries demonstrating
global acumen (Friedman, 2006;Gannon and Pillai, 2010;Meredith, 2008). The Indian
economy has been experiencing robust economic growth since the 1990s with an average
of 8-10 per cent annual increase in GDP, suggesting a strong business environment
(Cappelli et al., 2011).
From the early 1990s, the Indian government shifted from an insular trade policy to that of
a progressive one towards FDI and multinationals (Jain et al., 2012). For example, India
ranked fifth in the FDI Confidence Index for 2013 and second in 2012. This global index,
established in 1998, provides multinationals valuable insight of the market confidence
(political, economic and legal) of different countries as identified by prominent business
leaders. Leading multinationals have been establishing in India, demonstrating their
business confidence for the Indian market. In 2012, India received $25.5bn in FDI from
Received 25 April 2015
Revised 18 July 2015
7 September 2015
Accepted 9 September 2015
DOI 10.1108/JABS-03-2015-0033 VOL. 10 NO. 2 2016, pp. 125-147, © Emerald Group Publishing Limited, ISSN 1558-7894 JOURNAL OF ASIA BUSINESS STUDIES PAGE 125
multinationals in different countries such as Diageo (Britain), Starbucks (USA) and Ikea
(Sweden) (Laudicina et al., 2013).
Today, more than 100 of the Fortune 500 US companies have their research and
development (R&D) centers in India. For example, Dell has recruited almost 20,000
software engineers in India. Similarly, Pearson Educational Technologies, an educational
service leader, has moved its entire e-learning development to India because of the
sophistication of the local information technology (IT) industry (Frauenheim, 2006;Khozem,
2002;Zakaria, 2006). As these multinationals establish their Indian subsidiaries, they make
specific choices with regard to the kind of human resource management (HRM) practices
they should follow (Yang et al., 2008).
Traditionally, Indian organizations followed a paternalistic management style with a lot of
emphasis given to personal relationships among employees. The concepts of loyalty and
trustworthiness were important predictors for employees’ successes and professional
achievements. The increased presence of multinationals in India has prompted local
organizations to slowly change their conventional practices. The outlook of the Indian HRM
departments transformed placing an increased emphasis on organizational efficiency (Jain
et al., 2012). Today, several large and well-established Indian organizations offer
progressive HRM practices such as stock options, merit-based pay, flexible work
schedules and part-time jobs, which, until relatively recently, were not common in the
Indian corporate world (Ramamoorthy et al., 2005;Som, 2006). For example, Tata Iron and
Steel Company (TISCO), India’s oldest steel plant, replaced seniority-based promotions
with performance ethic programs (PEP) to create accountability among its employees.
Arvind Mills, a textile leader, introduced Selection Information System, a recruitment
practice that allowed HRM managers to offer different online recruiting options which were
not normally adopted (Som, 2006).
Cappelli et al. (2011) in their study of 98 Indian organizations suggest that the hallmark of
Indian business leaders is their attitudes towards their employees and customers. The
Indian business leaders indicated that investment in HRM practices and collaboration with
their stakeholders are their greatest strengths. Indian HRM leaders have prominent roles in
their organizations, with 87 per cent of them suggesting they work with the top management
teams in strategic operations. HRM leaders have realized that people management
practices are critical to create those lasting impressions with both customers and
employees.
The purpose of this research is to detail the HRM practices of 25 “best” companies in India,
as outlined by the Aon Hewitt research study. The results from this study were made
publicly available, making it easy for researcher to analyze relevant data. The format of the
paper is organized as follows:
the theoretical framework identifies Pfeffer’s classic “best” practice model. This section
integrates a literature review of conceptual studies from different global regions on
“best” practices;
the methodology details the research method of content analysis adopted;
the results describe the seven HRM themes from the “best” companies;
the discussion section integrates the literature and results to enhance the reader’s
understanding of this study; and
the conclusion provides the contributions and a conceptual model of “best” practices
in India.
The focus of this paper is to provide three clear objectives. First, it will showcase the HRM
practices of the 25 best companies in India as identified by an established study. These
companies include both Indian (16) and multinational subsidiaries (9) providing both emic
and etic perspectives. Second, this paper showcases a comprehensive conceptual model
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