Synergizing distinctive HRM strategies helps to create unique competencies that differentiate products and services and, in turn,

drive competitiveness. Senior managers remain aloof to the fact that FIRM practices extend to nearly all the activities of an organization and are not just restricted to one or few department(s). Well-organized HRM practices are a prerequisite for a successful strategic change. FIRM plays a pivotal role in redefining new strategies so that they can suit the changing environment. At times, HRM not only complements the new strategy, but also becomes the deciding and defining factor in pursuing a particular strategy. To keep abreast with the dynamic business conditions, Indian firms have revamped their HRM strategies and now incorporate part-time work, outsourcing, and temporary workers. This represents a drastic shit from the traditional personnel management policies. However, implementing such modern FIRM strategies is not an easy task for senior management, since changing the mind-set and motivating workers to agree to the change process is an uphill task by itself. An interesting example of this case was Mahindra & Mahindra Ltd., the lagship company of the Mahindra Group. The M&M Ltd Tractor Division was suffering from manufacturing inefficiencies, low productivity, an overstretched production cycle, and poor output. The primary reason behind this inefficiency was the underproductive and excessively unionized labor force. The situation was further aggravated by the changes taking place in the external environment due to the modifications in the business environment and government policies. The company had to adopt a new strategy in order to survive. In 1995, the company introduced business process reengineering (BPR), focusing on a total overhaul of the style in which the company was organized. Instead of improving or changing procedures, the scheme focused on reformulating the way the company carried out its business. This initiated several changes in the organizational structure, which enabled the company to realign itself with the BPR mechanism. The introduction of BPR was opposed by the labor union. Prior to BPR, the HR department was not part of the strategy-making process at M&M Ltd. BPR adopted innovative FIRM practices, such as group work, that used the "churning effect" to change the traditional mind-set of the employees and enforced concrete HRM. Policies and practices. First, from a multilayered structure, the company adopted a flat structure, which reduced the disparities existing in the different levels. It brought together people from different departments that encouraged cross-functional teamwork. Regular meetings with workers were encouraged to enhance the company's belief that "HR cannot function in cabins." Furthermore, the company repositioned existing people in key ranks and placed emphasis on training programs. It fol-lowed a simple recruitment philosophy by refusing to hire highly qualiied people who had a history of leaving the organization for a competitor MNC. Instead, it believed in hiring professional consultants to take care of advanced work practices and simultaneously capitalized on its existing employee talent through intensive retraining and redeployment strategies. The company also began outsourcing noncore manufacturing activities. After eight years, in 2003, the results of implementing BPR in synergy with new, innovative HRM. practices within the organization were spectacular, as it allowed the company to maintain steady proits, reduce working capital levels,and rationalize the manufacturing process. Redesigning

innovative HRM. strategies and expanding the HRM practices became an effec-tive method to reengineer the irm's plants. It created a social net-work within the organization and led to the effective team building lacking before.Competency-based strategies are dependent on people, and when people are regarded as a key strategic resource, the creation of social networks within the organization is an effective way of managing people. HRM policies differ depending on the rapport an employee shares with the company and how this rapport is co-opted with other stakeholders of the organization. Hiring of external consultants can play a key role in implementing strategies decided by a company as it tries to strengthen the networks within the organization by providing tools to adopt innovation. Tata Iron and Steel Company (TISCO), a Tata lagship company and India's most costeffective steel plant, provides an example. TISCO undertook a management restructuring program with the objective of transforming TISCO into a high-performing, high-growth organization. The key strategic drivers to achieve this goal were to focus on current growth, enhance the degree of proit and accountability, provide exciting career opportu-nities, and build a team of high-performing professionals. McKinsey & Co. was appointed to assist the company in achieving these objectives. McKinsey started with an organizational restructuring program by creating a lean and a lat strategic business unit (SBU) structure with enriched jobs, greater accountability, and autonomy. Accord-ingly, unit teams were formed comprising unit leaders and facilitators. In the beginning, McKinsey provided the facilitators who would coordinate a unit's performance. Each team had to set targets and work toward achieving them. The Performance Ethic Program (PEP) was introduced to promote young dynamic personnel to higher posi-tions to replace the policy of senioritybased promotions and to cre-ate new socially vibrant networks. The PEP institutionalized and tai-lored the management development programs for oficers. A new performance management system (PMS) was institutionalized to sup-port the new innovative practices that McKinsey implemented. The PMS included alignment of key result areas (KRAs) with business strategy at all levels and clear career paths to enable the company to identify and reward the strong performers and provide them with growth opportunities. The compensation and rewards were linked to performance and pegged to the market. This program made performance and reward systems transparent and fair within the organiza- tion, boosting the employees' initiative to succeed With the demand for knowledge workers increasing in a competitive market, enhancement of proitability depends on recruiting, selecting, and retaining them in the organization. Until recently, access to technology was considered as the prime area of focus for many Indian irms. With increasing competition, knowledge workforce (i.e., people) have become competitive differentiators.1 The HR executives are under pressure to stretch their capabilities and provide valueadded services by professionalizing the HRM practices. Organiza-tions are recruiting and selecting professionals who can

comprehend a complex organization structure and the requirements of a company in a dynamic business environment.A remarkable example is that of an internationally renowned IT com-pany, Infosys Technology Limited. Infosys is one of the biggest Indian exporters of sotware and offers IT consulting and sotware services to many of the Fortune 1000 companies. The determination and the effective management skills of the chairman, Narayan Murthy, were the driving force behind the success of the company. His strong belief that Indian professionals have the capability to han-dle complex projects led the company to establish a name for itself in the foreign markets. He implemented the best reward system in the industry to ensure that his employees were taken care of. According to him, they represented the company's most powerful wealth. He encouraged them to communicate with each other and to interact with the management through meetings. He set up a Leadership Institute in Mysore to prepare the Infosys employees to face the chal-lenges of a dynamic market scenario and to groom them to be efi-cient leaders. The CEO's profound faith that human resource is the most valuable asset of the company certainly motivated the employees to strive for excellence. The rapid expansion of this software export and information technology company from 42 in 1987 to 23,000 in 2003 called for redeining and innovating its recruitment, selection, and career devel-opment practices. For about 700 advertised positions in 2003, the number of applicants exceeded 160,000. The sheer number of applicants requires a tough recruitment process, which is followed at Infosys Technologies Ltd. Infosys carries out a rigorous interview process for selecting candidates, the primary selection criteria being capacity to learn. After diligently scanning the curricula vitae of the potential candidates, Infosys selects a small number of applicants for further tests. These tests include a set of puzzles and math algorithms in order to evaluate candidates' leamability. The exact skills required are not tested for during the screening process, as Infosys trains employees to acquire those. The candidates that pass the test stage have to further undergo an interview round, which determines their jobs at Infosys. Prospective candidates are tested primarily for analyt-ical, problem-solving, and communication skills to enhance a dynamic learning environment, the key to success in an industry where technology changes rapidly. This strict and thorough selection process ensures that the company manages to attract the most skilled people available in the job market. The chairman is confident that as long as the company innovates, it will survive and succeed. In his words: . The biggest challenge is to build a first-class
company in a thirdworld country. To become a global firm, we need not only the art of selling internationally but also the art of recruitment, compensation, training, and the art

Many Indian companies that perform well in the domestic market have not yet expanded to the international arena. Several factors, such as lack of conidence, technical know-how, and resources, inhibit leading Indian
of teamwork across borders. The quality of people is a survival imperative

groups to expand their area of activities to other parts of the world. Innovative HRM practices can play a crucial role in changing the attitude of the companies and its employees in order to facilitate entry and presence in the foreign markets. This is effectively illustrated by the case of the Indian pharmaceutical giant Ranbaxy, which succeeded in expanding its business internationally due to the single-handed determination of its past CEO, Dr. Parvinder Singh, and the manner in which he strived to change the mind-set of his employees. Ranbaxy found itself at the bottom of the pharmaceutical curve" in spite of being active in the export market for 18 years. For-eign markets had stringent quality requirements in terms of raw materials, packaging, and physical properties of pharmaceutical sub-stances. This implied heavy costs in research and development and careful organization of distribution and marketing activities. Despite entering the foreign markets at the bottom rung of the value chain, Ranbaxy inched upward because the employees shared their CEO's beliefs and dreams that they were in a position to harness their resources and capabilities to be successful in foreign markets. Together, they developed continual cross-border learning programs to enrich their ways of working and functioning. Their board attracted managers from different parts of the world. This step enabled them to catalyze their globalization process. Moreover, the CEO led the company to integrate backward, to enter new markets, and to develop novel drugs. This provided Ranbaxy with the edge to succeed in the global marketplace. tor for superior performance is people. Intelligent and skilled employees are a prerequisite for companies that wish to climb the lad-der of success. As more companies acknowledge the worth of employees in India, the competition for the limited and precious human resource will get iercer. The challenge is not just to attract human capital and enhance its skills and competencies to suit a com- tor for superior performance is people. Intelligent and skilled employees are a prerequisite for companies that wish to climb the lad-der of success. As more companies acknowledge the worth of employees in India, the competition for the limited and precious human resource will get iercer. The challenge is not just to attract human capital and enhance its skills and competencies to suit a com-pany's needs but also to retain it within the company. This is certainly not an easy task given the increasing mobility and lexibility of theworkforce. As the battle to win and retain a talented and knowledge workforce intensiies, the HRM department has to step in to play an important role in the conception, formulation, and execution of a company's strategy. Organizations need to incorporate country-speciic institutional factors that affect patterns of organizational practices like HRM. National institutional embeddedness of irms plays an important role in shaping HRM practices.12 With competition, the responsibilities and the domain of the personnel management need to expand to become proactive and innovative HRM. The HR department not only has to develop new skills regarding recruitment and selection proce-dures but also has to crat innovative compensation and integration schemes for the employees in order to retain talent in the organiza-tion. An interesting example is that of Arvind Mills. Arvind Mills, which belongs to the Lalbhai Group of companies, is a family-owned business, producing textiles, ready-to-wear apparel, agro-chemicals, and dyestuff. In the late 1990s, it was the third-

largest producer of denim in the world. However, with the change in fashion trend from denim to gabardine and corduroy, the company was adversely affected. The threat from powerlooms, the need to increase exports, and the growing demands of consumers led the company to introduce a new strategy. HRM played a crucial role in this business plan. The company created a Manpower Planning and Resource Group to take charge of the selection and recruitment procedure, to organize the job structure, and to deine the task description of various employees. The group absorbed fresh talent from top management and technical schools and established a compensation system that matched the industry standards. Innovative new methods of recruiting were adopted such as the Selection Information System (an online recruitment system) that provided facilities from generating call letters, ng interviews, and evaluating online interviews. This program was linked to
the Compensation Information System and the Training Information System. A Management and Organizational Development Group was incorporated to look into the training of the employees. It provided three kinds of training programs: functional, behavioral, and global. Another innovative concept (in the Indian context) developed at Arvind Mills was the Management by Objectives MBO), which focused on producing results desired by the management in keeping with the satisfaction of the employees. Arvind Mills succeeded in inding a harmonious balance between the top management and the industry workers. Udaan, a kite-flying competition between the management team and the operations team, is a perfect example of building healthy relations between the two. In addition, programs such as Booboos (rock show) and Umang (forum) were introduced to create synergies among workers. These were some of the ways that Arvind Mills adopted to build and retain talent. Most Indian companies still follow age-old practices and customs. Consequently, their HRM strategies are also based on the traditional "industrial model," which involves several features like senioritybased promotions, strong union inluence, and strict job classiications. With the advent of a new wave of thinking, several irms have decided to break away from the conservative model and adopt new and dynamic methods from their Western counterparts that were more in sync with the changing industry standards. Clariant (India) Ltd is one such example. With the demerger of Sandoz (I) Ltd, a new autonomous company called Clariant was born. Clariant develops, manufactures, and markets dyes, pigments, chemicals for textiles, leather, plastic, paints, and inks. A new company meant that man-

agers had new responsibilities to handle. A special program called Clariant Participation to Improve Proitability Through Performance and People (CLAP) was put into place to eficiently guide the transition. The unique feature of this program was that managers who had handled multidivisional responsibilities earlier were able to remarkably unlearn their experiences and adapt their learnings to new situations. The program aspired to "change the mental process" by introducing several changes in the company's way of functioning. The company moved from "top-down close communication" to "updown open communication," from "we and they" to "do it together," from "control" to "leading and managing." All these efforts enhanced the communication process. Task forces and crossfunctional teams increased employee participation and involvement. Furthermore, the company introduced a "goal-setting" program that increased motivation among the employees. The personnel department of Sandoz, which was mostly involved with administrative ities, expanded its role as a catalyzer, supplier of information, facilitator, and developer, thus trying to develop and retain talent. On the other hand, Infosys designed its performance management system to build, retain, retrain, and redeploy talent. Since employees are considered as the prime assets at Infosys, the HRM practices arose

from the belief that the employees stayed with Infosys because the management was able to satisfy the threefold needs of the workforce: learning value-added, inancial value-added, and emotional valueadded services. In the words of Chairman Narayan Murthy of Infosys:
if there is one challenge that Indian software industry faces, it is how to recruit, enable, empower, and retain the best and the brightest professionals.

On the learning aspect, Infosys provided its employees with an opportunity to accept responsibilities at an early stage in their careers. On the inancial side, Infosys provided stock options and low-interest and zero-interest loans to its employees. On the emotional side, a friendly, open, and transparent atmosphere within the company kept the employees motivated and involved. As a consequence, Infosys developed an ambience that fostered the overall growth and wellbeing of its employees. Infosys built a campus that was a set of multifloored buildings constructed on a sprawling ive-acre land that provided banking facilities, an ATM, volleyball and basketball courts, shower rooms, bus facilities, and housing if employees needed to work overtime. Respect for people enabled the company to create a leading position for itself in. the Indian market and to gain esteem in the international arena. This is the same story as Azim Premji, CEO of Wipro Corporation, who managed to exploit the talent of his employees. The biggest challenge faced by his company was holding on to its skilled employees. For new local entrants and MNCs like IBM, Microsot, Oracle, and Texas Instruments that wanted to recruit talented people from well-managed Indian companies, Wipro became a prime target. Azim Premji realized this problem and took necessary steps to retain his skilled workforce. Human resource managers considered employees as "talent investors" and treated them as partners to be rewarded as other investors are. Wipro, as Infosys, was one of the irst Indian companies to launch employee stock ownership, which they called the Wipro Equity-Linked Reward Program. The new concept of HRM calls for segmenting the workforce according to diferent criteria like age, educational background, and business background. Policies need to be tailor-made according to the needs of each group, in order to optimally utilize the resources offered by each segment. In the wake of liberalization, the

State Bank of India (SBI), India's largest public-sector bank decided to under-

take an intensive restructuring program. With the entry of and private-sector banks, SBI faced competition from

foreign both the Indian private as well as foreign banks. It turned to business consultants McKinsey 8r. Co. for suggestions and improvements. Accordingly, the business was divided into eight major functions, Personnel and HRM being one of the five most important divisions. The HRM department was divided into four branches in order to serve the varied needs of the organization: Corporate Ofice, Local Head Ofice, Zonal Branch, and Individual Branch. The Corporate Ofice handled most of the HRM activities; each branch was delegated speciic responsibilities, which made the management and decision-making process in the bank simpler and effective. The FIRM strategy placed special attention on the policies carved by the top management, which were subsequently implemented by the middle managers. Care was taken to ensure that the new strategies that were designed for the middle managers corresponded to their needs. But the implementation of the restructuring program had its share of dificulties. When a company is undergoing a restructuring phase, it is likely to uncover many problematic areas that hinder its smooth functioning. At such times, innovative HRM practices enable the company to improve its eficiency. This was the situation encountered by the SBI, when it introduced the Voluntary Retirement Scheme (VRS), or the "Golden Handshake" system. With the advent of new technologies like ATMs and Internet banking, the dynamics of banking had changed dramatically in the late 1990s. SBI found itself faced with the problem of a redundant workforce. The vast workforce that was once regarded as one of SBI's strongest assets became a liability following the computerization of the bank. In order to protect its deal-

ings and to remain profitable, SBI realized that it would have to undertake rigorous cost cuttings and the VRS. The VRS deal proposed 60 days' salary for every year of service or the salary to be drawn by the employee for the remaining period of service, whichever was less. When the VRS was offered, a large number of able employees accepted the offer and joined competitor banks. SBI was in danger of losing most of its talented employees and being let with less-eficient employees. The introduction of this scheme led to strong protests from the unions, which claimed that the bank had made a hasty decision without undertaking correct manpower planning measures. Unions and media strongly criticized SBI's VRS on the grounds that it was arbitrary and discriminatory. At this crucial moment, SBI needed to implement the right HRM practices in order to retain its talented workers and to do away with the excess unskille workforc A similar story is that of Mehta Group and its innovative HRM practices. Mehta Group is a leading conglomerate that houses two cement companiesSidhee Cement and Saurashtra Cement in west-ern India. Sidhee has been declared as a sick unit and is under the Board of industrial and Financial Reconstruction (BIFR) whilE Saurashtra is a loss-making irm. The group wanted to synergize operations of the two companies in order to reduce competition and the declining market share. A strategy to develop "synergy" between the two companies was devised in which strong emphasis was placed on innovative HRM practices. There was a complete redeinition of the organization structure. Job roles and work descriptions were revised, new positions were created, and competency exercises for the employees were effectuated. Instead of pursuing a retrenchment and recruitment philosophy, the group followed a redeployment policy. It reorganized its employees into technical experts, industry experts, and market research personnel. By enhancing human resource development within the company, Mehta Group was able to record significant improvement in performances and optimally utilize its resources. Liberalization forced domestic irms to adopt new changes to face foreign competition. Innovation became paramount, as it was the only way to satisfy the rising consumer

needs and requirements. Companies began reorganizing their organization structure and their business model. HRM became an essential element in this restructuring phase in order to enable companies to improve the recruitment procedures, hire skilled workers, and enhance their potential by devising distinct career paths. A striking example of this situation is the case of Bharat Petroleum Corporation Limited (BPCL). BPCL is a public-sector organization that is one of the leading companies in the Indian petroleum industry. BPCL had beneited immensely, as the petroleum sector was a monopolistic market enjoying tered prices ixed by the government. In 2002, when the industry was deregulated, it led to a significant loss of market share for both multi national oil companies and Indian firms. The challenge faced by BPCL was to retain its market share and to continue to be proitable. The company decided to redesign the organization whereby HRM strategies were regarded as important support services (along with finance and information technology). Three kinds of services embedded support service, shared support service, and corporate servicewere developed, and each contributed to the successful turnaround of the company. BPCL used the FIRM services to cushion their main stream of business with respect to reining and retailing. Since BPCL is a "public enterprise," it could not downsize the labor force. Instead, BPCL undertook a strong retraining and redeployment program to efficiently use the excess manpower within the organization. Consequently, its sales force was increased by 50% without hiring any new manpower. Competency mapping was introduced, and new people were hired for only specialized positions. The performance management system of the company was revamped and made more customer-oriented. Moreover, BPCL introduced a creative learning experience program for its employees called the "Foundation of Learning Plan" that encouraged the development of an employee's ability to work in high-performing cross functional teams. The introduction of this program led to a boost in the competencies of the employees and their motivation to excel. The example of BPCL illustrates how innovative HRM strategies can not only respond to traditional personnel problems but also improve and sustain superior performance. Table 2 provides a summary of the strategic initiatives and the innovative HRM practices of the II irms