Chapter - III

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Methodology

The Indian FMCG industry witnessed significant changes through

the 1990’s; many players have been facing severe problems on

account of increased competition from small and regional players

and from slow growth and recession across its various product

categories. As a result, most of the companies were forced to

revamp. Their product, Marketing, Distribution and customer

service strategies are being re-engineered to strengthen their

position in the market.

By the turn of the 20th Century, the face of the Indian FMCG

industry has changed significantly with the liberalization and

growth of the Indian Economy. The Indian customer witnessed an

increased exposure to new domestic and foreign products through

different media, such as television and internet. Apart from this,

social changes such as increase in the number of nuclear families

and the growing number of working couples resulting increased

spending power also contributed to the increase in the consumer

personal consumption. The realization of the customers growing

awareness and the need to meet changing requirement and

preference on the account of changing life styles required the

FMCG producing companies to formulate customer centric

strategies. These changes had a positive impact leading to the rapid

growth in the FMCG industry.

In this complex and highly competitive market, organizational

effectiveness is a critical ingredient for success in any business. In

order to achieve its goal, organizations need to define and apply

strategies that optimize people efficiency, engage them, delight

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customers and justify to stakeholders; regardless of prevailing

market conditions. However, there are enough anecdotal evidences

that even established corporations often struggle to align its human

resources effectively to achieve its desired goals.

Business performance is a combination of people engagement,

productivity, efficiency and key financial metrics (revenue, profit

etc.). To create company-wide effectiveness, business leaders need

to focus on streamlining their people, the people management

systems, the structure and capabilities (including organizational

culture) to the overall goals. Failure in fulfilling these often result in

lower levels of customer satisfaction, channel partner engagement

and employee retention.

In February 2004, the Harvard Business Review published an

article, where Kaplan and Norton argued that ‘an organization is

aligned when all employees have a commonality of purpose, a

shared vision, and an understanding of how their personal roles

support the overall strategy.’

Although simplistic at the first encounter, deeper exploration would

reveal challenges that organizations confront while implementing

the same. Successful organizational alignment requires a holistic,

coordinated effort to ensure that a number of key elements or

‘building blocks’ are in place. These can be broadly categorized into

three interrelated and interdependent business components:

People, Strategy and Operations, which can be rearranged to define

a set of attributes that characterize successful organizations. This

in turn depends on having the right people, in the right jobs, at the

right time, to meet rapidly changing environmental requirements.

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In an aligned organization:

1. People know what has to be done

2. They know why it must be done

3. They are capable of executing strategies with training and

access to resources

4. They learn from implementing, and use feedback to improve

processes

5. They maintain positive energy and enthusiasm despite

difficulties

6. They feel recognized for their contributions

7. Ultimately, they ensure financial success of the organization

An important aspect of achieving high levels of aligned organization

depends on the company’s human resource (HR) management

practices. It has been empirically demonstrated that HR

contributes directly to profitability, quality, and other goals in line

with the mission and vision of the company. Staffing, training,

compensation and performance management are key tools in HR’s

kitty that helps the organization to satisfy stakeholders needs.

Typically, businesses devote a lot of effort for developing a good

strategy, and aligning operations to support that strategy. However,

most organizations struggle to streamline or align their human

capital with strategic priorities of the company.

This is where Strategic Human Resource Management (SHRM)

comes. The goal of Strategic Human Resource Management is

simply to develop people processes that enable the firm achieve its

targeted outcomes. In other words, SHRM is about leveraging

peoples’ capabilities that is critical to achieving sustainable

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competitive advantage, through integration of employment policies,

programs and practices.

Importance of the Study:

This study will be a significant endeavor in the area of Strategic

Human Resource Management in particular, and this research will

be beneficial to HR professionals and executives. It will also serve

as a future reference for researchers on the subject of strategic

human resources and it will lead the companies to attain

organizational effectiveness. The rapid changes in the business

environment remind that, for a business to survive, it has to focus

on its core competencies in order to keep ahead of the competitors.

The understanding in Indian companies about the relationship

between strategic HR and business success is still at a nascent

stage. This body of work attempts to bridge the gap through an

empirical investigation of SHRM practices on the functioning of

Human Resources function in HCCBPL, and identify gaps in

current setup which needs to be addressed in persuasion of

company’s goals.

The choice of HCCBPL as a case study was driven by the pro-

active role of HR within the organization, as well its impact on the

overall business strategy. Further, HCCBPL also meets the

general parameter of the study’s objective and shares the defined

core characteristics, thereby making it an apt candidate for

investigation and exploration of the study hypotheses.

At a secondary level, this study also examines the impact

changing role of HR from a purely administrative to a strategic

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entity. We also touch upon management perception about HR,

along with expectations and responsibilities of the function. The

shift towards a more strategic role of the HR function implies the

need to develop a different level of awareness about the role of the

HR manager, by top management as well as employees, along

with their perceptions and expectations from the HR department.

The importance of this research is linked to the significance of

developing unique human resource practices in the Indian

industry that affect both the HR’s capital pool and the overall

human resource behavior towards achieving the organization’s

goals through developed and sustainable competitive advantages.

This work assumes that the shifting role of the HR department

towards a more strategic function in the future is a key element in

today’s business since HR acts as the conduit between the top

management and the staff. Using response data from a survey of

managers at HCCBPL, this study investigates the importance and

performance of HR in a multi-dimensional framework, while

conducting dipsticks on core fundamentals like communication,

culture, connection and capability. The statistical novelty of this

study is exploited in identifying core drivers of managers’

perception using a customized version of Rotational Factor

Analysis.

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Need for the Study:

The beverage industry is vibrant and growing in choices. It thrives

on brands and the Coca – Cola Company knows better than anyone

how to create branded beverages that people are passionate about.

This is the time that Company has great opportunity to reinvent

itself not just as a Growth Company, but as a sustainable growth

Company. Sustainable growth means meeting the short term

commitments while investing to meet our long term Goals.

Sustainable growth means ensuring that each one in the

organization continues to grow, too. The time is right for everyone

to commit themselves to working together for this common

purpose.

To establish foundation for the people to move forward towards a

common direction the organization has launched a ”Manifesto for

growth” which lays the frame work to invent every part of the

company in integrated, holistic way with the following building

blocks.

1. Mission, Vision and Values

2. Strategies growth paths

3. Living the values

4. Working as a Global team

5. Enabling the peak performance

6. Building distinctive capabilities

Every organization must know how it conducts its business and it

must be aligned to ensure that all are working towards the same

goal in a way that is efficient and will allow the organization to be

the best.

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This includes developing an integrated system to guide business

decisions and drive result. The system will link strategies,

business, planning, metrics, management routines and individual

performance management and rewards.

At this junction, it becomes inevitable for the organization to design

and implement the best and available strategies for achieving the

organizational effectiveness. The present study is conducted on this

ground, focusing on Hindustan Coca- Cola Beverages Private

Limited, one of the leading pioneers in the beverages industry in

India.

Objectives of the Study:

The understanding in the Indian companies about the relationship

between strategic HR and business success is at a nascent stage.

The body of work aims to investigate the impact of SHRM practices

on the functioning of Hindustan Coca- Cola Beverages Private

Limited (HCCBPL) and industry gaps in current setup which needs

to be bridged for HCCBPL to realize its potential.

In other words, the research attempts to explore the role of SHRM

in developing competitive advantage and also provides actionable

recommendation on what organizations need to ensure to create

the knowledge worker and to diffuse that knowledge to others in

the organization. The study in particular focuses on the following

aspects:

• To Study the Human Resource practices that promote

socialization, such as orientation programs, development

assignments, Project teams, etc. in creating talent.

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• To know the People development practices such as formal

training in creating and sustaining competitive advantage

through internal growth and career paths to employees

• To Examine the other initiatives to meet the abilities and

alignment of people and HCCBPL Goals/Strategies

• To Know the effectiveness of HCCBPL’s business strategy

in transporting the organizational effectiveness

• To assess the HR Function’s competency to drive, lead,

train and synchronize organization’s strategies to deliver

results.

At a secondary level, this study also examines the move of HR from

a purely administrative and operational personnel function to a

more integral component of business success. The study also

touches upon the manner in which management perceives the

importance of HR department and its expectations regarding the

HR function, as well as the responsibilities given to that function.

Sampling:

The universe for the present study is in a Multinational company

which has presence across India namely the Hindustan Coca- Cola

Beverages Private Limited. HCCBPL is a 100% subsidiary to the

Coca-Cola Company. Since the undertaking chosen as the

universe is a beverage process and sales organization, it is largely

manpower intensified and holds 8500 permanent employees in

different cadres in the organization. For the purpose of this study,

researcher has considered 3 categories of managerial associates.

These consist of managers in different cadres, junior level

managers, Middle level managers and senior level Managers. Junior

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managerial cadre 149, Middle level 251 and Senior Top level

managerial cadre 48. The name of the respondents in each category

figure in the sample is picked up through the Stratified Random

Sampling method. A pilot study was conducted prior to the

administering of the questionnaire. The respondents of the pilot

study have also been included in the actual size of the sample for

the purpose of analysis. Finally, the size of the sample has worked

out to be 448 of which 149, 251 and 48 represent junior level

managers, Middle level managers and senior managerial categories

respectively.

S. No. Classification No. of Employees

1 Junior Level Managers 149

2 Middle Level Managers 251

3 Senior Level Managers 48

Tools for investigation:

Different methods are adopted for investigation of the different

aspects relating to the sample, which includes Primary and

Secondary data. The researcher has personally visited the various

locations of the organization spread across India and administered

the schedule to the Junior level managers, Middle level managers

and Senior level managers and collected the first hand information

through a questionnaire. Secondary data was collected through

documented feedback sessions of business plans, previous internal

survey reports, and the number of training programs conducted on

leadership development for various categories of managers,

company report, online tools and company internet etc. of HCCB.

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The study is mainly based on the Primary data collected from the

officials of Hindustan Coca-Cola Beverages Private Limited, India.

Data was collected from the officers of Human Resource

department of region/unit/corporate office. Further, the researcher

has also incorporated the views of the executives and belonging to

different departments and divisions of Hindustan Coca- Cola

Beverages Private Limited.

The researcher, on completion of the pilot study has collected the

required data by using the methods of questionnaire and

observations. One comprehensive schedule was designed for the

purpose of the study, which forms the third important source of

data collection. The questionnaire contains in all about 24 items

besides the items eliciting the personal information of the

respondents. The 24 items in the questionnaire has been

categorized under four broad dimensions / attributes based on the

following empirical approach:

The Organizational Effectiveness Model (OEM):

While considering the above inputs, for simplicity we define a

business as comprising of the following factors:

•Capabilities and Ownership- Do we understand our core

capabilities and instill ownership among associates to leverage

them?

•Operational Effectiveness- Do processes and interactions create

powerful internal synergies or create barriers?

•Strategy and Leadership- Do we have actionable strategies and

clear directions?

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•Trust and Motivation- How much trust does staff have in

management, and how motivated and committed is the workforce

to achieve results?

While these dimensions alone can no way simulate the complexities

of real operations, they do help to indicate the key areas of

concerns and relative effectiveness of each function.

Each of these 4 factors are further defined in terms of 4

independent attributes respectively. Here too, we make a departure

from reality in assuming zero interdependence among the

attributes, while empirical evidence is likely to indicate otherwise.

The following section presents the final questionnaire

administered for the Organizational Effectiveness survey.

Diagnostic Questionnaire

Please rate the following items on scale of 1 to 5, where 1

represents complete disagreement, 3 neutral and 5 overwhelming

conformity to the statement.

1. Major developments are communicated in a way that I can

relate to my work

2. Important information is effectively disseminated

throughout the organization

3. In my work group, people are valued for their contribution to

the team

4. I have confidence in the leadership ability of the senior

management

5. I understand how my compensation is tied to my

performance

6. My work unit/group has clearly defined goals and objectives

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7. I understand how my performance determines rewards and

incentives

8. I know what is expected of me at work

9. People are held accountable for delivering high levels of job

performance

10. My opinion is considered for decision making at work

11. In the last seven days, I have received recognition or praise

for good work

12. 12. My job allows me the opportunity to do what I do best

every day

13. 13. We have clearly documented work processes

14. 14. I trust the senior management of the company to

implement their commitments

15. 15. In the last one year, I have had opportunities at my

work to learn and grow

16. 16. I understand how my work contributes to the overall

success of HCCBPL

17. Capabilities and Ownership

18. I know what is expected of me at work

19. People are held accountable for delivering high levels of job

performance

20. 15. In the last one year, I have had opportunities at my work

to learn and grow

21. 16. I understand how my work contributes to the overall

success of HCCBPL

Operational Effectiveness

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1. Important information is effectively disseminated throughout

the organization

2. There is good teamwork and cooperation between different

units / departments

3. My job allows me the opportunity to do what I do best every

day

4. We have clearly documented work processes

Strategy and Leadership

1. Major developments are communicated in a way that I can

relate to my work

2. I have confidence in the leadership ability of the senior

management

3. My work unit/group has clearly defined goals and objectives

4. I trust the senior management of the company to implement

their commitments

Trust and Motivation

1. In my work group, people are valued for their contribution to the

team

2. I understand how my compensation is tied to my performance

3. I am proud to say that I work for HCCBPL

FIGURE 3.1: OEM – Framework

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The Alternate OEM Framework:

The 4 quadrant model framework described in the previous section,

viz., Capability and Ownership, Operational Effectiveness, Strategy

&Leadership and Trust & Motivation can also be viewed in an

alternate perspective.

In fact, careful observation would suggest that with minor change

of verbiage and subsequent reordering, the questions help to define

effectiveness of SHRM practices in an organization. The schematic

representation of the revised OEM framework is given below:

FIGURE 3.2: Schematic Representation of OEM framework

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How well do employees

understand and resonate

with HCCB’s strategy

Do employees perceive HR

as Strategic or Operational

asset within HCCB?

Are HR resources capable

of delivering in line with

employees’ expectations?

How far is HR aligned to

support HCCB’s strategy?

Where are the gaps?

Business

Goals

Function 1:

Bottling

Function 2:

Sales

Talent

Development

Induction &

Skill Training

Retention &

Engagement

Recruitment

Strategy

Competency

Assessment

Role of HR as

Stakeholder

ST

RA

TE

GIC

AL

IGN

ME

NT

OR

GA

NIZ

AT

ION

EF

FE

CT

IVE

NE

SS

1

2

4

3

OEM in action @ HCCBPL

The schema represented in the diagram above, serves as a proof of

concept to evaluate effectiveness of the Human Resource function as

an item of strategic importance for achieving HCCBPL’s goals.

The framework has four interdependent components, Business

Strategy, Role of HR, Functional Capabilities and Strategic

Alignment. HR at HCCBPL is evaluated on each of these

parameters to deliver an Organizational Effectiveness Report Card

for Hindustan Coca-Cola.

The questionnaire discussed earlier can be adopted to take the

following form:-

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Business Strategy:

I understand the business strategy of HCCBPL

HCCBPL business strategy is effective to compete in the marketplace

1. I understand how my work contributes to HCCBPL

2. Important information is effectively disseminated throughout

HCCBPL

Role of HR: Strategic vs. Operational/Administrative:

1. I understand the accountabilities of HR at HCCBPL

2. The HR strategy has an impact on the business growth of

HCCBPL

3. HR policies and processes impact my work at HCCBPL

4. The culture at HCCBPL encourages proper execution of HR

processes

HR: Competency Assessment:

1. HR at HCCBPL has the right capabilities to lead people

processes

2. The talent management initiatives are effective in creating future

leaders

3. The line managers are trained to drive HR processes efficiently

4. People are held accountable for delivering high level of

performance

People Process Alignment:

1. The HR processes in HCCBPL are easy to understand and

practice

2. My job allows me the opportunity to do what I do best

3. In the last one year, I have had opportunities at my work to

learn and grow

4. I understand how my performance determines rewards

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Each attribute indicates a directional significance towards a

combination of factors. Every item is provided with five alternative

responses on the pattern of the Likert’s five point scale. The face

validity of the items is established through the specifically selected

from among the faculties of management. Similarly the

questionnaire has been originally administered to a small sample of

24 respondents. The reliability of the questionnaire has been

establishment through Test – Retest method. The interval between

test – retest was two months.

Considerations for Administering Survey Questionnaire

• Each attribute is represented as a positive statement from an

associate perspective, which respondents would confirm

according to their perception, using a 5 point Likert Scale.

• The sample is best composed of representation from all key

functions/ units, with no group comprises less than 10% of

the total survey sample.

• It is recommended to analyze results at a work

group/function level to capture difference in perceptions

among departments.

The attributes corresponding to a factor are randomly ordered to

avoid pattern matching, outliers and pre conceptions on an

element.

Statistical Tools Used for the Study:

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The researcher has applied CHP – Score Test, to find the

association between the demographic profile of the respondent and

the four dimensions of Strategic HRM and its impact on

organizational effectiveness in HCCBPL. Further the researcher

used correlation analysis to check the relationship within the four

dimensions of Strategic HRM in HCCBPL. The correlation is one of

the most common and most useful statistics. A correlation is a

single number that describes the degree of relationship between

two variables.

Reliability of the Questionnaire: Cronbach’s alpha

Cronbach’s alpha is a measure of interval consistency that is how

closely related to a set of items as a group. A high value of alpha is

often used as evidence that the items measurement an

understating construct. However, a high alpha does not imply that

the measure is un dimensional. If, in addition to measuring

internal consistency, it is required to provide evidence that the

scale in question is un dimensional, additional analysis can

performed. Exploratory factor analysis is one method of checking

dimensionality. Technically speaking Cronbach is not a statistical

test – it is a coefficient of reliability. Cronbach alpha can be written

as a function of number of test item and the average inter

correlation among the items. Below conceptual purpose, the

formula for the standardized Cronbachs alpha is shown below.

N C

A = ----------------

V+ (N-1).C

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Here “N” is equal to the number of items, C-bar is the average inter

item covariance among the items and V-bar equals the average

variance.

The researcher has administered the alpha scale method of

reliability analysis and it is found that the alpha coefficient is

0.9233, which suggested that the pattern of questions possess

internal consistency.

Period of the study:

The study covers normally a five year period beginning 2006 the

selection of the period is governed by considerations of availability

of data from Hindustan Coca-Cola Beverages Private Limited, India.

Moreover, the purpose of the study is basically to study the effects

of strategic Human Resource Management in recent years and as

such the five years period is considered as sufficient for the

purpose.

The researcher has approached the region Human Resources

department of the organization after taking the necessary

permissions from the authorities. The records verified thoroughly

by the researcher are:

i. Annual reports of the organization

ii. Online tools relating to the Performance management

system

iii. Career development process and its linkage to strategic

road map of HCCBPL

iv. Internal and External trainings on Leadership

development.

v. Internal survey results and So on.

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On scrutinizing the records, the researcher has prepared separately

notes relating to each of the variables under the study.

In the second stage the researcher has consulted Human

Resources managers and on their advice, with the assistance of the

department managers belonging to various functions, the

researcher personally investigated the understanding of the

Strategic Human Resources Management and its linkage with

business objectives. A note on the content of the personal interview

is prepared separately for each of the respondents.

The third phase involved the researcher administering the interview

schedule to the respondents figured in the sample. The perceptions

of the respondents are surveyed by using a pre-standardized

schedule. The researcher has administered the schedule to the

respondents on the prior appointment fixed for the purpose. The

researcher was present when each respondent was answering the

questions. The researcher has taken care that respondents

answering on their own do not consult anyone. As part of the

precaution, the researcher carried both English and the local

dialects of the area of research with the copies of the schedule, and

served the one which the respondent felt that can answer on his

own. The respondents were told about the purpose of the Study

and they were given limited time to answer with a view on that only

spontaneous response can be recorded. On completion of the

answering of the questionnaire, the respondent was asked whether

he likes to add anything to what he/she has already was answered.

The oral statements and elaboration also have been recorded on the

questionnaire with a view that they can be content analyzed.

Limitations:

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One of the methods used in the enquiry is the case study, which

has some limitations associated with the method. The

generalization of the study cannot be expected to have universal

application, even when we try to apply to the organizations of

similar nature. These must be applied with caution.

Limitations of the study may briefly stated as follows

1. This thesis primarily investigates the strategic implication of

the HR function in achieving business excellence. Other

themes that are closely connected to the problem, namely,

approaches to compensation, motivational techniques,

performance measurement, diversity or change management,

will not be treated in depth in this study primarily due to time

and space limitations. The nature of the subject demands the

support of an extensive literature review as well as a detailed

empirical research to give a complete understanding of the

implications of the subject.

2. At the onset, lack of relevant resources and case studies in

the Indian context that tackle the core issue of the thesis with

regards to linking SHRM with organizational effectiveness,

posed a considerable challenge. We were thus obligated to

rest upon previous studies, articles and refer case studies of

western economies while discussing the theoretical section.

3. The paucity of relevant references in the Indian context was

in fact an encouragement to the role of HR as a strategic

partner to a company, as opposed to being a mere support

function. The conclusions of this study are based on an

empirical survey research conducted with managers in

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HCCBPL, which may give encouragement for further

investigation in this area.

4. During the collection of information, it was found that

officials were rather hesitant ambivalent in providing the

desired information and same time officials tolerated to

discuss in some cases.

5. This study brings a case analysis of Hindustan Coca- Cola

Beverages Private Limited and its conclusions need not

necessarily apply to all Multinational and food and beverage

industries in India. While this does constitute limitations of

the study, one cannot deny the fact that there could be many

conclusions that could be applied to other industries in the

country.

6. Employee was hard pressed for time in view of the job

demands and rigorous work questionnaire. The researcher

has to persuade them for sparing time for responding to the

questionnaire and interview when he found that the

respondents were not in a position to spare adequate time

for the purpose, he had to request them to allot time after

the office hours. To overcome the suspicions of the junior

level managers, Middle level managers and senior level

managers, the researcher took the help of the unit HR

Managers in establishing identity and explaining the nature

and purpose of the study. However the above mentioned

limitations do not detract from the quality output of the

present study.

Chapterization:

122

The study has been organized into seven chapters, which are as

under.

Chapter –I - Introduction

Chapter-II - Review of literature

Chapter-III - Methodology

Chapter-IV - Profile of the organization

Chapter-V - SHRM Initiatives at HCCBPL

Chapter-VI - Data Analysis and Interpretation

Chapter-VI I- Conclusion and suggestions