HUMAN RESOURCE MANAGEMENT IIBMS EXAM ANSWER SHEET

 HUMAN RESOURCE MANAGEMENT IIBMS EXAM ANSWER SHEET

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 1

Note: Solve any 4 Cases Study’s

CASE: I - Enterprise Builds On People

When most people think of car-rental firms, the names of Hertz and Avis usually come to mind. But in the last few years,

Enterprise Rent-A-Car has overtaken both of these industry giants, and today it stands as both the largest and the most

profitable business in the car-rental industry. In 2001, for instance, the firm had sales in excess of $6.3 billion and

employed over 50,000 people.

Jack Taylor started Enterprise in St. Louis in 1957. Taylor had a unique strategy in mind for Enterprise, and that strategy

played a key role in the firm’s initial success. Most car-rental firms like Hertz and Avis base most of their locations in or

near airports, train stations, and other transportation hubs. These firms see their customers as business travellers and

people who fly for vacation and then need transportation at the end of their flight. But Enterprise went after a different

customer. It sought to rent cars to individuals whose own cars are being repaired or who are taking a driving vacation.

The firm got its start by working with insurance companies. A standard feature in many automobile insurance policies is

the provision of a rental car when one’s personal car has been in an accident or has been stolen. Firms like Hertz and Avis

charge relatively high daily rates because their customers need the convenience of being near an airport and/or they are

having their expenses paid by their employer. These rates are often higher than insurance companies are willing to pay, so

customers who these firms end up paying part of the rental bills themselves. In addition, their locations are also often

inconvenient for people seeking a replacement car while theirs is in the shop.

But Enterprise located stores in downtown and suburban areas, where local residents actually live. The firm also provides

local pickup and delivery service in most areas. It also negotiates exclusive contract arrangements with local insurance

agents. They get the agent’s referral business while guaranteeing lower rates that are more in line with what insurance

covers.

In recent years, Enterprise has started to expand its market base by pursuing a two-pronged growth strategy. First, the

firm has started opening airport locations to compete with Hertz and Avis more directly. But their target is still the

occasional renter than the frequent business traveller. Second, the firm also began to expand into international markets

and today has rental offices in the United Kingdom, Ireland and Germany.

Another key to Enterprise’s success has been its human resource strategy. The firm targets a certain kind of individual to

hire; its preferred new employee is a college graduate from bottom half of graduating class, and preferably one who was

an athlete or who was otherwise actively involved in campus social activities. The rationale for this unusual academic

standard is actually quite simple. Enterprise managers do not believe that especially high levels of achievements are

necessary to perform well in the car-rental industry, but having a college degree nevertheless demonstrates intelligence

and motivation. In addition, since interpersonal relations are important to its business, Enterprise wants people who were

social directors or high-ranking officers of social organisations such as fraternities or sororities. Athletes are also desirable

because of their competitiveness.

Once hired, new employees at Enterprise are often shocked at the performance expectations placed on them by the firm.

They generally work long, grueling hours for relatively low pay.

And all Enterprise managers are expected to jump in and help wash or vacuum cars when a rental agency gets backed up.

All Enterprise managers must wear coordinated dress shirts and ties and can have facial hair only when “medically

necessary”. And women must wear skirts no shorter than two inches above their knees or creased pants.

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 2

So what are the incentives for working at Enterprise? For one thing, it’s an unfortunate fact of life that college graduates

with low grades often struggle to find work. Thus, a job at Enterprise is still better than no job at all. The firm does not hire

outsiders—every position is filled by promoting someone already inside the company. Thus, Enterprise employees know

that if they work hard and do their best, they may very well succeed in moving higher up the corporate ladder at a growing

and successful firm.

Question:

1. Would Enterprise’s approach human resource management work in other industries?

2. Does Enterprise face any risks from its human resource strategy?

3. Would you want to work for Enterprise? Why or why not?

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 3

CASE: II - Doing The Dirty Work

Business magazines and newspapers regularly publish articles about the changing nature of work in the United States

and about how many jobs are being changed. Indeed, because so much has been made of the shift toward service-sector

and professional jobs, many people assumed that the number of unpleasant an undesirable jobs has declined.

In fact, nothing could be further from the truth. Millions of Americans work in gleaming air-conditioned facilities, but many

others work in dirty, grimy, and unsafe settings. For example, many jobs in the recycling industry require workers to sort

through moving conveyors of trash, pulling out those items that can be recycled. Other relatively unattractive jobs include

cleaning hospital restrooms, washing dishes in a restaurant, and handling toxic waste.

Consider the jobs in a chicken-processing facility. Much like a manufacturing assembly line, a chicken-processing facility is

organised around a moving conveyor system. Workers call it the chain. In reality, it’s a steel cable with large clips that

carries dead chickens down what might be called a “disassembly line.” Standing along this line are dozens of workers who

do, in fact, take the birds apart as they pass.

Even the titles of the jobs are unsavory. Among the first set of jobs along the chain is the skinner. Skinners use sharp

instruments to cut and pull the skin off the dead chicken. Towards the middle of the line are the gut pullers. These workers

reach inside the chicken carcasses and remove the intestines and other organs. At the end of the line are the gizzard

cutters, who tackle the more difficult organs attached to the inside of the chicken’s carcass. These organs have to be

individually cut and removed for disposal.

The work is obviously distasteful, and the pace of the work is unrelenting. On a good day the chain moves an average of

ninety chickens a minute for nine hours. And the workers are essentially held captive by the moving chain. For example, no

one can vacate a post to use the bathroom or for other reasons without the permission of the supervisor. In some plants,

taking an unauthorised bathroom break can result in suspension without pay. But the noise in a typical chicken-processing

plant is so loud that the supervisor can’t hear someone calling for relief unless the person happens to be standing close by.

Jobs such as these on the chicken-processing line are actually becoming increasingly common. Fuelled by Americans’

growing appetites for lean, easy-to-cook meat, the number of poultry workers has almost doubled since 1980, and today

they constitute a work force of around a quarter of a million people. Indeed, the chicken-processing industry has become a

major component of the state economies of Georgia, North Carolina, Mississippi, Arkansas, and Alabama.

Besides being unpleasant and dirty, many jobs in a chicken-processing plant are dangerous and unhealthy. Some workers,

for example, have to fight the live birds when they are first hung on the chains. These workers are routinely scratched and

pecked by the chickens. And the air inside a typical chicken-processing plant is difficult to breathe. Workers are usually

supplied with paper masks, but most don’t use them because they are hot and confining.

And the work space itself is so tight that the workers often cut themselves—and sometimes their coworkers—with the

knives, scissors, and other instruments they use to perform their jobs. Indeed, poultry processing ranks third among

industries in the United States for cumulative trauma injuries such as carpet tunnel syndrome. The inevitable chicken

feathers, faeces, and blood also contribute to the hazardous and unpleasant work environment.

Question:

1. How relevant are the concepts of competencies to the jobs in a chicken-processing plant?

2. How might you try to improve the jobs in a chicken-processing plant?

3. Are dirty, dangerous, and unpleasant jobs an inevitable part of any economy?

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 4

CASE : III - On Pegging Pay to Performance

“As you are aware, the Government of India has removed the capping on salaries of directors and has left the matter of

their compensation to be decided by shareholders. This is indeed a welcome step,” said Samuel Menezes, president

Abhayankar, Ltd., opening the meeting of the managing committee convened to discuss the elements of the company’s new

plan for middle managers.

Abhayankar was am engineering firm with a turnover of Rs 600 crore last year and an employee strength of 18,00. Two

years ago, as a sequel to liberalisation at the macroeconomic level, the company had restructured its operations from

functional teams to product teams. The change had helped speed up transactional times and reduce systemic inefficiencies,

leading to a healthy drive towards performance.

“I think it is only logical that performance should hereafter be linked to pay,” continued Menezes. “A scheme in which over

40 per cent of salary will be related to annual profits has been evolved for executives above the vice-president’s level and

it will be implemented after getting shareholders approval. As far as the shopfloor staff is concerned, a system of incentivelinked

monthly productivity bonus has been in place for years and it serves the purpose of rewarding good work at the

assembly line. In any case, a bulk of its salary will have to continue to be governed by good old values like hierarchy, rank,

seniority and attendance. But it is the middle management which poses a real dilemma. How does one evaluate its

performance? More importantly, how can one ensure that managers are not shortchanged but get what they truly

deserve?”

“Our vice-president (HRD), Ravi Narayanan, has now a plan ready in this regard. He has had personal discussions with all

the 125 middle managers individually over the last few weeks and the plan is based on their feedback. If there are no

major disagreements on the plan, we can put it into effect from next month. Ravi, may I now ask you to take the floor and

make your presentation?”

The lights in the conference room dimmed and the screen on the podium lit up. “The plan I am going to unfold,” said

Narayanan, pointing to the data that surfaced on the screen, “is designed to enhance team-work and provide incentives for

constant improvement and excellence among middle-level managers. Briefly, the pay will be split into two components.

The first consists of 75 per cent of the original salary and will be determined, as before, by factors of internal equity

comprising what Sam referred to as good old values. It will be a fixed component.”

“The second component of 25 per cent,” he went on, “will be flexible. It will depend on the ability of each product team as a

whole to show a minimum of 5 per cent improvement in five areas every month—product quality, cost control, speed of

delivery, financial performance of the division to which the product belongs and, finally, compliance with safety and

environmental norms. The five areas will have rating of 30, 25, 20, 15, and 10 per cent respectively.

“This, gentlemen, is the broad premise. The rest is a matter of detail which will be worked out after some finetuning. Any

questions?”

As the lights reappeared, Gautam Ghosh, vice-president (R&D), said, “I don’t like it. And I will tell you why. Teamwork as a

criterion is okay but it also has its pitfalls. The people I take on and develop are good at what they do. Their research skills

are individualistic. Why should their pay depend on the performance of other members of the product team? The new pay

plan makes them team players first and scientists next. It does not seem right.”

“That is a good one, Gautam,” said Narayanan. “Any other questions? I think I will take them all together.”

“I have no problems with the scheme and I think it is fine. But just for the sake of argument, let me take Gautam’s point

further without meaning to pick holes in the plan,” said Avinash Sarin, vice-president (sales). “Look at my dispatch

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 5

division. My people there have reduced the shipping time from four hours to one over the last six months. But what have

they got? Nothing. Why? Because the other members of the team are not measuring up.”

“I think that is a situation which is bound to prevail until everyone falls in line,” intervened Vipul Desai, vice president

(finance). “There would always be temporary problems in implementing anything new. The question is whether our long

term objectives is right. To the extend that we are trying to promote teamwork, I think we are on the right track. However,

I wish to raise a point. There are many external factors which impinge on both individual and collective performance. For

instance, the cost of a raw material may suddenly go up in the market affecting product profitability. Why should the

concerned product team be penalised for something beyond its control?”

“I have an observation to make too, Ravi,” said Menezes, “You would recall the survey conducted by a business fortnightly

on ‘The ten companies Indian managers fancy most as a working place’. Abhayankar got top billings there. We have been

the trendsetters in executive compensation in Indian industry. We have been paying the best. Will your plan ensure that it

remains that way?”

As he took the floor again, the dominant thought in Narayanan’s mind was that if his plan were to be put into place,

Abhayankar would set another new trend in executive compensation.

Question:

But how should he see it through?

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 6

CASE : IV - Crisis Blown Over

November 30, 1997 goes down in the history of a Bangalore-based electric company as the day nobody wanting it to recur

but everyone recollecting it with sense of pride.

It was a festive day for all the 700-plus employees. Festoons were strung all over, banners were put up; banana trunks and

leaves adorned the factory gate, instead of the usual red flags; and loud speakers were blaring Kannada songs. It was day

the employees chose to celebrate Kannada Rajyothsava, annual feature of all Karnataka-based organisations. The function

was to start at 4 p.m. and everybody was eagerly waiting for the big event to take place.

But the event, budgeted at Rs 1,00,000 did not take place. At around 2 p.m., there was a ghastly accident in the machine

shop. Murthy was caught in the vertical turret lathe and was wounded fatally. His end came in the ambulance on the way

to hospital.

The management sought union help, and the union leaders did respond with a positive attitude. They did not want to fish

in troubled waters.

Series of meetings were held between the union leaders and the management. The discussions centred around two major

issues—(i) restoring normalcy, and (ii) determining the amount of compensation to be paid to the dependants of Murthy.

Luckily for the management, the accident took place on a Saturday. The next day was a weekly holiday and this helped the

tension to diffuse to a large extent. The funeral of the deceased took place on Sunday without any hitch. The management

hoped that things would be normal on Monday morning.

But the hope was belied. The workers refused to resume work. Again the management approached the union for help.

Union leaders advised the workers to resume work in al departments except in the machine shop, and the suggestions was

accepted by all.

Two weeks went by, nobody entered the machine shop, though work in other places resumed. Union leaders came with a

new idea to the management—to perform a pooja to ward off any evil that had befallen on the lathe. The management

accepted the idea and homa was performed in the machine shop for about five hours commencing early in the morning.

This helped to some extent. The workers started operations on all other machines in the machine shop except on the

fateful lathe. It took two full months and a lot of persuasion from the union leaders for the workers to switch on the lathe.

The crisis was blown over, thanks to the responsible role played by the union leaders and their fellow workers. Neither the

management nor the workers wish that such an incident should recur.

As the wages of the deceased grossed Rs 6,500 per month, Murthy was not covered under the ESI Act. Management had to

pay compensation. Age and experience of the victim were taken into account to arrive at Rs 1,87,000 which was the

amount to be payable to the wife of the deceased. To this was added Rs 2,50,000 at the intervention of the union leaders. In

addition, the widow was paid a gratuity and a monthly pension of Rs 4,300. And nobody’s wages were cut for the days not

worked.

Murthy’s death witnessed an unusual behavior on the part of the workers and their leaders, and magnanimous gesture

from the management. It is a pride moment in the life of the factory.

Question:

1. Do you think that the Bangalore-based company had practised participative management?

2. If your answer is yes, with what method of participation (you have read in this chapter) do you relate the above

case?

3. If you were the union leader, would your behaviour have been different? If yes, what would it be?

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 7

CASE : V - A Case of Burnout

When Mahesh joined XYZ Bank (private sector) in 1985, he had one clear goal—to prove his mettle. He did prove himself

and has been promoted five times since his entry into the bank. Compared to others, his progress has been fastest.

Currently, his job demands that Mahesh should work 10 hours a day with practically no holidays. At least two day in a

week, Mahesh is required to travel.

Peers and subordinates at the bank have appreciation for Mahesh. They don’t grudge the ascension achieved by Mahesh,

though there are some who wish they too had been promoted as well.

The post of General Manager fell vacant. One should work as GM for a couple of years if he were to climb up to the top of

the ladder, Mahesh applied for the post along with others in the bank. The Chairman assured Mahesh that the post would

be his.

A sudden development took place which almost wrecked Mahesh’s chances. The bank has the practice of subjecting all its

executives to medical check-up once in a year. The medical reports go straight to the Chairman who would initiate

remedials where necessary. Though Mahesh was only 35, he too, was required to undergo the test.

The Chairman of the bank received a copy of Mahesh’s physical examination results, along with a note from the doctor. The

note explained that Mahesh was seriously overworked, and recommended that he be given an immediate four-week

vacation. The doctor also recommended that Mahesh’s workload must be reduced and he must take physical exercise

every day. The note warned that if Mahesh did not care for advice, he would be in for heart trouble in another six months.

After reading the doctor’s note, the Chairman sat back in his chair, and started brooding over. Three issues were

uppermost in his mind—(i) How would Mahesh take this news? (ii) How many others do have similar fitness problems?

(iii) Since the environment in the bank helps create the problem, what could he do to alleviate it? The idea of holding a

stress-management programme flashed in his mind and suddenly he instructed his secretary to set up a meeting with the

doctor and some key staff members, at the earliest.

Question:

1. If the news is broken to Mahesh, how would he react?

2. If you were giving advice to the Chairman on this matter, what would you recommend?

The Indian Institute Of Business Management & Studies

Subject: Human Resource Management Marks: 100

pg. 8

CASE : VI - “Whose Side are you on, Anyway?”

It was past 4 pm and Purushottam Mahesh was still at his shopfloor office. The small but elegant office was a perk he was

entitled to after he had been nominated to the board of Horizon Industries (P) Ltd., as workman-director six months ago.

His shift generally ended at 3 pm and he would be home by late evening. But that day, he still had long hours ahead of him.

Kshirsagar had been with Horizon for over twenty years. Starting off as a substitute mill-hand in the paint shop at one of

the company’s manufacturing facilities, he had been made permanent on the job five years later. He had no formal

education. He felt this was a handicap, but he made up for it with a willingness to learn and a certain enthusiasm on the

job. He was soon marked by the works manager as someone to watch out for. Simultaneously, Kshirsagar also came to the

attention of the president of the Horizon Employees’ Union who drafted him into union activities.

Even while he got promoted twice during the period to become the head colour mixer last year, Kshirsagar had gradually

moved up the union hierarchy and had been thrice elected secretary of the union. Labour-management relations at

Horizon were not always cordial. This was largely because the company had not been recording a consistently good

performance. There were frequent cuts in production every year because of go-slows and strikes by workmen—most of

them related to wage hikes and bonus payments. With a view to ensuring a better understanding on the part of labour, the

problems of company management, the Horizon board, led by chairman and managing director Aninash Chaturvedi, began

to toy with idea of taking on a workman on the board. What started off as a hesitant move snowballed, after a series of

brainstorming sessions with executives and meetings with the union leaders, into a situation in which Kshirsagar found

himself catapulted to the Horizon board as work-man-director.

It was an untested ground for the company. But the novelty of it all excited both the management and the labour force. The

board members—all functional heads went out of their way to make Kshirsagar comfortable and the latter also responded

quite well. He got used to the ambience of the boardroom and the sense of power it conveyed. Significantly, he was soon at

home with the perspectives of top management and began to see each issue from both sides.

It was smooth going until the union presented a week before the monthly board meeting, its charter of demands, one of

which was a 30 per cent across-the board hike in wages. The matter was taken up at the board meeting as part of a special

agenda.

“Look at what your people are asking for,” said Chaturvedi, addressing Kshirsagar with a sarcasm that no one in the board

missed. “You know the precarious finances of the company. How could you be a party to a demand that can’t be met? You

better explain to them how ridiculous the demands are,” he said.

“I don’t think they can all be dismissed as ridiculous,” said Kshirsagar. “And the board can surely consider the alternatives.

We owe at least that much to the union.” But Chaturvedi adjourned the meeting in a huff, mentioning, once to Kshirsagar

that he should “advise the union properly”.

When Kshirsagar told the executive committee members of the union that the board was simply not prepared to even

consider the demands, he immediately sensed the hostility in the room. “You are a sell out,” one of them said. “Who do you

really represent—us or them?” asked another.

“Here comes the crunch,” thought Kshirsagar. And however hard he tried to explain, he felt he was talking to a wall. A

victim of divided loyalities, he himself was unable to understand whose side he was on. Perhaps the best course would be

to resign from the board. Perhaps he should resign both from the board and the union. Or may be resign from Horizon

itself and seek a job elsewhere. But, he felt, sitting in his office a little later, “none of it could solve the problem.”

Question:

1. What should he do?