Cultural Diversity and Challenges for Human Resource Management

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Cultural Diversity and Challenges for Human Resource Management:A Study of the Indian Manufacturing Sector

Soumi RaiSymbiosis Institute of International Business, SIC Campus, Rajiv Gandhi

Infotech Park, MIDC, Hinjewadi, Pune 411057, Maharashtra, India______________________________________________________________________________ Abstract

Diversity is today a key word for organizations and leaders alike. This word encompasses

within itself a vast reference to all facets of mankind, be it gender, language, culture, race,

religion or creed. With shrinking horizons and ever expanding business complexities, this

word portrays the face of a twenty first century organization. Studies related to aspects of

diversity have been manifold, but most of them have concentrated on the cross-cultural

diversity aspect of organizations. This research paper tries to understand a different

perspective to the word Diversity, by looking at the effect of culture related diversity on

the human resource practices of the Indian manufacturing sector. This research stems from a

previous literature review done by the researcher on Human Resources practices of the

Indian manufacturing sector, that found lacuna in relation to focus on actually

understanding this specific sector. The research shall be concentrating on selected

manufacturing organizations, to understand the cultural diversity existing there. It shall

further concentrate on understanding the effect such diversity has on human resource

practices of the organization, specifically related to broader domains like recruitment &

selection, performance appraisal systems, training and development initiatives, career &

succession planning issues, leadership development and empowerment.


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Introduction

HRM or human resource management has been widely defined by scholars as a strategic

function that encompasses management of its critical human assets for gaining competitive

advantage in a dynamic business environment. HRM is the function performed in

organizations that facilitates the most effective use of people to achieve organizational and

individual goals (John Ivancevich and Glueck, 1989). The concept that human resource is a

valued asset that can help tide an organization over turbulent waters has been very aptly

realized in the recent times of economic turmoil by businesses worldwide. The genesis of this

concept however lies with the onset of Behavioral Movement in the early 20th century when

eminent researchers like Mary Parker Follet, Chester Barnard, Elton Mayo and Douglas

McGregor realized the most important component of any business its manpower or

human resources that made the difference towards better efficiency for any organization.

Termed the Human Relations Movement, researchers tried to understand how issues like

working conditions, workplace relations, job satisfaction, work variations etc could actually

impact efficiency levels for an organization. Armstrong (1992) defines HRM as a strategic

and coherent approach to the management of an organizations most valued assets the

people working there who individually and collectively contribute to the achievement of its

objectives.

Despite its origin in the United States, HRM has forever remained a topic of debate amongst

the academicians and businesses alike. While businesses in the initial years of evolution

failed to understand how the concept of HRM differs from the concept of purely Personnel

management, academicians had their own schools of thought relating to understandingHRM. (Cakar and Bititci, 2002) through their research demonstrated the levels of

inconsistency in the study of HRM with respect to HRM models from a business process

perspective. There exists a lot of debate in HRM related literature pertaining to the concepts

of hard & soft HRM (see for example Storey 1989, Legge 1998, Guest 1999, Truss 1999,


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Granton et al 1999) and also to an understanding of the strategic role of HRM in a business

process, particularly its contribution to the firm (see, for example, Guest, 1997; Huselid,

1995; MacDuffie, 1995; Schuler and Jackson, 1999). Nonetheless HRM over the decades has

moved from its role of being a mere spectator cum administrator to being a more strategic

proactive contributor in an ever changing business domain.Diversity and IndiaIndia has ever been a land of paradigm and fascination. People from the West had previously

envisioned the country as a land of spiritual gurus and snake charmers a concept that has

taken a long time to erode even with globalization and economic liberalization. Today India

stands tall with its diverse culture, considerably huge population, and economic disparity as

one of the fastest growing developing nations. It is a nation with the largest English speaking

population and the worlds largest base of middle class that has led the spur of growth. A

recent report by IMF has pegged Indias GDP growth at 7.9% for the year 2010. It is a

country representing every major religion, almost two thousand ethnic groups, four major

language families containing a total of 1,652 languages and dialects and a strong social

hierarchical structure unparalleled by any country other than the continent of Africa interms of linguistic, social and cultural diversity.1Indian work organizations respect and exhibit this vast diversity through its employees

wherein every organization in itself represents a mini India with its cultural flavors as people

from varied religion, ethnic group, caste and language working together for a common

organizational goal. However it is quite interesting that in the study of organizational

behavior related to Indian organizations, most researchers have agreed upon them displaying

a mixed set of values and characteristics adapted from both Western and Indian culture and

traditions (Rangnekar et al 2009; Sinha et al 1990, 1997)

1http://en.wikipedia.org/wiki/Demographics_of_IndiaAccessed3rd July 2010 at 11.15 am
http://en.wikipedia.org/wiki/Demographics_of_Indiahttp://en.wikipedia.org/wiki/Demographics_of_Indiahttp://en.wikipedia.org/wiki/Demographics_of_Indiahttp://en.wikipedia.org/wiki/Demographics_of_India


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Research on Indian organizations has primarily focused on understanding the value systems

and cultural context of the same in relation to western countries like US, UK and Germany.

(Tayeb 1987, Singh J.P. 1990, Tripathi 1990) The country has its own philosophies deeply

rooted in cultural beliefs, traditions and habits that dominate its human resource

management principles and functions (Sparrow, Budhwar 1997). The best part about HRM

evolution in the country has been its ability to incorporate principles, approaches and models

from across the world that was beneficial to the functioning of the organizations. While

labour and personnel management principles were heavily borrowed from United Kingdom,

approaches and models of HRM came from the United States, quality consciousness and

norms were adapted from the Japanese, thus creating a powerful productive concoction

sprinkled with indigenous Indian values and ethos a sure shot Indian recipe for success

even during the times of recent economic recession.Literature ReviewThere is very less data available on holistic understanding of the effect of cultural diversity

on work organizations (related to Human resource management aspect) in the manufacturing

sector of the country specifically so in the domain of automotive manufacturing. Literaturereview related to the study and understanding of Human Resource Management in the

Indian context has been primarily based on the post-liberalization era, while being generic in

nature; studying the Indian context of HRM across all spectrums of the Indian industry. The

focus has been on understanding what HRM means in the Indian context across the

industries(Singh 2005), how this particular discipline is helping firms cope against MNC

competition (Som 2002, 2006, 2008), and cross cultural context in terms of comparison

with the US and UK (Amba-Rao 1994, 2000) (Budhwar et al 1997, 2001, 2003, 2004).

(Ratnam& Chandra 1996) through their case based review of selected organizations across

the spectrum of Indian firms, detailed aspects of diversity and its related challenges of equity

and equality for both employers and HR practitioners. The paper details broad challenges of


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HRM related to coping with issues of workforce diversity while strategizing its resources to

deal with issues of employment and sustainable development for the organization.Review on the manufacturing sector by other prominent researchers has addressed major

issues related to values (Sinha 1980, 1988, 1990; Singh 1990 ), leadership (Sinha 1984) and

performance management (Amba- Rao et al 2000; Rao S. 2007) or has been based in

understanding union and industrial relation issues (Deshpande, Flagan 1996) (Ramaswamy,

Schiphorst 2000) (Bhattacharjee 2001) ( Bhandari, Heshmati 2005) (Bhandari 2010) with less

focus on understanding simple issues of organization, management and impact of cultural

diversityon functioning of HRM practices related to the Indian manufacturing sector

specifically.Scope of Research

The manufacturing sector of India is heading towards exponential growth, with India having

today being designated with tags like Small car manufacturing hub, Outsourced

manufacturing hub, Engineering Research & Development zone, to quote a few. SIAM

Automotive Mission Plan Report (2006-2016) states that The total size of the Indian auto

component industry in India is expected to be USD 40-45 billion by year 2016. This means that there

shall be huge requirement of manpower for this specific sector alone. SIAM also predicts that the

Automotive sector alone shall be employing 2.5 crore people by year 2016. Implications of this huge

surging manpower will mean major challenges for Human Resource Management and its related

practitioners.

(Ratnam& Chandra 1996) through their study found that one of the major problems with

Indian organizations is the influence of ethical considerations on organizational processes

and decision-making at varied levels. However the authors have portrayed this particular

issue more through Case based approach, without undertaking empirical research and based

on review of sampled Indian organizations from varied sectors. This research aims to address


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the gap by reviewing the effects of Cultural Diversity (ethnic considerations) on the Human

Resource management aspects, specifically related to the Indian manufacturing sector and

further understand its related challenges.

This research shall be an Empirical research, focused on selected organizations from three

states of India.1. Gujarat Manufacturing hub for Textile, Chemicals, Pharmaceuticals and Engineering.

Target City - Ahmedabad2. Maharashtra Manufacturing hub for Automotive sector, Capital Goods and Allied

machinery. Target City - Pune

3. Chhattisgarh Manufacturing hub for Iron & Steel, Sponge iron and Power.Target City - Raipur

Research ObjectivesThe objectives of this research would be to broadly address the following questions:-

1. To understand the aspects of Cultural diversity in the context of the Indian

manufacturing sector2. To understand the impact of diversity on the recruitment & selection process of the

selected organizations.

3. To understand the impact of diversity on the performance management systems andrelated employee career development perspectives.

4. To understand the impact of diversity on succession planning, leadershipdevelopment and empowerment.

5. To understand the impact of diversity on working relationships both at white collarworker and blue collar worker levels.

6. Identify challenges in above aspects of Human Resource management for theconcerned sector.


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7. Provide recommendations related to how Cultural diversity can be taken up as

strength by Indian organizations to create their indigenous work culture with strong

Indian values.The objectives given above are more broad based and shall be reviewed with due

recommendations by the Doctoral guide. Further sub objectives based on recommendations

shall be devised as feasible given the time period and budget of research.

Research MethodologyThis research is intended to be an empirical research focusing on the Indian automotive

sector. In absence of data availability from this particular sector, the research shall draw data

from the Indian manufacturing sector to broadly understand issues related to this sector. The

researcher has already conducted a sponsored Literature review on Human Resource

Management in the context of Indian manufacturing/automotive sector: A review,with the

Social Research Centre (WZB) Germany. This research has provided the basis for further

empirical research related to the objectives as outlined above, based on gaps in this particular

sector.General Hypothesis: Cultural diversity related to religion and caste does not affect the

HumanResource Management practices of an organization.Process:-

A. The research work shall begin with formulation of Hypothesis for each given objective

of research based on the general hypothesis.

B. Cultural diversity can be understood by taking Caste, Religionand Language asthe concerned data points. These details can be availed from the Employment records

of the organizations.


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C. Using Non-probability sampling technique, manufacturing organizations with a

registered workforce size of 500+ employees shall be considered. The researcher can

avail this data through the registered database of FICCI or CII, for the concerned

region. The focus would be on selecting organizations across different sectors within

the manufacturing domain to get a better representation of the population. The

assumption herein will be based upon a large population containing diverse mix of

employees across different religion, caste and language.

D. Questionnaire based survey method shall be employed for empirical research. Thesurvey shall be in a detailed format to be filled up Personnel Manager/Head HR ofeach organization. The researcher also plans to conduct Interview based survey with

selected number of employees across varied job levels, to get a better perspective of

the challenges faced by HRM from an Employee view point.

E. Thereafter appropriate statistical tools (SPSS version 17) shall be utilized for analysisof the available research data, detailing on acceptance or rejection of devised

hypothesis. Conclusions and findings shall be based on the outcomes of the researchand shall be elaborated upon accordingly.

F. The researcher also intends to supplement this empirical research with few Casesfrom the varied sector of the manufacturing domain, to give a better understanding of

issues related to each objective. This shall give a more practical humanistic picture to

numerical data presented in the research.

LimitationsThis research shall be concentrated on the Western and Central Eastern region of India,

particularly to the manufacturing/automotive organizations in and around three cities vizPune, Ahmadabad and Raipur. This is specifically related to the researchers inability to


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cover the wide geographic spread of the country. Also the research shall be limited to a few

key aspects of Human Resource Management, as it difficult to collect and interpret data for

all activities related to this domain, given its widespread coverage in an organizational setup.

There may also be some limitations in both collection and analysis of data, which shall be

attributable to data collection errors in normal circumstances.

DisclaimerThis proposal is just a preliminary document of intention to conduct research in the given

area and topic. However the research is subject to review by the concerned Doctoral Guide

and his/her recommendations or suggestions to refine the same shall be final and binding.

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4. Armstrong, Michael. Handbook of Human Resource Management, Kogan page, 10thed2006, Pg 6-8, 11-13

5. Bhandari, A. K. & A. Heshmati, "Labour Use and Its Adjustment in Indian ManufacturingIndustries", Global Economic Review, 34 (3), 2005

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Cultural Diversity and Challenges for Human Resource Management

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