HRD DILEMMA

Sukumar Vyas read the message on his E-mail. It was an anxious and urgent message from
sudeep Rai, the vice-president of human resource development !R"# at $rifle India %td.
$I%#. It read& '$I% is downsi(ing in a )ig way, and this comes as a shock to me. It was not
on the agenda when I accepted their offer, and I am wrecked )y a tremendous feeling of
despair over this exercise. $he agitation I am feeling is straining my o)*ectivity. I need to
talk to you urgently.'
Vyas pondered for a minute. Rai+s inner conflict was not alien to him. !owever, he also knew
that Rai would have to experience this conflict if he had to find a solution. Vyas+ message
)ack to Rai read& 'I know your feeling. ,ut you need to sift anger from concern. It can )e
de)ilitating. "o not react. -ou need to respond. $here is no value in pitting .what was+ with
.what is.+ -ou are at $I% and there is a development metaphor in downsi(ing too, if you look
for it. I will now speak to you on Saturday, /0 1.2. Rai read the message with
disappointment. !e had hoped that his former professor and guide of /3 years would once
again provide him with some much-needed light on his new dilemma. !is feeling of
disappointment with $I% was overwhelming. 4hen he left 5eelo India to *oin $I%, there
were many more changes to cope with than *ust a new *o) in ,om)ay. 6or one, he was
leaving )ehind his hometown, ,angalore, where he had lived all his life. !owever, he had
made the change )ecause the challenges )efore him at $I%, a multi-product company which
manufactured processed foods, tetra-packed )everages and agrochemicals, were much more
exciting than at 5eelo, which was in household hygiene products.
$I% vice-president !R"# 7oshir 2unsiff was leaving to take up an overseas posting with the
parent company. Rai had )een personally recruited )y 2unsif and chairman, ".7. 7eogi.
2unsiff had said that $I% was a)out to dou)le its turnover, and that new plants and
diversifications were planned. Rai got his first shock while he was still serving his notice
period at 5eelo. 7eogi called him to say& 'Rai, what I am going to tell you now may change
your decision to *oin us, )ut in all fairness, I must inform you that we have decided to hive off
our )everages division.' 6or Rai, it was a ma*or *olt, )ut having taken a decision to *oin $I%,
he decided to stick )y it-though he did feel a little )it despondent at having to start a new *o)
with retrenchment.
$he second shock came *ust two months after he *oined $I%. $I%+s processed foods )usiness,
which manufactured ketchup, canned vegeta)les and *ams, was going through a severe crisis,
and )usiness economics demanded that the company either close down or downsi(e its Sewri
plant. $he plant, which employed some /,800 workers, was low on productivity and the cost
of production was very high. Rai could see it for himself. 9 plant that worked at :3;
capacity and paid )etween Rs.<,000 and Rs./0,000 per worker could hardly )e economically
via)le. ,esides, the second processed foods plants at 7agpur, a reference point, was fully
automated, and the low wages and tax )enefits that came with )eing in a )ackward area
rendered the unit cost of production significantly lower. 9nd during his second month at $I%,
Rai sat through a management committee meeting which decided that the workforce at Sewri
)e halved in the next two years.

$he severity of the plan came as a rude shock to Rai. !e had )arely )egun to come to terms
with the hiving off of the )everages division, and he had the downsi(ing to contend with. !e
wrote to Vyas again& =Somehow, !R" guys like me )elieve that development is the metaphor
we should work on, not asking people to leave. $hat seems negative. I came in anticipating
the retrenchment of /00 people of the )everages division. ,ut now it looks like >00 people.'
6urther, Rai had very serious misgivings a)out the management+s attitude to the )usiness
situation. $he economics of the Sewri plant was not the issue. 4hat angered him was, what
were the likes of 2unsiff doing all this while? "id they not see the symptoms all these years?
4here was risk management then?

@n Saturday when Vyas called, an angry Rai said& 'Is this what ,om)ay is all a)out?
,om)ay, which produces terrific professionals? !ow am I to )uy that when I am facing the
rot of /: years, )red )y the very same hyped-up ,om)ay professional?' Vyas heard him
through patiently. !e knew where Rai came from, he know that feeling, )ut he also knew that
it had to )e managed. So he said& 'Start at (ero )ase Rai. Images, perceptions and cultural
handouts are not relevant in your pursuit of finding a solution. $he past had reasons and
pro)ing into them now will offer no solution for what you need to do. channel this anger into
concern.'

6ortunately, for Rai, the Sewri workers took the call for downsi(ing well. $hey were aware
of the poor productivity of the plant which produced covering from a spate of communal
riots. 2any areas were still under curfew, shops closed early and sales of products like *ams
and *ellies, which were not essentials, dropped significantly. "ealers cut )ack on stock levels.
1roduction of the tetra-packed fruit *uices also dropped, as their shelf-life was short. $he
Sewri plant worked only three days week, and the rest of India was served )y the 7agpur
plant. 9nd this scenario provided the unwitting context to forcefully sell the downsi(ing to
the workers. $he riots served as a catalyst, and the timing was opportune to discuss the
non-via)ility of the plant.
Rai started on a structured communication plan where he spoke to the union, the workers and
supervisors on the cost structures at Sewri and 7agpur and explained the strain on the )ottom
line, the economics of high production costs etc. ,ut they threw it )ack at him, pointing to
the //A 7Es and air-conditioning, even the innumera)le teas that were served at the plush
head office at 7ariman 1oint. ,ut Rai had to go )eyond reactivity. !e realised that in a
situation of downsi(ing, the company needed to exhi)it an effort at cost reduction.
,ut the union had other points to make. Said a Supervisor& '-ou are the management. -ou
run the )usiness. 4hy did you let things come to this? If num)ers increased, it was in the
context of an anticipated growth in markets and sales. 4hy didn+t your strategies work? 4hy
are you making us pay for your tardy management vision? If we are working only three or
four hours, and productivity is low, why did you not precipitate the crisis sooner? 4hy didn+t
you Buestion the productivity? Rai realised that politically, this was a correct statement. $he
efforts that the company had made were not sufficient in their view, )ecause productivity had
never )een an issue in the past. Cntil four years ago, sales were )ooming and televi sion
advertising was fren(ied. $hem came the tomato crop failure, followed )y a 6ood D "rug
"epartment investigation into the processes used at Sewri, leading $I% to shift a significant
part of the production to 7agpur. '@ur accent on productivity was not forceful enough,' said
Rai to 2unsiff. 'It+s one thing to say increase productivity, )ut Buite another to say, +If you
don+t you+ll )e out of a *o).' ,ut 2unsiff was nonchalant. !e said&'Rai, they will give you
/0 other reasons. 9re you going to dissect all that, or sell the closure? $hey have to go, so
work towards it.'

@n the other hand was the sale of the )everages division, which produced flavoured milk and
fruit drinks. In spite of doing well, the )rands continued to )e regional. $he product had
failed in the north, where the market leader was headBuartered. Eust as plans were )eing
finalised to promote the )rand in the south, the changed economic environment )rought in
new esta)lished players from overseas, rendering the sustenance of the )rand difficult. ,ut
Rai was not convinced that the decision to hive off the )usiness was opportune and felt deeply
distur)ed )y the sale. @nce again, 7eogi and 2unsiff offered )usiness and market economic
reasons to *ustify an early exit from the )usiness. If that was true, thought Rai, why had $I%
not evaluated the product )efore it had invested in it?
7ow it was left to him to not only lay off workers at the Sewri plant )ut also to )id adieu to a
young division )ursting with energetic youngsters. 4hile this was not how he had expected
his new *o) to )egin, what really )othered him was the way the sale was structured. $he
terms of the sale of the )everages division to ,lue Fow International, a Swedish company
which had recently struck an alliance with a large Indian company, was a tricky one. 6or one,
,lue Fow had insisted on taking the entire staff of the )everages division as part of the deal.
!owever, what had not )een highlighted were the incompati)ilities in the grade structures in
the two organi(ations. $hus for instance, the grade F *o)s managers# at $I%, were )eing
fitted in grade " *o)s assistant managers# at ,lue Fow. Rai also dreaded how he was going
to handle the situation, when he was already faced with a hostile staff that felt they had not
)een taken into confidence.

So it was not surprising when Ctpal Ghosh, the area sales manager, asked& '-ou decided how
the assets would )e transferred, )ut how come you never gave us a thought? Shouldn+t we
have )een told a)out this earlier? 9nd when you finally inform us, it is only after the final
decision has )een made and the modalities completed.' $he real pro)lem arose when ,lue
Fow sent letters of appointment to the $I% )everage staff, detailing the grade and position.
9rup 5hanna, a management trainee 2$# who had only recently )een confirmed in grade F
at $I%, found that at ,lue Fow he would )e placed in grade ". $hinking this was some kind
of mistake, he called ,i*u $ripathi, the !R" vice-president at ,lue Fow, and asked for a
clarification. ,ut $ripathy contended that the *o) class of the grade F staff at $I% compared
with ,lue Fow+s Grade "-and that, as an 2$, that was where 5hanna fitted. 5hanna, who
had armed himself with all the ground information at ,lue Fow, pointed out that its 2$s were
in fact confirmed in grade F. Replied $ripathy& '@nly if the training has )een acBuired at
,lue cow. Every other training is discounted )y us and Bualifies only for a grade ".'
5hanna was dum)struck. $his meant that his two years of training at $I% were )eing struck
off his career records. Secondly, grade " at ,lue Fow was in fact a promotee grade, which
was )asically meant to provide mo)ility for clerical staff. $herefore, his education at a
premier management school in ,om)ay was effectively )eing thrown into the waste )in at
,lue FowH 5hanna protested to Rai& '$his is ridiculousH 4hat were your paradigms in
selling this division? !ow did you attempt to protect our careers?
Rai knew there was not much he could have done. 6or the terms with ,lue Fow had )een
agreed upon long )efore he had come on ,oard-and worse, $I% had agreed to hand over all
the staff of the )everages division. 4hat this also meant was that those who dissented with
,lue Fow+s offer could not )e retained )y $I%. '$herefore, where did that leave me with any
option?' asked Rai of Vyas. '9nd look at the deal itself. It doesn+t even address the )asic
issues of grade compati)ility. Employees are not worried a)out eBuity in salaries, especially
when you are talking of a sale to a )lue chip like ,lue Fow. 4hat they do want is to maintain
the eBuities of their position in the new company. 9nd this factor has clearly )een ignored )y
)oth $I% and ,lue FowH'
Vyas could see from Rai+s narration that his feeling of hurt was more due to the fact that he
had not )een involved at the negotiation stage. !e said to Rai& 'I somehow feel this situation
is not avoida)le, nor could you have rendered it any different. Such strange pacts are
somehow a function of a deal itself. In this case as I can see it, ,lue Fow needed your staff
for continuity. ,ut they were not willing to ensure grade compati)ility for fear of crowding
their own ta)les.' ,ut Rai felt he would have at least ensured )etter communi cation and
interplay )etween the two companies. 9nd in the case of Sewri plant, he felt that it was one
thing to shed people )ecause they were incompetent and another to cast them off )ecause they
were not relevant anymore. "idn+t the corporate mission statement talk of growing with the
company, growing and developing managers, contri)uting to their career and welfare? So
how was he to lay off people? $here was a clear value to .human resource maintenance,+
which was supposed to periodically take stock of organisational needs and shed the audited
surpluses in a phased manner, than accumulate fluff and then choke on it.
So he asked Vyas& '4as this crisis not a function of poor management? !ow come the
system did not signal fat deposits? "id the !R" function perform capa)ly all these years?
,usiness trends were made availa)le to the top management staff. If )usiness was staggering,
why wasn+t a periodic review of resource management done? "idn+t they look at production
resources and decide on rationalisation? "id they not look at the product mixes and decide on
a )usiness rationalisation? $hen why is the net Buotient expressed in over-manning?
',ecause over-manning is the net Buotient of poor )usiness strategies,' said Vyas.
'@ver-manning does not happen overnight, *ust as failures and non-via)ility do not happen
overnight. "ownsi(ing is *ust another euphemism for sacking. If you go )eyond the
transactional issues, then it is clearly for a greater good, dictated )y )usiness economics.
Reality is living with this adversity.'
!owever, Rai had still to digest the fact that they had to demolish some structures and )uild
new castles. $here was the whole aspect of intra-personal conflict-of what he was expecting
to inherit on *oining and what he eventually got. ,esides, the !R" function itself was )eing
seen as the orchestrator. 4hen the net Buotient was expressed in people terms, !R" carried
the emotional can. $he next few weeks found Rai working round the clock at the Sewri plant.
!e craved for more opportunities to talk to Vyas, )ut all he managed to do was *ot his feelings
on his word processor. !is diary read&
'$he dilapidation I am surveying is an accumulation of years of neglect. $oday as
surveyor, I am given the task of clearing the ru))le. 9s an !R" man I am seeing the
emotions and trauma of I00->00 people, some of whom have )een with the company
for /3 years. $he pro)lem definition is succinct-.organisatinal non-via)ility.+ 9nd the
workers have Bueued at my door, hoping that a sleight of my wrist will
produce a miracle which will reinstate them. 9nd some of these workers are
saying& .$his new man has )rought it a)out. It+s his policy.+ 4hat we transact in my
room is final. I have to take them through a computer printout that has arithmetically
calculated their net worth. 9nd when they have picked up their check, it will )e end
of a relationship.'

$he following week, Vyas was in ,om)ay for a workshop on .empathy in empowerment,+
when he took time off to meet Rai. 'So how goes it with the downsi(er these days?'
Buestioned Vyas. Rai smiled with pain writ large over his face and said& 'I have learnt to live
with this image and I do see some truth in this personification . I have also realised that if an
organi(ation has always empowered the !R" function with strategic thinking and decision
making, over time, it also markets it to the rest of the organi(ation as one that is relevant and
critical. 9nd when !R" gains importance for the first in a scenario of downsi(ing, as is the
case in $I%, it is natural that the !R" man is viewed with suspicion. ,ecause for all these
years $I% had placed !R" only in an administrative role. I often feel very low when I see
how the function itself was ill-conceived and ill-eBuipped to prevent the crisis the company is
in today. $ell me, why is the !R" functionary vested with this task? 4hat is the line
functionary doing? 4here is the issue of collective responsi)ility?

Vyas realised that this was the feeling that many !R" managers were facing all over the
country, where glo)alisation was throwing up newer interpersonal and functional conflicts.
Every change )rings a)out unsavory decisions. Rai+s conflicts are a function of the transition
phase that India is in, feels Vyas, 'a catharsis to evolution.'
JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ
$his case has )een prepared )y 2eera Seth /<<3#.
Questions for Discussion
/. 4hat is the dilemma confronting Sudeep Rai? 4hat factors are contri)uting to
the dilemma?
8. "iscuss the management philosophyK !R2 approach followed )y $I%?
L. 4hat inferences can you draw a)out the changing nature of !R function and
the roles# of !R manager?