How Voltas came back from the brink with right HR moves

Performance is all about people, the organisation’s most valuable resource and its most vulnerable. Any strategic decision or change in an organisation has huge implications on its employees. The Malcolm Baldrige Criteria for Excellence state that action plans for deploying strategy “should include human resource plans that are aligned with and support the overall strategy.”

Human resource strategy operates at two levels: one is the individual level, addressing issues such as job specifications, performance indicators, assessment and compensation. The other is the organisational level, involving the structure and broader issues like ethics and corporate culture.

Individual level
From market leader to ugly duckling and back —- the Voltas story illustrates how a company can reinvent itself by deploying the right strategic moves at the right time.
Voltas, founded by the Tata Group in 1954, was a pioneer in the Indian cooling appliances business; an unchallenged leader until the mid-1990s.

Then came globalisation, and with it a number of national and international players. Voltas suffered its first loss in 1996, and was soon relegated to the backseat in the cooling business.

That was when the company launched a massive restructuring exercise. The main problem area was its unwieldy workforce, 80% of which was unionised. But in spite of stiff resistance from the workers’ unions, the company launched “zero budget,” under which employees considered inevitable were identified —- the others were encouraged to avail of VRS. In order to boost employee morale, Voltas introduced performance-based incentives and hiked starting salaries. In a bold move, it introduced online systems for performance appraisal and salary processing to ensure transparency across all levels.

The human resource interventions were complemented by changes in finance and marketing strategy. Results began to show within a year and the company regained much of its market share in the air-conditioner segment. Today, Voltas is back on the profit and growth trajectory.

Organisational level
The Tata Group pursues corporate social responsibility (CSR) initiatives through its corporate strategy. This is not only implemented through various community development programmes but also through its business processes in its quest for business excellence.

In July 2004, while speaking at the AGM of the Madras Chamber of Commerce and Industry, B Muthuraman, MD, Tata Steel, declared their strategy of not dealing with (buying from or selling to) companies that did not conform to their CSR standards. Besides pioneering this concept, the Tata group has been setting benchmarks and defining standards to facilitate adoption and growth of this concept. Linking this concept with their overall group strategy has helped them move closer to achieving business excellence.

Strategy deployment is the fundamental link between an organisation’s strategy and goals. In the context of today’s learning organisation, companies need to constantly analyse their strategies, measure performance and implement action plans to attain their strategic objectives and move towards the long-term vision.

The writer is the managing director of Qimpro Consultants, founder of the BestPrax Club, and chairman of the IMC Quality Awards Committee. In 2005, he was awarded the Distinguished Alumnus Award by the Indian Institute of Technology, Bombay, in recognition of his outstanding achievements in Quality Management Consultancy.