Article: PSUs on the forefront of energizing change

Strategic HR

PSUs on the forefront of energizing change

Nehru's Temples of Modern India have transformed to become at par with any other professionally run and managed organisation of the nation

The financial instability that hit the Indian shores has affected the PSUs as much as their private counterparts


Over the years, PSUs have indeed embarked upon the change strategy and transformed themselves into pro-fessionally run and managed company


In 1954, when the then Prime Minister, Pt. Jawaharlal Nehru, inaugurated the Bhakra Nangal dam, he christened it as the Temple of Modern India. As the stream of water gushed into the large towering pillars of the dam, it signified that the Indian economy too is bound to gain momentum in rapid industrialization. And so were born Nehru’s Temples of Modern India -- public sector undertakings (PSUs) that took the onus of making India a self-sufficient nation. Today, India Inc. proudly boasts of over 20 million people employed in over 250 PSUs, which are largely owned and managed by the Central Government. Once criticized for their lackadaisical attitude, PSUs in India have shed that image and emerged to be the building blocks of the Indian economy. Each of the PSUs have contributed a great deal to the development of the Indian economy and contributes significantly to India’s domestic output, thereby making India self-reliant and less dependant upon exports. At the same time, PSUs have also embarked over strategies to counter people issues in their large-sized organizations and gotten on board experts to deal with their people issues.

Even though PSUs contributed to the success of India Inc. and transformed it from an agri-based nation to industries-led economy, there has always been an eagle eye on them by experts and critics. PSUs have also been accused of being profitable by the virtue of the fact that they have the financial backing of the Central Government. However, much has changed since then. Riding such accusations off its back, most, if not all, PSUs have transformed themselves from being a babu-driven company to professionally run and managed organizations. Today, Steel Authority of India Ltd. (SAIL) is India’s largest steel manufacturing unit, Oil and Natural Gas Corporation (ONGC) is touted as India’s highest profit making organization, and the Indian Oil Corporation Ltd. (IOCL) is reckoned as India’s largest commercial enterprise.

PSUs realized well in time that for such behemoths to run businesses of such size and magnitude, it was very imperative for them to transform not only their approach to their business objectives, but at the same time transform their people management practices. In fact, according to a survey conducted by Hewitt Associates, NTPC sat proudly at the third position for being adjudged ‘The Best Employer” in 2003 as well as 2004. Power Finance Corporation Ltd. (PFCL) posted healthy net income figures -- to the tune of Rs.13.55 billion for year-ended March 2009 with little over 300 employees on its payroll. Today, SAIL HR Awards, in collaboration with IIM-Ahmedabad are reckoned as a prestigious award in the entire HR fraternity.

The financial instability that hit the Indian shores has affected the PSUs as much as their private counterparts. Take for instance the steel industry. While private players were reeling under the tremendous cost pressures accrued to them due to increase in critical raw material prices, SAIL not only acted wisely by using alternate resources for steel manufacturing; but also streamlined its employee strength in a rather meticulous and mindful manner by rationalizing the workforce instead of mass retrenchment. In order to foster motivation in the organization, manpower to the tune of 4,200 was rationalized in FY 2008-09. The complete focus was on motivating employees by improving individual and team productivity.

In order to foster growth in organizations, especially during an economic downturn, instilling a sense of ownership too is imperative and PSUs seem to have taken active steps towards it. This sense of ownership is then translated into a low attrition rate. Today, PSUs in India have the lowest attrition rate. Bharat Heavy Electricals Ltd., for instance, boasts of an attrition rate as low as 2%. And the reason for that too is self-explanatory. Most of the PSUs offer a comprehensive range of products and services. And so, each and every employee that is recruited goes through various skill nurturing processes and practices, which add tremendously to their existing knowledge base.

When it comes to rewards and recognition, PSUs are again looking at implementing best practices. Lets take the case of BHEL, which has a dual reward package system. The Excel Award that BHEL propagates is given on a national level to the best performers, while the Impress Scheme award is a monetary recognition is awarded for the outstanding performance of individuals. BHEL also maintains a scorecard for periodical evaluations, which helps employees to climb up the promotional ladder. In order to be neck-to-neck with the technological upgradation, BHEL invests regularly in continuous training and development of its employees. BHEL also has access to captive institutes like The Human Resource Development Institute (HRDI) and The Human Resource Development Center (HRDC) that trains its employees on a regular basis. In fact, such inspirational has been the leadership of K. Ravi Kumar, Chairman, BHEL, that he was profiled by The Week as top 25 most valuable Indians.

PSUs have for long chucked away the appraisal system based on the age of the employee and many PSUs have also adopted electronic paperless appraisal making them more tech-savvy. The Central Government too is working toward introducing a performance management system in the PSUs in order to have a uniform process for distributing performance-linked bonus to employees. Hitherto, each of the PSUs had their own performance appraisal systems. However, with this change, if implemented, the performance appraisal system will be at par with the industry standards. Under the new regime, a ‘bell curve approach’ will be adopted to grade executive. This would lead to a clear demarcation between outstanding performers as well as below par employees.

As far as employee benefits goes, PSUs takes care of needs of its employees through provision of facilities for housing, medical and educational sponsorship for children’s education. SAIL, NTPC, et al have also created large townships for their employees complete with all facilities and civic amenities. The work culture is that of participative style. As a test of its programme effectiveness, PSUs also conduct an Employee Satisfaction Survey under TQM Programme. PSUs have also inducted transparency in their working environment. PSUs now encourage informal regular communication in a structured institutionalized manner.

Over the years, PSUs have indeed embarked upon the change strategy and transformed themselves into professionally run and managed company. And this is also reflective in how they have been one of the most resilient in an economic downturn than their private counterparts. According to the prestigious Fortune 500 list released in 2008, while only two companies from the private sector made it to the list (Tata Group and Reliance Industries Ltd.); as many as four PSUs found their place in the coveted list. While Indian Oil Corporation perched at rank 116; Bharat Petroleum, Hindustan Petroleum, ONGC and State Bank of India too sat proudly at ranks 287, 290, 335 and 380 respectively.

Another change that the PSU sector has adopted is its branding. And the pioneer in this, so to say, is SAIL. With its campaign ‘There’s a little bit of steel, in everyone’s life,” SAIL has been able to break its image as a heavy industries manufacturer to a company making change in a common man’s life. Likewise, various other PSUs like BHEL, NTPC, Power Grid, et al, have also come out with a targeted strategy of focus branding.

No organization has been ever able to survive without embarking upon a change strategy. And PSUs have also embarked in this transformation and change. And seems the effort has paid off. Now that most of the PSUs are looking at disinvestment as an option to further expand their wings in the national as well as the international market, adopting professionalism is imperative. And equally imperative is the need to adopt world-class HR policies to fight the recession and turn the world on its head. The need of the hour for the PSUs is to have dynamic leadership who can further transform the people practices to make them at par with their private counterparts.

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Topics: Strategic HR, C-Suite, #ChangeManagement

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