W20019

NATIONAL PHARMACEUTICALS: THE ART OF EMPLOYEE

RETENTION

Ashok Priyadarshi, Subrat Sarangi, and Gloryson Chalil wrote this case solely to provide material for class discussion. The authors
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Copyright © 2020, Ivey Business School Foundation Version: 2020-11-09

It was a regular Monday morning at the Mumbai headquarters of National Pharmaceuticals (National) in
March 2018. Suresh Sharma, the company’s chief human resources (HR) officer, was turning over the
pages of a business magazine when he read a quote by N.R. Narayan Murthy: “Our assets walk out of the
door each evening. We have to make sure that they come back the next morning.”1 This sentiment was the
underlying theme behind Sharma’s upcoming board meeting.

The past few months had been difficult and stressful for the HR department at National. The organization
was receiving resignations and losing good employees at regular intervals, and it urgently needed to
overcome the challenge of high employee attrition. A new product range would soon be launched, and fresh
recruitments were needed. Although the company had managed to reduce the attrition rate from 44 per cent
in financial year (FY) 2013–14 to 25 per cent in FY 2017–18, it still had a long way to go to match the
industry benchmark of 12–13 per cent. Sharma knew that it was a big challenge, and much was at stake for
him and his team. The board and senior leadership would definitely be looking to his department for some
concrete measures. The next board meeting was just two weeks away, and Sharma needed to put the best
minds together to draft a plan to present to the board on April 2, 2018.

INDUSTRY BACKGROUND

The pharmaceutical industry was one of the fastest-growing industries in India from 2012–2018. The
competition and the workforce in the industry was also growing, doubling from 150,000 employees in 2013
to 300,000 employees in 2018. In 2018, 85 per cent of the employees working in the industry were males
and 15 per cent were females. Similar to other industries, the pharmaceutical industry required both skilled
and semi-skilled employees. In 2018, 80 per cent of the workforce consisted of skilled employees, and the
remaining 20 per cent of employees were semi-skilled. The employees worked in various fields, such as
research and development, quality assurance, intellectual property, manufacturing, sales, and marketing.2

1
Narayan A. Murthy was the founder and former chief executive officer of Infosys, an Indian information technology services company.
2
Press Trust of India, “Pharma Sector Hiring to Grow 20%: Report,” Hindu Business Line, February 8, 2016, accessed November
29, 2018, www.thehindubusinessline.com/economy/macro-economy/pharma-sector-hiring-to-grow-20-report/article8210243.ece.

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As the competition in the market increased within the domestic pharmaceutical industry, employee
poaching was a common phenomenon. The industry faced high employee attrition, increasing from an
industry benchmark of 14 per cent in 2013–14 to 16 per cent in 2016–17, then decreasing to 12–13 per cent
in 2018. Although the industry received many job applications through various sources, such as job portals,
referrals, social media, walk-ins, and internal recruitment, the process of recruiting was costing the industry,
and this made it difficult to find individuals who best fit the organization and its culture. The average cost
incurred to on-board a new recruit who had three to five years of experience in the pharmaceutical industry
was estimated to be US$10,000–US$12,000.3 This cost increased when recruiting individuals with greater
experience and higher-level skill sets.

Despite the industry spending as little as 1 per cent of its employee costs on training and development in
2018, the industry was set to reach new heights. Worth $33 billion in 2017, the Indian pharmaceutical
industry was expected to be valued at $55 billion by 2020,4 with a compound annual growth rate (CAGR)
of 15.9 per cent.5 The industry consisted of three segments—generic drugs, over-the-counter drugs, and
patented drugs—which, by 2020, were expected to capture respective market shares of 70 per cent, 21 per
cent, and 9 per cent.6 Moreover, by 2020, the Indian pharmaceutical industry was expected to be one of the
top 10 global markets in terms of value.7

NATIONAL PHARMACEUTICALS—A MODEST BEGINNING

National was established in 1937 in the eastern state of Bihar, India. It was founded by Samprada Singh
and his brother, B.N. Singh. The organization set out with a vision to improve the quality of life through
exceptional health-care facilities and services. In 2014, it was India’s fifth-largest pharmaceutical company,
with revenues exceeding ₹23 billion8 and a CAGR of more than 16 per cent over the period 2013–2018
(see Exhibit 1). The company pioneered in addressing pharmaceutical needs for acute illnesses (which could
often be easily treated by medications) and chronic therapeutic segments. It had extensive brand share in
pharmaceuticals to treat the central nervous system (for conditions related to the nervous system),
gastrointestinal issues (for conditions related to the intestine), diabetic conditions (for conditions related to
blood sugar), and cardiovascular conditions (for conditions related to the heart), as well as anti-malarial
drugs, immunosuppressants (medications required during an organ transplant), and nutraceuticals
(additional nutritional supplements). In 2014, National had a portfolio of 800 brands, of which three
brands—Taxim (cefotaxim), Clavam (amoxicillin + clavulanic acid), and Pantaprozole—were ranked
among the top 25 brands in India, while 14 were featured among the top 300 brands in the domestic market.

National had classified its business into four main segments: general, speciality, chronic, and others. The
general segment consisted of medicines that were used to cure infections. The speciality segment consisted
of medications for illnesses that were curable through medication over a short period of time. The chronic
segment consisted of medications that were required to be taken for a lifetime, and the remaining products
were grouped in the “others” segment. In 2013, the company expanded its product range to other segments,
including pain relief balms, pregnancy kits, condoms, and other lifestyle medications. Tasting success, the

3
All currency amounts are in US$ unless otherwise indicated.
4
India Brand Equity Foundation, “Indian Pharmaceutical Industry,” accessed November 29, 2018,
www.ibef.org/industry/pharmaceutical-india.aspx.
5
“Pharma Sector to Create 58,000 More Jobs by 2025, Feel Experts,” Hindu Business Line, February 28, 2017, accessed
November 29, 2018 www.thehindubusinessline.com/companies/pharma-sector-to-create-58000-more-jobs-by-2025-feel-
experts/article9564251.ece.
6
Ibid.
7
Indian Pharma Inc.: Gearing Up for the Next Level of Growth (n.p.: PricewaterhouseCoopers Private Limited, 2012), 3,
accessed November 29, 2018, www.pwc.in/assets/pdfs/pharma/pharma-summit-report-31-10-12.pdf.
8
₹ = INR = Indian rupee; ₹1 = US$ 0.0167on March 31, 2014.

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organization decided to revisit its product portfolio in 2018 for possible additional opportunities for
expansion. However, to pursue and sustain any expansion plans, the company needed an effective and
efficient workforce. The leadership at National Pharmaceuticals was clear that to be successful in its future
endeavours, the company needed to improve its talent acquisition and retention functions across all levels.

The organization was struggling to reduce its attrition rate to the industry’s benchmark level of 12–13 per
cent, or even lower. At the next board meeting, scheduled on April 2, 2018, the second day of the new
financial year,9 the HR team was to present an action plan to reduce the attrition rate in the coming financial
year. Sharma, a veteran with National (having joined the company in 2007) realized the board’s
expectations of himself and his team. To prepare, Sharma had called for a meeting with his HR team, which
consisted of Neela Shah (head of talent acquisition and recruitment strategy), Kishor Gupta (head of training
and development), and Pranay Roy (head of performance management). Sharma was determined to identify
several action items to propose to the board on April 2, 2018. The stage was set for the HR team meeting.

THE HR TEAM MEETING

The HR team (see Exhibit 2) sat in the conference room, tense with the situation they faced. There was pin-
drop silence, as they reviewed the data in front of them. Each of the functional heads was guessing at both
how the day would proceed and the current mood of their supervisor, Sharma. There was much to be discussed
and resolved. Each member realized that the HR department in particular was going through difficult times.
The organization, which was worth ₹6 billion in 2018, had been dealing with high employee attrition rates
since 2013 (see Exhibit 3).

Sharma was the first to break the silence in the room. He took a deep breath, went up to the whiteboard and
began writing the key figures as he was speaking:

So let’s look at the data we have at hand. In 2017, our workforce size was 13,000,10 of which 95
per cent of our employees were males and 5 per cent were females. In the financial year 2017–18,
we faced an attrition rate of 25 per cent. On the other hand, we received 10,000 applications for
employment in 2018, with an acceptance ratio of 1:5. This was lower than our previous acceptance
ratio of 1:3 in 2013. We need to discuss and understand the cause of such a high attrition rate and
drop in the offer acceptance rate. This is a double whammy.

Looking at the data sheet, Gupta stated, “Sir, the dipstick analysis11 conducted by the HR department in
2014 shows that salary was one of the main reasons why employees left the organization [see Exhibit 4]. A
similar result was also observed in the other two dipstick analyses—one conducted in 2015 by a consultant,
and another conducted internally in 2017 by the HR department [see Exhibits 5 and 6].”

Roy interrupted:

Sir, I don’t think salary is a big issue. The fixed and variable pay structure provided by National
Pharmaceuticals is only slightly different from what the industry structure is. In 2018, the industry
offered 85 per cent as fixed pay, and 15 per cent as variable pay. At National, we offer 80 per cent as
fixed pay and the remaining 20 per cent as variable pay. Even if we compare the salary of a marketing

9
The Indian financial year was April 1 to March 31.
10
This number included contract workers and those on the company payroll.
11
A dipstick analysis was an exploratory study to gain an understanding of a problem or area of concern.

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executive, the industry offers ₹250,000–₹350,000 per annum, and we offer ₹200,000–₹300,000 per
annum. There is only a marginal difference.

Disagreeing with Roy’s view, Gupta pointed out,

The variable pay component was more than 20 per cent in the East and North sales zones due to the
emphasis on targets. However, we need to note that in the East sales zone, none of the employees had
an issue with salary, whereas in the North and South sales zones, six people left the organization because
of salary. They have stated this clearly in their exit interviews [see Exhibit 4].

Gupta continued: “Comparing this with the 2017 dipstick analysis, we see that more than 80 per cent of the
employees who left the organization in less than a year were working as marketing executives” (see Exhibit 6A).

As the discussions unfolded and started gathering momentum, everyone picked up their calculators and started
crunching numbers from the data sheets. They were puzzled. Compensation seemed to matter in some zones
but not in the others. If the salary difference was very little then why did 121 marketing executives leave the
organization in less than a year (see Exhibit 6A)?

Shah interrupted:

I agree that salary is an issue, but I think there is something else also that we should be paying attention
to. The latest dipstick analysis conducted in 2017 looked at 144 employees who left the organization
in less than a year [see Exhibit 6A]. Out of the 144 employees, 105 employees left within their first
six months. The data state that 45 per cent of the employees resigned from their job at National
Pharmaceuticals due to manager- and work-related problems [see Exhibit 6B]. Yes, salary was also
a contributing factor to resignation, but accounted for only 19 per cent [see Exhibit 6B]. I think we
should focus on the latest data rather than looking at data that are four years old.

Shah’s emphatic remark made the others a bit jittery. Sharma took lead:

Are we saying that our managers are not treating their subordinates well? You are right, Shah, we
need to look at the latest data, but the 2014 dipstick analysis cannot be ignored. We need to understand
the reason behind why salary is an issue or not an issue, zone-wise. It is, according to these analyses,
on which we base our current or future programs, schemes, incentives, and other HR policies.

There was again a pin-drop silence, as every person in the room delved deeper into the issues discussed and
problems raised.

Finally, Roy, clearing his throat, stood up and spoke, “I agree with Shah and Sir, both. I think we have two
weeks’ time for the meeting with the board, which is enough to look at all the issues to prepare the action plan.”

Sharma had listened intently to Roy’s views and circled some numbers on the data sheets in front of him.
He was particularly looking at the results of the 2017 dipstick analysis. Sharma said:

I don’t think there is much that we can do when employees leave the organization due to personal
reasons. However, there is a lot we can do to reduce the attrition due to manager- and work-related
problems, and better work opportunities. As you all are very well aware, at National we are firm

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believers of the “people-first policy.12 And if we truly believed and applied the policy, we would
not find ourselves in this soup.

Silence filled the conference room, as the team members took time for self-introspection and reflection. It was
as if the boss had dropped a bombshell. All the functional heads faced the bare truth spoken by Sharma. After
a pause, and building some courage, Shah started speaking slowly and softly, “We have introduced so many
programs and initiatives over the years and most have been developed based on the findings of the dipstick
analysis conducted over the years [see Exhibit 7]. These initiatives have given fruitful results as the attrition
has come down [see Exhibit 3].”

Sharma asserted:

Yes! It has gone down and we have come far from the 44 per cent where we used to be. Nevertheless,
our attrition rate still does not match with that of the industry’s benchmark at 12–13 per cent. We
need to arrest it further as we have to embark on fresh recruitment for the new expansion plans. We
cannot be losing our people assets to our competition while we keep on acquiring talent. We have a
long way to go in this regard.

Gupta, as the head of training and development, responded to Sharma’s challenge:

Our programs, incentives, and policies take into consideration the people-first policy, Sir [see
Exhibit 8]. We would not be investing ₹50 million–₹70 million annually on training and
development if we did not put the employees first. If we did not believe in the people-first policy,
we would not have management development program (MDP) sessions that cover topics related to
work ethics, business hygiene, leadership, people management, and many more issues. We would
not have the capsule induction program to help new hires become acquainted with the organization,
and we would not even have had the career progression plan in place. That is not sufficient, I
suppose. We are lacking something somewhere.

The entire team, including Sharma, was in deep thought as the day progressed. Sharma’s vast experience said
that whatever they were doing was not enough. Most of the training programs lasted for two to three days, except
for the basic training provider (BTP) program, which was 10–15 days. Looking at Gupta, Sharma said,

Firstly, I think we need to relook at most of our programs, policies, and initiatives in place. The
career progression program looks only at internal job postings for managerial vacancies. We have
not inculcated the other aspects of career progression. Coming to training and development, let us
increase the number of training days for employees. Right now, most training programs (other than
BTP) are for two to three days. If we increase the number of training days, we can engage with the
employees more and try to make the learning more effective.

Gupta immediately reacted: “This would increase the cost of training and development. More budget would
be required to do all that. The organization is already spending a lot of money on recruitment and selection.
This is going to further increase the cost.”

To this, Sharma responded by saying, “I understand that the cost would increase, but training and development
is also an essential part of building the organizational culture and getting employees up to date with the skills
and processes of the organization as well as the industry. It also helps to boost employee morale.”

12
A people-first policy referred to the HR practice of keeping people above all.

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Agreeing with Sharma, Roy added,

We also have the e-Sampark13 platform to acknowledge the success of our employees. In addition,
the e-Sampark platform enables employees to get feedback on their work, especially the new
employees. The feedback on the new employees is taken at intervals of 10, 30, 60, and 90 days.
The platform not only collects feedback but also provides new hires with corrective measures that
they can take for specific issues and concerns they are facing at the workplace. Hence, they do not
have to wait for a formal training intervention to get their concerns addressed. Currently we conduct
appraisals twice a year (half yearly and annually) with the co-operation of the reporting managers
and the divisional heads.

Roy had definitely made his presence felt in the room. It was then that Shah got into the conversation,
shaking her head vigorously. She expressed the following:

While we have a great performance management system in place, I still think we have lot of scope
for improvement. Currently we are taking into consideration only the feedback, performance
reviews, and ranks that we receive from the divisional heads. We are not looking at the other side!
Who will review the divisional heads and other managerial staff? How do we drive away biases
and scope for being revengeful on subordinates by the superiors?

Roy disagreed with the idea: “It will become too time-consuming. If we introduce any other form of
performance management system, we will need to train the employees once again on how to use it. Apart
from the amount of time, the divisional heads and managers know their reporting staff the best. So who else
should be appraising?”

Sharma seemed to be getting impatient with Roy’s views. Finally, he looked at Roy and said,

Roy, as you know, there are other modern approaches to performance management that are more
structured and scientific in nature. Why don’t we look at adopting them—for example, management
by objective or the 360-degrees method, among others? Roy, you should understand that, as
important as it is for the managers to evaluate their subordinates, it is equally important for HR to
know how managers are treating their subordinates, and that can only happen when the subordinates
also do an upward appraisal.

Sharma had ended his statement on an assertive note. Gupta was taken aback! He felt as if all the hard work
done by his team in training employees had been fruitless. He explained:

While working on what sessions to conduct in trainings, I viewed the results of the 2014 dipstick
analysis. The analysis showed that unfair performance reviews was also a reason why employees
were resigning [see Exhibit 4]. Hence, we did sessions on the performance management system
and review process and their importance on employee motivation and retention. Everyone seemed
to enjoy it, and there was a lot of discussion also taking place in the classroom. I thought it was a
successful session, but that has not reflected in the results of the 2017 dipstick analysis report. Many
employees have expressed that they left National Pharmaceuticals because of their managers.

As Sharma listened to all these views, he realized that maybe the issue was the recruitment process or the
culture the organization was building. The HR department looked particularly at three traits during

13
Sampark was the Hindi word for connect.

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recruitment: candidates’ curiosity to learn and study a topic further, the passion they brought to their work,
and their ability to be accountable for getting things done and seeing tasks through to completion.

If candidates were thoroughly scrutinized for these traits during the recruitment process, the company would
not have employees who were laid back, submitted their reviews late, and failed to apply to their jobs what
they had learned in their training and development sessions. With this in mind, Sharma questioned Shah:
“Neela, as you are the head of talent acquisition and recruitment strategy, you know the specific three
aspects that the organization looks for at the time of recruitment.”

Shah nodded her head and answered, “Yes, Sir. Curiosity, passion, and accountability.”

Sharma carried on and further asked, “If these aspects were thoroughly analyzed and questioned during the
recruitment process, then do you think we would face such issues in the organization culture or work ethics,
as we are facing today?”

Once again, silence fell on the room. Shah rummaged through her sheet of papers and replied,

Sir, I agree with what you are saying. As you know, to change an organization’s culture is a very
challenging task. It is not something that can be done overnight or in a few months; it takes years.
Having said that, the recruitment and selection standard operating procedures (SOPs) were
reviewed and modified only last year [2016–17]. The outcome of the same was precise and definite
shortlisting criteria for selection. Based on the new SOP, managers were also provided with training
for the new hiring process. It is too early to say if the results have been positive or negative. In
addition, Sir, as far as recruitment for the managerial roles are concerned, we are encouraging
internal job postings and promotions. This helps us retain home-grown employees, and it reduces
the amount of resources we need to invest for those employees to learn about the organization and
its culture. As most of the employees at the managerial level are home-grown employees, the
organizational culture has already been inculcated in them.

Gupta who had been quiet for a long time now, inquired,

I understand the reason behind encouraging internal job postings and promotions. However, I
believe it is also important to have fresh blood come into the organization, not only at lower
positions but also at higher positions. Fresh blood can bring in new perspectives, solutions, and
working methods. We are all aware of the employee poaching that happens in the industry,
especially among the domestic pharmaceutical companies. We too can benefit from employees who
have been well trained and have enough experience from their previous organization.

Shah agreed, nodding her head, and stated,

That is true, and we have been trying to do the same by using various sources for recruitment and
not just putting all our bets on one source. We receive applications through referrals, the corporate
website, social media portals, and third-party job application sites such as Naukri.com, Shine.com,
and Monster.com.14 Most of our applications are received through referrals. This is similar to the
industry standard, where, in 2018, 60 per cent of the workforce in the industry was recruited through
references, 20 per cent through job portals, 10 per cent through walk-ins, and 10 per cent through
internal recruitment.

14
Nuakri.com, Shine.com, and Monster.com were three popular job portals in India.

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The statistics that Shah had shared were impressive. Everybody looked at her with appreciation for the
homework she had done for the meeting. Just then, Sharma stood up from his chair and walked toward the
whiteboard with the data sheets. He stood in front of the whiteboard, looked at the figures on the board, and
then looked at his data sheets. Meanwhile, Roy and Gupta were cross-checking some data points, and Shah
was going through her data sheets carefully, page by page. As she flipped the pages over, she observed that
all the data they had been analyzing so far related to past employees. They had not even once considered
what the current employees thought. Shah brought this oversight to everyone’s attention.

This point was definitely critical for them while they prepared their plans for 2018–19. Everyone nodded
in agreement.

Roy questioned, “Would all the employees be willing to give their honest feedback on what they think and
feel about the organization they are working in? Won’t they have some sort of fear or feel anxious that their
job might be taken away from them if they voice dissatisfaction?”

Shah replied, “Yes, at first, employees might feel anxious. But we need to create that space and environment
for them where they can trust us and be comfortable to be honest and share their concerns with us.”

The meeting had already extended beyond the two hours that had been scheduled. Sharma’s secretary had
come in twice and passed on messages of guests waiting to meet Sharma. Sharma stood up to make the
concluding note and set the tone for the preparations that were to be done for the board meeting on April 2.
Sharma appealed to his team members:

We are in the midst of challenging times, where we need not only to control attrition in the company
but also to hire good talent to meet our expansion plans in the near future. I agree with Shah that it
will take a few years to change the organizational culture. Nevertheless, it is critical for us to look
at and address attrition immediately and prepare for the hiring drive. All that we have discussed
today will help create the culture we want, and I am sure you all find the discussions helpful. To
do that, we first need to create an action plan to present during the board meeting.

He had concluded on a high note, in hopes of motivating his team.

WHAT NEXT?

The team was excited yet puzzled about what should be the first steps. All of them stayed in their seats,
busy looking at the data sheets and contemplating the discussions. Many questions filled their minds:
Should the organization change all its policies—from recruitment and selection to performance
management, training, and development? Should the organization invest more in training and development
to arrest the attrition rate? What policies would create the organizational culture they aspired to? Could they
create an effective action plan in the two weeks before the board meeting with the data they had at hand?
What were the possible solutions to meet the benchmark attrition rate of 12 per cent?

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EXHIBIT 1: NATIONAL PHARMACEUTICALS FINANCIALS, 2013–2018 (IN MILLIONS OF ₹)

Year Ending March March March March March March

2018 2017 2016 2015 2014 2013
INCOME
Revenue from Operations 51,967.00 46,030.40 38,971.00 32,141.20 26,886.40 23,055.10
(Gross)
Less: Excise/Service 0 0 0 1,165.10 1,052.20 801.60
Tax/Other Levies
Revenue from Operations 51,967.00 46,030.40 38,971.00 30,976.10 25,834.20 22,253.50
(Net)
Other Operating Revenues 1,035.60 654.10 539.40 853.20 894.80 755.60
Total Operating Revenues 53,002.60 46,684.50 39,510.40 31,829.30 26,729.00 23,009.10
Other Income 816.60 1,166.00 2,512.80 1,821.30 1,666.80 1,681.00
Total Revenue 53,819.20 47,850.50 42,023.20 33,650.60 28,395.80 24,690.10
EXPENSES
Cost of Materials Consumed 13,276.90 12,322.60 9,694.20 8,541.10 7,514.00 6,483.40
Purchase of Stock in Trade 8,389.50 7,750.40 6,119.40 5,563.50 4,358.40 3,753.10
Changes in Inventories of FG, (914.20) (2,119.20) (340.60) (116.20) (426.90) (1,211.90)
WIP, and Stock in Trade
Employee Benefit Expenses 8,616.30 7,222.50 6,266.30 5,522.00 4,535.60 3,684.10
Finance Costs 323.70 236.80 586.70 726.30 842.70 792.20
Depreciation and Amortization 107.65 76.48 73.53 59.68 42.73 36.02
Expenses
Other Expenses 13,707.60 12,728.30 10,573.40 8,201.60 6,782.60 6,009.20
Total Expenses 43,507.45 38,217.88 32,972.93 28,497.98 23,649.13 19,546.12
Profit/Loss Before 9,342.90 8,944.30 8,388.50 4,615.50 4,362.10 4,819.80
Exceptional, Extraordinary
Items and Tax
Profit/Loss Before Tax 9,342.90 8,944.30 8,388.50 4,615.50 4,362.10 4,819.80
Tax Expenses—Continued Operations
Current Tax 2,016.60 1,909.40 1,610.00 0 0 7.10
Deferred Tax 167.90 (1,796.70) (223.40) 227.10 (39.90) 144.90

Total Tax Expenses 2,184.50 112.70 1,386.60 227.10 (39.90) 152.00

Profit/Loss after Tax and 7,158.40 8,831.60 7,001.90 4,388.40 4,402.00 4,667.80
Before Extraordinary Items
Profit/Loss from Continuing 7,158.40 8,831.60 7,001.90 4,388.40 4,402.00 4,667.80
Operations
Profit/Loss for the Period 7,158.40 8,831.60 7,001.90 4,388.40 4,402.00 4,667.80

Note: FG = finished goods; WIP = work in progress.

Source: Company files.

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EXHIBIT 2: THE HUMAN RESOURCES TEAM AT NATIONAL PHARMACEUTICALS

Team Member Designation Responsibilities Years with

National
Suresh Sharma Responsible for overall
Chief Human HR functions (including
Resources for the manufacturing 11
Officer units, sales, and
corporate office)
Neela Shah Head of Talent
Acquisition and Recruitment planning
7
Recruitment and selection
Strategy
Kishor Gupta Training needs
Head of
identification, planning,
Training and 6
and learning
Development
management
Pranay Roy Head of Compensation
Performance planning, budgeting, 9
Management and career planning

Note: HR = human resources.

Source: Company files.

EXHIBIT 3: NATIONAL PHARMACEUTICALS—TOTAL NUMBER OF EMPLOYEES AND ANNUAL

ATTRITION RATES, 2013–14 to 2017–18

Particulars 2017–18 2016–17 2015–16 2014–15 2013–14

Total Number of Employees on
11,783 9,908 9,732 9,186 7,700
Company Payroll
% Increase in Employee
18.90 1.80 5.94 19.29 NA
Numbers
Revenue in Millions of ₹ 46,660 39,500 31,050 26,570 24,050
% Increase in Revenue 18.20 27.20 16.91 10.47 NA
Attrition % 25 26 33 44 NA

Note: NA = Data not available.

Source: Company files.

This document is authorized for use only in Prof. Sonia Mathew's Principles of Management 2022 at Christ University from Jul 2022 to Jan 2023.
Page 11 9B20C001

EXHIBIT 4: 2014 DIPSTICK ANALYSIS ON REASONS FOR RESIGNATIONS FROM NATIONAL

PHARMACEUTICALS

North South West

Reason for Resignation East Zone Total
Zone Zone Zone
False Reporting – – – 2 2
Family Issue – 1 – 1 2
Health Issue 2 1 – – 3
Higher Studies – 1 – 1 2
Headquarter Change – – 3 – 3
Industry Change 1 – – 3 4
Leadership Issue – – 1 1 2
Unfair Performance Reviews 1 8 1 3 13
Employee Job Position (Job –
– – 1 1
Designation)
Salary – 6 6 1 13
Union Issue – – 1 – 1
Total 4 17 12 13 46

Source: Company files.

EXHIBIT 5: REASONS FOR EMPLOYEE ATTRITION AT NATIONAL PHARMACEUTICALS IN 2015,

BY PERCENTAGE

70

58
60
Percentage of Employees

50

40

30

20 17 16

10 5 4

0
Better Opportunity Family Low Increment & Work Pressure Health
Less Salary

Source: Company files, from 2015 dipstick analysis by consultant.

This document is authorized for use only in Prof. Sonia Mathew's Principles of Management 2022 at Christ University from Jul 2022 to Jan 2023.
Page 12 9B20C001

EXHIBIT 6A: RESIGNED EMPLOYEES’ TENURE, ZONE, AND POSITION FROM THE 2017 DIPSTICK
ANALYSIS

Tenure Count
0–6 Months 105
7–11 Months 39
Total 144

Zone Count
East 8
North 35
South 43
West 58
Total 144

Position Count
Area Business Manager 13
Divisional Sales Manager 3
Marketing Executive 121
Regional Manager 5
Sales Manager 2
Total 144

Source: Company files.

EXHIBIT 6B: REASONS FOR EMPLOYEE ATTRITION FROM THE 2017 DIPSTICK ANALYSIS

Reasons Count Percentage

Manager- And Work-Related Reason 65
Manager’s Bad Behaviour and Unethical Practices 22
No Guidance and Support 18
Had to Spend from Own Pocket to Buy Extra Orders from Stockists 10
45%
Asked to Leave without Any Reason 5
Sales Pressure: Early Expectations to Meet Huge Targets 4
Unethical Behaviour by Stockists 3
Team Issues 3
Better Opportunity 27
Salary Package 19 19%
Better Company and Salary Hike 8
Personal/Family Reason 36
Personal Reason (Further Studies, Own Business, Marriage, Medical, 22
Government Job)
25%
Change of Field 6
Wanted to Shift Near Residence 6
Rejoined Previous Company 2
No Specific Reason Cited 16 11%
Total 144 100%

Source: Company files.

This document is authorized for use only in Prof. Sonia Mathew's Principles of Management 2022 at Christ University from Jul 2022 to Jan 2023.
Page 13 9B20C001

EXHIBIT 7: INITIATIVES INTRODUCED BY NATIONAL PHARMACEUTICALS HUMAN RESOURCES

DEPARTMENT

Program Date Description

Started
Employee 2014 Employees received marriage gifts, referral incentives, and other benefits.
Engagement & The referral scheme was revamped to attract the right talent across all levels.
Welfare Activities
Career Progression 2014 An internal job posting program was launched to fill managerial vacancies.
Talent Development 2015 The Talent Development Centre had two objectives: (1) to prepare proactive
Centre talent pipelines for the next level managers and (2) to support internal
promotions with home-grown talent to retain and reduce lateral hiring.
Probation Period 2016 The probation period of marketing executives and area business managers was
decreased from nine months to six months in an effort to retain talent.
Employee Pulse 2016 The survey sought employee feedback on key engagement drivers, such as
(Employee collaboration, performance management, strategic alignment, and culture. The
Engagement Survey) survey took place every two years.
E-Sampark 2016 The company magazine was launched with the objective of building leadership
connections by showcasing employee success stories and key milestones
achieved at the organizational level.
Structured On-the- 2016 On-the-job training was designed for all area business managers, regional
Job Training managers, and newly recruited marketing executives.
Redefined 2016 The new, redefined recruitment and selection SOPs focused on strengthening
Recruitment and the basic elements of hiring.
Selection SOPs
We Value You 2017 “We Value You” became part of the e-Sampark platform, through which new
hires and their reporting managers could post and receive feedback on their
work. Feedback was taken at intervals of 10, 30, 60, and 90 days.

MDP 2017 MDP sessions covered topics on managerial competencies, recruitment, quality
of hiring, process ownership, leadership, people management, business
hygiene, work ethics, codes of conduct, and related topics.

Note: SOPs = standard operating procedures; MDP = management development program.

Source: Created by the case authors, based on company files.

EXHIBIT 8: TRAINING PROGRAMS AT NATIONAL PHARMACEUTICALS

Training Program Duration Target Group

(in days)
Capsule Induction Programme 3 New hires
BTP (Basic Training Provider) 10–15 New hires
Employees who were promoted and first-time
First-Time MDP 3–4
managers
Older employees and employees who had been
Refresher Programme 3
with the organization for a longer time period
MDP 2 Senior managers

MDP = management development program.

Source: Company files.

This document is authorized for use only in Prof. Sonia Mathew's Principles of Management 2022 at Christ University from Jul 2022 to Jan 2023.