I.INTRODUCTION
I
n the present era of globalization, the basic contoursof organizing and doing business have been chang-ing at a fast pace. Organizations are increasinglywitnessing change, re-engineering, restructuring,downsizing, transformation or merger/acquisition. If aquestion is asked: “what characterizes today’s businesscompared to that 15 years ago,” the obvious answer in-variably is likely to be: “managing and coping withchange.” In the corporate history, this period will be de-scribed as “the age of change,” “the age of chaos,” “theage of surprise,” “the age of uncertainty.” Besides glo- balization, this dispensation is being caused by techno-logical changes and information revolution. The demandsof managing change have also necessitated a re-defini-tion in the roles of employers, employees, trade unionsand the state. Increasing tumult and chaos in the envi-ronment has been adversely affecting businessviability. As has been noted by Saini (2005), some of the contemporary business trends that are noticeable inthe changeful new economy at the global level are asfollows:
big-sized companies, venture capitalists, and glo- bal consulting firms are largely driving today’seconomy;
strategic alliances, and mergers and acquisitions aretaking place as devices to counteract competition;
virtualization of organizations is being resorted toin a big way to help promote a larger degree of co-operation even amongst competitors so as to attemptmore effective organizational survival;
the incidence of customization in manufacturing aswell as services sectors operations is increasing;
product lifecycles are becoming shorter resulting inconstant need for research and innovations;
bureaucratic organization structures are being dis-mantled to expedite decision-making for more ef-fective tapping of business opportunities;
the lines separating different businesses are getting blurred as technology and markets have been con-verging fast, giving rise to new opportunities for growth;
THE INDIAN BUSINESS SCENE, CHALLENGES OFCHANGE, AND CAPACITY-BUILDING THROUGHPEOPLE-MANAGEMENT STRATEGY
Debi S. Saini
In today’s business world of chaotic high incidence of competition, managing change is one of the most critical factors for corporate success. Studies show that Indian corporate leaders of the pre-reform erahave not been able to sustain their growth rate in sales and profit. They have not been able to withstand thewinds of change caused by the new economic realities. Even those players who have demonstrated greater incidence of success have not been seriously considering internationalization of their businesses. This paper discusses the opportunities offered by the new economic policy (NEP) to corporates in India; some of the achievements attained by them; and the problems and challenges they face in this regard. It identifiesthe need for change as a corporate strategic priority. The paper argues that for organizational capacity-building for performance excellence, Indian companies need to invest in learning and benchmarking indifferent spheres of organizational working; and also resort to leveraging the empowerment model of human resource management (HRM) strategy as a way of organizational life.
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Saini
corporates are searching for appropriate talent whichcan be expected to deliver high degree of performanceunder rapidly changing conditions; and
effective people-management and change manage-ment strategies are being evolved to cope with theemergent realities.In this scenario, it is believed that both at the globaland country levels only the best companies are likely tothrive over a long period of time. As is shown in Figure1, economy and society are in the course of the thirdindustrial revolution, which has led to the emergence of the knowledge economy. In order to be successful intoday’s business environment, companies have to comeout of the mindsets of the industrial economy and fullygrasp the impact of the factors that drive the knowledgeeconomy. While the knowledge economy provides op- portunities to those who possess capacity to fight com- petition, it also reflects complexities and uncertaintiesin business environment.As is shown in Figure 2, the globalization syndromecharacterizes, among others, the need for radical changeand management of flexibility. Companies which are notable to promote these objectives, gradually getmarginalized and eventually even wiped out. It is wellknown that of the 30 listed companies in the Dow JonesIndex (that was created in 1892) only one survives to-day, i.e., General Electric founded in 1892 by ThomasAlva Edison . And, the speed of change for successfulcompanies is likely to be much faster in the coming de-cades, thanks to the increasing pace of globalization, theemergence of changed technologies, and related reasons.It would be difficult to imagine a situation where com- panies may sit pretty on past laurels for long; they arelikely to be under dynamic tension. It is also importantto note that managing change is generally not done withthe requisite sensitivity. Companies often commit blun-ders in handling change which may prove very costly.Also, much of change is managed in a way which pro-duces demoralization, fear and apprehensions amongstemployees, which impedes organizational performance.Managing change involves taking strategic direction aswell as planning and implementing performance im- provement agenda through more efficacious manage-ment of systems, processes and people. Winners intoday’s business environment will be those who are ableto efficaciously manage the transformational agenda.In the context of the above scenario, it is importantto ask as to what is in store for the Indian corporate sec-
Figure 1: Shifts in Factors that Drive Today’s Economy
E c o n o m y
S o c i e t y
?
InformationRevolutionIndustrialRevolutionAgrarian Revolu-tion
People = Mindset, Talent
New Technology
Information/ data/knowledge
Internet
Focus on services
Raw material
Machines
Technology
Focus on goods
People=Presence
Weather
Climate
Livestock
Irrigation
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Vol. 9
No. 3
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The Indian Business Scene and Capacity-Building Through People-Management Strategy
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tor. In the Asian context, many smaller countries includ-ing the Asian tigers, i.e., Singapore, Taiwan, Hong Kong,and South Korea have emerged as the newly industrial-izing economies and are known to have managed changeexceedingly well. But especially in comparison to the performance of these economies, corporate India has notdone too well in the new scenario of globalization. Itsuffers from a problem that Ghoshal
et al.
(2000) labelas “satisfactory under performance: a state in which acompany continues to make money but gradually losesits competitive edge as a complacent management failsto ask itself what it is doing to add value.”This paper discusses the opportunities offered by thenew economic policy (NEP) to corporates in India, someof the achievements attained by them, and the problemsand challenges that they face. The paper makes a casefor investing in the intangible of capacity-buildingthrough learning and benchmarking. The concluding partdiscusses the increasing role of empowerment model of HRM strategy in promoting global competitive excel-lence.
II.THE NEW ECONOMIC POLICY AND THECORPORATE SECTOR
The post-Independence India followed an import-sub-stitution model of economic development. But it did notdeliver results as per the goals envisaged by the eco-nomic planners. This welfare-state model put primacyon taking public sector to commanding heights as a de-velopment strategy. However, the model resulted in su- premacy of procedures, bureaucratization, inflexibility,inertia, corruption, and non-accountability. Most of the250 central public sector enterprises (PSEs) were run-ning into losses; so were majority of the nearly 850 statePSEs. Since they were mostly headed or controlled by bureaucrats, who were trained in state administrationrather than management of business enterprises, PSEswere never run as per business exigencies.The adoption of the new economic policy (NEP) bythe Narsimha Rao government in July 1991 involvedchanges on several fronts: industrial policy; the policyon monopolies; trade and exchange policy; fiscal con-solidation; macro stabilization policy for low inflationand faster growth; banking sector policy; foreign invest-ment policy; and the competition policy including pub-lic sector restructuring. The economy responded positively to the new market needs as per the structuraladjustment programme. India is now considered as oneof the largest emerging economies. One of the manifes-tations of the appropriateness of the NEP is that the coun-try could successfully bypass the Asian economic crisis.And, the World Bank forecasts that by 2020,India could become the world’s fourth largest economy.India adopted this policy fairly late compared to mostothers in rest of the world. Even communist China startedmodernizing as early as 1978. Despite many initiativesin response to the demands of the globalization process,India is comparatively slow in implementing the reforms
Globalization Syndrome
Chaotic Competition
Radical change
Opportunities
Strategic alliances
Complexity
Uncertainty
Flexibility
Digitalization
Virtualization
K n o w l e d g e E c o n o m y I n d u s t r i a l E c o n o m y
Figure 2: The Globalization Syndrome in Knowledge Economy
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