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Indian Institute of Management, Indore PGP-1, 2013-2015

Analysis of Case: Infosys (A): Strategic Human Resource Management (As a part of course Human Resource Management, PGP 2013-2015)

Submitted on January 13, 2014

Prepared by: Group 1, Section B Alka Borogaon 2013PGP028 Anirudh Srikant 2013PGP042 Devang Jain 2013PGP123 Lavanya D. Karanth 2013PGP198 Tushar Rathi N 2013PGP427 Wazeem M A 2013PGP456

Under the Guidance of Prof. Amitabh Deo Kodwani Indian Institute of Management, Indore

CASE ANALYSIS
Infosys was the brain-child of Mr. Narayan Murthy and six other friends, which was started in the year 1981 with a shared vision of creating wealth in a legal and ethical manner. It was started with the purpose of creating a software company that was of the professional, by the professional and for the professional. As the company grew globally it was faced with national and international regulations and at the same time were faced with employees who were becoming dissatisfied with shrinking benefits and a disregard for their technical ingenuity. Infosys had always tried to ensure that the firm was the Best Employer and wanted to provide good working environment to its employees. Infosys also undertook a lot of initiatives in order to maintain their status as an employer of choice by providing ESOPs, Open Door Policy etc. Vision: "To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people Mission: "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large" Values(C-LIFE) Customer Delight: To surpass customer expectations consistently Leadership by Example: To set standards & be an exemplar for the industry & ourselves Integrity and Transparency: To be ethical, sincere and open in all our transactions Fairness: To be objective and transaction-oriented, and thereby earn trust and respect Pursuit of Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services and products to become the best

CASE FACTS:
Infosys was found by Narayan Murthy along with six of his former colleagues in 1981. In the initial years of Infosys the bureaucratic and regulated environment were not favorable to their vision of seeing the company grow into a global company and by 1986 they still had only one client. Despite the adverse conditions the founders decided to stay together and the accidental economic liberalization of the Indian economy set the stage of dramatic success for Infosys. Infosys had an annual compound growth rate of 65%, and revenue of about US $ 754 million in 2003. The firm grew from 250 employees to 15000 employees and from $5 million to $754 million within a decade. Infosys started of providing services to foreign clients from within India, thus leveraging the low labor costs of software professionals. In the initial years they focused only on IT implementation and IT management using the already developed solutions but over time Infosys moved toward providing IT strategy and IT design themselves. They also focused on improving the brand equity by a number of initiatives like becoming the first Indian company to be listed on

NASDAQ on March 11, 1999 and continuously differentiating themselves from their competitors. Infosys believed in the People Philosophy and recognized that its employees were the most significant for the success of the company and took special efforts to keep the employees satisfied and engaged. It ranked No.1 in the Business Today Best Employer Survey in 2001 and 2002. Infosys also created HALE (Health Assessment and Lifestyle Enrichment) for employees that offered them with health checkups, yoga classes etc. The HR group was involved in creating Infosys a fun and community empathy workplace. However, after 2003, despite these efforts the case highlights the increasing discontent among the employees. Fast and continuous growth made the diversity and disparity of the employee hierarchy more apparent with the management not in touch with the rapidly changing realities of the employees at lower levels. Infosys started experiencing a high turnover rate even though the company was expanding and growing which meant high employee costs because of the need to build up recruiting efforts. By 2007, the founders wanted HR to ensure that Infosys was on the top 10 lists of both the Best Performing companies and Best Employers

PROBLEMS FACED:
Increasing employee discontent despite the efforts of Employee Relations department. The implementation of C-LIFE across the organization was still a challenge. As a result of the continuous growth Infosys faced the challenge of managing the big scale of employees as diversity and disparity of employee hierarchy increased. Challenges of executing the work efficiently and meeting the customer expectations as the company evolved. Increase in the number of on bench resources and immigration issues due to new visa restrictions. Cultural and compensation disparities in the BPO subsidiaries of Infosys. Introduction of variable pay across the organization based on three components: company performance, unit performance, and individual performance was thought of by some skeptical as a way for the company to reduce compensation costs. Broad Banding by dissolution of 15 layers in Infosys into 7 bands acted as a tipping point of employee dissatisfaction and discontent. Rapid changes in the HR policies caused confusion among employees and managers as well. The Promotions Policy now linked the promotions to the needs of the organization: individual performance, individuals abilities to fulfil the next role, and the existence or need of that particular opening as opposed to the earlier parameters of individual performance and seniority.

ANALYZING CASE
As a company, Infosys had come up with various innovative HR policies to increase employee motivation and retention. We start with a SWOT analysis to assess the HR department STRENGTHSWEAKNESSESKnown for path-breaking HR practices Insufficient integration between HR and Ranked highly in the best employer lists Middle & upper level managers Firm vision - to create a company of the Increasing communication gap between professionals, by the professionals and for lower and upper levels of workforce the professionals Some of the HR policy changes backfired

OPPORTUNITIES With the growing size, there was huge scope for efficient management of human resources By coming up with innovative HR policies, the company could set benchmark for other companies and create brand equity

THREATS People are averse to policy changes Implementation may backfire and be expensive Increasing number of rival companies post liberalization

Based on the above analysis we come up with the following suggestions regarding the change in HR policies to facilitate the problem in hand.

SUGGESTIONS
1. Since the employees thought that they were being deprived of creativity and technical ingenuity, giving them more autonomy in terms of carrying out the project will increase their motivation. Also decentralize the decision making process which empowers the employees. 2. The employees perceived the variable pay component as a cost cutting measure. A financial statement showing the increase in incentive pays can be circulated to the employees. This can enforce more trust. 3. Appreciating those employees who earn the highest incentives and showcase this to the entire team, so that others aspire to achieve this and hence motivate them. 4. To help adjust to rapid growth Infosys can recruit Human Resources as a partner in their plan for expansion, thereby allowing that department to organize the employee development process to include those activities that would build the teams necessary to work on the various projects. 5. Similar to expansion in China, look at clients outside the US to increase the number onsite experiences, which are a crucial part of employee motivation. 6. Utilizing strategic human resources to attract the right employees that will expand the organizations competitive advantage in the marketplace. And working towards retaining them by providing them autonomy and attractive pay packages.

CONCLUSION
Along with the traditional roles of HR department, the strategic roles also play a significant role in the growth of a company. Strategic management involves the HR department becoming a strategic business partner in the company. SHR can fulfill an important role in change management by helping upper management understand the situation of employee and the reasons for their negative reactions to changes in policies. This writer feels that strategic human resources management provides the greatest support for a company in achieving its mission and goals because it works with all levels of an organization. Strategic Human Resources is more involved in helping the company to bring their employees on board by motivating employees, encouraging effective communication, training and cross-training employees in the functions they are expected to perform, and help company achieve its goals.

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