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7HR001 – Managing Human Resources – Case Study

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1232696

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rdevinda@yahoo.co.uk

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Managing Human
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For the attention of

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27th December 2013

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Case study Analysis – Taj Hotel Group

7HR011
Dr. Paschal Anosike

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Page | 1

number of HRM roles has also signified new dimensions in managing people. 1995). However. however issues were raised due to the inability of Taj group to uphold ethical standards of Tata conglomerate. Evolution from traditional personnel management functions to a Strategic Human Resources Management (SHRM) system was evident during last few decades and simultaneously. Wright et al. primarily to address the corporate governance issues. including replacing the management structure and improving the service quality to match with international standards.7HR001 – Managing Human Resources – Case Study Case synopsis This case study examines the Taj Hotel group under the leaderships of two charismatic leaders. 2006. who has groomed leaders throughout his tenure at Taj. rapidly changing business environment and increasing complexity of operations. thus placing Kumar in a dilemma whether to respect the decision of CDC or to ignore the request of Bhowmick. The entire case study is cemented on the Bhowmick’s request to re-consider the decision taken by Kumar to select a candidate for the General Manager position at the Taj Kumarakom based on the test results of Career Development Committee (CDC). as a result of revolution of information technology. He implemented a PMS at Taj in order to evaluate and award increments to staff members’ fairly. To create and execute strategic alignment in order to build long-term success. 2001). Kerkar has led the Taj group from 1970 to 1997 and during his tenure the hotel group was thriving financially. Ajit Kerkar and Krishna Kumar. there were major shifts on how Taj operates. Theoretical Analysis Human Resource Management (HRM) procedures have a direct impact on the productivity and financial performance of any organization (Huselid. Strategic Performance Management Systems (SPMS) are adopted by most organizations Page | 2 .. With the rapid advancement in technology and emerging competition with the entrance of top international hotel chains in to the Indian hotel industry. of different eras and describes the extensive changes made to its Performance Management System (PMS). including viewing employees as sources of competitive advantage (Becker and Huselid. As a result Kerkar was replaced by Kumar in 1997. organizations are experiencing significant changes on how human resources are managed thus HRM is currently perceived as a strategic partner in attaining organizational goals (Lawler and Mohrman. 2003).

Since promotions and rewards were based on personal affiliations. the top management and other managers set specific objectives for each division and individuals. Quantitative tools. The rigid environment also led to create fiefdoms within Taj group. One of the advantages of the Kerkar’s system is that it did not promote employee ranking through appraisals. well executed PMS.7HR001 – Managing Human Resources – Case Study (Ulrich et al. Conger and Kanungo (1998) has suggested that inspiration. The major drawback of Kerkar’s system was the unavailability of a structured. As recalled by a senior executive. 1992). Evaluation of PMS at TAJ Hotel group under Kerkar and Kumar. considering the overall effectiveness and efficiency of organizational functions and both qualitative and quantitative mechanisms are used to measure performance of employees. Muduli Page | 3 . informal PMS was based primarily on subjective criteria and decisions taken were perceived bias. The discernable. Balance Scorecard is one of tools used in SPMS and it permits the management to view the organizations from various perspectives. help in motivating employees. “Kerkar had a nose for ferreting out who would be a good leader. a sub-factor of charismatic leadership. Taj case study provides the background to identify major issues and challenges faced by organizations during a shift from a traditional HRM system towards a strategic PMS.2). Qualitative tools are based on personal judgments and inferences of different stakeholders of the organization. 1996). internal perspective. 2001). Balance scorecard help managers to link long-term organizational objectives with short term actions (Kaplan and Norton. there were no systematic carrier progression pathways to individuals thus leading to de-motivation of employees. including statistical formulas are used to measure the achievements against set objectives. The intrinsic faith and mutual trust placed on Kerkar by Taj employees was the main factor for high employee retention even though salaries were less compared with market. In SPMS. and he could effectively groom them” (Taj Case study. Kerkar was a charismatic leader and his charisma was a great source of motivation to all employees and his vision was behind the growth of Taj. customer perspective. There was no clear strategy for setting objectives for organization as well as for individuals and this could reduce the morale and productivity of employees. p. This could be a reason for Taj group thriving financially during the tenure of Kerkar. Kerkar had the ability to identify leaders and mentor them effectively.. innovation & learning perspective and financial perspective (Kaplan and Norton.

Unlike the old system where promotions were based on personal relationships. which helped in creating career progression pathways where individuals. employees who precisely know what is expected. Upon replacing Kerkar. Kumar initiated the “Taj People Philosophy” which included a formal PMS and a mechanism termed balanced scorecard. This suggests that employees who were outside the coterie of Kerkar were looking for a fair system for evaluation. The new PMS helped to build the transparency in monitoring. As recalled by one executive “It was a big change to have people asking. where are you on your KRA’s. Kumar established the CDC and Potential Assessment Centers (PAC). not how close are you to Krishna Kumar?” (Taj Case study. measuring and rating of employee performances and to Page | 4 . However. Kumar ensure that clear goals and objectives are set in the form of Key Results Areas (KRAs) for individuals at the beginning of each year so that everyone is clear about what tasks they are expected to execute and how those tasks are required to be performed. Williams (2002) suggested that this could create strong relationships between the organization and employees since employees can observe how their contribution is impacted on success of the company.3). will perform better than individuals who are unaware of their objectives. the competition created through PACs resulted in demoralization of individuals whom were not selected. yet they were considered as great performers. under new PMS. to evaluate the employees fairly. individual ratings and increments are less concerned and performance based pay is discouraged. so that they would be fit for general managerial positions in future. were sent for evaluation and trained them outside the area of work. Reasoning behind implementing new system There were several reasons for Kumar to launch a formal PMS. The new PMS helped Taj to align individual objectives to long-term organizational goals. Deutsch (1975) suggested that individuals who perform and contribute more to the company should receive a higher percentage of rewards than individuals performing less. p. (2004). whom were identified as high performers. First reason was to address issues with regards to not meeting ethical standards of TATA group. progress of employees was measured against KRAs and promotions and increments were awarded according to results of performance-appraisal system.7HR001 – Managing Human Resources – Case Study (2011) described that in collectivist cultures. such as Indian culture. According to Beardwell et al.

personality and resourcefulness and he further argued that “great managers do not always follow procedures” (Taj Case study. If the selection made by the CDC is not respected by Kumar. Bhowmick believed that new systems implemented by Kumar did not capture all aspects being a good manager. Kumar also knew the fact that Bhowmick will be responsible for training and mentoring the chosen candidate. This suggests that Bhowmick did not trust the CDC or the system in selecting right candidates for right positions and therefore he could argue that his candidate is a better choice than the individual selected by CDC. Krishna Kumar’s stance on Bhowmick’s request According to my point of view. there could be few implications as well in granting Bhowmick’s request. Kumar should grant Bhowmick’s request and reconsider his choice for selecting the candidate for the General Manager position due to several reasons. for instance. any future decisions made by CDC would not be taken seriously by employees. Page | 5 . He rotated even senior managers to learn “new ways of doing business” thus to improve the quality of the service delivered and to break up fiefdoms. as such Bhowmick might help the person nominated by him to become successful or choose not to help the person designated by the CDC.6). There could also be a hidden agenda behind Bhowmick’s nominating his candidate over the decision made by CDC thus leading not to select the right person for the job. Pressure exerted on TAJ group due to external forces such as entrance of global competitors and technologically demanding operations could also be considered as a critical factor for Kumar to launch a formal PMS. Brady (1987) proposed that managers are required to make rational decisions which are not guided by rules and systems. Considering all above factors Kumar should reconsider his decision and select the candidate nominated by Bhowmick. However.7HR001 – Managing Human Resources – Case Study build the ethical platform for promotions and increments while annihilating personal relationship based rewarding in order to uphold the corporate governance standards demanded by the TATA group. p. Kumar knew that not respecting the work autonomy and judgment of Bhowmick could result in de-motivation of one of the highest ranked subordinates of the company. Bhowmick is considered as a legend within the Taj group and has a pedigree of identifying and grooming leaders for senior managerial positions. thus could lead to downfall of the system. He has developed managers throughout his career at different properties of Taj group.

Therefore CDC must carefully manage its strategies to prevent de-motivation of star performers of Taj in order to prevent them from moving to competitors. One of the main objectives of the CDC was to value the importance and shaping the careers of solid performers. provides clear career progression pathways to solid players while coaching them to recognize their true talents thus giving opportunity to perform well. dynamic. Huselid et al. 2004). The formal PMS and its tools such as Balanced Scorecard. Groysberg et al. Page | 6 . But with the establishment of CDC and PAC.7HR001 – Managing Human Resources – Case Study “A” or Star Players and new system Star players always had a special attention from the Taj management even during the Kerkar’s informal system and under the new system. “B” or Solid Players and new system Organizations generally disregard the importance and value of “B” performers and this could pose a risk to the long-term success of the organization (Delong and Vijayaraghavan. Under the Kerkar’s system. the CDC has helped in grooming “A” players for “A” positions. Harnessing and developing talents of Solid “B” players are important to an organization since their contribution is vital in building competitive advantage. solid players of Taj group only had a limited opportunity to develop their careers since promotions were based on personal affiliations. ensure feedback is provided to solid performers thus enabling them develop and improve so that they could be groomed for future managerial positions.. Delong and Vijayaraghavan (2003) further argued that B players play the role of “truth tellers” in an organization and helps in stabilizing the system in the presence of “A” players. They do not stay with an organization for a longer period regardless of paying big salaries and group performance could also get affected (Groysberg et al. there could be risks associated with “A” players. charismatic and could predict changes while adapting quickly. CDC helps Taj group in identifying “high-level openings” or the “A” positions and then identifying suitable candidates through various evaluations. However. 2003). (2005) argued that “A” positions in organizations have a direct impact on organizational strategic management and add value by increasing revenue or reducing costs and as such organization must systematically identify “A” players to fill “A” positions. (2004) explained that “A” players are intelligent.

Conclusion The Taj case study provides a platform to understand how organizational functions are interrelated to HRM functions and how strategically executed PMS could align individual objectives to organizational goals. It also discussed about the importance of setting objective and goals up-front so that employees would understand what is required to be done to achieve objectives. 1996). Taj case study gave me an insight of challenges and issues faced by real life organizations and various HRM tools used by organizations to manage such issues and gain advantage over a competitive market. Page | 7 . but also for solid performers in order for them to grow and develop so that there will be a balance in the system. not just for Star performers. Balanced scorecard used as a performance appraisal tool in the PMS at Taj helped to evaluate employees fairly. I personally found that this case study is interesting and challenging and hope that it would be helpful for me in future when dealing with strategic HRM issues.7HR001 – Managing Human Resources – Case Study The CDC must ensure that opportunities are provided. Fair evaluation system helped Kumar to build an ethical leadership at Taj and to maintain ethical standards of TATA group. It could also helped in communicating and aligning organizational goals and strategies at every level of the organization and enabling real-time learning mechanisms with regards to providing feedback (Kaplan and Norton.

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