One of the things that impressed me the most when I joined Tata Power was the quality of the HR team and the way they were tuned to the sector
Tata Power has introduced sustainability in the procurement process by integrating the supply management as well
S Padmanabhan, Executive Director, Operations, Tata Power, in an exclusive interaction with People Matters talks about how the dynamics of people issues in the Power Sector vary from the IT sector and the role of HR in driving engagement and growth...
Prior to joining Tata Power in 2008, you were heading TCS’ Global HR Department. From IT to Power, how do you think people management issues vary?
Well, both sectors are very dynamic and different from each other. These differences have an implication on the type of people that work in these industries and the way the organization makes strategies, manages and executes people practices and policies. To start with, while the IT industry is more people intensive and services driven; power industry is asset intensive and engineering driven. Interestingly, people in the power industry generally have a long term commitment towards the organization and this commitment goes on for generations. In fact, at Tata Power, we’ve people working for more than 35 years and belonging to third generation in a family.
Another major difference is that precision is one of the most crucial skills in the power sector, where the work performed has to be virtually error-free with a zero margin error. Consequently, roles take longer to mature as an employee needs to spend three to four years in a particular job profile to become an expert in a particular domain. Promotions in the power sector are not linked to time but to change of roles and maturity of expertise. Another consequence is that job rotation is low as people are not rotated until sufficient expertise is acquired. In contrast, professionals in technology have the potential to become experts in less than a year of experience. Finally, while people in the IT Industry are expected to be fully mobile; expectations of frequent mobility in power sector are low. Normally, it takes four to five years to build a power plant and Tata Power sets up a colony or a township near the plant with all facilities for its employees available in that township.
As a result of the above mentioned dissimilarities between the two sectors, the people policies and practices are different for both the industries. Therefore, the power industry has a strong focus on providing welfare benefits as a vital part of the rewarding mechanism where movement of roles or promotions is based on ‘tested expertise’.
What major structural and strategic changes have you influenced in the areas of people management since you joined Tata Power?
One of the things that impressed me the most when I joined Tata Power last year was the quality of the HR team and the way they were tuned to the sector. Tata Power has very rigorous HR practices and processes. One thing that we introduced was the cascading of the Balance Score Card (BSC) and the schedule of fixed monthly reviews. This new process has proven to be very effective in aligning people’s energy and has even increased our internal performance.
The concept is simple. Managing Director’s BSC is drilled down to all his direct reports like Operations, Strategy and Business Development, HR, Finance et al, and likewise, the BSC for each department head is further drilled down. This monthly review gives an opportunity to each department to assess performance of different groups. For instance, I meet with my team once a month and we together review the department scorecard for a complete day. Such meetings allow our people to learn and share experiences as the complete team has access to the challenges and achievements of other plants. It’s also an excellent mechanism to create engagement, ownership and alignment with the goals of the company.
Another innovation that we have added to the monthly review meetings is that we invite 15 junior employees, who are around four to five levels below the MD’s level and have been identified as high performers with high potential. Not only does this group get the visibility and exposure to the management team, but they also have the mandate to identify projects and prospective challenges and initiatives to overcome them. These initiatives are then owned by the plant Head to ensure they facilitate the execution of the same from the higher level.
Over the last one year, ever since economic downturn hit the Indian shores, how do you think that the business dynamics have changed due to changes in the environment?
Economic downturn has had four key implications in capital intensive industries like the power sector. When money is not available, liquidity dries up and cost of debt increases. Tata Power, like many others of its ilk, had to reduce the borrowings and prioritize the spending. That’s one implication. Secondly, Tata Power undertook initiatives to reduce working capital costs like improving inventory management and reducing the carrying cost of inventory. Next, it not only made us relook at the credit terms, but also to negotiate better payment arrangements. Finally, downturn led us to undertake initiatives towards cost management like reducing travel and lodging cost, number of attendees to conferences and seminars, et al.
The power generation business is extremely diverse. Tata Power is present in all areas of power sector – from generation and transmission to distribution and trading, which consistently requires embracing new technology, especially when combating climate change and energy conservation has become an integral part of the business. What are the challenges you face while adopting technological changes in the working environment?
Tata Power set up its first power plant in 1915 and since then a number of plants have been set up. All these plants are still running albeit with different technologies. The challenge is that technology in the power industry changes very rapidly and integration of new technologies is a very challenging task. One of the main concerns on technology implementation is the buy in and engagement from people. Technology changes can create a situation of anxiety among employees who were used to a particular way of functioning. Organizations should facilitate technology absorption by communicating the business purpose of the change and by providing opportunities for learning and assimilating the new technology.
Tata Power has recently announced plans to enhance its power generation capacity by more than 200% (to 9,000 MW from current capacity of 2,300 MW), for which you have raised $335 million through GDRs. An expansion of such magnitude would require a tremendous value addition to the existing pool of skill and talent. How do you plan to go about the recruitment process in alignment with your business objectives?
Tata Power required mainly three types of competencies: Construction Management Capabilities (capabilities on how to build a power plant), Project Management Capabilities (How to provide the required resources to build and maintain a plant) and Operation and Maintenance Capabilities. The recruitment of these competencies comes from various sources, first being campus recruitments. Tata Power invests in the future by recruiting from campus and creates a full year training/induction program for new recruitments. This program is normally one year long as the expertise required for any role in a power plant is high due to safety and precision requirements. Secondly, Tata power utilizes internal capabilities by releasing experienced employees and assigning them new and more challenging roles to build different competencies. Tata Power also uses traditional mechanism to build capabilities through training and competency building. Finally, there are also some lateral recruitments for specialist roles, even thought this is a difficult option due to the scarcity in the market for these roles.
With this scarcity of talent in the power industry, you might be looking very closely at your attrition rates?
Yes, of course. All organizations do and so does Tata Power. Our attrition rate is between 3-4%. More than numbers, what matters is that the people we want to retain should remain in the organization. One of the major reasons for attrition is employees wanting to move to a particular geographical area closer to their families. As opposed to the service industry, where companies can always find arrangements to facilitate movement of employees, there is a constraint in the power industry of having limited power plans that run across the country. The flexibility of being able to accommodate this requirement of employees is, therefore, limited.
How critically have you imbibed practices like climate change, energy conservation, et al, in the work culture at Tata Power?
Sustainability is a crucial pillar for Tata Power. Power industry pollutes the most followed very closely by the automobile industry. This raises the challenge on how to address climate change. Tata Power has been one of the first organizations in the industry to calculate its carbon footprint. We have also joined the Global 3C Council and are aggressively and actively planning to reduce this footprint by firstly, creating energy efficiencies in the plant itself by introducing technology that maximizes output while reducing pollution; and secondly by starting various initiatives for energy conservation in the plant itself. We’ve also introduced sustainability in the procurement process by integrating the supply management as well.
Can you elaborate on ‘Tata Power Energy Club’? How is the initiative in line with the business objective?
The Energy Club initiative is to educate the demand side of the organization. Energy conservation is important both from the supply as well as from the demand side. We have created a program to educate users by taking schools as a platform. The use of cartoons and attractive stories has made children buy-in the concept of energy conservation and efficiency. Children are encouraged to implement projects in their homes to reduce the energy bill and also to teach five other children about their learning. This has become a mass movement in all cities where we have operations. There is a shortage of energy in India and educating the demand side is also important for energy efficiency and conservation.
For year-ended March 2009, your staff cost has increased by 16%. Is the growth in tune with the overall growth prospects of the company?
Staff cost in the power industry accounts to only 5-6 % of the total cost. The main cost head is fuel that accounts for more than 60% of our overall cost. We have looked at managing that cost by having multiple suppliers in multiple locations and getting into long term contracts that are index linked. We have the responsibility to control fuel cost but eventually the changes in the cost structure do have an impact on the consumer tariffs as well.
How different is the working culture between TCS and Tata Power? Does a higher average age and the fact that the power industry is much more Government focused than the software business make a huge difference?
While the average age in the power industry is around 40 years; it is around 28-30 years in the IT industry. Interestingly, the average age in the power industry is also reducing due to the scarcity of talent and the fact that we are adding more people in the entry level positions as we discussed earlier. When it comes to the working culture, there are differences based on the nature of people that work in both industries. But eventually, people and their aspirations and dreams are same. In the power industry, a fresher will join the organization with the aim to have exposure to as many technologies as possible and opportunity to work in different roles and eventually be able to build a plant or head the operation and maintenance group. In the IT industry, the fresh graduate will also have similar aspirations and will want to eventually become an account manager or a delivery manager.
In terms of the difference when it comes to working with the government, I don’t think there is much of an implication. The Distribution Companies are our primary customer and their treatment and requirements are similar to any other customer. The only difference is that the level of regulation is very high and so, people must understand the rules of the game to function.
Your rise within the Tata Group has seen you move from Engineering to Sales to HR to Operations across group companies. What advice would you give to HR managers for nurturing top talent in their organizations by providing such opportunities to move laterally across the company?
I have learnt over the years that career growth is the responsibility of the individual himself. The organizational culture will facilitate opportunities but it is the individual who needs to respond and take action over those opportunities. The ingredients to facilitate this career growth are transparency in job openings and opportunities in skill development. And here, HR should be the catalyst to provide best opportunities, show the path to grow to those opportunities and provide tools and mechanisms to grow.
From your years of experience in the Tata Group, what in your opinion, are some of the most important aspects of management young HR professionals should be focusing on today in large organizations?
HR professionals need to have the competencies for deploying their work in order to contribute significantly to the growth of the organization. For example, a recruitment professional should know all the nuances of the recruitment process as there is no short cut when it comes to professionalism and there is no exception with HR community. Additionally, one should find a mentor, someone who is an expert in a particular field. Finally, there should be an attitude to learn and experience the nuances, to go into the depth of the process. HR professionals have a challenging task because even if processes, practices and policies have a lot in common, the way they affect and engage people is unique for every single employee.
These have consequences in different levels in the organizational structure. The key role of an operations HR person should be to connect with people one on one. He/she I should know everybody in the team. Just like a front sales person knows his/her clients inside out, a line HR too should know everybody in the team inside out. People may feel a disconnect with the HR person due to age, seniority et al, but I have seen HR line managers overcome this by exhibiting values of trust, integrity and honesty. As you move up the roles, the higher you grow the stronger is the need to understand the business. It is important to create that linkage between line managers and HR managers to work together in a proactive manner and seek solutions to business challenges. This can only happen if HR professionals understand the business and Line Managers understands the nuances of managing people. The effort has to come both ways.