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Strategic global human resource

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Mohan Thite
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Department of Employment Relations & Human Resources,
Griffith University, 170 Kessels Road, Nathan, QLD, 4111, Australia

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 Human Resource Development International
2012, 1–9, iFirst article

PERSPECTIVES
Strategic global human resource management: case study of an
emerging Indian multinational
Mohan Thite*

Department of Employment Relations & Human Resources, Griffith University, 170 Kessels
Road, Nathan QLD 4111, Australia
Downloaded by [Griffith University], [Mohan Thite] at 21:23 31 January 2012

(Received 25 August 2011; final version received 4 October 2011)

With the growing importance of emerging economies, researchers call for the need
to pay attention to non-Western management models with a view to developing
an integrated approach. Using a case study of an Indian multinational firm in the
IT industry, this article highlights the key ingredients of its success in managing a
global workforce, such as diffused and empowered leadership, metrics and value
driven performance and reward management and strategic mindset of the human
resource (HR) function. It recommends an adaptive approach to global HR
practice that facilitates cross-transfer of best practices.
Keywords: emerging multinationals; India; international HRM strategies;
information technology services industry

Introduction
Thanks to the knowledge economy, today Strategic Human Resource Management
(SHRM) is seen to be a key competitive advantage and taken seriously in strategic
decision making. However, most of the best practice literature on SHRM is
grounded predominantly in a Western context, particularly with regard to the
multinational companies (MNCs), ignoring the fundamental changes underway in
the global economy (Ferner 2009). For example, the growth rate of the number of
MNCs from developing countries and transition economies, referred to variously as
the ‘new, infant, third world or emerging multinationals’, over the past 15 years has
exceeded that of MNCs from developed countries (UNCTAD 2008). Reflecting the
growing importance of Asia, the Asian MNCs dominate the list of 100 largest
developing country MNCs (UNCTAD 2006). China and India are two of the most
attractive inward as well as outward foreign direct investment (FDI) destination
countries (UNCTAD 2007).
In terms of Indian multinationals, 7 of them featured in Global Fortune 500 and
20 in Boston Consulting Group’s BCG 100 new Global Challengers (Sirkin,
Hemerling, and Bhattacharya 2008). In contrast to China, Indian multinationals are
largely private owned and cover a wide range of sectors in energy-related areas,
information technology (IT) services, pharmaceuticals, engineering goods and

*Email: M.Thite@griffith.edu.au

ISSN 1367-8868 print/ISSN 1469-8374 online

Ó 2012 Taylor & Francis
http://dx.doi.org/10.1080/13678868.2011.646896
http://www.tandfonline.com
 2 M. Thite

natural-resource-based manufacturing firm (Ramamurti and Singh 2009). In 2006,

the share of service sector in Indian FDI stock stood at 38%, mainly in IT,
communication and software followed by media, broadcasting and publishing. The
competitive advantages of Indian multinationals today are more broad based and
include technology, skills, management expertise, quality and scale of production
(Pradhan 2005; Thite and Dasgupta 2011). According to Jonsson (2008, 6), the
Indian multinationals ‘represent a new breed of multinationals that build their
competitive advantage in novel ways; multinational corporations that derive their
advantage from service rather than technological innovations and manufacturing
MNCs that straddle a low-cost and medium technology position’.
The key driver of internationalization for Indian MNCs is market-related
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factors, i.e. ‘the need to pursue customers for niche products – for example, in IT
services – and the lack of international linkages’ (UNCTAD 2006, 25). In terms of
global excellence, the Indian IT firms stand apart as a stellar example of Indian
ingenuity and entrepreneurship. They are seen to be at the fore front in acquiring the
highest number of quality certifications and accreditations pertaining to IT services
sector. The top Indian IT firms have also pioneered end-to-end business service
model with development and delivery centres situated in a combination of on-shore,
near-shore and off-shore models (NASSCOM 2009).
The case study in this article pertains to one such Indian IT multinational
enterprise, Alpha Computers (name changed to maintain confidentiality). It explains
why and how Alpha has been able to become a world class IT firm by keeping its
intellectual capital at the core of its business philosophy and strategy. The article
begins with a brief theoretical overview of SHRM best practice literature. It then
describes the key elements of the corporate human resource (HR) philosophy,
policies and practices of the case study organization in order to explore whether and
how they mirror the best practices in the strategic global HRM literature. The article
concludes with a discussion on the implications of the case study findings for
international HR theory and practice.

Strategic global HRM – a theoretical perspective

There is growing evidence that HR practices influence organizational performance
and competitive advantage and those organizations, which deploy good people
management practices, reap the benefits. After reviewing the literature on strategic
human resource management (SHRM), Thite (2004) concludes that successful
organizations follow certain common high performance/ high involvement work
practices:

. The HR function in these organizations establishes business partnership with

line managers who have direct interest and involvement in delivering HR. The
HR functionaries become an integral part of the strategic business units
(SBUs) and customize HR solutions to provide fast and efficient service. It is
their attitude to internal and external customer service that distinguishes their
work from traditional HR delivery.
. They identify, operationalize and implement the competencies and characters
that they believe are at the core of their organizational culture.
. They leverage intellectual capital in and around the organization by
institutionalizing a life long learning culture.
 Human Resource Development International 3

. They aim to recruit the best talent available in the market by carefully
cultivating the image of a preferred employer.
. Their remuneration system is timely, performance-based and profit sharing. It
rewards and reinforces the competencies and characters valued by organiza-
tional members.
. Their commitment to employees is demonstrated in several ways, such as
continuous training and opportunity to work on challenging tasks.
. They develop organizational structures that revolve around autonomy, self
leadership and team-based learning and problem solving.
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In identifying HR best practices, the strategic HRM literature cautions that in a

global economy, such practices are not universally applicable or relevant. Their
success is contingent upon national and organizational culture, size, industry type,
occupational category, etc. Further, these practices need to be considered in total,
not in isolation. They are interrelated elements in an internally consistent human
resource ‘bundle’ or system. An organization that follows a coercive approach to one
part of HRM system cannot succeed in adopting collaborative approach to another
part. Strategic HRM becomes even more critical in a global context and focuses on
‘optimising, value-driven, reciprocal global leadership as a core competency of a
global organization facing environmental discontinuities (Harvey, Buckley, and
Novicevic 2000).

Case study
Methodology
The case study organization was part of a larger research project on Indian
multinational firms. It adopts an ‘exploratory case study approach’ involving in-
depth interviews with the business and HR leaders of the organization at its Indian
headquarters and subsidiaries in both the developed market (namely, USA) and a
developing market (namely, China). A total of 15 interviews were conducted between
the period 2008–2009 with the senior managers across the global network of the
organization, involving eight business and seven HR leaders. All the interviews were
tape recorded and later transcribed verbatim. Even though the interviews covered a
wide range of topics, such as the company’s history and internationalization process,
its business strategies in developed and developing market subsidiaries, management
control and coordination between headquarters and subsidiaries and the evolution,
philosophy, global practices and role of HR, this article presents only the findings
related to HR processes, policies and practices of the organization.
An ‘inductive’ data analysis method was employed by extracting research
findings from the dominant themes that emerged from raw data. It involved three
steps: data reduction, data display and reaching conclusion via verification (Miles
and Huberman 1994). The research design employed adds value to international
HRM research by giving ‘equal weight to both the subsidiary level and to corporate
headquarters within a firm’ (Ferner 2009) as well as covering sectoral variables
(Colling and Clark 2002) by looking at different industry segments that the
organization operates in globally.
Please note that some sections of the data presented below are reproduced or
adapted from Thite, Wilkinson and Shah (forthcoming).
 4 M. Thite

Overview of Alpha
Alpha was established as a private limited company in India in 1987 but today is a
publicly listed company both in India and New York Stock Exchange (NYSE). In
2010, Alpha was one of the top five Indian consulting and IT services companies
with a turnover of about US$ 2.5 billion from its operations in over 44 countries that
employ around 45,000 professionals. Alpha’s operations cover three business
segments, namely, IT services, business process outsourcing (BPO), and software
products, catering to a wide range of industry segments. It aims to be one of the most
valued global integrated IT services companies.
It derives its overseas revenue from the North America (59%), Europe (21%) and
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the Asia Pacific region (20%). The company has been aggressively diversifying to
other regions as well to spread its geographical diversification. It has its software
development and delivery centres in India, North America, UK, Brazil, Hungary,
Egypt, UAE, China Malaysia, Singapore and Australia.
The breadth and depth of Alpha’s world class organizational, technological and
people management excellence are demonstrated by a number of international
awards, accolades and quality certifications that include SEI CMM Level 5
Certification, ISO9001:2000, several national and international awards, such as Best
Employer and training excellence award from the American Society for Training and
Development (ASTD).

HR philosophy
In line with Alpha’s policy of decentralization, distributed leadership, employee
empowerment and non-hierarchical work environment, every employee in the
organization is known as an ‘associate’. Its leadership motto is ‘every Alphaite is a
leader’. Everything that the organization does is underpinned by its philosophy of
enabling leadership which has come to life around the core concepts of ‘full life cycle
business’ (FLCB) and ‘full life cycle leaders’ (FLCL). Alpha encourages employees
to ‘think like CEOs’ and accordingly they are expected to run their ‘business’ as any
CEO would do to achieve a reasonable return on investment in time, efforts and
money. As a consequence, the same performance metrics apply to every employee
and position, as explained later.
Collectively, it is known as the ‘AlphaWay’ of doing business. The AlphaWay is
more than a handbook that is distributed to every new employee. It is embedded in
the corporate DNA of the organization and is the common currency that circulates
across the length and breadth of the organization in its day-to-day life. Recognizing
that the greatest motivation for people comes not from monetary rewards but from a
sense of achievement, Alpha believes that by empowering every employee to be and
act like the CEO of their own world of work, it can retain people and engage them to
their full potential.
The Alpha School of Leadership brings this vision to fruition through continuous
learning programmes at its sprawling corporate training centre in India as well as at
its units throughout the world. Its mission is to develop 80% of the leadership
requirements from within. In the words of the Head of Leadership Development, ‘at
Alpha, the reward for a good job is a bigger job’, reflecting the organization’s desire
to enable and encourage employees to achieve their full potential. Alpha believes
that it is the ordinary people of the company who are capable of doing extraordinary
 Human Resource Development International 5

things provided their talent is recognized, nurtured and rewarded. It uses star
performers to act as role models and spread best practices so that their collective
wisdom is distilled, institutionalized, automated and then spread across the
corporate DNA.

Metrics – the lifeblood of Alpha

The most potent symbol of AlphaWay is the incorporation of performance metrics.
According to the Global Head of HR, ‘metrics is the most common communication
tool at Alpha’. Designed in line with a similar system at General Electric (GE),
Alpha’s key business partner, the metrics are built around five outcome measures (5
Downloaded by [Griffith University], [Mohan Thite] at 21:23 31 January 2012

R’s) and six built measures (6 P’s).

The outcome measures ask the questions: ‘is your business doing

. Better (aiming for zero defects),

. Larger (that results in repeat business),
. Faster (reduced turn-around-time),
. Cheaper (reduced resource cost) and
. Steadier (adherence service standards).

In order to produce these outcomes, the built measures ask the questions about

. People (do you have the right technical skills?),

. Process (how process oriented is your job in demystifying knowledge?),
. Product (how much of your work processes are automated?),
. Proliferation (are you aware of and benchmarking against best practices, inside
and outside the organization?),
. Patent (how innovative are you in cost management?) and
. Promotion (do you motivate people by appreciating and celebrating team
achievements?)

These measures apply to every employee irrespective of their position, task

and location. The achievements are highlighted by different colours: shining is
green, bright is blue, visible is orange, twilight is brown and invisible is red (in
the descending order). The weightage for each measure differ for different jobs –
triple platinum, platinum and gold. The targets are stretched to the extent where
they are challenging enough against global benchmarks for comparable jobs.
Those who fall behind targets are placed under a performance improvement plan
(PIP).
The measures take into account both hard and soft aspects of the job. For
example, when it comes to resolving employee grievances, both the response time
and resolution time are taken into account as it is not enough just responding
quickly but it is equally important to resolve it satisfactorily which may take time
and involve other people.
As with many organizations that use team-based organizational structures, most
teams at Alpha are cross-functional which can be challenging for performance
measurement. Alpha uses a ‘collaboration index’ to account for the degree of
collaboration between members and teams. The idea is to promote the culture of
‘competing to collaborate’. This forces employees to shed their silo mentality and
 6 M. Thite

look beyond the boundaries of their tasks and departments in the interests of the
overall organization.
Flexibility is built into the metrics system to ensure that it is not rigidly
implemented irrespective of the situation. Employees have a say in what measures
apply to their position, why and how. The collaboration meetings take place across
different levels, and functions to achieve consensus before performance targets are
agreed upon both in terms of soft and hard deliverables.
Alpha is taking its metrics driven business approach beyond organizational
boundaries by involving customers and suppliers as part of its eco-system. The
customers are given access to the live performance monitoring database for all of
their projects. Similarly, suppliers are trained in how the same metrics can be applied
Downloaded by [Griffith University], [Mohan Thite] at 21:23 31 January 2012

by them to improve their performance.

HR as a strategic business partner

One of the most distinguishing features that demonstrate how HR is strongly
embedded at the strategic level in Alpha is the fact that today, most of the critical
HR functions at the corporate level are staffed by managers who have come from
business background. Even at lower levels, technical personnel are being inducted
into HR roles and responsibilities. It is the result of a conscious decision by the top
management because as in any technology company, people are the most important
assets and can make or break its future.
Another equally notable feature that illustrates the strategic nature of HR
function at Alpha is the incorporation of the ‘full life cycle leadership’ (FLCL) and
‘full life cycle business’ (FLCB) into HR policy making and practice. For example,
the recruitment function is a regarded as a ‘business’ in its own right. Within that
business, campus recruitment and lateral recruitment (of experienced people) are
separate business lines. Within campus recruitment, business colleges and technical
colleges are again treated as sub-businesses. The managers in charge of all these
business lines are the full life-cycle leaders subject to the same 11 performance
metrics as discussed above. The leader in charge of campus recruitment is assessed
every month on relevant critical measures, such as how many top educational
institutes have been signed up for recruitment, how many offers have been released
and how many joined and so on.
Similarly, any manager in charge of people management will be assessed on
‘associate delight index’, that is, how fast and how effectively employee concerns
have been addressed in a given period and whether there is a gradual improvement
over time. This exercise of feeling the employee pulse is qualitatively different than
the annual ritual of conducting employee survey because it is done more frequently
and monitored more closely. According to the Head of Global Delivery and
Leadership Development, ‘Alpha is a listening organization’.

Global staffing
Alpha believes that with over 45,000 employees spread over 40 countries, it is poised
to reach the next level in becoming a truly global company with firm local roots. The
statement from Alpha’s Head of HR in China that ‘Alpha wants to be a Chinese
company in China but provide the same global experience to clients, no matter where
the operations are carried out’ reflects this ambition. At lower levels, Alpha is
 Human Resource Development International 7

committed to localize the workforce in its overseas offices to the extent possible but
this effort is somewhat hampered by many reasons, such as the need for cost
effectiveness in an offshored business model necessitating the bulk of project
execution in India, the diminishing attractiveness of IT as a career in the developed
world with fewer people opting to study IT courses and in some countries, the poor
perception of Indian companies as employers of choice.
As a policy, Alpha strives to staff locally at least 20% of all positions in all of its
overseas operations, 50% of entry level positions and 90% in its non-English
speaking geographies, such as China, where possible. With regards to lateral
recruitment (of experienced people), Alpha prefers local managers for their
knowledge of the local market and environment.
Downloaded by [Griffith University], [Mohan Thite] at 21:23 31 January 2012

Global HR policies and practices

One of the critical challenges for any multinational enterprise (MNE) relates to the
control and coordination between the headquarters and subsidiaries. The MNE is
faced with the constant need to balance between ‘push for control from
headquarters’ and ‘pull for autonomy from subsidiaries’. The headquarters may
assert its control over its subsidiaries by a variety of means, such as sending
expatriates from corporate office to staff key positions in subsidiaries, formulating
and implementing organization wide management policies and controlling finances
and other output measures.
With regard to the standardization of HR policies and practices, where local laws
and conditions permit, uniform policies are rolled out across all the units of the
organization. For instance, in terms of remuneration and reward management, 80%
of compensation-related policies at Alpha are common across the world. Similarly,
every Alphaite is offered a fixed and variable pay, the latter being tied to
performance at individual, team, unit and organizational levels. The proportion of
variable pay increases at higher levels. So performance pay is a common practice
throughout the organization whereas the fixed pay is subject to local laws and
conditions. The two basic principles that determine compensation policies at Alpha
are comparability in the local market and affordability as an employer. While Alpha
strives to maintain a cohesive organizational culture throughout its global network,
some of the managers at its overseas subsidiaries believe that there is too much
centralization of power in the corporate office and decisions are more often India-
centric than global.

Discussion
As can be seen from above, Alpha is well on its way to become a truly globalized
MNC with best in class organizational capabilities in its corporate strategy,
leadership vision, organizational structure and HR policies and practices. Alpha’s
process driven performance and reward management systems, global mindset and
strategic positioning of HR auger well in its evolution. Despite the liabilities of
foreignness, country of origin, newness and smallness that firms from emerging
economies face (Thite, Wilkinson, and Shah forthcoming), Alpha’s internationaliza-
tion process shows an ‘adaptive or polycentric approach’ in learning from and
embedding the best practices from its subsidiaries in global markets, particularly in
advanced countries.
 8 M. Thite

Recent research on Indian firms shows that one of their distinguishing

characteristics is that they take a long term view of their businesses, invest heavily
in HRM practices and empower their employees in decision making (Cappelli et al.
2010; Khavul, Benson, and Datta 2010). As demonstrated by several studies, the
Indian IT companies are known for their progressive and world class people
management strategies and practices (Hamm 2007; Gurjar 2009). However, several
studies also point out the HR challenges, such as lack of trainability and
employability of the Indian workforce, high employee turnover and escalating wages
in the Indian IT and IT-enabled services sector (ITES) (Wallace 2009; Thite 2010).
One of the limitations of the case study in this article is that while it captures the
strategic intent of the organization at the senior management level, the ‘employee
Downloaded by [Griffith University], [Mohan Thite] at 21:23 31 January 2012

voice’ which is the true reflection of the effectiveness of the HR function is missing.
After the data collection ended, a senior leader of Alpha was embroiled in financial
irregularities which severely dented the image of the organization and even though
the company bounced back later to regain its standing in the market place under new
management, it illustrates how shaky the foundations of a firm can be but at the
same time, it attests to Alpha’s resilience to emerge relatively unscathed from
unexpected shocks. Despite the above limitations, the case study illustrates that the
managers in the emerging economy firms are ‘mixing and matching’ progressive HR
policies and practices in a multi-polar world that only stands to benefit from cross-
integration of emerging business and people management models.

Acknowledgements
This study was funded by a grant from the SHRM Foundation, USA. However, the
interpretations, conclusions and recommendations are those of the author and do not
necessarily represent the views of the SHRM Foundation. The author would also like to thank
Alexandre Ardichvili for her helpful comments in the revision of this article.

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