03The Line vs Staff Tussle at Hi-Speed Venture Technologies Threatening the Company’s Future CASE

The Line vs Staff Tussle at Hi-Speed VentureTechnologies: Threatening the Company’s Future?Incorporated in 1997, Hi-Speed Venture Technologies (HSV) was the brainchild of Sumant Kumar

(Kumar). Backed with 12 years of industry experience, Kumar was driven by the aim of makingHSV a one-stop destination for the website development needs of Indian companies. Striving towardsthe same, he hired four team members, each of whom boasted of an excellent professional record.Owing to the persistent efforts of Kumar and his team, HSV got their first client in 1998. Thecompany’s client base increased to nearly 10 companies by 1999. The flourishing business made itimperative for the company to recruit new members with a strong need to revamp the organisationstructure. While the four-team members were promoted as team leaders, eight new team memberswere also hired. Further, Kumar also felt the need to hire an HR manager to handle employeerelated issues and implement company wide HR policies. With the help of a well-known HRconsultancy, Kumar went through an elaborate search process for a highly accomplished and efficientHR manager. With nearly 12 years of experience across various functions of HR, Amit Sharma(Sharma) emerged as the ideal choice. During the interview, Sharma highlighted decision-makingability and working independently as his major strengths. Further, Sharma asserted that he believedin taking initiatives and worked meticulously towards achieving them. With the new team in place,Kumar was confident that HSV would continue to climb the ladder of success. However, theseaspirations were dampened by the brewing disagreements between his technical team leaders andSharma. Sharma’s approach of single-handedly designing and implementing the recruitment andperformance appraisal processes made the technical leaders feel neglected. Further, they also feltthat being a staff function Sharma should only act as a facilitator and not intrude into their domains.Kumar was not sure how he should resolve this conflict amicably without disrupting the company’sprospects. Will this line vs staff scuffle thwart the company’s ambitious plans?

This case study was written by Deepti Srikanth under the guidance of Dr. Nagendra V. Chowdary, IBSCDC. It is intended to be usedas the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The casewas written from generalised experiences.

© 2009, IBSCDC.No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoeverwithout the permission of the copyright owner.

Background Reading: Chapter 1, “xxxxxxxxxx”,Principles of Corporate Finance (Brealey and Myers)

Ref. No.: HRM0043

The Line vs Staff Tussle at Hi-Speed Venture Technologies...

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HSV Technologies: Climbing the Ladder of SuccessEstablished in 1997, HSV had emerged as a leading company in web designing industry in India.

Founded by Kumar, HSV was dedicated towards catering to the website related needs of Indiancompanies across various industries. With 12 years of work experience as the web developmentmanager in a reputed IT company, Kumar boasted of in-depth industry knowledge while being adeptat handling teams. His affable character also earned him many friends across several companies,spanning across varied industries.

Driven by the aim of fostering a culture of innovation and employee empowerment, Kumarmajorly focused on the skills and past work experience while recruiting his team members. After 3months of rigorous hiring and selection process, Kumar shortlisted four team members, all of whomhad an excellent track record and relevant experience in web designing and development (Exhibit I).With the team size at HSV still being small, Kumar decided to shoulder the responsibility of handlingthe administrative as well as HR related issues.

Kumar and his team worked relentlessly towards identifying potential clients and building strongcustomer relations. However, with many Indian companies being ignorant of the relevance andimportance of web development, luring customers and building a sizeable client base turned out to bea tedious task. Kumar said, “Many Indian companies are yet to understand and appreciate thebenefits of having a captivating and interesting website. Despite our initial setbacks, we are optimisticthat our efforts shall reap the desired results.”

Undeterred by their sluggish start, Kumar and his team decided to personally visit companies anddemonstrate the benefits of having a customer-friendly and aesthetically designed website. After 3months of persistent efforts, HSV succeeded in roping in their first client, Crescent Homes (Crescent),a countrywide chain of interior decoration stores, in January 1998. Impressed by the company’sdedication to meet customer expectations and their focus on quality, Crescent referred HSV to ahost of new companies, opening new business avenues for the company.

By 1999, the company was catering to the website development and hosting needs of nearly100 companies across the country. However, with the business flourishing, HSV felt the need tohire new members to shoulder the increased work pressure. Using this opportunity to mould HSVinto an organisation with formal teams and clear reporting structures, Kumar decided to set upfour technical teams (with two team members each) headed by his experienced and initial teammembers, Raina, Mathur, Sunita and Radhika , who were promoted as team leaders (Exhibit II).In consultation with and involvement from them, Kumar hired eight new team members, over aspan of 2 weeks. Each of these teams was individually responsible for handling the end-to-endweb development requirements of the company’s clients. Kumar realised that it was no longerpossible for him to look after the technical, administrative and HR issues at HSV. Further, theincreased team size created the need for an HR manager to deal with employee related needs anddemands. Realising the same Kumar, with the help of renowned consultancy, recruited Amit Sharma(Sharma) as the new HR manager for HSV.

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Exhibit IIOrganisation Structure at HSV

Director(Kumar)

HR Department(Sharma)

Technical Team 1(Raina)

Technical Team 2(Mathur)

Technical Team 3(Sunita)

Technical Team 4(Radhika)

Prepared by the author

Having worked as the HR manager at Trisoft Tehnologies (Trisoft), a small player in the IndianIT industry, since its inception, Sharma had successfully handled a gamut of HR-related activitiesranging from recruitment to performance appraisals. At 36, Sharma was a gold medalist in HR andIndustrial Relations, with more than 12 years of work experience. His initiatives like cross-culturaltraining and workforce diversity management programmes were not only critical in shaping the workculture at Trisoft, but were also widely received and appreciated.

The prospect of single-handedly setting up HR practices at a budding entrepreneurial ventureappeared as a lucrative and demanding proposition for Sharma. Highlighting the same he said,“...handling end-to-end HR activities for a burgeoning start-up organisation is exciting as well aschallenging. Having successfully handled the various facets of HR for more than a decade, I amconfident of creating a success story at HSV.”

Sharma’s initial endeavours in the company revolved around formulating detailed HR policiespertaining to leaves, salaries and company ethics among other aspects. Interacting constantly withKumar, Sharma focused on understanding the essence of the technical teams at HSV. He also usedthese interactions to understand the company’s business model and expansion plans.

Combining these inputs with his vast experience, Sharma designed detailed job descriptions forthe existing roles in the company. He also formulated induction programmes and training manuals forthe new employees. These new rules and policies introduced by Sharma helped to inculcate a formalisedorganisation framework at HSV. Additionally, during this period, HSV continued to climb the ladderof success, bagging new clients and building its reputation as a quality driven web designing andhosting company.

At the turn of the millennium, HSV had registered a profit of INR 200 lakh. Over the years, it alsogained remarkable expertise in search engine optimisation achieving appreciation from many of theirclients. It was also emerging as one of the most sought after web designing companies in the country.

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Encouraged by this success, Kumar had planned out an ambitious future for the company. Highlightingthe same he said, “HSV has a strong technical team supported by an experienced HR manager. Ourgrowing client base has made it essential to expand our team while fostering a performance drivenculture. The immediate focus shall be to nurture a highly motivating and rewarding work environment.”

Brewing Line vs Staff Issues: Thwarting the Company’s DreamsTo achieve the planned ambitions for HSV, Kumar called a meeting with his team leaders to

discuss new company-wide initiatives relating to performance management, training and developmentand recruitment.

Following was the conversation between Kumar and his technical team leaders:

Kumar: Congratulations for the commendable job by your teams. Our growing popularity in theweb designing, hosting and SEO technologies and the appreciation received from our clients is anindication of the same. However, I hope you all realise that the expectations from our company arehigher than ever before.

Raina: We all agree to that. In fact, we have all been brainstorming on chalking out an actionplan to ensure the timely completion of these new assignments.

Radhika: We have decided to distribute equally the new projects amidst our teams. But Kumar, tobe able to deliver high-quality results within the stipulated time we shall have to hire new team members.

Mathur: Our team members are already handling three clients each. Expecting them toconcentrate on the new projects shall not be fair. We feel that having three new members per teamshall help us handle the existing pressure while creating a bandwidth for efficiently shoulderingfuture assignments.

Sunita: In addition to hiring new members, there is a need to introduce certain performanceevaluation methods. It shall help us to evaluate our team members based on their performance whilebeing able to highlight their areas of improvement. Moreover, it shall also motivate our team members.

Radhika: In fact, the performance evaluation should be introduced not only for the team membersbut for all the employees and the process should be introduced as soon as possible. As HSV preparesitself for the future, these appraisals shall help the company to reward performance while motivatingteam members to achieve better results.

Kumar: I agree with all of you. I had been deliberating on similar lines and have even had adetailed discussion with Sharma regarding the same. Focusing on recruitment and using performanceappraisal methods seem to be emerging as the immediate and pressing priorities for HSV.

Raina: Absolutely Kumar. Our focus is not only on satisfying our existing customers but also onexpanding our business by attracting newer clients. It shall therefore be imperative for us to expandour team while instilling a performance driven culture. Often these elements are overlooked orundervalued. But we all hope that as HSV grows, as an organisation, these matters become anintegral part of the company.


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Kumar: I am glad that my team leaders are equally concerned and involved in building HSV asa holistic company. I shall update Sharma regarding our discussion. I am confident he shall be able toimplement these new initiatives successfully.

Having concluded this discussion, Kumar had a brief meeting with Sharma. The prospect ofintroducing practices like performance appraisals and performance-based rewards was a challengingyet exciting proposition for Sharma. With the aim of gaining an in-depth understanding of the rolesand responsibilities of the new hires and to update them regarding the performance appraisal process,Sharma had an elaborate meeting with the team leaders. It was decided to conclude the hiringprocess within a span of 2 weeks while simultaneously introducing the performance appraisal process.

A recruitment drive was conducted at HSV where aspiring applicants underwent a rigorousselection process, wherein their resumes were screened based on the educational qualifications andprofessional experience. Short-listed candidates had to undertake a rigorous 3 hour test. Candidateswho cleared this test underwent a personal interview. Each of this stage was planned and executedsingle-handedly by Sharma.

To understand the exact job roles of these new hires, Sharma held numerous detailed meetings withKumar. Sharma said, “Being the founder of the company, I feel that Kumar is the apt person to interactwith while hiring new talent for HSV. Kumar’s technical knowledge combined with his industryknow-how has helped me in understanding the nitty-gritty of the new job roles.” Additionally, Sharmaused his personal contacts in the IT industry to educate himself on the essential skills and qualificationsexpected from the new recruits. He also constantly interacted with the HR managers of other IT basedcompanies to gain a deeper understanding of the qualities and skills required to hire.

At the end of the 2 week recruitment drive, 12 candidates (three each for the four team leaders)were selected. Additionally, he also designed an induction programme for the new recruits to acquaintthem with their job roles and familiarise them with the company’s culture. Having completed therecruitment drive within the stipulated time frame and having designed and executed their inductionprogramme, Sharma was certain that Kumar would be pleased with his performance.

After the successful completion of the recruitment drive and the induction programme, Sharmafocused his attention towards the performance appraisal process. Before commencing the process, hesent a detailed e-mail to all the team leaders, explaining the nature of the process and also the performancereview templates that the team leaders were expected to fill-in and reply within 1 week.

However, Sharma’s approach was not received well by the team leaders. With Sharma designingand orchestrating both the recruitment and performance appraisal process, the team leaders feltneglected and were unhappy at not being involved in the implementation and final decision-making.

The following was a conversation between the team leaders:

Radhika: I am extremely unhappy about Sharma’s style of working. I was expecting that wewould be involved in the recruitment process as the new recruits would ultimately be a part of ourteams.

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Mathur: Absolutely. Sharma’s job is to facilitate the process. As line managers of the company,we should have been responsible for conducting the personal interviews. Sharma’s duty as the HRmanager is to assist these processes and not to make the final decisions.

Sunita: Moreover, I am finding it difficult to work with the new members on my team. They arenot well versed in the field of web designing and require constant guidance and support in completingthe tasks assigned to them. In the midst of increasing work pressure and pressing deadlines, I wasexpecting these new recruits to ease my teams’ burden. On the contrary, I and my team membersare now wasting time in training and educating these new hires!

Radhika: Even the induction programme designed by Sharma was not in accordance with thedemands of the job. The new hires were merely briefed about the nature of responsibilities usingpresentations without providing them any real time problems to work upon.

Mathur: It’s the same situation in my team. To make matters worse the new hires are unwillingto adapt to the company’s web designing methods and processes. This reluctance to change isleading to frequent altercations and is leading to frictions within the team. If this continues theproductivity of my team is bound to deteriorate.

Radhika: If my team fails to meet the deadlines, I will not shoulder the responsibility. Sharmashould have understood the practical demands of work before making these hiring decisions.

Raina: It’s the same story with the performance review process and templates. I am notconvinced about the evaluation parameters set by Sharma. He lacks a clear understanding of theskills and expertise required by the technical team members. We were not even personally intimatedregarding the performance review process. Instead, an email was sent regarding the same.

Mathur: Prior to Sharma’s recruitment, we were consulted for every major company relateddecision. Kumar valued our suggestions. However, off late, we have been reduced to the roles ofpassive spectators.

Sunita: What is surprising is that even Kumar has not raised any objection to Sharma’s style ofworking!

This growing discontent translated into non-compliance from the team leaders. Mathur and Radhikaonly sent partially filled performance review forms. Raina and Sunita, on the other hand, e-mailedSharma informing him their inability to fill the forms due to lack of time. This reluctance to cooperatestrained the relations between Sharma and the team leaders. Additionally, the team leaders were notpleased with the performance of the new recruits and had constant arguments with them. To makematters worse, Sunita and Mathur had an altercation with Sharma when the latter highlighted theirreluctance to cooperate in the performance appraisal process. Sharma said, “I do not understand thesudden change in attitude of the team leaders. The appraisal process has been delayed owing to theirnon-cooperation. I have always delivered results within the promised deadlines and do not want tobe held responsible for the delay caused by others.”


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These differences gradually took a toll on the company’s performance. Kumar had already takenan extension on the delivery date from two of the company’s important clients. Though Kumar hadbeen hearing certain incidents of the growing discontent between his technical leads and Sharma, hehad not paid much attention on the same. Vexed by the brewing troubles Kumar decided to have ameeting with his team leaders and Sharma.

The following was the conversation from the meeting:

Kumar: Am sure you all have an idea regarding the purpose of this meeting. In the 4 years of ourexistence, it’s for the first time that the company has faltered in fulfilling its commitment. I was notexpecting this from my team. Especially when we are at such a crucial juncture of growth!

Mathur: All of us have also been disappointed with these delays in our assignments, especiallywhen each of us has strived hard to nurture and build these high-performing teams. Kumar, we hopeyou do not doubt our dedication and diligence towards the company.

Kumar: Mathur I have complete faith in each of my team leaders. However, I fail to understandthat despite hiring the desired number of new team members why has the performance declined?Sharma has worked very hard to complete the hiring process within the stipulated time of 2 weeks.

Sunita: But Kumar, Sharma had designed and implemented the entire recruitment process withoutinvolving any of the team leaders. As the new hires are not aware of the company’s web designingprocesses, each of us along with our old team members is spending a considerable amount of time intraining and coaching these new hires. The new hires have added to our work burden instead ofeasing it, so the productivity is bound to decline!

Sharma: Kumar I had a detailed meeting with the technical leaders to understand the roles andresponsibilities of the new hires before commencing the recruitment process at HSV. Moreover,each candidate was expected to undertake a rigorous selection process before being hired. However,I do realise that the team leaders are finding it difficult to coach and train these new members amidstpressing deadlines. I should have probably adopted a different style for the recruitment process.

Kumar: But why is there a delay in conducting the performance evaluation? All of you hadexpressed interest in implementing appraisal systems for rewarding and motivating our team. Sowhere is the problem?

Radhika: Kumar we agree that Sharma has a vast experience in the field of HR but his technicalknowledge is definitely limited. Then how can he alone design the performance evaluation templatesand processes for judging the competence and skills of candidates who are expected to shoulderresponsibilities on technical teams?

Raina: Kumar, the same approach has been used while designing the appraisal process. Thetemplates have been designed and mailed to each of us. No efforts have been made to collaboratewith any of us while formulating the evaluation and assessment parameters!

Sharma: As the HR manager, it is my responsibility to design the performance appraisal formsand templates. The parameters of evaluation have been formulated in accord with the roles and

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responsibilities of the technical team members. If I would have involved the technical team leadersat each of these stages, it would have hampered their existing work and day-to-day operations.

Raina: We do not agree with this outlook Kumar. As a HR manager, Sharma was expected tofacilitate and support the process not design and conduct it!

Sharma: Kumar I think that the technical leaders are not willing to accept the changing paradigmsof business. HR today is no longer a support function in organisations. I had joined this organisationwith many expectations. I was sure that the team at HSV wants to nurture and build a world-classcompany for the future. However, if you feel that I have failed to deliver my responsibilities, I haveno issues in resigning from my position.

With the feud between his technical team leaders and HR manager intensifying, the future ofHSV appeared murky to Kumar. Despite the hiring mismatch, Kumar was aware that Sharma wasan experienced and able HR manager. He did not want to choose between his dedicated technicalteam leaders and a competent HR manager. Faced with these problems, Kumar found himself atcrossroads. Was Kumar to be blamed for the current discontent between the line managers andSharma? Will accepting Sharma’s resignation solve the problem? Was Kumar unable to demarcatethe roles and responsibilities of his technical leaders and HR manager? What approach should Kumaradopt to resolve the growing line vs staff dispute?

03The Line vs Staff Tussle at Hi-Speed Venture Technologies Threatening the Company’s Future CASE

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