Human Resource Practices
in India
Pramila Rao, Ph.D.
Learning Exercises for Module
• This learning module is divided into three 50minute classes and includes the following
exercises (bulleted):
• 1. Background information and federal Laws:
o A presentation from students (slide 9).
o Quiz on Class I content.
• 2. Culture and HR practices:
o Socrates Seminar (slide 22).
• 3. Indian HR practices
o Quiz on Classes II and III content.
o Article discussion (slide 32).
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Module Outline
Class 1:
• Welcome to India.
• Quick facts.
• History and societal background.
• Business facts.
• Best Indian companies to work for (2007).
• Federal laws.
Class 2:
• National cultural profile (GLOBE study).
Class 3:
• HR practices:
Staffing.
> Training.
> Performance appraisals.
> Compensation and benefits.
>
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Class 1
Background and Federal Laws
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Welcome to India
Namaste (pressing of the palms
together) is the traditional greeting
of Indians.
• The Indian flag:
o Colors have symbolic
representation.
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India Quick Facts
• Population: 1.1 billion.
• Political structure: Democratic republic.
• Government: President, prime minister and two Houses
of Parliament.
• The ruling party: Congress.
• Twenty-eight states and seven union territories.
• Seventeen distinct languages: Hindi and English are the
official languages.
• Religion: Hinduism (83%), Muslim (11%), Christian
(2%), Sikh (1.9%), Other (1.8).
• Literacy rate: 65%.
• Indian currency: Rupee ($1= 40 rupees).
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History and Societal Background
• British colony for 100 years.
• Great national leader: Mahatma Gandhi.
> Ghandi introduced the concept of non-violence protest.
• The Indian social system is dominated by a caste
system.
 Four specific castes; Brahmins, Khastriyas,
Vaishyas, Shudras.
 Created distinct labor categories.
 Associated status differences.
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Business Facts
• Today, India is the fourth largest economy in the world.
• Until 1991, there was an import substitution policy that
favored domestic industries.
• After 1991, there was active foreign investment with a
very strong trade liberalization policy.
> Foreign direct investment in India increased dramatically
($15.8 million in 1997 compared with 0.3 million in 1991).
• In 2000, the Y2K computer crisis required worldwide
computer remediation provided by software engineers.
• Indian software engineers were found to be very
dedicated and hard-working (Friedman, T. 2005; “The
World is Flat”).
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Mercer’s 2006 Best Companies to Work For in
India
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•
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•
•
•
•
•
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Infosys Technologies Limited (IT industry).
MindTree Consulting (IT industry).
Satyam Computer Services Limited (IT industry).
Dr. Reddy’s Laboratories Limited (pharmaceutical
company).
Sapient Corporation (business and technology
consulting).
Agilent Technologies (IT industry).
Johnson & Johnson (consumer health care company).
Covansys India (IT industry).
HCL Comnet (IT industry).
HSBC; Hongkong and Banking Corporation (banking
services).
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Class Presentation Exercise
• Divide students into groups based on class size.
• The instructor will assign each group one of the best
companies identified in the previous slide.
• As a homework assignment, each group will research
two best HR practices from their assigned company
using the Internet, academic or practitioner journals.
• Each group will have 8-10 minutes during the next class
session to present their best HR practices.
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Federal Employment Laws
• HR began to play a significant role with the early
enactment of these employment-related laws:
•
The Workers’ Compensation Act of 1923 ensured that
employers compensate employees for work-related
injuries.
•
The Trade Union Act of 1926 gave formal recognition to
trade unions.
•
The Industrial Disputes Act of 1947 led to the increased
role of industrial relations (employees were distinguished
by the work they did such as permanent, temporary,
trainee etc.).
•
The Factories Act of 1948 regulated the work environment
in factories to ensure the safety of employees.
•
The Employees Provident Funds and Miscellaneous
Provisions Act of1952 required employers to provide
contributions for retirement.
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Federal Employment Laws
• The Minimum Wage Act of 1948 established
minimum wages that vary from state to state.
• The Payment of Bonus Act 1965 provides for a
minimum bonus of 8.33 percent of salary, even if the
organization is not making any profit.
• The Persons with Disabilities Act (PWD) of 1995
was landmark legislation for disabled people in
India.
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Indian HR Associations
•
In the 1940s and early 1950s, two professional HR
associations were established to acknowledge the
importance of HR:
• Indian Institute of Personnel Management (IIPM).
• National Institute of Labor Management (NILM).
•
In1980, the two associations merged to form the National
Institute of Personnel Management (NIPM).
•
NIPM is the only group engaged in the advancement of
HR, industrial relations and labor welfare.
•
NIPM has a working relationship with HR groups in the
United States, Australia and the United Kingdom.
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Affirmative Action
• Affirmative Action:
• Based on the caste system.
• Federal jobs and admissions to colleges are strongly
influenced by quotas for caste reservations.
• State governments can set aside 50 percent of jobs
based on different castes. To get increased support
from the public, some states have 75 percent of job
reserved.
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Quiz 1
Please take the quiz on Class 1 of this module.
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Class 2
Indian Culture and HR Practices
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Cultural Profile (GLOBE Study)
• Power distance:
o India: 5.47 (rank 16).
o Morocco : 5.80 (highest score).
• Institutional collectivism:
o India : 4.38 (rank 25).
o Sweden: 5.22 (highest score).
• In-group collectivism:
o India: 5.92 (rank 4).
o Philippines: 6.36 (highest score).
• Uncertainty avoidance:
o India: 4.15 (rank 29).
o Switzerland: 5.37 (highest score) .
Source: Chhokar, J., Brodbeck, F., & House, R (Eds) .(2007). Culture and leadership
across the world. The GLOBE book of in-depth studies of 25 societies. Lawrence
Erlbaum Associates. Mahwah, New Jersey.
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Definition of Cultural Dimensions (GLOBE Study)
• Power distance: The degree to which organizations and
societies accept power.
• Institutional collectivism: The degree to which
organizational and institutional practices encourage
collective action.
• In-group collectivism: The degree to which individuals in
societies reflect collectivist behavior.
• Uncertainty avoidance: The degree to which
organizations and societies avoid uncertainty by relying
on practices and procedures.
• Performance orientation: The degree to which upper
management in organizations and leaders in societies
reward group members for performance excellence.
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Cultural Profile (GLOBE Study)
• Performance orientation:
o India: 4.25 (rank 9).
o Switzerland : 4.94 (highest score).
• Assertiveness:
o India: 3.73 (rank 53).
o Albania : 5.80 (highest score).
• Future orientation:
o India : 4.19 (rank 15).
o Singapore: 5.07 (highest score).
• Gender egalitarianism:
o India: 2.90 (rank 55).
o Hungary: 4.08 (highest score).
• Humane orientation:
o India: 4.57 (Rank 9).
o Zambia: 5.23 (highest score).
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Definition of Cultural Dimensions (GLOBE Study)
• Assertiveness: The degree to which individuals in
organizations or societies are assertive in social
relationships.
• Future orientation: The degree to which individuals in
organizations or societies plan for the future.
• Gender egalitarianism: The degree to which
organizations or society promote gender equality.
• Humane orientation: The degree to which individuals in
organizations or societies reward individuals for positive
behavior.
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National Culture and HR Practices
• Scholars have found a strong connection between
cultural dimensions and HR practices.
• High power-distance cultures create:
 Hierarchical organizational structures.
 Loyal and committed subordinate workers.
 Autocratic relationships between managers and
subordinates.
• What kind of HR practices would low power-distance
cultures adopt?
• What staffing practices would high power-distance
cultures encourage?
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National Culture and HR Practices
• High institutional-collectivism cultures prefer:
 Group harmony and cooperation.
 Conformity to societal norms valued.
• High in-group collectivism cultures feel:
 A very close bond with their organization family, friends
and relatives.
• What kind of HR practices would low institutional
collectivism cultures adopt?
• What staffing practices would high in-group collectivism
cultures encourage?
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National Culture and HR Practices
• High uncertainty-avoidance cultures create:
o Formalized procedures to minimize unpredictability.
o Clearly defined roles for employees.
o Focus on security and trust.
• What kind of HR practices would low uncertaintyavoidance cultures create?
• What staffing practices would high uncertaintyavoidance cultures encourage?
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Socrates Seminar: Learning Exercise
• Ask students to read : Javidan, M., & House, R. (2001).
Cultural acumen for the global manager. Lessons from
Project Globe. Organizational Dynamics, 29 (4), 289305.
• Conduct a Socrates Seminar where students ask “why,”
“what for” and “so what” questions for the cultural
dimensions listed below as well as the dimensions
discussed in the previous slides.
•
•
•
•
•
Performance orientation.
Assertiveness.
Future orientation.
Gender egalitarianism.
Humane orientation.
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Class 3
Indian HR Practices
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Staffing Practices
• Resumes seek strong educational background.
• Employee referrals (predominantly used for middle and
senior management).
• Succession planning (predominantly used for middle
and senior management).
• Elaborate employment tests related to the job,
especially at entry level.
• E-recruitment: Naukri.com was the first e-portal
established in 1998 (naukri means job in Hindi ).
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Staffing Practices
• Newspaper advertisements are used to brand the
company to potential applicants.
• Newspaper advertisements will specify age and gender
requirements.
• Personal questions will be asked in interviews/resumes
about:







Age
Marital status
Family plans (women planning to start a family)
Family background
Caste background
Photos to be included
Verification of educational certificates
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Training Practices
• Training (future orientation):
• Education is extremely valued, and training is an
extension of it.
• Entry point training programs (3 to12 months of
orientation).
• Ongoing training programs.
• Development programs (promotions involve
training).
• In-house training centers are a common feature in
Indian organizations.
• Deductive learning style in training: Known as “topdown approach” where learning principles start with
general concepts and move toward specific
application.
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Performance Appraisal
• Cultural dimensions of collectivism and power distance
make objective appraisals a challenge.
 Supervisors and subordinates develop close relationships.
 Organizational loyalty is as important as work
performance.
 Employee promotions are frequently based on seniority.
• Annual performance appraisals.
• Supervisors provide performance ratings that are
frequently inflated due to personal relationships.
• Employment at will does not exist in India. Employment
termination carries a social stigma.
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Compensation and Benefits
• In addition to a base salary, compensation includes:
>
>
>
>
>
House rent allowance (HRA*).
Medical allowance.
Dearness allowance (DA*).
Leave travel allowance (LTA*).
Commuter allowance.
>
* These allowances are frequently referred by their acronyms
• Several categories of leave (vacation) exist:
> Sick leave: 7 days (medical certificate required).
> Casual leave: 7 days (for personal and family
emergencies, requires prior permission of boss).
Employees can take maximum 2 days at a time
> Annual leave: 3 weeks (after one year of employment).
> Federal holidays: About 20 days.
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Compensation and Benefits
• Retirement age:
•
>
55-60 years (private sector);.
>
60 years (public sector).
Retirement Benefits: Employees receive two lump-sum
payments when they retire:
> Provident Fund (similar to 401(k))
• Typical contributions: 10-12 percent of base salary
(employer and employee).
• Payable on retirement, voluntary separation, death.
> Gratuity
• Only employer contributes (15 days salary per year of
service).
• Tax-exempt for employees.
• Payable on retirement, voluntary separation, death.
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Compensation and Benefits
• Organizations are seen as an extension of the family.
 Provide both short-term and long-term personal loans.
 Personal loans for housing, car, home maintenance and
family emergencies.
 Loan amounts vary by position and level in organization.
 All employees after their probation (confirmation) period
are eligible.
• Many medium and large organizations have cafeterias
with subsidized lunch facilities.
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Compensation and Benefits
• Executives receive special benefits to reflect status
such as:
•
•
•
•
Club memberships.
Overseas training.
Company housing.
Company cars.
• Provided with drivers.
• International cars.
• Operational and maintenance costs.
• Phone bill reimbursements.
• Organizations provide business and cell phones.
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Quiz 2
• There will be a quiz based on slides 13-33.
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Article Discussion
• Grossman, R. (2006). HR's Rising Star in India. HR
Magazine. 46-52.
• Identify and discuss three major HR challenges in India.
• If you were hired as the HR director for a multinational
corporation in India, how would you overcome these HR
challenges?
• Which two HR strategies of PPMS do you think are
effective?
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References
• Budhwar, P., Luthar, H., Bhatnagar, J. (2006). The
dynamics of HRM systems in Indian BPO firms. Journal
of Labor Research, 27(3), 339-360.
• Babu, V. (2006). Infosys: Incredible Infy; What's the
secret sauce that makes Infosys the best company to
work for, year after year? Business Today, pp 88.
• Budhwar, P., & Khatri, N. (2001). A comparative study
of HR practices in Britain and India. International
Journal of Human Resource Management, 12(5), 800826.
• Challapalli, S. (2005). Those grand jobs. The Hindu,
Business line. Retrieved from
http://www.thehindubusinessline.com/catalyst/2005/03/3
1/stories/2005033100070100.htm
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References
• Chhokar, J., Brodbeck, F., & House, R. (Eds). (2007).
Culture and leadership across the world. The GLOBE
book of in-depth studies of 25 societies. Lawrence
Erlbaum Associates. Mahwah, New Jersey.
• Deshpande, S. (1992). Compensation Legislation in
India. What US investors need to know. Compensation
& Benefits Review, 24(5), 57-60.
• Grossman, R. (2006). HR's Rising Star in India. HR
Magazine, 46-52.
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References
• World Flag. http://www.worldflags101.com/i/indiaflag.aspx.
• http://www.disabilityindia.org/pwdacts.cfm.
• Klie, S. (2006). HR around the world. Canadian HR
Reporter, 7-8.
• Merchant, K. (2006). Companies in India offer a taste of
the sweet life. Financial Times (Asia edition), 23-24.
• Ratnam, V., & Chandra, V, (1996). Sources of diversity
and the challenge before human resource management
in India. International Journal of Manpower, 17, (4/5),
76-96.
• Tyler, K. (2006). Infosys Technologies Ltd. HR
Magazine, 56–60.
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References
• Saini, D., & Budhwar, P. (2004). HRM in India. In
Managing Human Resources in Asia-Pacific. Routledge.
London and New York.
• Srinivasan, N. (2002). Flawed Law. India Together.
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Human Resource Management Practices India