Emerald Emerging Markets Case Studies

Human resource management in the changing business environment of the Indian construction industry:
a case study
Shashank Shah
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Shashank Shah , (2013),"Human resource management in the changing business environment of the Indian construction
industry: a case study", Emerald Emerging Markets Case Studies, Vol. 3 Iss 6 pp. 1 - 17
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 Human resource management in the
changing business environment of the
Indian construction industry: a case study
Shashank Shah and Ajith Sankar R.N.
Shashank Shah is based at
School of Business
Management,
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Sri Sathya Sai Institute of
Higher Learning,
Anantapur, India.
Ajith Sankar R.N. is an
Assistant Professor based
at PSG Institute of
Management, Coimbatore,
India.
Dr Shashank Shah would like to
express his gratitude to
Professor Peter Pruzan,
Professor Emeritus,
Copenhagen Business School,
Denmark, and Visiting Faculty,
Sri Sathya Sai Institute of Higher
Learning, Prashanti Nilayam,
for his guidance through the
course of the research work.
A special note of appreciation is
due to the Former Deputy
Managing Director of the case
study company for his help in
gaining access to the senior
executives at the headquarters
of the company at Chennai,
India. The authors humbly
dedicate this endeavour to
Sri Sathya Sai Baba, Revered
Founder Chancellor, Sri Sathya
Sai Institute of Higher Learning.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making.
The author/s may have
disguised names; financial and
other recognizable information
to protect confidentiality.
DOI 10.1108/EEMCS-05-2012-0095
ABC Constructions[1] is a US$12.8 billion technology, engineering, construction and
manufacturing company and is one of the largest and most highly respected companies in
Indias private sector[2]. ABCs operations covered a broad spectrum of industries and thus
it became a recruiting ground for other companies. In the 1990s, as the Indian economy
became liberalised, talent opportunities outside the company increased. As the company
moved away from merit-based promotions, many employees were looking for opportunities
outside. The chairman of the company expressed the operational context of ABCs people
practices, by saying:
ABC would have grown faster if we had no turmoil on talent; thats our only limitation, not the market
place. I am not taking orders or quoting for new jobs because I dont know how to deliver in the middle
of all these people going away for lucrative jobs all over the world. Some 70% of the best Indian talent
goes out of India. Out of the balance 30%, 25% goes to non-infrastructure, non-manufacturing-
oriented job opportunities. So, only 5% of the talent is available to us. ABC grabs the best ones and
then, after a year or two, with a golden stamp of ABC, seven out of the 10 leave. So, within three years,
we are back to square one. All I have to do is training and more training[3].
Introduction to the company
Headquartered in Mumbai, the company operates primarily in India, but its operations extend
across the globe. It markets plant and equipment in over 30 countries, has manufacturing
facilities in India, China and the Gulf and a supply chain that extends to five continents. Within
India, ABC is said to have a presence in almost every district[4] through a nationwide network
of distributors of its products. In response to the changing market dynamics, ABC has gone
through a phased process of redefining its organisation model that facilitates growth through
greater levels of empowerment. The new structure is built around multiple businesses
designated independent companies or ICs. These ten ICs include: hydrocarbon, heavy
engineering, ABC construction, power, electrical and automation, machinery and industrial
products, information technology, financial services, shipbuilding, and railway projects[5].
The 2015 strategic vision of the company is To make ABC a INR 75,000-crore company.
ABC has a distinguished record of achievements including the worlds largest coal gasifier
made in India and exported to China, Indias first indigenous hydrocracker reactor, and the
worlds largest continuous catalyst regeneration reactor. Among the most recent success
stories of ABC is its association with Indias first nuclear submarine Arihant, inaugurated by
Prime Minister Manmohan Singh at Vishakhapatnam in July 2009. The company is also
known to be an organisation that contributed significantly to nation building. In 2009, the
chairman mentioned that India is shining only in a few cities and not in villages. All those six
and eight-lane highways ABC builds are of little use if the branches that need to connect the
towns and villages, that are a little distance away, are not built as well, said the chairman[6].
In an interview to MoneyLife, the chairman said:
VOL. 3 NO. 6 2013, pp. 1-, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 In 1965, we were chosen as partners for building nuclear reactors. In 1971, we delivered Indias
first nuclear reactor and set up nuclear steel generators. BHEL (Bharat Heavy Electricals Limited)
was the only other company selected. In 1972, India launched its space programme. Once again,
ABC was invited to participate and we did. I was the one responsible for taking the programme
further. I was already in charge of the whole manufacturing and then from SLV (space launch
vehicles) to advanced SLV to PSLV (Polar Satellite Launch Vehicle) to GSLV (Geosynchronous
Satellite Launch Vehicle) and now to advanced GSLV. Most of ABCs expertise has been built from
scratch[3].

The current chairman of ABC Constructions was appointed as the CEO in 1999 and became
the chairman and managing director in 2003. During the annual general meeting held in
March 2012, the role of the chairman and managing director was split. While the chairman
was given a five year extension in his role as the executive chairman, another member of the
board of directors was appointed as the CEO and managing director with effect from April 1,
2012. Accordingly, the new CEO and managing director would be responsible for the
businesses of the company, and the executive chairman would focus on completing the
portfolio restructuring, institutionalizing the independent companies structure, and
mentoring and developing the leadership team and future leaders to face the global
challenges.
In spite of having a diversified expertise, the revenues of the company are highly
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concentrated at present. For the financial year ending 2008, the construction division
accounted for approximately 69.3 per cent of the companys total revenues and 75.2 per
cent of the total income. Of these the construction division had been the largest contributor
to the top line growth of the company. This division is the focus of this case study.

Construction division
The Construction division of ABC Ltd, headquartered at Chennai since its inception, is
Indias largest construction organisation. The construction industry in India had been
considered to be Indias second largest employer, employing approximately 33 million
people. It figures among the top 225 contractors in the world and ranks 47 among global
contractors (revenues outside home country) and 72 among international contractors
(revenues from home as well as outside country)[7]. Many of the countrys prized landmarks
have been built by ABC. Its capabilities cover all disciplines of construction civil,
mechanical, electrical and instrumentation. It is also equipped with the requisite expertise
and wide ranging experience to undertake engineering, procurement and construction jobs
with single-source capability.

ABC: vision[8]
ABC shall be a professionally managed Indian multinational, committed to total customer
satisfaction and enhancing shareholder value. ABC-ites shall be innovative, entrepreneurial
and empowered team constantly creating value and attaining global benchmarks. ABC shall
foster a culture of caring, trust and continuous learning while meeting expectations of
employees, stakeholders and society.
ABC Constructions range of services include (Department of Corporate Communications,
ABC Constructions, 2007-2008):
B pre-engineering, feasibility studies and detailed project reports;
B engineering, design and consultancy services;
B complete civil and structural construction services for all types of buildings, industrial and
infrastructural projects;
B complete mechanical system engineering including fabrication and erection of
structural steel works; manufacture, supply erection, testing and commissioning of plant
and equipment; heavy lift erection; high-pressure piping; fire-fighting; heating, ventilation
and air conditioning (HVAC) and low pressure/utility piping networks;

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PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 B electrical system design, project electrification, automation and control system including
instrumentation for all types of industrial and telecom projects; and
B design, manufacture, supply and installation of EHV Switchyards, transmission lines.

Methodology of the case study

The case study methodology based on an exploratory and descriptive research design with
an inductive approach, using the evolving anecdotal style of narrative has been used. Both
primary and secondary sources of information have been used for this purpose. While the
primary sources of information consist of responses to an executive perception survey on
employees and interactions with senior executives of the company, the secondary sources
of information consist of information published in the public domain. The personal interviews
with the senior management executives represent the qualitative aspect and the responses
to the executive perception survey represent the quantitative aspect of the mixed-method
approach used in this case. Details of each of these are provided.

Personal interactions with senior executives of the company

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The case study data has been collected based on personal interaction by the primary author
with top executives of the company and based on the following five parameters:

1. Needs. The needs/expectations that the employees have from the company.
2. Constraints. The constraints/challenges faced by the company in order to fulfill the
needs/expectations of the employees.
3. Alterables. The alterables/noteworthy practices undertaken by the company in order to
satisfy the needs of the employees or to overcome the challenges/constraints that exist
with respect to them.
4. Strengths. The strengths possessed by the company with respect to the employees.
5. Areas of improvement. The areas where the company needs to improve with respect to
the employees.
The parameters of needs, constraints and alterables as stated above are based on the
social systems engineering tools as proposed by Sage (1977) and Warfield (1976). This
framework provides a structured method to understand the various aspects relating to the
employees. Studying the people-related initiatives of the company is one part of the case,
but the purpose behind undertaking those specific initiatives is understood after studying
the needs/expectations that the employees have from the company and the constraints that
the company faces with respect to resources financial or others in order to fully satisfy
these expectations. The organisational strengths focus on the areas capitalizing on which
the company has already made a mark for itself. The areas of improvement give the futuristic
focus path for the company.

Responses to an executive perception survey of employees

Responses were also gained to an executive perception survey on employees conducted by
the primary author. This consisted of 36 parameters relating to various aspects and initiatives
related to the employee stakeholder by ABC Constructions. 19 respondents across different
levels of the management hierarchy within the division responded to the survey and
indicated the level of implementation of each of the stated employee-related initiatives within
the organization. Important observations relevant to the case study have been appropriately
included.

Triangulation was done through the study of published material available in diverse media in
the form of reports, web-based documents and published articles.

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3
 Employee stakeholder management at ABC Constructions: an introduction
Recollecting the words of the founder and former chairman of ABC Constructions, the former
Dy. MD said:
In any business you can have land, money, and equipment, and make buildings; but all this is
nothing compared to your people. Unless your people are happy you cannot do anything. In other
words, employee satisfaction is primary. Only when they are motivated and willing to work, the
Company can run. Otherwise it doesnt run even if you have all the money in the world[9].

Discussions with the senior management of the company resulted in the

needs-constraints-alterables, strengths and areas of improvement with respect to the
employee stakeholders. Since the construction industry has employees at different levels,
i.e. managerial staff, technical and engineering staff, and the labour (both permanent and
temporary/contractual) working on the sites. The case attempts to study people issues at all
these levels.

Needs of the employees

Elaborating on the basic needs of employees, the former Dy. MD said:
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Employees can be satisfied if they have a proper salary, they are able to lead a good life, they
continuously learn and they equip themselves in such a way that they are beneficial to the growth
of the Company and serve the needs of the nation. Employees are happy to do what they are
good at. Job satisfaction is more important than salary and money. Family life is also very
important, as in our construction business, the employees need to travel a lot[10].

Among the major needs of the employees is the need for rewards and recognition. These
mainly include immediate and short-term rewards and recognition which act as means for
continuous motivation and for them to give their best to their team, department and the
organisation at large. The employees also expect that they get sufficient exposure within the
diverse functional areas and verticals within the organisation so that they can have a
well-rounded perspective of business and the organisations functioning in a period of three
to five years.
Monetary aspects are also important for employees. At the entry level, the pay package
plays an important role in job selection. These are important needs not only in the short-term,
but also in the long-term in terms of asset building and wealth creation. The employees also
expect that the organisation would facilitate the process of their long-term career growth.
80 per cent of ABC staff reside at the project sites. They work in distant locations. Only
20 per cent are in technical, support, design and administration. Thus, the grassroot level
employees (permanent and temporary/contractual labour) also expect facilities in terms of
physical and family comfort, family-type atmosphere in the project sites, accommodation,
transportation, schooling and other social requirements for themselves and their family
members. As 80 per cent of the employees are working on site, the employees expect that
the organisation takes sufficient safety precautions for their health and safety while working
for the organisation projects. Hence, this becomes another critical expectation of employees
from the organisation.
For the remaining 20 per cent of the employees who work in technical, support, design and
administration jobs, the immediate boss is the representative of the company. Hence,
employees would expect that their superiors would facilitate in the satisfaction of their needs
(professional and personal). There is a need for the superiors to coach their juniors.
Whatever knowledge and experience that can be imparted to them, should be done.
Every employee works for his benefit and for his family. Hence, every organisation has to
ensure that they have growth in personal life for themselves and their family. The VP (BMH)
said:
A person works primarily for himself, then for his business unit, then for the organisation and then
for the country. The more you work, the knowledge and experience you gain, it also helps you
perform better and get recognised. If you put in your efforts, the benefits are bound to come.

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PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 If you are sincere, dedicated and committed to whatever assignment you are given, then results
are bound to come. This is what we try to tell our colleagues here. When we are working for an
organisation like ABC, it does not belong to any individual, it belongs to us. Please work here as if
it is your own personal work. Passion and dedication are very important for them to grow, their
business unit to grow and the Company to grow[10].

Constraints/challenges for the organisation

In its report on ABC, Edelweiss Securities Pvt. Ltd, a Mumbai-based financial services firm
pointed out that construction being at the lower end of the value chain, it has become
increasingly difficult to attract younger talent. The report further added that as ABC scales
up the technology chain, providing high-end engineering solutions, hiring talented and
qualified human resources would be a challenge (Business India, 2009, p. 56).
Along with attraction of the right talent, their retention is another challenge. Construction
companies may not be able to pay like IT companies. So keeping the trend with the market in
terms of compensation is not easy. In the current market scenario, when the job offers are so
lucrative, the Company may not able to hold back its employees. In this context, the
chairman observed:
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Please tell me how much capacity of the Indian IT industry is being spent to automate Indias
medical science, health ministry, hospitals, government, etc. We sell our bodies. Infosys and
Wipro do not lose engineers to the Gulf. I lose them to the Gulf; I lose them to IT; I lose them to
multinational engineering companies; I lose them to Australia, Canada, New Zealand, FMCG,
investment banks [. . .] Simultaneously, I should fill in the void. People ask why I dont pay more,
but my margin is 5%. All my competitors around the world pay less than 5%, which is the industry
margin. Construction business all over the world works on 2%. The IT Industry earns 30%
margins. India is only adding 4% of value in the product cycle. Every year, foreign companies
come here for designing and I know, within three months, I will lose 20 more guys because they
can pay two to three times more. Foreigners get their design done here. We add 4% of the value.
China adds 45%-50% value by manufacturing it too[3].

Therefore, the logic may creep in why pay everyone the same. Pay little more to the better
performers, and pay something acceptable to the others. As it has a large spread across
industries, ABC, found it difficult to align rewards and expectations across its various
divisions. The top management wanted to ensure that there was not too much variation within
its various divisions. The head (POD) gave an example:
I have to necessarily distinguish between two individuals wherein I tell one of them that you are
performing well but the other person is performing extremely well, so his rewards will be twice
yours. So, we have to force the concept of differentiation and look at performance with a
magnifying glass which we never did earlier. So a little harder look at performance and capability,
competence, etc. is needed[10].

The historical context of ABC played a major role in creating some of the HR challenges
faced by the company today. Since the mid-1970s, there had been a culture shift in ABC due
to a change in the management. As the expatriate managers left the company, the senior
Indian managers of the company became directors. In tune with the times, seniority became
a criterion of assessing performance, and merit-based performance assessment took a
back-seat. There was a lot of resistance to change because people who were in senior
positions were not used to such management styles. They felt that when they had
succeeded all these years, then where was the need to bring in all this change now? As the
organisation was increasingly engaged in projects in global markets, the companys
management took note of the changing environment. To tackle the ever changing dynamics
of the business world, it is very important to continuously develop our human capital to make
them ready to face challenging situations. Our learning and development initiatives are
designed keeping in mind the overall business strategy and organisational requirements,
observed the chairman, ABC, in the Sustainability Report for 2010.
The market and the external environment also posed major constraints and challenges. The
head (POD) said:

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5
 Its an explosive kind of situation out there, and so whether we like it or not, it surely impacts us.
There are challenges on issues such as loyalty. Though we tell the employees that ABC is a
company where they can join and retire, the entire concept of loyalty and continuity is challenged
today[12].

Other challenges include:

Workmens training
ABCs Constructions division employed 1,50,000 unskilled workers on an average day at the
project sites across the country and abroad and 85 per cent of these workers had not been
through any formal vocational education. Among the various challenges that existed while
training such a large workforce from a diverse cultural and linguistic background included
non-availability of effective trainers at all project sites, multi-lingual workforce who could
understand better only in their native language, workmen unable to appreciate traditional
training methodologies such as classroom lecture, etc.

Cross-cultural management
With several of ABCs overseas offices recruiting both local and a multinational workforce,
the challenge for the HR function was to evolve fair and transparent policies and practices
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that would ensure a harmonious blend of such diverse cultures and yet retain the companys
distinct character as a company of Indian origin. There was a need for ABC to standardise its
HR processes across locations, and to improve its cycle times and role-based
access/authorisation to information.

International competition
With other global construction companies likely to be drawn to India in the wake of huge
infrastructure spending, analysts felt that sourcing workers might be difficult. They further
observed that ABCs practice of not having workers on roll and depending largely on
sub-contractors to provide them during project execution was not fool proof. Further, the pay
scales of ABC, though considerably better than what they were earlier, with stock options
being granted to employees, were still below the pay packages of foreign companies, which
may chose to come and bid aggressively for Indian jobs (Business India, 2009, p. 57).

Alterables/noteworthy practices for the employees[11]

Introduction of SAP ERP Human Capital Management Solutions
The head (POD) opined that ABC Constructions was known for its HR systems. With the
employee strength increasing, the company had to support a diverse and global workforce,
and there was a need to standardize HR processes across multiple geographies. In 2010,
the company adopted SAP ERP Human Capital Management Solutions, which resulted in
the company being able to access consolidated HR data from across locations. This also
resulted in reduced dependency of line managers on the HR department for MIS reports.
With that, the HR department was able to focus on employee development, rather than on
generating reports. The ABC Group established a Shared Services Center across various
business units. To facilitate the implementation, the services of ABC Infotech, the Groups IT
unit, was taken. A shared services team was created that acted as a bridge among the
business units and ABC Infotech, one common portal for employees, managers and HR
administrators. A common platform emerged to manage multiple work calendars, job
grades and salary components. A SAP case study report stated:
By automating and linking the process, workflow and reminders, the appraisal administration time
has been reduced to half. The company is able to ensure 100% coverage of employees eligible
for the process. Now employees go through all facets of the performance management system
process cycle (including objective setting, training need identification, midterm review, and final
appraisal). ABC has also slashed the processing time for leave and vacation administration up to
90%, while HR can now generate needed reports within a few minutes (instead of four or five
days).

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PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 ABC Constructions work culture emphasised on freedom to experiment, continuous
learning and training, transparency, quality in all aspects of work and rewards based on
performance and potential. The head (POD) observed that ABC was always seen as an
institution. So organisation-building was somewhat well accepted and well supported.

Rigorous recruitment process

Trainees formed the core of recruitment at ABC Constructions. An extensive recruitment
process ensured quality induction. Several schemes for induction of trainees included ABC
Build India Scholarship Programme at IITs, Post-graduate engineer trainees, graduate
engineer trainees through campus recruitment, diploma engineer trainees through campus
recruitment and graduate trainees.

Compensation
ABC Constructions had been able to increase the compensation levels, perhaps not as
drastically as an IT Company, but consciously it had been simplifying and rationalising the
components in the salary structure. Within the ABC Group, there had been a move towards
standard and variable components to take care of the specific needs of each division. Since
2006, the management staff had been extended the option of stock options in the company.
Highlighting the objective behind this, the head (POD) said:
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By this they not only become well-off financially, but also in terms of wealth-creation possibilities.
Being a large company we cannot give this option to everybody. So to start with, we have offered
it to the management staff which itself is a substantial number and runs in thousands. Across ABC
we have 28,000 employees and in ABC Constructions we have 13,500 staff. Half of ABCs staff is
in the construction division[10].

There had been take-over attempts on ABC in its history. The chairman wanted to keep the
professionally managed character of ABC intact. It was in 1999 that he decided to bring in
employee ownership. Stock options not only helped in generating employee loyalty, it also
helped the company to remain independent. Even today, I ask (ABC employees), do you
want to remain independent or do you want to be taken over. The reply is that we want to
remain independent. I ask: can we have a low market value and still be independent, when
someone can sign a four to five hundred million dollar cheque to take us over? This has gone
deep into every managers mind. If you want an independent professional company, you
have got to make it valuable; you have to make it so expensive that people stay away from
you [. . .]. Stock options are the reason we have a fairly stable top management for the last
seven years. This changed the whole Companys attitude. Today, my junior manager looks
up at ABCs share price on the internet since he has 500 shares. This is how shareholder
value begins to get created in the minds of people. But the most important thing is that I
touched their soft spot you want to be independent or one day be a part of somebody?
explained the chairman.

Employee assistance programmes

The Engineering, Design Research and Consultancy (EDRC) buildings and factories
operating company has partnered a very renowned consultant PPC worldwide[12] to
provide employee assistance programmes (EAP) support services to its more than 500
employees and their immediate family members at the headquarters in Chennai. The DISHA
EAP service is available 24/7 with toll-free phone numbers for telephonic counseling to
provide immediate support and guidance on any issue, for example, work life enhancement
services, legal advice, money management, image and confidence building, relationship
management, etc.

Quicker promotions
Unlike the current generation wherein it would take about 40 years to head the company,
ABC Constructions provided quicker accelerated promotion possibilities for identified
employees with consistently higher and higher performance so that the rest of the crowd
could see that a particular employee was performing better and so (s)he was growing faster.

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7
 Leadership potential at various levels was identified and the selected employees were given
special training programmes and were regularly monitored.

Performance management systems

These were well laid out, well carved out, well designed, as stated by the head (POD).
Rewarding high performance also meant that we became more decisive with
nonperformers, something that was tough and difficult in the Indian and in the ABC
culture. Earlier, if a talented employee got a $100 bonus, the non-performing person, who
should never have been in the job, would still have got $65 or $70, instead of zero. If top
talent got promoted in three years, then mediocre performers were promoted in five. So, I
created a new reference point: if youre inefficient, you will stay at zero, said the
Chairman[13]. To overcome the challenge of attrition, the company tried to give a lot of
freedom to people to operate so that they did not feel constrained. The head (POD) said that
mistakes were pardoned so that there was a healthy working environment.

Training at ABC Constructions

ABC-ites went through a process of continuous learning, assisted by training programmes.
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Even the front-office staff had to go through a two-day training programme. Apart from
on-the-job training and technical training, over 100 programmes on general management
and behavioural topics were conducted each year. The companys development strategy
had been to nurture good corporate citizens, to retain strong performers and to create
emergence of leadership throughout the hierarchy and across geographies. The chairman,
ABC observed, Over the years, we have shifted from traditional to more strategic training
systems. The company developed a competency matrix for its employees[14]. This matrix
listed 73 competencies, with associated knowledge, skills and behavioural attributes. The
competencies varied depending on the roles played. This matrix was used while assessing
the performance and development needs of an employee. Training was provided to fill the
gaps that were revealed as part of this appraisal process. By linking the matrix to the
companys strategic needs, the Company ensured that its training and development
programmes were focused.
Programmes. At ABC Constructions, quality training and development of human resources
was realised through: Identifying training needs within the Organisation and designing and
implementing those need-based training programmes to bring about continuous
upgradation of knowledge, skills and employee attitudes. The company provided both
technical as well as behavioural training. These were well designed to help the leadership
development activity in the company. These supported the competency building activity in
the company. ABC Constructions drew up an annual training calendar, highlighting the
training activities for the year. Inputs to formulate this training plan were taken from the
performance review form, by interacting with ABC Constructions regional offices and
the higher echelons of the management on the present and future requirements of the
construction industry. It also included detailed discussions with the faculty. Highlighting the
idea behind the training programmes, the head (POD) said:
At different levels of leadership in the organisation, we are able to identify capable, promising
employees who can then be given these inputs in the area of competency development
business, managerial and technical competencies. We have a very well organised Management
Development Center which is an institution by itself and is located at Lonavala near Pune. There is
a lot of cross-fertilisation, which happens in these training programmes because we bring
employees from different domains. Some of these programmes are well-designed residential
programmes. We are very good on follow up of training, i.e. if there are four levels of measuring
ROI as per some model training, we have systems to ensure that the employee captures what he
learns and applies it on the job and himself[12].

The head (POD) further added that more than anything else, it was the commitment of the
top management to the development of employees and to the fact that our leadership would
be primarily internally grown.

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PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 To train its employees to adapt to international settings, the Company conducted sessions
that introduced its employees to global cuisines and encouraged them to holiday abroad.

Skills training. The company had been known for its pioneering work in starting the
Construction Skills Training Institute (CSTI). ABC started such institutes in seven states of
India and trained approximately 17,000 people through them. While the institute offered
skills training for people who had an eligibility criterion of Class V fail, it also discouraged
people with higher qualifications like a bachelors degree or a diploma. The company
expected these institutes to provide them with quality human labour in a market where the
demand was surging and the supply was unable to cope with the increasing demand. ABC
Constructions employed these skilled people through the companys sub-contractors, and
after six to seven years, they were taken into the regular payroll of the company with a profile
of a supervisor.

Interaction with top management. In the residential training programme, apart from the
games that were conducted as a part of the training programme, every evening there were
senior members of the ABC Constructions management coming and interacting with the
trainees by turn. All functional heads such as marketing, finance, HR, execution,
administration, etc. interacted with them. They sat with the participants for an interactive
session for 112 hours wherein they brought in an external perspective and told the
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participants as to what was happening in the external world regarding the expectations of
customers, the bids that the company was participating in, or the new domains it was
entering. This was a good practice in terms of employee communication. This was also an
opportunity for the senior members of the company to get feedback from the managers who
were from different project sites, functions and departments across the country regarding
the opinions of the employees, sub-contractors, society and community regarding their
projects, etc. This was an informal and unstructured way of seeking feedback. This covered
not only the employees, but also many other aspects of the business as well. The senior
member would also get feedback from the employees about many issues which no one in
the company had attended to till then or the lack of focus from the side of the senior
management in spite of highlighting the issues on a number of occasions[15].

Faculty development. The company had a strong internal faculty development programme.
90 per cent programmes of the ones it had in a year were developed internally, with a good
mix of external and internal faculty, but primarily internal. Line executives and managers
involved themselves as faculty for most of the in-house programmes. The concept of
learning organisation was said to be rooted in ABC Constructions through this process.

Intra-departmental training programme. Certain units within the company conducted regular
training programmes once in two months within the unit to give the employees specialised
domain and functional knowledge. People within the department made presentations on
areas of their expertise or experience. Even suppliers gave presentations on their area(s) of
expertise. The training programmes were conducted on six to seven themes once every six
months. The VP (BMH) shared that though participation was not compulsory, everyone
participated and no one missed such an opportunity.

Such training programmes were essential for those who were joining the company. Every
year ABC Constructions was inducting new graduate engineering trainees (GET), graduate
management trainees (GMT), etc. In order to ensure that they performed to the required
expectations, they had to be given domain knowledge and functional knowledge. In order to
facilitate this, training programmes were conducted within the department once in two
months or based on mutual convenience. The VP (BMH) opined that while the people and
OD (HR) section provided training, providing domain and functional knowledge was the
departmental/unit level responsibility. This enabled employees to be well equipped and
become specialists in specific disciplines. Our online training programme Prayag has
helped us to engage more effectively and groom our GETs (Graduate Engineer Trainees).
The on-site training introduced through our Construction Skills Training Institutes (CSTIs) has
trained more than 15,000 into skilled workforce, said the chairman.

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9
 Self learning packages. To enable employees to learn at their own choice of time, topic and
pace, ABC Constructions promoted the concept of self-learning. Training Desks
(multi-media computers) were available in the head office, regional offices and factories
of ABC Constructions. Various CD ROMs and CBTs of varied operational, behavioural,
finance, quality-related topics were made available to enable employees to learn at their own
pace.
ABC strongly believed that to be in business, upgradation of employees knowledge and
skills was essential. Hence, investment in human resources was one of the top priorities of
the management. The company had certain international certification programmes that it
offered to employees. It also offered employees upgradation programmes wherein an
engineer could do an MBA. These were all funded and sponsored by the company.
However, in return the company expected a two to three year bond to be signed by the
employee, wherein the employee had to serve the company and give the benefit of the extra
learning to the company. In 2009, the COMPANY launched a new Management Education
Programme in association with the Indian Institute of Management Ahmedabad, with the
objective of grooming potential leaders at an early stage of their career at the company.
Some unit heads encouraged their colleagues to write articles to be published in
international journals whenever they successfully completed a project, so that they would
get worldwide recognition. The VP (BMH) shared his opinion in this matter. He said:
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I tell my colleagues that your job as a project manager is not just to complete the project but to
ensure that when you finish the project, the whole world knows about it. Give it publicity. I have
made it mandatory that an article is written on every project done, and published in international
journals or Indian magazines[12].

The company sent the project managers for international conferences whenever there was
an opportunity to present the papers. The VP (BMH) felt that making presentations not only
made the employees feel important, but it was a win-win situation for the company as well.

Educational facilities for employees children

ABC Institute of Technology, Mumbai was an exclusive facility for the ABC employees
children. The institute conducted four-year industry-integrated diploma courses in
mechanical engineering and electronics engineering. On successful course completion,
students were awarded diplomas by the Directorate of Technical Education, Maharashtra to
which ABC Institute of Technology was affiliated. To acknowledge and motivate meritorious
wards of employees, the welfare department of ABC presented cash awards to those
students who had scored high percentage marks[16].

ABC Constructions Recreation Club

Employees were provided with a work-life balance through a broad spectrum of recreational
facilities through ABC Constructions Recreation Club which was spread across all metros
and provided quality entertainment, and promoted sports and cultural activities for
employees and their families. The club attempted to cultivate healthy competition amongst
colleagues through interdepartmental tournaments within the organisation and even
participation in inter-corporate tournaments conducted by various external clubs and
association of companies in specific metros and towns.

ISO certification
The ABC Constructions HR department was ISO 9001 certified and in the words of the
head (POD), it was perhaps the first of its kind in the country. He stated that this was done to
ensure that the internal processes were rigorous enough to deliver the same quantity and
performance. There were internal audits and surveillance audits done to ensure that the
interface with the customer continued to happen and was not just stated.

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PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 Special initiatives for the workmen working on site (permanent and
temporary/contractual labour force)
E-learning module for workmen
To address the challenge of the construction workforce understanding only their native
language, and the non-availability of effective trainers at all sites, ABC Constructions
designed an in-house e-Learning module to impart training to the workmen which essentially
consisted of a cartoon film of 30-45 minutes explaining the various hazards and risks at
construction sites and the precautionary measures to be adopted. The module had been
prepared in nine Indian languages and it had become mandatory to administer the
health-safety-environment (HSE) induction training to all workmen at all project sites before
deployment. More than a million workmen had been trained through these modules in the
recent years.

On-site facilities
80 per cent of ABC Constructions staff resided at the project sites in the far-fetched
locations. Their physical and family comfort, family-type atmosphere in the project sites
however remote, their accommodation, transportation, schooling and all other social
requirements were said to be ensured from the company side, constantly reviewed,
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upgraded and changed if necessary. The president, ABC Constructions said:

In our job sites, if it is a sufficiently big site, we open a school or else assist in opening a school by
supporting the bigger chain of schools existing in that area. We provide them the infrastructure
and they run the school. So not only our children but children from the surrounding areas also
come and attend[17].

Stressing on the quality of the ABC Constructions on-site facilities, the Head (POD) narrated
an experience:
Yesterday one of my colleagues visited the farthest hydel site that we ever had in Arunachal
Pradesh. He used that opportunity to visit the families of our employees, visited their homes,
talked to them and tried to find out if there are any issues. This person has worked in other
companies as well and he feels that what we are doing in ABC is much better in quality. The
money spent, the care and attention we give to the provision of those kinds of facilities, the tie up
with the local schools such as the Delhi Public School or the Kendriya Vidyalaya so that they have
a branch in those distant locations, and the pain we take in ensuring that our employees families
are happy and comfortable are praiseworthy[12].

Health, safety and environment

The company has a HSE department. ABC Constructions also opened a clinic inside its
campus at Chennai to cater to the health-related needs of the employees. The special
medical insurance scheme available to employees was in addition to other medical benefits.
Employees had the option of covering their parents, aged up to 85 years under this scheme.
Besides, this, all staff members were covered under the provident fund and gratuity scheme.
Highlighting the increasing importance given to safety in recent times, the president, ABC
Constructions reminisced:
In the good old days, projects were done in four to five years, but as time progressed the same
projects were sought to be done in half the time and more modern equipment and gadgets had to
be used. The perils of construction at site were increasing. The number of reportable accidents
was increasing and sometimes there were fatal accidents. Therefore, we started a Safety
Department. We said there should be zero accidents, no reportable accidents. We have to spend
a lot of money in teaching the workmen what to do, what is the safe practice, and ensure there is
no accident at all.

Workmen welfare
Benefits of provident fund, bonus for the construction industry workers were available only
for the period they were in employment and the encashment took place after they finished
service. With a view to provide sustained welfare to construction workers in the form of a
fund, ABC contributed to the workers welfare fund at its Delhi International Airport Ltd (DIAL)

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 11
 Project site. It was proposed that this fund be utilised for the worker and his/her family such
as higher education of children, hospitalisation treatment expenses, loans for marriage of
children, etc. The workmen needed to register for membership and remained a member of
the fund by paying INR 20 on a monthly basis, while the organisation would contribute
largely to the welfare fund.

Workmens accommodation
To cater to the problem of shifting accommodation of workmen in the construction industry,
ABC Constructions had been constructing labour colonies provided with all basic and
essential amenities in all major projects. The DIAL project site was an example where ABC
Constructions employed a workforce of over 100,000 workmen and provided comfortable
housing for 30,000 workers. The housing colony was provided with facilities such as a
medical centre, drinking water, canteen, general stores, sanitation facilities, solid waste
disposal, safety, security, environment quality and waste water treatment[18].

Sub-contracted construction workers

ABC Constructions did not employ all the people themselves. The construction workers were
not directly employed by the company. They were employed through piece rate
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sub-contractors. ABC Constructions looked after them indirectly because the labour laws
of the country are such that if workmen were employed, then they could not be retrenched
after the completion of the project. Elaborating on this aspect, the former Dy. MD said:
This is a problem for the Company because such employees become a liability. In the
construction business you dont know when the job comes and when it will close. So we found a
via media. We encourage sub-contractors. Their business is to provide labour. They will work for
us, for some other contractor or even directly. The idea is that they have continuous employment
and we also try to give them continuous employment. So we take care of the workers through the
sub-contractors. We also ensure that they get proper pay. There is the Minimum Wage
Regulation. Most of the contractors dont pay the minimum wage because the workers are willing
to work at much cheaper wages. We dont exploit. The sub-contractor should be able to make
some money, the worker should be happy, and they should have safety. We have safety rules in
such a way that we train them. We tell them how to produce more without exerting too much. So
employee satisfaction is equally important[10].

Organisational strengths with respect to the employees

We have been there for 70 long years and it is not a fly-by-night type of organisation. Its
backed by reputation as we are involved in several nationally significant projects. Earlier we
had the tag line Builders to the Nation. Of course, now we have changed it to Builders to
Nations as we are now doing projects in the international arena as well.[10], observed the
head (POD). Credibility, reliability and dependability and organisational image were among
the diverse strengths of the company with respect to the employees as identified by him. It is
said that In ABC people dont join and then leave. Its a Company where one can join and
settle down. However, the considerations for the younger generation are little different. ABC
provided a sense of ownership and decision making freedom to its employees. Detailing
this, the Chairman observed:
ABC provides tremendous freedom. We do make mistakes but we learn from them. This company
gives you the feeling of ownership over what you do. I never felt that this Company did not belong
to me, although our salary got frozen during the socialistic regime for years together and when it
was finally removed, our children started earning more than us, especially in the IT industry. In
1989, I became a director on the board and, in 1999, I became the CEO. But if I look back at what
made me stick on, it was great excitement, feeling of owning the Company, empowerment and
environment[3].

The responses to an executive perception survey from the company indicated the following
to be its strengths with respect to employees[19]:
B Equality. The organisation treats all employees with fairness and provides benefits equally
to them (irrespective of caste, creed and religion).

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PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 B Commitment. In the organisation, employee commitment is highly appreciated.
B Health and safety. The organisation provides safe and healthy working conditions for all
its employees.

Future focus areas with respect to employees

Succession planning
In an interview with the Business India magazine, the CMD, ABC Group said:
We have to breed and acquire new talent in different age groups and slots, because if the
person is only as good as you are, he is bound to fail. The future is going to be difficult. The next
CEO, who comes in, has to be far smarter than me. Far more global and far more international and
really bring in fresh thinking (Business India, 2009).

The chairmans term as CMD was to end in September 2012, but he was given an extension
of five years during the annual general meeting of March 2012. Most of his current senior
management is also well over 60 years old and nearing retirement, with some of them having
to stay beyond their tenure. Though efforts are on within the organisation to get ready two
levels of leadership, succession planning continues to be an area of concern for ABC.
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Change in mindset
The head (POD) identified another major area of improvement the need for a mindset
willing to change. He said:
Change can happen only when the mindsets change. Any change is painful but all change is for
the good. Thats the message which we want to continuously tell the employees. The more we
resist change the more we are putting ourselves into a non-improving zone[10].

Talent management
Reiterating the need for focus on talent management, the chairman said, My single biggest
challenge is that I dont know how to connect with the younger generation and make them
feel for ABC as we feel for the Company.[3] To connect with the young students during
campus placements, ABC started sending ABC employees who usually would have studied
on the same institute. They were referred to as campus ambassadors.
The responses to the executive perception survey from the company indicated the following
to be its areas of improvement with respect to employees[19]:
B Salary. The organisation needs to have a salary structure comparable to industry
standards. There is scope for improvement in this regard.
B Grievance redressal system. There is need for improvement in providing effective
grievance procedures for workers and their representatives.
B Feedback. The organisation can work towards obtaining periodic feedback about the
level of employee job satisfaction[20].

The road ahead

The case indicates that the company has indeed been embarking on new people practices
that align with the changing business environment. The company has endeavoured towards
ensuring employee satisfaction and welfare at levels of the management hierarchy and at all
stages of employment from recruitment to exit. Some if its initiatives in employee training
and development are very innovative. The company has also worked towards providing
reasonably just employment opportunities to its sub-contracted labour and has not exploited
their ignorance and compulsions. The awards received by the company also indicate that it
is well-respected by the citizens.
However, with a changing business environment and HR policies suited to changing needs,
the jury is yet to determine whether ABC would continue to remain a benevolent organisation
as it had been till now. All the actions we are taking now will make ABC a technological

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 13
 growth engine. So what we would like to be in 2015 is a company with greater technological
excellence, which indulges in very complex projects. We will be a very heavy
core-infrastructure builder. We want to be the Indian equivalent of Mitsubishi Heavy
Industries, which can take on any global competitor in advanced technological missions,
whether it is in nuclear energy, aerospace, defence or infrastructure. This is what I would like
to see ABC as [. . .], said the Chairman[6]. In an interview to McKinsey Quarterly, he
mentioned that the decade long transformative exercise he had undertaken in the company
was only 65 per cent complete. During this period, the companys market capitalisation
multiplied about 30 times (beating the broad market growth), and revenue had grown almost
six times[15].
In January 2011, ABC created nine independent verticals power, hydrocarbon, machinery
and product, switchgear, heavy engineering, infrastructure, buildings and factories,
minerals and metals and electrical and automation. Though these verticals have
independent boards, these entities do not have any legal standing and the business
heads of these verticals report to the chairman of ABC. One among the many reasons
cited[21] for the creation of these independent verticals was the development of a deeper
leadership pipeline and attracting lateral talent.
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Notes
1. This is the disguised name given to the company under study.

2. Based on details provided on the company web site.

3. An extract from an interview the chairman gave to www.suchetadalal.com (accessed October 11,
2011).

4. As per census 2011, India has 640 districts.

5. Based on the information provided on the company web site.

6. An extract from an interview the chairman gave to www.businessworld.in/ (accessed March 18,
2011).

7. Survey conducted by Engineering News Record Magazine (2007).

8. As stated on the company web site.

9. Personal interview.

10. Personal interview on May 30, 2008.

11. ABC Constructions has an independent HR set up for those verticals which are under its domain. It
enjoys a fair level of decentralized decision making in the HR domain. This case focuses on the HR
practices of the construction division headquartered in Chennai, and not the parent company
headquartered in Mumbai. However, there could be certain overlapping initiatives with the parent
organisation which have been highlighted in the case.

12. Founded in 1975 by Carl Tisone and Richard Hellan in St. Louis, Missouri, PPC Worldwide rapidly
grew to become the major EAP provider in the USA, serving a wide range of businesses spanning
across the USA. In 1986, in response to demand from many multi-national clients, PPC Worldwide
began providing international services. It provides services in areas including employee wellbeing,
organisational development and employee health and safety.

13. An extract from an interview the chairman gave to www.mckinseyquarterly.com/ (accessed October
12, 2011).

14. ABC Construction, one of three companies as part of best practice in employee performance
appraisal www.chrmglobal.com/ (accessed March 16, 2011).

15. Based on the interaction with the head (POD).

16. Based on the information provided on the ABC web site.

17. Personal interview on November 6, 2009.

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PAGE 14 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 18. Details on the e-learning module, workmen shelter and workmen welfare are based on the
information provided in the company newsletter.
19. In order of importance as identified by the respondents.
20. Though the organisation is said to have a grievance redressal system in place and there is also a
mechanism for the employees to give feedback to the senior management, the company executives
have stated this as an area of improvement.
21. www.thehindubusinessline.com/todays-paper/article1122179.ece (accessed March 18, 2011).
22. Based on the information provided on the company web site www.lntecc.com (accessed October
Keywords: 12, 2012).
Human resource management,
Changing business 23. Hailing from the state of Gujarat and educated in a reputed engineering college from Anand in
environment, Gujarat, the Chairman has been awarded the Padma Bhushan, Indias third highest civilian award,
Employee welfare, on January 26, 2009. He was also the recipient of the prestigious Economic Times Awards
Business Leader of the Year award, for the year 2008.
HR challenges,
Indian construction industry, 24. Based on the information provided on the ABC web site, in many cases the year of award has not
Construction been stated on the website and hence not mentioned here.

References
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Business India (2009), The great gamble, Business India, February 22.
Department of Corporate Communications, ABC Constructions (2007-2008), Landmarks 2007-2008,
Department of Corporate Communications, ABC Constructions, Chennai.
Engineering News Record Magazine (2007), August.

Sage, A.P. (1977), Methodology for Large Scale Systems, McGraw-Hill, Inc., New York, NY.
Warfield, J.N. (1976), Social Systems Planning, Policy and Complexity, Wiley-Interscience Publication,
New York, NY.

Further reading
ABC Sustainability Report (2010).
Business World (2009), Restructuring has been a way of life, Business World, August 3.

Hindu Business Line (2011), January 25, Issue.

Exhibit 1. Board structure[22]

ABC is currently headed by a chairman[23]. Reporting to him is the managing director and
chief executive officer. Reporting to him are the apex representatives of each of the main
business divisions under the parent organisations. These include:
B the chief financial officer;
B president: heavy engineering;
B president: power and corporate affairs; and
B senior executive vice-president: infrastructure and construction.

Exhibit 2. Corporate human resource policy at ABC

This stated the company commitment to:
B Acquiring, developing and retaining a pool of high-calibre talent. The company policy
stated that recruitment be made solely on merit by following well-defined and systematic
selection procedures without discrimination.
B Enabling and empowering our employees to be creative and innovative.

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 15
 B Establishing systems and practices for maintaining transparency, fairness and equity.
The company developed a human resource management system that met international
standards as per ISO 9001.
B Creating a culture of continuous learning, competitiveness and excellence through
change management. Identify training needs and the design and implementation of those
need-based training programmes has been of primary importance to the organization.
B Respecting ethics, values and good governance.

Exhibit 3. Impact of key performance indicators

Table EI
Key performance indicators Impact (%)

Time for HR to respond to data analysis requests 220 to 230

HR report generation time 295
Leave and vacation processing time 290
HR transaction processing time 230
Appraisal processing time 250
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Percentage of employees covered by

performance management 99.9 (up from 60)
Ability to go through complete process cycle for
any HR activity 100

Source: SAP case study ABC: Building HR Excellence in a Global Enterprise

Exhibit 4. HR awards[24]
B Asia Pacific HR Conclave Award for the company with Most Innovative HR practices.
B National Award for Best HRD Practices from Indian Society for Training and
Development, 2006.
B National Award for Outstanding Work in Human Resource Management from National
HRD Network.
B Award for Outstanding Human Resources Development from Confederation of
Engineering Industry.
B Integration of Information Technology with HR in ABC Constructions has been recognised
by the National HRD Network.
B National Safety Council of India (NSCI) declared five prestigious construction safety
awards on ABC Constructions.
B The training and development practices of ABC Constructions secured the top spot for
the company in the corporate sector in the National Competition for Innovative Training
Practices 2006 organised by Indian Society for Training & Development (ISTD), New
Delhi.
B Gold Award of the Royal Society for the Prevention of Accidents, UK for ABC
Constructions excellence in occupational health and safety performance achieved at its
sites in TISCO Jamshedpur during a continuous period of 4 years from January 2000 to
December 2003.

About the authors

Dr Shashank Shah completed his PhD in the area of corporate stakeholders management in
2010 and was the recipient of the Association of Indian Management Scholars International
Outstanding Doctoral Management Student Award 2010 at the Indian Institute of
Management, Ahmedabad in 2011; and the HR College Golden Alumnus Award 2011
from the Honourable Sheriff of Mumbai for his research achievements. Prior to that, he

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PAGE 16 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 6 2013
 received the President of India Gold Medal for excellence in the MBA programme and the
Governors Gold Medal for excellence in the MPhil Programme at Sri Sathya Sai Institute of
Higher Learning (SSSIHL). He has published over 70 research-based papers and case
studies in reputed national and international journals and conferences in the areas of
business ethics, corporate governance, social responsibility, stakeholders management,
values-based management and education. He has also co-authored four books and two
monographs in these areas. He has been invited to present his research papers at various
international conferences at Harvard University, USA, INSEAD, France and other institutions
at Italy, Brazil, Turkey, Malaysia, Japan and India; and was Visiting Scholar at Centre for CSR,
Copenhagen Business School, Denmark. As Editor of the Universitys Publications Division,
he has compiled and edited over a dozen books on Indian culture and spirituality based on
the Message of the Revered Founder Chancellor. He has been a Resource Person for
Executive Development Programmes in the area of Corporate Social Responsibility at the
School of Management, Indian Institute of Technology, Mumbai. He is also an International
Advisory and Editorial Board Member, Journal of Values-Based Leadership, Valparaiso
University, USA. On multiple occasions, he has addressed large gatherings on topics
relating to Indian culture and spirituality, values-based education and management.
Currently, he is Post-Doctoral Fellow at the Department of Management Studies, SSSIHL.
Shashank Shah is the corresponding author and can be contacted at: shashankshahjs@
sssihl.edu.in
Ajith Sankar R.N. is an Assistant Professor at PSG Institute of Management, Coimbatore,
India. His case studies and caselets have been published in a number of national and
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international journals and textbooks. In addition to academic experience, he was also part of
two start-up companies. Ajiths PhD research is on the theme of spirituality and organisation.
He has completed the Chartered Market Technician Programme offered by Market
Technicians Association, New York, USA. His MBA, from University of Hyderabad, was
focused on environmental management and human resources management. Ajith holds a
Bachelors degree in psychology from Annamalai University and a three-year full-time
diploma in hotel management from IHMCTAN, Mumbai.

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VOL. 3 NO. 6 2013 EMERALD EMERGING MARKETS CASE STUDIES PAGE 17