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presents articles focusing on managerial applications of management practices, theories, and concepts

HRD Practices and Philosophy of Management in Indian Organizations
Anil Kumar Singh

Executive Summary

KEY WORDS Human Resource Development Managerial Philosophy Theory X Theory Y

The managerial philosophy of a company is generally based upon the top management’s assumptions about people working in the organization. It reflects the attitude of the top management towards the human resources of an organization. Managerial philosophies of companies are embedded in the society. McGregor (1960) has labelled these managerial philosophies as ‘Theory X and Theory Y.’ This paper is an attempt to identify the relationship between human resource (HR) practices and the philosophy of management of the Indian business organizations. For this, the different variables of HR practices were studied and the management’s philosophy was identified by measuring beliefs of top management about employees in the organizations. The sample for the study consisted of 95 respondents from two private sector organizations and 119 respondents from two public sector organizations. The findings of the study indicate that the variables of HR practices (planning, recruitment, and selection) were highly but negatively related to the philosophy of management in the private sector organizations. This meant that the Indian organizations were practising traditional philosophy of management in such organizations. The prevalence of traditional managerial philosophy focusing on managerial control has always dominated the managerial community in the sense that it is more prevalent and is more ‘tightly’ linked to managerial practice. As new managerial ideologies evolved, the older ones “never disappeared; instead, images and practices central to each were gradually institutionalized” (Barley and Kunda, 1992). The philosophy of management showed a blurred picture in the public sector organizations. Though the top management’s views and balance sheet emphasized the belief of the organization towards Theory Y, the analysed responses proved that management philosophy was not clear to managers working in these organizations. In fact, the Indian public sector organizations started as welfare organizations. However, the impact of market economy has led to a competitive environment. Though the public sector organizations have started realizing the impact of competition, it is difficult for them to understand when they lost their focus on the managerial philosophy. The following key issues emerged from the study: Organizations will have to design managerial philosophy which is sensitive to human existence. The managerial philosophy in the organization has an impact on the organizations of the future. HR concepts that get packaged along with modern managerial philosophy are likely to revolutionize the workplace. The bottom line is that people want to be cared for and respected. On their part, organizations want commitment and integrity. A successful combination of committed people and a benevolent organization could well be the way for organizations in this competitive environment in India.
Note : This paper is a part of a larger research project on HR practices in the public and private sector organizations in India.

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In the process of organizational socialization. etc. Sims (1994) felt that balanced psychological contract is necessary for a continuing. The organization provides certain rewards and expects in return certain contributions from the individual. If the Indian organizations are to develop and maintain their competitive edge. The idea that individuals are capable of development is founded on the conviction that people are important and their involvement is necessary for an organization to be effective. the potential value of the employees needs to be increased by enhancing and linking their skills and capabilities in tune with the contemporary requirements of the market. According to Schuller (2000). transformed. HR provides the enabling work climate of the organization comprising of managerial values. It has not been developed in isolation but rather in the context of industrial change and economic development. technologies. As suggested by Spindler (1994). there is a significant risk of organizations incurring an intellectual capital loss unless individual knowledge is transferred. structures. its human resources. The entire process is thus institutionalized. Schein (1990) indicates that people identify with the visionary leaders — how they behave and what they expect. Enterprise vision and mission will not become a reality unless employees are involved and integrated with the company’s goals. goals. The crucial inputs to an organization include. job motiva- tion. The challenge of human resource development (HRD) practices would be to create an environment of resilience which can successfully accommodate and assimilate changes in systems. The individual and the organization establish a ‘psychological contract. “skills. Thus. contributions are unpredictable. the strategic goal will be to create firms which are more intelligent and flexible than their competitors. harmonious relationship between the employee and the organization. The patterns of work relationships at work reflect the HR philosophy. thinking. Barney (1991) proposes that sustainable competitive advantage is attained when the firm has a human resource pool that cannot be imitated or substituted by its rivals. and competencies are the key factors in determining whether the organizations and nations will prosper. Youndt (2000) felt that since employees are free. to leave their firm. The human resource management (HRM) function has emerged as one of the most important areas of organizational practice. The pressures of change are most likely to be felt by those who have to lead and manage the change process in such a volatile economic environment. and a favourable organizational culture.’ The individual member expects to make contributions to the organization and receives certain rewards in return. among others. relationships are delicate. appraisal-reward process. and paradigms. The employees are socialized into the organization first by way of recruitment and then through continuous functioning in the organization. shared. attitudes. and expectations. psychological contract creates emotions and attitudes which form and control behaviour. knowledge. People bring to their jobs diversity of skills. and stability is uncertain. they internalize the values and attitudes of their leaders. HRD would have the ability to attract and retain people and is the key to manage this macro change—both in terms of pace and rate. The challenge is for the change agents to get individuals who would have a sense of belonging and commitment to the HRD PRACTICES AND PHILOSOPHY OF MANAGEMENT 72 72 . leadership. The uniqueness of HR requires a totally different type of attention from management. and institutionalized. for attaining this. work analysis. Barney (1991) felt that firms could develop strategic capability and. human resources are a company’s most valuable and strategic asset and the focused involvement of the top management with institutionalized leadership down the hierarchy is a prerequisite to attract and retain people. The change leaders would be confronted with the need to reorient culture. A company’s HR is fragile.T he changes in the market scenario have necessitated the Indian industry to look inward for the development of human resources (HR). methods. This interface can be effectively handled with the help of HR planning.’ the new economic environment is primarily marked by the freeing of shackles for entrepreneurship and economic growth. career development. The HR function has the characteristics that provide the greatest challenge as well as the opportunity. With the ‘license system’ being replaced to a great extent by the ‘market system. needs. and styles. This conviction is translated into practice through a variety of programmes that facilitate individual development and lead to better adjustment with the environment.” The interface between the individual and the organization is critical to full utilization of human resources. within limits. The managers who are encouraged to follow the role model of their seniors perpetuate the philosophy and practices of HR.

7 in 1994. 2000). rewards. Most of the work was undertaken to study the relationship between HR practices and firm level outVIKALPA • VOLUME 30 • NO 2 • APRIL . managers often find that the management tools that they adopt are not magic bullets. 1978). The Harvard model is conceived as an analytical framework which is premised on the view that if general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise.organization and who would welcome the impending changes. This model allows for multi-level analysis of these outcomes. Mintzberg (1978) and Porter (1985) have also contributed to the populism of the concept of strategy in the HR lexicon. The result is that managerial innovations become management fads which are tried and then abandoned. 1982. they would solve most of the problems of HR. 1990). This argument was extended by linking different personnel functions such as career paths. Ichniowski. the average company used 11.’ It stresses on the human aspect of HR and is more concerned with employer-employee relationship. while doing so. flexible manufacturing technologies. tools. 1990.1996. In the US. 1992). This literature. These failures may be attributed to an organization’s HR practices and the underlying philosophy of management (Barley and Kunda. there are two opposing models of HR: the Harvard model (Beer et al. 1987. 1996. The model’s emphasis on tight fit makes the organization inflexible and incapable of adapting to the required 73 73 . completely ignores the interest of employees and hence considers HR as a totally passive. and profitability was an important research issue in the early nineties. Business Today. Rao and Pereira. 1991). Singh. 1998). Becker et al. A study by Rigby (1998) found that 77 per cent of the executives reported that these tools promised more than they delivered. Unfortunately.. and techniques to help them cope with the demand of accelerating change. Managing in a turbulent environment is not easy and managers are constantly looking for new concepts. turnover. concludes that HRD practices can help create a source of sustained competitive advantage. Hamel and Prahalad (1991) contend that a firm would achieve competitive advantage if it can obtain and develop human resources which would enable it to learn faster and apply its learning more effectively than its rivals. performance. A number of researchers abroad (Ichniowski. Strategic management has assumed an overwhelming significance among practitioners partly as a result of being heavily promoted in the management literature (Peters. 1988. reactive.JUNE 2005 comes like productivity. The main criticism of this model is that it does not explain the extensive relationship between strategic management and HRM (Guest. enterprise resource planning systems) where failure rates are above 50 per cent. It also highlights the interests of different stakeholders in the organization. It can provide a useful basis for comparative analysis of HRM (Poole. reengineering. and 13 in 1997 (Micklethwait and Wooldridge. although largely conceptual. 1997). The matching model has been criticized as being too prescriptive by nature mainly due to the fact that its assumptions are too unitarist (Boxall. and implementationist function. Such an approach is completely missing in the matching model. Compared to the matching model.. It emphasizes a ‘tight fit’ between organizational strategy and HR strategies and. this model is termed as the ‘soft variant. 1984) emphasizing its utilitarian/instrumental functions in the achievement of managerial objectives. 1982).8 of these tools in 1993. TQM) and technological innovations (e. 1996. Peters and Waterman.g.. 12. It is argued that an organization’s structure is an outcome of its strategy (Chandler. This finding is consistent with other accounts of implementation failure across the range of managerial innovations (e. Huselid. HRM DEBATE AND HR MODELS The debate about HRM could be regarded as an outcome of the current interest in corporate and business strategy. The impact of HR practices on organizational level outcomes such as productivity. and leadership styles to the organization’s mission (Galbraith and Nathanson. Tichy and Devanna. 1992).. Arguments made in related research are that a firm’s current and potential human resources are important considerations in the development and execution of its strategic business plan. Rigby. 1962). Delaney and Lewin. 1989. 1993) and in India related a comprehensive measure of HR practices to the firms’ financial performance (Rao. turnover. The Michigan model is based on the paradigms developed by Chandler (1962) and Galbraith and Nathanson (1978). and market value (Becker and Gerhart. 1985) which stresses on the developmental aspects of HR and the Michigan model or the ‘matching model’ (Fombrun. There are 25 leading management tools and techniques and according to an annual survey.g.

however. a source of competitive advantage through their commitment. 1993). been observed that “even if the rhetoric of HRM is soft. have done a lot of empirical studies in the area of HR practices. The modern philosophy of management is based upon an optimistic view of the nature of men and women. they decide how to deal with their superiors. and that authority comes from the top and is transmitted down through the organization structure.1999). no attempt has been made to systematically evaluate the extent of HRD function or its components or practices.’ The traditional managerial view that the average human being working in an organization has an inherent dislike for work. the matching model provides a good framework to theory development in the field of HRM. It involves “treating employees as valued assets. The ‘school of excellence’ writers may have exerted some influence on management thinking about the need for strong culture and commitment (two features of HRM) but. The very idea of the model to consider and use human resources like any other resources in an organization seems unpragmatic as it misses the human aspect. Gratton et al. peers. Whether managers are aware of these assumptions or not.’ Faced with this fundamental ‘fact. The soft model of HRM traces its roots to the Human Relations School. and its internal working and support provided to it by the management (Pareek. performance etc. It also provides a promising schema to look at the HR practices in universal and generic term. The ideas of Adam Smith propounded in his Wealth of Nations have served for about two hundred years as the basis of our capitalistic system. on the other hand. HRM as a concept emerged in the mid-1980s with the efforts of the writers of management of that decade including Pascale and Athos (1981) and Peters and Waterman (1982) who listed the attributes which they claimed as characterizing successful companies. is synonymous with power. as mentioned by Truss (1999). however. lacks ambition. the kinds of assumptions a manager makes about the nature of people will determine his managerial strategy and his concept of the psychological contract between the organization and the employee. 1985) while Theory Y emphasizes the importance of integrating the needs of the organization and those of the individual — the principle of mutual trust again being expressed by Walton (1985). its expected impact on the organization. McGregor (1960) has labelled this managerial philosophy as ‘Theory Y. A basic tenet of the traditional point of view is that the authority of the employer is supreme. 1992). and wants to be closely directed is termed ‘Theory X. 1997). trustworthy. The power and the right to make decisions HRD PRACTICES AND PHILOSOPHY OF MANAGEMENT 74 74 . McGregor’s Theory X describes the ‘control’ model of management (Walton.” (Storey. In the words of Schein (1970). avoids responsibility.’ the only option open to management is to exercise close control and to coerce and threaten people working in the organization in order to attain the organizational objective. they were ‘right enough to be dangerously wrong’ (Guest. It. Control is exercised through command. The matching model and the Harvard analytical framework represent two very different emphases — the former is closer to strategic management literature while the latter to human relations tradition. (1999) identified a combination of soft and hard HRM approaches in the eight organizations studied. Despite many criticisms. Some aspects of the basic philosophy of ‘soft HRM’ can be traced back to the writings of McGregor (1960) who. MANAGERIAL PHILOSOPHIES The managerial philosophy is based upon the top management’s assumption about people working in the organization. even used the terminology ‘hard’ and ‘soft’ to characterize the forms of management control. adaptability. the reality is often hard with the interests of the organization prevailing over those of the individual” (Truss. In an era of competitive market. It has. The economic doctrine of Adam Smith which was built on this assumption led to the theory that relationships in the marketplace between organizations and customers or buyers should be left alone because the separate pursuits of selfinterest would regulate market relationships. and cooperative.changes and hence is a ‘misfit’ in today’s dynamic business environment. especially the US. The Western countries. and subordinates. They are considered to be potentially creative. ignores the cultural processes. implementation of HRD practices without extensive empirical studies may turn out to be disastrous for the Indian organizations. and high quality of skills. In India. Schein (1970) also felt that the tradition of philosophy of management underlies the doctrine of rational-economic man derived originally from the philosophy of hedonism which argued that man calculates the actions that will maximize his self-interest and behaves accordingly.

The need of the hour is to attract high level of initiative and innovation. People are taught to accept responsibility and exercise self-control. challenge. It is in this 75 75 .JUNE 2005 sumption about people in organizations largely reflected philosophical positions on the nature of man. In summary. He points out that McGregor’s ‘Theory X’ and ‘Theory Y’ reflect the American’s cultural emphasis on individualism and hence do not apply in South East Asia. in the Indian context. Managements had developed plans for growth but they have now realized that they had not developed the attitudes and skills within them to take initiatives. job accomplishment. many decades of research has resulted in vastly complicated models of man and attitude of the management towards the human resources of the organization. and take risks (Theory Y). The top management of an organization makes assumptions about the human resources. On the one hand. The philosophy of management reflects the attitude of the top management towards the human resource of an organization. being possessed of many needs and potentials. the lowest degree of fulfilment of esteem and autonomy needs. Hofstede (1987). the assumptions underlying the concept of self-actualizing man emphasize on higher order needs for autonomy. Argyris (1964). The employee is highly motivated to work when he derives satisfaction from doing it himself. According to him. Herzberg. While there is empirical evidence of relationship between the philosophy of management and organizational culture. and others felt that the jobs in modern industry are so specialized that they neither permit the people working in the organization to use their capacities nor enable them to see the relationship between the job done by the human beings working in the organization and the overall organizational mission. It has always been difficult to generalize about man. the asVIKALPA • VOLUME 30 • NO 2 • APRIL . Emphasis is placed upon activating the higher needs such as responsibility. recognition. In the self-actualizing man theory.’ The liberalization. one finds little evidence of research on the relationship between the philosophy of management and HR practices. privatization. make decisions. suggests that American management theories are not universally applicable. This points to the fact that people working in the Indian organizations are in the category of ‘Theory X. the contract involves the exchange of opportunities to obtain intrinsic rewards (satisfaction from accomplishment and the use of one’s own capacities) for high-quality performance and creativity. Schein (1970) felt that man is a more complex individual than the rational-economic. Tannenbaum and Davis (1969) do see a trend towards acceptance of ‘Theory Y’ as a philosophy of management. Not only is he more complex within self. They assert that growing evidence suggests that humanistic values not only resonate with an increasing number of people but are also highly consistent with the effective functioning of organizations built on the newer organic model. Before recasting the philosophies and practices. McGregor (1960). Historically. egoistic — must be activated. who surveyed employees from 50 countries. there is a need to understand the philosophy of management of Indian organizations. Such needs exist in all men and become active as lower order security and social needs come to be satisfied. achievement. Consequently. social. and autonomy. Haire. there are fears about the consequences of human growth and deep pessimism about human beings changing their behaviour. The initial stimulus came from the realization that the paternalistic philosophy of management in the past gave little momentum for growth in future. but is also likely to differ from others in the patterns of his own complexity. Organizations and managements have both tended towards a simplified and generalized conceptualization of man. Mausuer and Snyderman (1959) found that the self-actualizing man felt good about his job which invariably had to do with accomplishments and feeling of growth in job competence. and innovation. people in South East Asia behave as members of a family and/ or group and those who do not are rejected by the society. and self-actualization. ‘Theory Y’ holds that all motives — economic. on the other. there is a genuine interest in human beings and. and the second lowest fulfilment of self-actualization needs in comparison with managers from all the other 13 countries. social or self-actualizing man.must be centralized at the top. Managerial effectiveness will depend on the degree to which these assumptions fit empirical reality. Pelz and Andrews (1962) confirmed the findings that productivity and creativity are strongly related to challenge. Ghiselli and Porter (1966) found that the Indian managers report the highest degree of fulfilment of security needs as compared to the managers in any other country. and globalization of the Indian economy has resulted in a competitive market economy.

Performance evaluation: The items focused on measuring and evaluating an employee’s past performance against a standard of performance. maps the attitude of the management towards employees working in the private and the public sector organizations. Selection: The items focused on obtaining employees who are most likely to meet the desirable standards of performance. recruitment. all the companies were profitmaking organizations. The questionnaire was standardized and spilt half reliability was calculated to be 0.81. the questionnaire developed by Gordon (1986) was used. Training and development: The items related to the set of activities designed to increase an individual’s skills. HRD PRACTICES AND MANAGEMENT PHILOSOPHY IN INDIA The objectives of this study are to: • examine the assumptions of the top management about the people working in the organization • understand the social organization through HRD belief and the philosophy of management in the organization • examine the nature of differences in the philosophy of management subscribed to by the organization towards employees working in the public and the private sector • examine the nature of relationship between HRD practices represented by planning. and strategies to satisfy the organizational needs while allowing individuals to achieve their career goals. career management. This questionnaire consisting of eight items is used in this study to examine the philosophy of management towards people working in the organizations. The sample size consisted of HRD PRACTICES AND PHILOSOPHY OF MANAGEMENT 76 76 . selection. training and development. career management and rewards and the philosophy of management in the private and the public sector organizations. We hypothesize that HRD practices in terms of planning. Measure of Philosophy of Management The management belief questionnaire examined the theory and beliefs of managers regarding the top management’s philosophy on people working in the organizations. recruitment.000 managers in 14 different countries across the world. In other words. It consisted of 69 items including the following variables: Human resource planning: The items focused on the process of analysing an organization’s human resource needs and developing the activities necessary to satisfy these needs under changing conditions. Rewards: The items focused on repaying equitably for a service based on the quality of service. individual action. it explores the impact of HRD practices on the philosophy of management and. at the same time. performance evaluation. and leadership • belief in the value of sharing information and objectives • belief in participative management • belief that individual control should be by selfcontrol rather than control by supervisors. training and development. knowledge or change an individual’s attitudes to preparing individuals to assume higher level or different responsibilities. Recruitment: The items focused on identifying and attracting candidates for current and future jobs. The questionnaire probed four areas of management belief system: • belief in individual’s innate capacity for initiative. plans. and rewards are significantly related to the philosophy of management. There were 95 respondents from the private sector organizations (Organization ‘A’ and Organization ‘C’: 54+41) and 119 from the public sector organizations (Organization ‘B’ and Organization ‘D’ = 68+51). Ghiselli. Measures Measure of Human Resource Development Practices For the purpose of measuring HRD practices. performance evaluation. Characteristics of Organizations Studied The sample consisted of 214 participants working in four different organizations — two belonging to the public sector and two belonging to the private sector (see Box for a profile of the organizations). At the time of selection.context that this paper examines the relationship between HRD practices and the philosophy of management. All the organizations in the sample were either listed in Group A of the Bombay Stock Exchange or contributed significantly to the development of the nation. selection. Haire. Career management: The items related to the process of designing and implementing goals. and Porter developed this questionnaire in 1966 and surveyed the attitudes of 3.

It is among the top ten best employers in India and the only public sector organization in the top ten list. Organization ‘B’ has global recognition and is ranked the ninth highest in terms of total electric power generated and the second most efficient among the top ten worldwide thermal power generating companies. The sample size comprised of all management levels but most of the respondents were from middle level management with an assumption that they would possess an accurate perception of HRD practices employed in their organizations. Thus. of cases = 95.01. especially after liberalization and globalization. were highly but negatively related to the philosophy of management. and Employees.17 • executives in various positions (right from entry level to top position). Organization ‘C’ is India’s largest private sector enterprise in the area of electrical engineering.JUNE 2005 economy. RESULTS AND DISCUSSION We analysed the data and computed the correlations considering that our main objective was to examine the nature of relationship between various aspects of HR practices and the philosophy of management. Cost. particularly training and development and rewards.. it was felt that their personal involvement in policy formulation would be much less than the HRD department.e. The findings pertaining to private sector organizations reflected that Indian organizations were practising traditional philosophy of management. it is a cause for concern that Indian private sector organizations still have faith in ‘Theory X. HRD.16 -. Philosophy of Management . Contrary to the hypothesis. We collected the data personally and also by mail using non-probability incidental sampling with an assurance that information obtained would be kept confidential. education.27* • • Table 2: Correlations between HRD Practices and the Philosophy of Management for the Public Sector Variables Planning Recruitment Selection Performance evaluation Training and development Career management Rewards No. the results showed that there was no significant relationship between the variables of HR practices and the philosophy of management in the public sector organizations whereas. the hypothesis has been partially proved by this study. In the fast changing scenario of the Indian VIKALPA • VOLUME 30 • NO 2 • APRIL . The findings are presented in Tables 1 and 2.19 -. The issue of HRM practices in large business organizations was explored in this study to determine whether organizations were practising traditional or modern philosophy of management. Table 1: Correlations between HRD Practices and the Philosophy of Management for the Private Sector Variables Planning Recruitment Selection Performance evaluation Training and development Career management Rewards No. *1-tailed significance = -. The main message in the communication exercise was excellence through concern for QPCE — Quality.’ the response showed that the management philosophy was not clear to managers working in the organization. Philosophy of Management -. free electricity. Organization ‘D’ is one of the largest producers of paper. marketing.23 -. Most of its expansion schemes have been financed by internal accruals and borrowing and it has not raised any money from its shareholders except in 1994. It has always relied on its strong cash generation and leveraging capacity to grow. The traditional philosophy of management depends primarily upon economic motivation.Box: A Profile of the Sample Organizations • Set up primarily to meet the needs of the power sector in the country. In 1985. Organization ‘A’ had grown to become India’s leading engineering company.02 .01 -. people. Though the top management’s views and the balance sheet emphasized the belief of the organization towards ‘Theory Y. the Managing Director of Organization ‘C’ identified the need for a change in the mindset of employees and articulated new values for the organization such as concern for customers.09 . in the private sector. finance.11 .23 -. He also conducted an organization-wide communication exercise for sharing a vision of renewal of the organization. etc.15 . of cases =119. The organization has a personnel department and its managerial staff and workers are provided housing. and water. i. The perceived negative correlation of philosophy of management with HRD practices showed that the private sector organizations still had belief in ‘Theory X’ of McGregor.07 -. The purpose of including managers other than the HRD function was to get an honest account of HRD practices in their organizations.23 -. ‘the carrot and stick’ policy — the rewards go to the perform- 77 77 . Productivity.’ The philosophy of management projected a blurred picture in the public sector organizations. The sample also included other departments such as production. and cost. the variables of HR practices.24* -.

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