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Best Practices of HR in Services Sector: An SME Service Industry Perspective

Best Practices of HR in Service Sector : An SME Service Industry Perspective

This article has been written based on the Human Resources (HR) practices followed by an SME service industry. It tries to reveal the HR practices, where some of the best practices are followed to maintain a peaceful atmosphere and good working conditions. This will help the SME managers to get an insight in order to improve their efficiency. It mainly discusses the HR mantras of the company and the HR strategies that they follow - Recruitment, Induction, Learning and Development, Communication Channel, Performance Management System, Compensation Management, Motivational Initiatives, and Retention Strategies.

Management is the art of getting extraordinary results from ordinary people. Human Resource Management (HRM) is also a management function concerned with hiring, motivating and maintaining people in an organization. It focuses on people in organizations. Knowledge, as a principal factor of competition and quality advantage, today, has a crucial role in the development of Small and Medium Enterprises (SMEs). As a part of their evolution process SMEs are being given more concentration towards territory development and production growth. Managers are interested in training courses that suit their needs, are flexible and provide innovative solutions without constraints of time and space. Modern organizations are today looking for `knowledge management' strategies and processes to be able to collect information and expertise knowledge, coming from individuals and accessible to everybody. SMEs and Small and Medium Businesses (SMBs) are companies whose headcount or turnovers fall below certain limits. In India, the Micro and Small Enterprises (MSEs) sector plays a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total exports of the country. Further, in recent years, the MSE sector has consistently registered higher growth rate, compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million people, spread over 12.8 million enterprises, and the labor intensity is estimated to be almost four times higher than large enterprises. Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages, the auto industry was overlooked by the government and their policies were also not favorable. The liberalization policy and various tax reliefs provided by the Government of India in recent years have made a remarkable impact on the Indian automobile industry. The Indian automobile industry, which is currently growing at the rate of 18% per annum, has become a hot destination for global auto players. A well-developed transportation system plays a key role in the development of an economy and India is no exception to it. With the growth of the transportation system, the automobile industry of India is also growing at a rapid speed, occupying an important place on the `canvas' of the Indian economy. Today, the Indian automobile industry is fully capable of producing various kinds of vehicles and can be divided into three broad categories: cars, two wheelers and heavy vehicles. The article describes Popular Vehicles & Services Ltd., established in 1983-84, which is a subsidiary of a famous group which traces its history back to 1939 and has interests in

automobile spares and education. It established an envious position in automobile retailing. Popular is the first Maruti dealership, started in 1983-84 at Thiruvananthapuram, the capital city of Kerala. The Kochi branch has been functioning since October 1985 and the third dealership was started at Kozhikode in 1996. The first Maruti dealership outside Kerala was inaugurated in March 2003, in Chennai. The group has grown into a business house, with a turnover of over Rs. 1000 cr and with an employee strength of above 4,500. The problems faced by a service industry are: mainly lower productivity levels, poor quality products and services, high levels of complaints from customers, loss of customers with subsequently lower revenues, higher costs, higher staff turnover and poor industrial relations. In order to overcome all these problems, the HR managers should be vigilant and their strategies should be competent. HR Mantras of the Company An employee should feel happy to come to work; An employee should be happy and productive while at work; At the end of the day, the employee should return home in a relaxed frame of mind and spread happiness, and To improve is to change, to become more effective, change has to happen often. The human resource strategies of this SME are based on the concept that the employees should feel cared for. They believe that employee empowerment is the key word in a service industry. Given below are the strategies followed by the SME. Recruitment One of the most crucial roles of an HR manager is recruitment. According to experts, the biggest problem is talent crunch due to extraordinary growth. This SME recruits by selecting people with passion and quality, because only then will the employees stay longer with the company. Through buddy schemes, the company recruits the relatives or friends of the employees. The consultants of the company are: `Headhunters' and `Thomas International' . Thomas's profiling is helpful for the recruitment process. They have a three-tier interview process, including psychological tests. In reference checks, previous employers are preferred, as they are aware of the applicant's performance. Induction After an applicant has been selected, he or she must be oriented and placed on the chosen job. Induction is a planned introduction of employees to their jobs and co-workers. The organizational induction manual of the company includes: job description, role clarity and career path. It helps employees to get a clear idea of their job profile. Learning and Development It attempts to improve the current or future employee: performance by improving their abilities to perform through learning, usually by changing their attitude or increasing their skills and knowledge. In this SME, the gestation period has been reduced to 3 months, from the earlier 6 months. Their attempt is to reduce it to 1 month. As part of their learning and development, one can see an attempt to build a work culture. ASHA 20081 is an example. ASHA refers to Attitude, Synergy, Harmony and Achievement. Leadership development programs are also being conducted. Another attempt of the company in the learning process is "one book a month". In this learning process, on a monthly basis, one book is issued to a person, who is the team leader for that month. He has to read the book and make a capsule

presentation. The book will then be gifted to him. Through this method, they are trying to incorporate the latest information in the field. Performance Management System It is an objective assessment of an individual's performance against well-defined benchmarks. Their performance management system includes self appraisal, 360-degree appraisal, mentoring and job rotation. Here, we see the high and low- level performance appraisal system. High performers have to be engaged with complex assignments all the time and groomed to take up top positions. Low performers are asked to improve their performance level. In self appraisal, the employees themselves use a particular format provided by the company to evaluate their performance. In the 360-degree appraisal system, performance of an employee is rated by superiors, peers, subordinates and clients. During counseling sessions, employees get a chance to share their problems with mentors. Job rotation is a part of their strategy. This helps the employees to move from one job to another in order to add variety and reduce boredom. Compensation Management Compensation management of the company includes a compensation survey in order to simplify and compare the complex compensation structure. A good compensation survey uses standard, proven methods of data gathering and statistical analysis to determine how much companies pay for a specific job in a specific industry. According to the variable pay scheme policy of the organization, 60% pay is fixed. The remaining 40% is according to the performance. The company also makes attractive incentive payments to encourage the employees indulge in conspicuous consumption. Motivational Initiatives Motivated employees are always looking for a better way to do their job. The SME follows a suggestion scheme. Through this, the employee can express their suggestions in the workplace. If that suggestion is being adopted, then the suggester will benefit. In order to relax at work, employees engage themselves in various games. Employees are not encouraged to sit late after work. Incentive trips are offered to employees who achieve their targets. From each department, best performers are selected monthly and are honored with the `Star Performer' award. This is to motivate the back office people as well. Organizations must be able to create and maintain effective partnerships across departments. These crossfunctional relationships can increase quality, conserve resources and speed up the response time. Although most managers recognize the importance of cross-functional teams, very few organizations effectively build and nurture these relationships. In this organization, we can see this cross-functional recognition. In order to create a family atmosphere, family events are arranged on Independence Day. This helps the family members to meet and creates a healthy relationship with each other. Communication Channel Openness and transparency is the mantra of the company. It believes that its strength depends on a strong communication channel. Every month, interactive sessions with toplevel managers are held. This is known as session "C". Here, the employees get a chance to reveal their problems, if any. They follow an open door policy. E-learning programs are conducted as an information window. They follow the grievance redressal system, where each and every employee can reach his or her immediate superior. It is like a bottom to toplevel arrangement. Presently, a centralized grievance cell is not functional in the company.

Issues are being solved at the unit level itself and there are around 35 units. Whatever may be the problem, they try to solve it within 48 hours. Retention Strategies The retention strategies followed by the company are: flexible working hours, counseling, stay interview and an active alumni club. The flexible working hours, called flextime are intended to suit the convenience of individual employees. Functioning of a counseling cell is deemed to be effective. The company seeks help from external mentors. Instead of conducting exit interviews, the strategy of the company is to conduct a stay interview. In the questionnaire, the name is optional. Through this interview, employees can share their problems and the company takes a proactive approach, rather than conducting a post action. The alumni club is very active. People who leave the organization can remain in touch with the company. The reputation of the company helps the employees get a better job, even without an interview, sometimes. Achievements and Recognition of the Company Achieved Best Practices Award five times in a row from Maruti. Has won Kerala State Productivity Award thrice. Top ranked in Employee Satisfaction Survey conducted by Maruti. HR Practices Award Winner since inception. Conclusion The positive gains of these practices are: a low attrition rate of about 12% and the absence of a trade union even after 25 years of its service in Kerala. No industrial dispute has been reported yet. The sense of belonging among the employees has kept the unions away. As a CSR initiative, they are running a driving school in a no loss no profit strategy