HRD in Public Sector Undertakings

HRD in PSUs at Cross Roads
T. V. Rao
Chairman, TVRLS

HR Management in India PSUs had a great past and currently at cross roads in spite of some innovative practices a few of them are attempting. The way they are going about is not right. They have become increasingly consultant dependent and surrendered their own learning and leadership opportunity to external agencies and ignored their role in institutionalisation and effective implementation. They have become short term target driven than long term intellectual capital focused. Cost saving (rather pseudo cost saving) and vigilance concerns and risk aversion seem to characterise their work that performance focus and long term commitment. Consultants introduce and leave but the problem of HRD in PSUs had never been lack of ideas but that of serious and consistent implementation. The implementation suffered in the past due to frequent changes in top level leadership. Instead of figuring out and working on implementation issues most PSUs and their HR Managers are busy in shopping spree to introducing systems without understanding the implications and changing systems along with the consultants as their top management changes. I like to present my views in this article. I don’t refer to any single organization in this article but as trend and it is meant to set direction for the future by pointing out what in my view is not right. I am an admirer of PSUs and have worked with them in the last four decades and continue to work with them.
HR in PSUs in 70s and 80s
HRD in the Public sector undertakings had a glorious past. PSUs attracted highly competent people in the past. It used to be a prestigious thing for most engineering graduates from leading educational institutions to join corporations like NTPC, BHEL, BEL, HMT, HAL and the like in seventies and eighties. High achievers in Economics and other areas considered joining the Nationalised Banks and the RBI as a dream job. Thus the PSUs attracted talented engineers and other graduates. The quality of manpower was great. They also instituted good HRD systems which were path breaking. The following illustrate the same.
HMT was the first to start a dedicated Organization Development (OD) department in early seventies. The work of this department was well respected and quoted. Those associated with this OD department latter rose to be leading CEOs and consultants and contributed in many ways to development of other sectors. For example MSS Varadan in Bangalore who became an active process facilitator and worked with ISTD, NIPM, and HRD Network besides the institutions like the Indian Institute of Science and so on. BHEL was the first to initiate MECOMs (Manager Employee Communications) systems to facilitate employee development and create a healthy organizational culture. State Bank of India and its associates were the first to start the HRD function under the guidance of Dr Udai Pareek and appointed a Full pledged HR department to design and implement HRD systems to promote continuous development of employees. The author was associated with training the various HRD Managers of these banks to initiate various systems. The HRD Managers of the Associate Banks used to meet periodically to share their progress. OD work was undertaken systematically to survey the organizational climate in these banks. SBI itself appointed a highest level functionary (A Chief General Manager and subsequently elevated to Dy. Managing Director level) to look after HRD. In late seventies Bharat earth Movers (BEML) appointed the author as Advisor in General Manager’s capacity to design and develop HRD systems and also to train internal talent to manage HRD. It is largely based on these experiences of BEML we were able to complete the first book on HR (Pareek and Rao) and test out various ideas in a seminar organized at IIMA. Many of those who were associated with these seminars have later become champions of HRD and also CEOs. Indian Oil Corporation used to conduct regular surveys of HRD Climate in early eighties and was the first to bring out a Role Directory internally. P. K. Sarangi spearheaded the moment and M B Athreya facilitated the same. SAIL revamped its performance appraisal and various other systems with the help of IIMA. B L Maheshwari used to facilitate the Directors’ conferences of SAIL which used to have a rejuvenating and direction setting value. HPCL was the first to think of Communications as a strategy of HRD and examine all its policies form the angle of communications in mid-eighties. IIM team helped it do the same. The report of this team still seems valid though forgotten by HPCL itself due to continuous change in leadership. Bank of Baroda got its Branch level structured re-examined. The author along with now famous Management Guru Dr Govindarajan and Dr. N R Sheth were involved in the same. LIC changed its performance appraisal system to work planning and review system using the service of Dr Ishwar Dayal. NDDB introduced a HRD function and undertook various HRD and OD interventions. The films produced by SAIL for its internal use are still shown even today in leading management schools. People like Dr. V. Krishnamurthy used to be cited for their contributions to leadership along with Hindustan Lever. Both produced leaders and developed leadership.
Thus HRD in PSUs in seventies and eighties can be characterised as path breaking, with highly committed HRD facilitators who devoted their time and energies to design and lead HR. This era can be characterised as HR Leadership era in seventies and eighties.
Fall of HR- Nineties
With opening up of the economy in nineties the HRD’s role had to be redefined in PSUs. It succumbed to pressures and changing realities of the PSUs and the government. With liberalisation the bench marks started changing. The HR departments had to largely perform the painful role of downsizing and VRS schemes in many organizations. Organizations were under tremendous pressure to perform. This perhaps was the time when HR Managers could have come more alive and thought of innovative HR practices for developing current manpower, modernising their technical and other skills, conduct change management programs and develop new era of leadership. Unfortunately they were caught unaware. Combined with this was pressure on organizational performance, upgrading the quality of products, cost reduction exercises etc. The HR people largely concentrated on downsizing or right sizing the organizations. Unfortunately this also happened to be the time when many private sector and MNCs grabbed competent people from PSUs. Many PSUs like the SAIL, NTPC, IOC etc. Lost a lot of its talent to private sector and MNCs. The HRD managers of PSUs helplessly watched this talent migration. Their focus on performance management and OD interventions also dwindled. However in all fairness it must be said that a few of them struggled and did their best to keep their talent management practices intact. As the PSU chiefs were pre-occupied with debates on privatisation or disinvestment they remained the HR got pre-occupied with downsizing and right sizing and VRS. HRD suffered quite bit in this period and its credibility got into the bottom. A few innovations started in those years to promote change went un-noticed or talked about. For example SBI under the guidance of the then Banking Secretary Dr. Y. V. Reddy introduced Assessment Centre Approach in the top level promotions. In this approach the departmental Promotions at top level got replaced by a full day testing and interactions by a group on internal and external experts who sued multiple techniques of assessment. IOC started its Petroleum Management Institute. RBI itself has appointed a HRD Advisor to change its HRD systems.
Rise of HR in 2000+
The last ten years have seen again a good rise of the HRD function. With increased success of liberalisation the country realised that there is no alternative to talent management. Competencies are being recognised the PSUs have come to terms with the reality. They also face the stark reality that they have to be content with existing systems and staff. Given the difficulties in compensation changes there is a recognition that PSUs cannot come to compete with MNCs in their race for salaries. They however recognise that their CTC (employee Cost to Company) as they projected are under-estimates of what they really give to their employees. When their investments on infrastructure like residential facilities, hospitals, schools, town ships, other benefits in organizations like SAIL, BHEL, BEML, ITI, LIC, BEL, HAL, Nationalised Banks are taken into account the CTC may be considered as large though not comparable with the MNCs and private sector. This recognition coupled with the reforms in PSUs relentlessly though somewhat unsuccessfully being pursued by the Government has put pressure on the new HR Manager in the PSUs to perform. Today almost all PSUs have Director level positions for HR. They are expected to manage talent. Many of the PSUs have begun to meet this challenge in the last ten years by initiating appropriate interventions.
NTPC has profiled the competency requirements of its General managers and EDs in early part of this century and started the concept of assessment centres. They have been running the same for the last seven to eight years. ONGC has also started Assessment and development Centres for their Asset and basin managers and have trained a number of their Directors as assessors with h the help of the author. SAIL has revisited their performance appraisal system and has redesigned the new system incorporating 360 Degree Feedback and Assessment centres for appraising the potential of their managers. HAL has been running Leadership development programs with the help of IIMs and other consultants. BEL has been using 360 degree Feedback and Change Management interventions to train their Managers with the help of MDI, COD and TVRLS. LIC has started a one year Post graduate program to develop their internal Talent with the help of IIMA. BOB has identified a large number of their top level mangers aged above 50 years and have worked out Leadership development Interventions. BHEL has been attempting to identify competencies and revamp their performance management system. RBI itself has introduced 360 degree feedback and Assessment and development centres. Bharat petroleum has been conducting a number of change management initiatives by developing internal change agents and facilitators of change. HPCL is extensively using competency mapping and ADCs for talent recognition programs. BPCL has even facilitated a nationwide study of the competencies required for the New CEOs in private and public sectors. Thus a number of good practices are going on at present.
The recently released directive from the Department of Public Enterprises appealing to all PSUs to revamp their PMS and make it more robust and transparent especially in view of the introduction of the performance based incentive or pay system is laudable and may give rise to some innovations and more accountability.
HRD in PSUs at Cross roads Now: Problems and Issues
While many good things are going on like those mentioned above the author notices a great qualitative difference in the way HRD interventions are being made to day as compared to eighties- something missing, perhaps the spirit. Essentially because in many of the PSUs, HRD interventions seem to have become short term target- driven, consultant driven, Vigilance driven and Tender Driven. As a result they have taken away the spirit and pleasure of implementation from the HR Managers. The HR Managers themselves including their top needs to be blamed for this. It is time that the PSUs realise the traps they have walked themselves into.
Today is the time when they can take lead and make many things happen. They have the freedom and opportunity. The most important strengths of PSUs is that they are secure as they are Government supported. Jobs are secure and their existence is secure. They have great scope to innovate and invest. It is not difficult to raise funds and they have the support of the nation and its politicians. Investments are easy; technologies can be acquired fast and easily. They already have reasonably robust systems. If you have financial support, technological support, systems support what else do they need? Perhaps the only thing needed is Talent.
Talent is the most needed thing is PSUs. However they also have talent. They need to realise that they have certainly talented people and they are not using their talent. The only issue with these talented people is this: Those who are older in age and need to change are not changing and those who are young in age and talented are not sticking. Younger generation has to be put in forefront. However a number of senior employees may not appreciate the same. Hence there is a generation gap developing. HRD needs to fill this by providing opportunities for younger groups to play leadership roles. PSUs have the capability but this needs to be focused. The bureaucratic approach and love for seniority, designations and power prevent them from doing. Changing this culture and getting talent put first is the first challenge they seem to face.
With different generations of employees in a PSU you need differentiated HR policies. You cannot treat baby Boomers, Gen X and Gen Y the same way. Gen X is PF and Pension driven. While Gen X likes quick settlement fast changing roles and high movement and activity level. Uniform HR policies don’t serve the three generation of employees. HR department should be seized with this issue. On the contrary they are seized with the problem of uniform application of policies for all people for equality and justice.
Second challenge they seem to face is to think innovatively. Most of the HR managers have surrendered their thinking and intellectual faculties to consultants. I know of PSUs where the number of consultants are more than the number of HR section Heads. There are a set of consultants to do competency mapping, another set to do PMS, a third group to do 360 degree feedback, a fourth to do Assessment centres and a fifth to do employee engagement surveys. Ultimately one raises the question “what are the HR Managers doing”. Should they be designated as “Outsourcing Managers” rather than HR Managers?
Each HR Manager is busy preparing tender documents, appointing consultants, monitoring their work, arranging line manager interviews and the like and there is no HR happening. It brings down the credibility of HR in such corporations. It is high time the HR staff become sensitive to this. They may feel that by appointing consultants they transferred the risk of designing, managing and implementing HR systems to consultants. They also nave wasted the company money.
Ignorance of the local tested out practices and preference for un-implementable global practices. HR is one area where the country needs no foreign expertise. There is abundant expertise available in the country. In one organization they recruited and “Expat HR Chief” for handling HR and spent ten times the amount they were spending on the earlier Head HR. The new HRD Manager had to be put up is a five star hotel for four months, toured round the country and visiting their outfits and few outside India, and concluded that little could be done in this company as Indians do not respect systems and like to feel powerful by breaking systems and rules while he comes from a county where systems are adhered to. Expressing his inability he left the company and the company took another six months to find a new HR manager after concluding that outside talent can’t do much in HR. Fortunately this is not a PSU but one will not be surprised in future Indian PSUs start looking for foreign HR Managers considering the rate at which they are appointing foreign consulting firms. One should review the experiences of the Consulting firms. Most of the Big Five and other consultants carry big names but use local talent from IIMs, XLRI and the like. Consider the fact that most of the consultants are graduates from these management schools of the last few years and yet employed at high cost for promoting HR they themselves have learnt largely from text books including the Indian books.
Tendering syndrome: Imagine if the Prime Minister of India has to be operated for his heart through a tendering process and lowest bidding surgeon will be called on to operate him. What would have been the fate of this country? Most PSUs don’t realise that management practices cannot be designed and implemented through tendering process. Most competent consultants including the leading Institutions like the IIMS do not participate in bidding process. Just like a famous surgeon need not be subject to a tender document and examination by a committee who knows nothing about surgery to decide whether he is a famous surgeon or not. In fact there is no need for most management practices to be designed by external consultants. There are enough internal talent available in Indian corporations to design and implement any HR system. There is more expertise available in India and Indian academics and consultants on PMS, ADCs, Competency Mapping, Learning systems, Soft skills training, 360 DF (In fact it was first Initiated at IIMA much before US called it as 360 DF), Employee engagement and Commitment (there are more than score of thesis written on this theme at IIMs and other places. Yet the preference for foreign expertise in HR is amusing. Probably we have to live still with the old dictum “Ghar ka Murgi Dal Barabar”. Indians seem to respect foreigners. That is our culture. Public sector private sector no difference. The farther the distance of the consultant is from you the more he is respected. New York is farther than Delhi and Delhi is farther than local town. If you cannot get a foreign consultant get at least a Foreign Consultancy firm. They quite often forget that the consultancy service of the foreign firm is delivered by the locally trained youth and what the company gets is the local knowledge at global rates. It is very sad to see this happen in HR field which took lead across the world in eighties. PSUs seem to fall into this trap. One PSU sent a delegation of five people from several hundred kilometres to negotiate a five lakh rupee project to fill the tendering requirements. The same company gave a two crore project to another organization without any tendering process. When asked the reply I got was “It party is only one of its kind and hence does not need any tender”. The party was a reputed Business School with foreign faculty. Also often the HR managers take protection for their inability to make difference under the vigilance requirements. Sometimes I feel bad decisions get taken and the excuse offered is “vigilance requirement”. It is true that vigilance departments have become very active. They have become active to protect the interests of the organisation as well as the employees. Vigilance therefore attempts to protect people so that they can follow the process and at the same time do good job. In my view subjecting Management consultancy to tendering because of vigilance is doing serious damage to the very purpose of management systems improvements. This is because management consultancy does not need such high levels of investment. The moment you get in to tendering the level of costs raises. For example I got once an invitation to submit a proposal. Only those companies with a turnover of more than five crores were allowed. Imagine what would be the signal to companies. Research evidence shows that small companies deliver better service in management consultancy. In my view many HR managers are reducing themselves in PSUs to be outsourcing managers rather than change agents.
The top level managers in HR are busy with other policy issues they are neglecting most important Talent Management issues. The credibility of HR at present in most PSUs are at their lowest in spite of the scope for great work. What most HR people think about themselves and their work in some of the PSUs is totally different than what their line managers think.
This is the time that HR can wake up and do a lot. Reforms are on way. HR Managers need to reform themselves. Acquire competencies to do good HR and initiate change. The consultant dependent HR need to go and internal teams should come up do the work of consultants. Institutions like IIMs and other management schools locally should be used for initiating and managing innovations. HR talent could be developed by getting trained globally where needed or for giving confidence that there is a lot we can learn from ourselves. It is good to go to Michigan University to attend Dave Ulrich’s sessions and learn about how HR is being managed in the USA or other countries. But it is futile to go there to learn how HR is being managed in India or how it should be managed or to get US based consulting firm to teach Indian PSUs how to manage their talent. It should be remembered that both Top level consulting firms and MBA Graduates from Top US business schools have a share in the failure of corporations like Enron and the current global crisis! India is great and Indian PSUs should make it even greater by doing right things and things right.