Project on HR policies of Consumer

Durables sector in India

By : Zain Uddin
DM18A60
PGDM-HR

Submitted to : Yamini Ghanghorkar

Introduction
Indian consumer durables market is broadly segregated into urban and rural markets, and is attracting mar-
keters from across the world. The sector comprises of a huge middle class, relatively large affluent class and a
small economically disadvantaged class. Global corporations view India as one of the key markets from where
future growth is likely to emerge. The growth in India’s consumer market would be primarily driven by a fa-
vorable population composition and increasing disposable incomes.
Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983 in 2012. The maximum
consumer spending is likely to occur in food, housing, consumer durables, and transport and communication
sectors.

Market Size
• The growing purchasing power and rising influence of the social media have enabled Indian consumers to
splurge on good things. Import of electronic goods reached US$ 53 billion in FY18.
• Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48 billion) in
2017. India is one of the largest growing electronics market in the world. Indian electronics market is ex-
pected to grow at 41 per cent CAGR between 2017-20 to reach US$ 400 billion.
• Television industry in India is estimated to have reached Rs 740 billion (US$ 10.59 billion) in CY2018 and
projected to reach Rs 955 billion (US$ 13.66 billion) in CY2021.
• As of FY18, washing machine, refrigerator and air conditioner market in India were estimated around Rs
7,000 crore (US$ 1.09 billion), Rs 19,500 crore (US$ 3.03 billion) and Rs 20,000 crore (US$ 3.1 billion),
respectively.
• India’s smartphone market grew by 14.5 per cent year-on-year with a shipment of 142.3 million units in
2018. India is expected to have 829 million smartphone users by 2022. In 2019, India is expected to manu-
facture around 302 million handsets.

Investments
According to the Department for Promotion of Industry and Internal Trade, during April 2000 – June 2019,
FDI inflows into the electronics sector stood at US$ 2.45 billion.
Following are some recent investments and developments in the Indian consumer market sector.

• In November 2019, Nokia entered in partnership with Flipkart to enter consumer durables market in India
and plan to launch smart TVs.
• In October 2019, Apple Inc. entered in agreement with Maker Maxity mall, co-owned by Reliance Indus-
tries to open its first company-owned iconic outlet in India.
• In August 2019, Voltas Beko launched India’s first five star washing machine.
• In July 2019, Voltas Limited entered into partnership with Energy Efficiency Services Limited (EESL) to
manufacture and sell 5-star rated Inverter Air Conditioners.
• In April 2019, TCL Electronic announced its entry into home appliances market in India.
• Xiaomi became the India’s largest brand network in the offline market, having presence in over 790 cities in
the country.
• Bosch Home Appliances to invest US$ 111.96 million to expand in India.
• Number of TV households and viewers in India reached 197 million 835 million, respectively in 2018.
• According to the retail chains and brands, there is 9-12 per cent increase in the sales of consumer electronics
in Diwali season in October 2019.
• The smartphone shipment witnessed a year-on-year growth of 9.3 per cent in July-September 2019 with
46.6 million unit shipped.
• Consumer durables loans in India increased by 68.8 per cent to Rs 5,445 crore (US$ 780 million) in Sep-
tember 2019.
• Intex Technologies will invest around Rs 60 crore (US$ 9.27 million) in 2018 in technology software and
Internet of Things (IoT) startups in India in order to create an ecosystem for its consumer appliances and
mobile devices.
• Micromax plans to invest US$ 89.25 million by 2020 for transforming itself into a consumer electronics
company.
• Haier announced an investment of Rs 3,000 crore (US$ 415.80 million) as it aims a two-fold increase in its
revenue by 2020.
Government Initiatives
• National Policy on Electronics Policy was passed by the Ministry of Electronics & Information Technology
in February 2019.
• A new Consumer Protection Bill has been approved by the Union Cabinet, Government of India that will
make the existing laws more effective with a broader scope.
• The mobile phone industry in India expects that the Government of India's boost to production of battery
chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025.
• The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by
amending the M-SIPS scheme, in order to further incentivise investments in electronics sector, create em-
ployment opportunities and reduce dependence on imports by 2020.
• The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) under the automatic
route in Electronics Systems Design & Manufacturing sector. FDI into single brand retail has been increased
from 51 per cent to 100 per cent, the government is planning to hike FDI limit in multi-brand retail to 51 per
cent.
 HR CHALLENGES IN CONSUMER DURABLES
SECTOR INDIA

Over the past three to four years, the global economy has gone through a tumultuous change and
the looming threat of a “double dip” and “triple dip” recession. The environment that organiza-
tions are operating in today is one characterized by volatility, uncertainty, complexity and ambi-
guity. The Indian economy has also not remained insulated from the economic turmoil that the
world is going through – many industries have seen slowdown and organizational decision-mak-
ing is today marked by cautiousness. In this context, the HR profession in the Indian context has
several daunting challenges to face in the year 2019.

Consumer durables registered gains of just 33% on the BSE Consumer durables Index last year.
At the macro level, Indian economy is poised to remained buoyant and grow at more than 7%.
The economic growth would impact large proportions of the population thus leading to more
money in the hands of the consumer. Changes in demographic composition of the population
and thus the market would also continue to impact the Consumer durables industry.

Major HR challenges in Consumer durables sector India are as follow:

1. Managing Knowledge Workers

Essentially, here we are looking at different kind of people who does not obey the princi-
ples of management for the traditional group. This boils down to higher educational
qualifications, taking up responsibilities at a lesser age and experience, high bargaining
power due to the knowledge and skills in hand, high demand for the knowledge workers,
and techno suaveness. The clear shift is seen in terms of organization career commitment
to individualized career management. Managing this set of people is essential for the
growth of any industry but especially the IT, BPOs and other knowledge based sectors.

2. Managing Technological Challenges

In every arena organizations are getting more and more technologically oriented. Though
it is not in the main run after the initial debates, preparing the work force to accept tech-
nological changes is a major challenge. We have seen sectors like banking undergoing
revolutionary changes enabled by technology. It is a huge challenge to bring in IT and
other technology acceptance all levels in organizations.

3. Competence of HR Managers
As it is more and more accepted that lot of success of organizations depend on the hu-
man capital, this boils to recruiting the best, managing the best and retaining the
 best. Clearly HR managers have a role in this process. Often it is discussed about lack of
competence of HR managers in understanding the business imperative. There is now a
need to develop competent HR professionals who are sound in HR management prac-
tices with strong business knowledge.

4. Developing Leadership
It is quite interesting to note that there is less importance given to developing leadership
at the organizational level. Though leadership is discussed on basis of traits and certain
qualities, at an organizational level it is more based on knowledge. The challenge is to
develop individuals who have performance potential on basis of past record and knowl-
edge based expertise in to business leaders by imparting them with the necessary "soft
skills".

5. Managing Change
Business environment in India is volatile. There is boom in terms of opportunities
brought forward by globalization. However this is also leading to many interventions in
terms of restructuring, turnaround, mergers, downsizing, etc. Research has clearly shown
that the success of these interventions is heavily dependent on managing the people is-
sues in the process. HR has a pivotal role to play here.
 COMPARISON OF RECRUITMENT AND SE-
LECTION

In a highly competitive environment of Consumer durables market companies are very much
investing in selection and recruitment process to gain the comparative advantage and to get best
resource in the organization. The studied companies have been using traditional as well as mod-
ern techniques. As the firms want to reach to maximum level of masses with lower cost compa-
nies are more shifting towards modern techniques like use of internet etc.

COMPARISON OF RECRUITMENT SOURCES:

Recruitment Apple LG Samsung Hewle= Sony Panasonic

Sources Packard
AdverCsement in Newspaper YES YES YES

Online AdverCsements YES YES YES YES

Company Website YES YES YES YES YES

Job Portals YES YES YES

Employment Exchange YES

Placement Agencies YES YES YES

Campus Recruitment YES YES YES YES YES

Casual ApplicaCon YES YES YES

Walk-ins YES YES YES

Head HunCng YES YES
Mergers & AcquisiCons YES

Internships YES YES YES

Internal Data Banks YES YES YES

Employee referrals YES YES YES

Private Consultants YES

Trade Unions YES YES

Internal PromoCon YES YES YES YES YES YES
COMPARISON OF SELECTION PROCESS:

SelecCon Tools Apple LG Samsung Hewle= Sony Panasonic

Packard
Preliminary YES YES YES YES YES YES
SelecCon

IniCal screening YES YES YES YES

ApplicaCon forms YES YES YES

Tests/Role YES YES YES YES YES

Play/Case study

SelecCon YES YES YES

Interview
Final Interview YES YES YES YES YES YES

Medical EvaluaCon YES YES

Job offer YES YES YES YES YES YES
Group exercises YES YES
PresentaCons YES YES YES

Specialized TesCng YES YES

Performance YES YES YES YES
Exams
Panel Interview YES YES YES YES
 COMPARISON OF COMPENSATION AND BENEFIT
PLANS

To gain a competitive advantage, attract potentially skilled and qualified employee and retain
their employees in this highly competitive world Consumer durables sector companies come up
with large number of compensation and benefit plans.

COMPENSATION:

Apple, Samsung, LG and Sony provide a basic salary and some variable salary depending on
performance of the employee.

LG gives a basic salary and bonus as compensation.

BENEFITS:

Medical and Insurance benefits are provided by Apple, Sony, Samsung. E.g. Apple offers med-
ical and dental coverage for full-time employees. It also partners with programs such as free
therapy services, which can help employees who are struggling or experiencing hardship.

Retirement benefits like Gratuity are given by LG, Pension Plan by Sony and Apple 401(k)
Savings Plan and the HP Pension Plan, Provident Fund by HP, Apple, Panasonic, Samsung and
Sony.

Benefits for Personal growth & Development are provided by Apple, Samsung and LG. Sony
has a world-class corporate university Sony University, providing transformational learning and
development solutions to our customers. Tuition assistance programs are provided by LG which
included financial assistance to meet tuition expenses for all employees.

Company stock option plan is given by Apple offers to the employees to enable them to share
the benefits of the company’s performance.

Facilities like Leave and Travel Allowance is provided by almost all the companies.
 COMPARISON OF PERFORMANCE
APPRAISAL

Consumer durables Sector in India is highly competitive between few giants and several medi-
um small and medium scale companies. Transparent, fair and attractive performance appraisal
plays the curtail part in retaining, developing and attracting the human resources.

Most organizations focus on an annual evaluation process for employees and call that Perfor-
mance Management. However, annual evaluations are often subjective and can lack specific
measurements and supportive data to help the employee truly improve their behaviour.

Companies that are being studied in this report are focusing mainly upon the transparency in
performance appraisal and genuine feedback of employees. Taking it into consideration almost
all companies are using modern techniques of performance appraisal. In the study conducted and
the results below supports the argument that Consumer durables industry follows the modern
techniques for performance appraisal and certain similarities has been noticed in the studies be-
tween the competitors and differences also to take the competitive advantages.

The below table shows the techniques used by studied companies in this report.

COMPANY MB BAR 360 Degree Assessment General

O S Center appraisal
Apple ✓ ✓
Samsung ✓ ✓ ✓
LG ✓ ✓ ✓
Hewle2 ✓ ✓
Packard
Sony ✓
Panasonic ✓
 COMPAIRISON OF TRAINING AND DE-
VELOPMENT

The needs of individual are objectively identified & necessary interventions are planned for
identified groups, which get rolled out in a phased manner through training calendar.

The training and development program is charted out to cover the number of trainees, existing
staff. The programs also cover the identification of resource personnel for conducting develop-
ment program, frequency of training and development programs and budget allocation. Training
and development programs can also be designed depending upon job requirement and analysis.
Selection of trainees is also facilitated by job analysis.

The company has a strong focus on manpower training according to their requirements. The in-
ternal training department aims at improving the skill sets relevant to the work profile of em-
ployees. This includes improving communication, Different skills, E-mail programming, Opera-
tion systems.

The design of the training program can be undertaken only when a clear training objective has
been produced. The training objective clears what goal has to be achieved by the end of training
program i.e. what the trainees are expected to be able to do at the end of their training. Training
objectives assist trainers to design the training program.

Apple, Samsung, LG, HP, Sony and Panasonic being all multinational firms has operations in
many different countries of the world but they all are well interconnected with their all the of-
fices and ground workforce. For instance if a plant at Cairo does something new or applies a
new strategy which is successful, people are sent from here so as to learn them and apply it into
their operations. So on job training takes place continuously.

They also comprise of technology based training programs. Like they have a mentor program on
their website where employees can interact with each other, discuss issues and find ways to help
each other in times of need (Experiential exercises). Here people in similar departments or on
similar projects interact, share information, guide and find solutions.

Annual functions are held regularly where employees of all levels interact and discuss advance
strategies and do planning for future. Team building exercises are also conducted along with mo-
tivational workshops so that specific issues concerning employees could be addressed and recti-
fied. Management trainees in this company are also trained through job rotation.

Similar practices are carried on by all the companies.

 Conclusion

The entire are Learning Organizations to some extent as it focuses on enhancing its systems (in-
cluding people) to continually increase the organization's capacity for performance. They all
have built a strong foundation for consistent sustainable growth, with clear strategies and room
to grow in each strategic focus area, core strengths in the competencies that matter most in the
industry, and a unique organizational structure that leverages strengths.

Their HR department has evolved since the organization’s inception and it now empowers em-
ployees to choose their mentor on their own from any part of the organization worldwide
through their intranet. This helps to even resolve any issue regarding similar problems faced by
employees in different parts of the world.

An organization’s ability to meet the recruitment & selection challenges provides an opportunity
to make significant contribution to the company. With better quality people executing the com-
pany’s operations the HR department can create a competitive advantage for the company.

In light of the research conducted by our team members we have concluded that these organiza-
tions are extremely formal, organized, dedicated and quality conscious organization. It has very
formalized structure for the recruitment and selection of employees.

All these organization have a unique human resource management system where it focuses on
bringing out the best of its employees through continuous hard work and devotion.