Human Resource Management - Tata and Virgin Group - Case Study Example

Human Resource Management Contents Introduction 3 Human Resource Planning 3 Human Resource Planning Steps 4 Tata Group 4 Virgin Group 4 Effectivenessof Recruitment Process 5 Tata Group 5 Virgin Group 6 Motivational Theory 7 Reward System Tata Group 8 Job Evaluation 9 Tata Group 10 Virgin Group 10 Conclusion 10 Reference List 11 Introduction Since the emergence of globalization, number of companies existing within the conglomerate industry has substantially increased. Companies belonging to the conglomerate industry expand scale and scope of business operations in more than one type of industry. This essay throws light upon the human resource management system of Tata Group, a multinational conglomerate based in India. The context focuses on workforce management activities of Tata Group in United Kingdom. In order to evaluate efficiency and success of human resource management of Tata Group in U.K, the researcher has selected another native multinational conglomerate of the country, Virgin Group (Virgin Group, 2014). Human capital is a crucial factor of production and helps in generating higher economic surplus for an organization. Hard working professionals can be hired and nurtured in a company with the help of effective human resource management (Mcgraw-hill, 2000). The essay will compare the human resource planning steps, effectiveness of recruitment process and the existing reward system of Tata and Virgin Group in U.K. Human Resource Planning Human resource planning is the process through which human resource officials of a company recruits new workforce for accomplishing specific predetermined organizational tasks. Matters relating to workforce reward, penalty and promotions are types of human resource planning activities (Hunt, 2000). Human resource planning activities are extensively practiced in organizations like, Tata Group and Virgin Group, in U.K. for ensuring higher organizations productivity. Moreover, such actions help to assure that all requisite tasks of these companies are completed on time. Since the degree of market competition faced by companies like, Virgin and Tata Group, in U.K. is increasing with time, aggregate labour supply availed is scarce. These firms aim to accrue skilled labour resources from external workforce markets. If human resource planning processes of these firms are weak, then productive labour force would be recruited by industry rivals (Keenoy, 1990). Under such circumstances, companies would lose market competency within the industry. Human Resource Planning Steps Tata Group Tata Group had established business in the market of U.K. in 1907. The company has expanded within the continent over time by way of opening up new branches. It recruits more than 60000 workforces here. In U.K., the human resource planning activities of Tata Group are conducted according to the Human Resource Development Program (HRDP) (Tata Group, 2014a). The human resource management officials of the company perform their specific roles under this program. These officials annually recruit skilled workforce for the operational branches of Tata Group in U.K. from premium business and engineering schools worldwide. After initial recruitment process, these newly appointed officials are trained for six months to one year. These trainings help to enhance existing skills and knowledge base of the workers in fields of performance management, employee relations, interest and capabilities and community development. Finally, after the training period, employees are allotted work according to their knowledge base and capabilities (Tata Group, 2014a). During the training process, knowledge base of the newly recruited employees is judged through examinations. Nevertheless, it should be noted that human resource officials working under the HRDP program of Tata Group are selected by senior business executives and HR officers of the company so as to ensure an accurate and efficient recruitment method. Virgin Group Virgin Group is another company based in U.K. conducting business in the conglomerate industry. Similar to Tata Group, Virgin Group recruits more than 50000 workers from the international labour market (Virgin Group, 2014). The company aims to provide innovate services with the help of skilled workforce. The Human Resource Department (HRD) of Virgin Group assures that the organization recruits the most productive workforce, who can help to enhance its brand value within the industry (Virgin Group, 2014). The human resource planning steps of Virgin Group are similar to that of Tata Group. However, it is found that the company tries to recruit talented workers with good sense of humour. During the training process, newly recruited employees are given practice projects relating to innovation and customers service. Hence, Virgin Group pays higher importance to customer satisfaction and innovation oriented lessons while training its employees, relative to the Tata Group. A large proportion of workers in Virgin Group are hired through walk-in-interviews; whereas, Tata Group primarily recruits new employees through campus recruitment processes. Both Virgin and Tata Group human resource management departments try to enhance the existing skill set and knowledge base of workers by conducting regular knowledge sharing and building sessions (Gray, 2011). Such activities enhance working quality of existing human capital of the two multinational companies. Effectiveness of Recruitment Process The skilled labour resource available to a company in the external market is heterogeneous in terms of characteristic features and knowledge. It is the duty of human resource management department in a company to recruit only those skilled workforces, whose capabilities can serve interests of the organization in most appropriate manner (Hunt, 2000). Multinational companies conducting business within the conglomerate industry try to experience economies of scale in manufacturing to reduce costs. Scale economies can be enjoyed only with the help of increased manufacturing and this is supported by specialization of workforce. The recruitment process of Tata Group and Virgin Group involve detailed and complex screening processes. This is because these companies aim to recruit specialized workforce who are capable of generating maximum output (service or product) within minimum amount of time (Tata Group, 2014c). Tata Group The recruitment process of Tata Group in U.K. is highly efficient, which helps to generate products and services utilities for the customers. Figure 1: Human Resource Strength U.K. (Source: Tata Group, 2014b) From the above chart, it can be claimed that maximum employees are recruited in Tata Group within Information Technology and Communications, materials and engineering sector. The job attrition rate in Tata Group U.K. is low because the company offers lucrative career growth opportunities to employees. The entire organization grows at an annual rate of 10% and provides scopes for higher employability in U.K (Tata Group, 2014b). Even so, it is found that company’s U.K. branch often outsources labour resource from the Asian countries like, India. This is because it desire to recruit productive workforce at less cost. Labour cost incurred by the company in India is less than that in U.K. The workers of Tata Group use their expertise to accomplish tight budget projects of its clients within short time schedules. The company hires employees both on part and full time basis. From the above context, it can be stated that cost leadership is an important business level strategy for Tata Group. In order to practice this strategy, the company tries to recruit skilled workers at less cost. In order to create a positive working environment, the company maintains “one size fits all” based norms for employees. This proves that it does not discriminate among employees on grounds of class, creed, religion or gender. Moreover, the regulations imposed on employees are flexible and less rigid. All such aspects help in enhancing employees’ trust over the company, thereby improving their proficiency at work. At the same time, it is also found that the company tries to maximize returns accrued from silver skills. Tata Group gathers valuable information from experienced workers and enhances working performances accordingly. Thus, old and young workers of Tata Group collectively diversify knowledge base and stimulate its business growth in U.K. Virgin Group In the contemporary era, it is found that multinational companies of U.K., such as, Virgin Group, try to outsource labour resources from developing countries like, India, China and Brazil. This is because; currency values and exchange rates of these nations are low and help to lower company’s operational costs (Gray, 2011). Furthermore, aggregate young labour forces in these economies are higher than that of European nations like, U.K. Since demand of labour resource in these countries is lower than its supply, their market negotiating wage rates are lower than U.K. Virgin Group of U.K. owns approximately 200 businesses under its brand. The company experiences tremendous growth in business and in turn provides great career development opportunities to employees. The company’s high brand value and superior business performance in market indicates the nature of workforce skills. Comparison From the above analysis, it can be claimed that recruitment process of Tata and Virgin Group is considerably effective. Virgin Group owns 200 businesses under its brand name, while Tata Group has 100 businesses across 7 different sectors (Ankit, 2002). In 2012, it was estimated that revenue of Virgin Group Ltd was £15 billion, while the gross revenue generated by Tata Group in the same year was £ 57.78 billion. Though the structure and business relationships of both companies are similar, yet aggregate revenue earned by Virgin Group is lower than that of Tata Group. Moreover, Tata Group had started to procure cheap labour from countries with lower currency values than that in U.K., earlier than Virgin Group. The scale of commercial operations conducted by Tata Group is lower than that of Virgin Group Ltd, but former’s higher revenue indicates superior quality of work delivered by its recruited employees (Ankit, 2002). Furthermore, workers of Tata Group are more efficient and productive than that of many other companies, given that the firm aims to recruit the “Beta Generation” employees. This generation comprises young employees who are highly productive and can be recruited at less cost. Motivational Theory Motivation is an attribute that helps workers to accomplish tasks on time. The Maslow’s Theory of motivation claims that a worker does not seek to achieve more, until his current requirements are fulfilled (Aghazadeh, 2004). This proves that an employee of a concern would never put in more effort at work and progress professionally, until he is highly motivated at workplace. Nonetheless, motivation of workers can be substantially enhanced through special reward and incentive schemes. There are several theories that associated with the concept of reward system. All theories claim that needs of workers within an organization determine their workplace behaviour. In turn, behaviour of the workers in a firm indicates their level of job satisfaction. If labourers of a company are not contended with workplace atmosphere, then they would become unproductive and exhibit bad behaviour. Finally, extent of satisfaction experienced by a worker determines his needs from organization. If an employee is not satisfied at work, then he would require additional incentives to perform activities with interest. According to basic theories of motivation, the needs of workers within a company can be classified in terms of five factors. These are self-actualization, belongingness, safety, esteem and physiological. If these needs are satisfied, then workers become motivated at work, thereby gaining high efficiency and productivity (Messmer, 2011). Therefore, from the above context, it would be correct to state that reward system is a crucial determinant of workers motivation and satisfaction. By providing adequate rewards, managers can build superior relationships with employees. The degree of trust between employees and managers enhances with the essence of good workplace relationship. Reward System Tata Group Tata Group considers talented labour resource as its most crucial competency in business. Annabel Sweet (head of people’s strategy and employee experience) claimed that, “The penny dropped that unless your people are happy, they won’t deliver a brilliant customer experience” (Tata Group, 2007). Tata Group realizes that working proficiency of employees greatly depend on their job satisfaction level. According to the theories of motivation, satisfaction of workers can be achieved by offering rewards and incentives. Tata Group has already introduced several incentive and reward programs for employees. The company also offers additional medical, gym, holiday and concierge services to employees. Then again, by incorporating a new reward system, Tata Group can enhance the motivation level of employees and become more productive in the long run. Reward systems are generally of four different types, namely transactional, individual, communal and relational. The transactional rewards are tangible rewards that can be provided to employees in the form of financial returns (Tata Group, 2007). Nonetheless, such rewards are imitable and not rare. If transactional reward is given to an individual employee, then it becomes an individual reward. If a company gives intangible rewards to employees, then it is known as a type of relational reward. Such rewards are rare and non-imitable. Finally, when a company provides reward to an entire environmental community, then it is known as communal reward. Tata Group already gives numerous communal rewards to its external business environment (Mertens, 2005). The company can introduce a new form of relational reward system within its workplace in U.K. Such rewards can be offered in the form of special award giving ceremonies. In such occasions, the company can provide special recognition awards to hard-working workers, in terms of their working punctuality and creativity. The company already provides several rewards to its productive workers in U.K. However, most of the rewards are presented on grounds of targets and productivities. The company should initiate new rewarding systems for workers who are innovative and punctual at workplace. Relational reward system is the best rewarding approach for Tata Group because similar approaches cannot be completely imitated by competitors within the industry (Tata Group, 2007). This reward system will be highly productive because it would improve creativity of workers. Such creativity would be beneficial for the organization during crisis periods in the external market. Being a multinational company based in a developing nation like, India, Tata Group often faces financial crunches while competing with rivals in the automobile industry. Even so, greater dynamism and ingeniousness of its diversified employees would help in obtaining lucrative business opportunities in the competitive market. Job Evaluation Job evaluation process of a company includes three basic steps. In the first stage, the job value of an employee is determined. In the second stage, salary structure of the employee is settled on basis of the job value. Finally, human resource officials make decisions regarding exact pay of the worker (CWR, 2011). The job experience, educational qualification, expectations about promotion and quality of job interview given by an employee indicates the value of salary offered to him by an organization. Matters of external business environment also determine wage rates of the workers. During recession, companies aim to reduce costs as well as wage rates of workers. In addition, if the labour market of an economy experiences surplus workforce, then companies are able to avail skilful labour resources at cheaper costs (Hunt, 2000). Tata Group Tata Group follows performance appraisal method of job evaluation. Under this process, the company offers promotion and rewards to workers based on their workplace performance. The strengths and weaknesses of employees of the concern are judged in terms of their demeanour in workplace. It is a continuous and ongoing method of job evaluation process. The steps involve establishment of special performance standards, communication of standards, performance measurements, appraisal discussion and correct action taking process. Tata Group utilizes Critical Incident performance management method (CWR, 2011). As per this method, the company considers detailed performance of each worker and determines areas where performance must be enhanced. Virgin Group Employee performance monitoring is conducted in Virgin Group by way of performance appraisal. Nevertheless, unlike Tata Group, the company uses graphic scaling rates in the process (CWR, 2011). Through this method, the company rates performance levels of the employees in terms of certain scales. The factors considered for scaling relates to working quality, attitude, dependability, creativity and interest of employees (Eve, 2007). Conclusion Human resource management has become a crucial activity for all corporate business organizations. Labour resources act as productive human capital and in turn help to enhance economic prosperity of an organization. Tata Group is considered to be one of the largest private sector employers in the international market. It generates high turnover rates with the essence of skilful productive workforce. Even so, it should be noted that productive employees of the firm are selected by an efficient human resource management system (Bull and Compton, 2006). Despite a smaller scale of business compared to many native conglomerate firms in U.K., like, Virgin Group, Tata Group earns high revenue and has built an image of a prominent industry rival. The company understands that working efficiency of employees is highly influenced by their level of motivation. By enhancing relational reward practices, the company can achieve higher growth in long run. Skilled and diversified workforce of Tata Group in U.K. reflects proficiency of its employee evaluation process. Reference List Aghazadeh, S. M., 2004. Managing workforce diversity as an essential requisite for improving organizational performance. International Journal of Productivity and Performance Management, 53(6), pp.521 – 53. Ankit, P., 2002. The ultimate branding. [pdf] Insight. Available at: [Accessed 4 June 2014]. Bull, M. and Compton, H., 2006. Business practices in social enterprises. Social Enterprise Journal, 1 (2), pp. 42-60. CWR, 2011. Job evaluation process. [online] Available at: [Accessed 4 June 2014]. Eve, A., 2007. Development of project management systems. industrial and commercial training. 39 (2), pp. 85-90. Gray, R., 2011. Recruitment process outsourcing: recruiting the recruiter. [online] Available at: [Accessed 4 June 2014]. Hunt, J., 2000. The shifting focus of the personnel function. Personal Management, 16(2), pp. 14–19. Keenoy, T., 1990. HRM: Rhetoric, Reality and Contradiction. International Journal of Human Resource Management, 1(3), pp. 363–384. Mcgraw-hill, 2000. Introduction to human resource management. [pdf] Mcgraw-hill. Available at: [Accessed 4 June 2014]. Mertens, D. M., 2005. Research methods in education and psychology: Integrating diversity with quantitative and qualitative approaches (2nd ed.). California: SAGE. Messmer, M., 2011. Motivating employees for dummies. New Jersey: John Wiley & Sons. Tata Group, 2007. Planet, people and products. [pdf] Tata Group. Available at: < http://www.uk.tata.com/pdf/CBI_business_guide_corporate_sustainability.pdf> [Accessed 4 June 2014]. Tata Group, 2014a. Human resource development program. [online] Available at: [Accessed 4 June 2014]. Tata Group, 2014b. Tata group financials. [online] Available at: [Accessed 4 June 2014]. Tata Group, 2014c. Tata technologies recruitment. [online] Available at: [Accessed 4 June 2014]. Virgin Group, 2014. Virgin group. [online] Available at: [Accessed 4 June 2014]. Read More