CASE STUDY

DILEMMA OF A HR MANAGER

VINAY V NAIR
ROLL NO: 39
• Everest Auto Company Ltd (EAIL) was started in the 1960 by an entrepreneur family. At that time government of India gave
considerable support and incentive to the Automobile Sector, as it was considered one of the major industries of the country. The
Company was headed by Mr. Ashok Chopra who functioned as the Chairman and Managing Director of the Company. He had
an excellent academic background—with an engineering degree from India and a Post Graduation in Management from abroad.
He worked in one of the multinational companies abroad, before he came to India to setup the family controlled Everest
Automobile Industry ltd. Though the Company was started in a moderate way, under his able guidance it grew quite well. Right
from the beginning, it was considered to be a blue-chip company. Mr. Chopra was quite interested in establishing a company of
high repute. He started introducing all modern technologies, processes and methods. He gave a lot of importance for product
quality; cost, deliveries and all other aspects of business. By early 1990’s the company had a strength of 10,000 employees with
multi location operations. To meet the growing demands of manpower, right in the early stage, the company started practice of
recruiting young persons directly from various campus and giving them in company training to proper them for job with in the
company. One of the major training activities in the company was technical graduate training programme. The engineer was
recruited from the campus. They were given intensive training in the company and then posted to various departments,
according to the aptitudes as also the need of the company. It had well established schemes and had an excellent reputation. The
“Fresh” engineer used to take it as a matter of period to the selected by the company for its TGT scheme. However, with change
in the government policy which initiated liberalization and globalization, things started changing rapidly from the beginning of
the 1990’s. There were also other developments in the country.
 Cont…..
The IT industries which started around the late 1980’s started “blooming up”. By the end of 1990’s things had so drastically changed in the
industrial environment that fresh engineers started preferring job in IT industry as also in the service sector. Earlier, the employees who were
strongly in favour of engineering industry had started change in and by the beginning of the millennium; the service sector had grown
substantially well. There were a large number of jobs created in the sector. Today the engineers as wide choice besides opting for
manufacturing industry like EAIL. There are bloom financial sector organizations in addition to the IT sector.EAIL which used to get
excellent response for TGT scheme was hardly able to attract good engineer. Most of the high profile engineers prefer to go to other sector as
they found things were far better there. The moderate profile engineers, who joined the industry, hardly remained satisfied and motivated.
They always compare their service condition with those in the service sector. As one could visualize, the working condition and the
remuneration in the manufacturing sector could not be comparable to those in service sector or in IT industry. For instance, an engineer is
paid about Rs.20,000 in the beginning of his career, while an engineer in a company like EAIL gets about Rs. 10,000/- in the IT industry
they enjoyed better facility — like flexible working hours, various facilities, social acceptances, growth, challenging tasks, and so on,
whereas in the engineering industry these are not possible. The engineer met the HR manager and complained about the enormous difference
between the two industries. Besides keeping the engineer and other satisfied, the HR manager faced many other difficulties. With the
liberalization and globalization, the competition in the market had enormously grown. Many multinational have been permitted to bring their
product and sell in the Indian market.
 Cont…..
The company lasts its market share. There is, in general, a glut in automobile field which is almost coming towards a
period of recession. Some of the big automobile companies have been incurring considerable losses in the last few
quarters. There was a great demand for people who had the background of computers. Things started changing rapidly
and the IT industry becomes a matter of choice by all fresher engineers. Besides, there is also a very strong need for
technology up gradation and introduction of system like ISO 9000, QS9000, ISO 14000 and other things. All these
involve huge expenditure, time and effort. While there has been a demand for higher salaries, the company is not in a
position to make both ends meet. There was thus an exodus of good people looking for greener pastures. The
company has also introduced creations of new technologies like CAD (Computer Aided Design), CAM (Computer
Aided Manufacturing). All the required engineers with a computer background, versatile in the high-tech field.
Unfortunately, the brilliants once don’ join the industry. Those who join get trained and level for other industries.
There has thus been a demand by the ERP consultants for engineers with experience in industry. This has create
enormous problem for the automobile industry. There have been suggestions that have engineers in those department,
where they have better opportunities may be paid higher than those who are in other department. For instance, people
working in functional area like CAD, CAM etc may be paid more and other in manufacturing could be paid lesser.
This is likely to have serious repercussions as people would come to know the difference and get further dc-
motivated. The HR manager is now wondering as to how he could overcome these problems.
 SUMMERY
• Everest Auto Company Ltd (EAIL) was established in the 1960s by an entrepreneurial family, receiving significant support
from the Indian government due to the importance of the automobile sector. Mr. Ashok Chopra, an academically accomplished
individual, led the company as the Chairman and Managing Director, transforming it into a successful and respected blue-chip
company. EAIL focused on modern technologies, quality, cost, and delivery in its business operations.
• In the early 1990s, the government's liberalization and globalization policies, along with the booming IT industry, led to a shift
in career preferences for fresh engineering graduates. More graduates started opting for jobs in IT and service sectors, resulting
in a decline in interest in EAIL's technical graduate training (TGT) scheme. The engineering industry faced challenges in
attracting and retaining talented engineers due to comparatively lower remuneration and working conditions when compared to
the IT and service sectors.
• The HR manager of EAIL also encountered difficulties due to increased market competition, a slowdown in the automobile
industry, and the need for costly technology upgrades and certifications like ISO 9000 and ISO 14000. The company struggled
to retain skilled employees as many sought better opportunities elsewhere. Additionally, the company's efforts to introduce new
technologies like CAD and CAM were hindered by the lack of experienced engineers willing to join the industry.
• To address the issues, there were suggestions to offer higher salaries to engineers working in areas like CAD and CAM to
attract and retain talent, but this approach could cause further demotivation among other employees. The HR manager is now
faced with the challenge of finding solutions to overcome these problems and retain skilled personnel in the company.
• Questions:
1. How to attract brilliant engineers to the Industry?

2. How to keep the Engineers motivated on their job?

3. Is it advisable to pay difference rates of pay for people in different
departments?
4. How Everest Auto Industry could overcome the problems with respect to
Service condition? Is it possible for them to introduce a system like, flexible
working hours etc.?
• 1) How to attract brilliant engineers to the industry?
According to the case, today software industry is lucrative job as compared to the industries
like EAIL. The major reasons behind this change are flexible working hours and higher pay
packages. It is a major task for company like EAIL to attract brilliant engineers. This
objective can be achieved via following steps:
1. Challenging work
2. Higher responsibilities
3. Pay packages
4. Other related packages
5. Training
6. Healthy work environment
2)How to keep the engineers motivated to their job?
Motivation comes from a Latin word called MOVE. It is an inner state which energizes,
activates or move and that directs or channels behavior towards goals. Motivation
is performed by manager in order to induce its subordinates to perform a task in a manner
which satisfies according to company’s need.
Motivation of an employee can be performed in following ways:
1) Stick and carrot approach
2) Motivation through Job Enrichment:
Is it advisable to pay different rates of pay to people in different
departments?
• It is not advisable to pay different rates of pay to people in different departments in a company.
The pay given should be completely based on the qualification, experience and the skills of a
person. Also, only giving higher pay packages will not solve the problem. There are numerous
issues involved in retaining the employees. If as mentioned above different pay rates are
employed for different departments then it may result in unrest in a company. It is possible that a
person in manufacturing department is more qualified and has more skills but is underpaid as
compared to an engineer in designing department. Money is the biggest motivation. And in the
absence of his work being acknowledged the engineer of manufacturing department may leave
the job. Also, it is important to understand that only design department is not important.
Other departments like manufacturing, QC , marketing , finance etc are equally important. So,
differentiating in pay packages just on the basis of pays will create unrest in company which in
turn will worsen the situation.
How Everest Auto Industry could overcome the problems with respect to service
conditions? Is it possible for them to introduce a system like flexible working hours, etc.?
The basic service conditions of a manufacturing firm and service industry cannot be compared.
It is possible for the company like EAIL to overcome the problem of service conditions:
1) Interest of an employee:
2) Pay Packages:
3) Motivation:
4) Remuneration and other advantages:
According to me company can introduce system like flexible hours for the onsite engineers.
Production engineers can’t be included in this system.
1) If an on- site engineer is working continuously for a week or ten days at site then he may
take day or two off.
2) The system of payment of advances should be introduced as this will reduce the financial
tension on them.
3) Also if bill has to be cleared then the repayment process should be less hierarchical and
speedy.