EMERGING HUMAN RESOURCE

PRACTICES AT ADITYA BIRLA

GROUP
ASHOK SOM

This article describes in detail through a longitudinal case study the emerg-
ing nature of human resources (HR) practices at Aditya Birla Group and, more
importantly, links it to the strategic redesign that the whole organization un-
derwent from 1995 to 2006. The longitudinal case study provides a snapshot of
the dynamic and turbulent nature of the new liberalized Indian economic envi-
ronment and how an organization such as Aditya Birla Group needed to brace
itself from competition through innovative HR practices. The article argues that
in challenging liberalizing business environments like India, the nature of HR
itself demands that organizations develop new capabilities and that HR’s role
is to reevaluate its competencies and develop new ones to help in the overall
strategic redesign of organizations. The article elaborates on two critical issues:
(1) the peculiarities and defining characteristics of HR models unique to India
and (2) the main factors that shape people management policies and practices
in the liberalized Indian environment. © 2010 Wiley Periodicals, Inc.

Keywords: redesign, innovative HR practices, India, Aditya Birla Group

Introduction
functions in Indian organizations have re-
ver the last 15 years, radical innova- sponded to this turbulent environment (Som,

O tions have taken place in the human

resource management (HRM) func-
tion in India (Som, 2006) due to
phased liberalization of the Indian
economy that has created a dynamic, turbu-
lent, and hypercompetitive business environ-
ment. Organizations in India are facing in-
creasingly greater turbulence, volatility, and
complexity, with the corresponding need to
adapt their strategies and HR functions as
new realities emerge. Human resource (HR)
2007). In challenging liberalizing business
environments like India, the nature of HR it-
self demands that organizations develop new
capabilities, and the role of HR is to reevalu-
ate its competencies and develop new ones to
help in the overall strategic redesign of orga-
nizations. To understand this phenomenon,
a growing spate of literature has tried to un-
derstand the emerging role of HRM in the
Indian context (Budhwar, 2001; Budhwar &
Boyne, 2004; Som, 2008; Venkata Ratnam,

Correspondence to: Ashok Som, Management Area, ESSEC Business School, Paris, Avenue Bernard Hirsch - B.P.
105, 95021 Cergy-Pontoise Cedex, France, Phone: 33 (0)1 34 43 30 73 / 3309 (O), Fax: 33 1 34 43 36 90,
E-mail: SOM@essec.edu.

Human Resource Management, May–June 2010, Vol. 49, No. 3, Pp. 549– 566
© 2010 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com).
DOI: 10.1002/hrm.20354
550 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
1998). This article analyzes a longitudinal
case of organizational redesign and the emerg-
ing role of HRM during this redesign of Adi-
tya Birla Group, the third largest diversified
business group in India, that grew from
US$1.5 billion in 1995 to US$7.59 billion in
2006 (see Figure 1).
Previous Research
Before looking at the case study findings, this
study began with a review of previous litera-
ture on case studies of different organizations
that reportedly understood HRM practices
and their redesign.
Describing findings from 11 longitudinal
case studies, Som (2006) elaborated on them
with the challenge of increasing competition
that has resulted from liberalization. Indian
organizations have adopted innovative HRM
practices both critically and constructively to
foster employee creativity and innovation. Som
described how Indian firms were adopting in-
novative HRM practices to brace for competi-
tion in the post-liberalization scenario.
A case study on the development of strate-
gic HR professionals at BAE Systems found
that BAE understood the demand for greater
HR contributions to its business value by pro-
viding a comprehensive HR professional de-
FIGURE 1. Growth story of Aditya Birla Group, 1999 to 2005
Source: Internal company documents, Mumbai, India.
velopment program that developed knowl-
edge (real capability), competence, HR
knowledge, management skills, organization
design, and development and consulting. This
was meant to enhance its HR professionals’
competencies to encourage better business
performance (Quinn & Brockbank, 2006).
A detailed case study of employee reten-
tion at Wal-Mart demonstrated that any cor-
poration, particularly a high-growth business,
needs to focus some attention on employee
retention. It pointed out that without mini-
mizing the importance of roles such as com-
pliance, diversity, compensation, and bene-
fits, if the basic exercise of getting, keeping,
and growing a company’s talent is done well,
the other HR functions will reflect this excel-
lence (Peterson, 2005).
In the case of Sysco Corporation, Cascio
(2005) reported that in the 1980s, a combina-
tion of economic and political factors led to
the demand for greater accountability in all
functional areas of business, including HR.
The massive restructuring of organizations in
the 1990s led to the outsourcing of many of
HR’s basic transactional functions. For HR to
add value to an organization, five key compe-
tencies are needed: common understanding
of the mission, clear expectations, compli-
ance, commitment, and capability.
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES
In a detailed longitudinal case study, Som
(2005) built a conceptual model of strategic
response through effective HRM policies and
practices within the framework of a liberal-
ized market environment. The article under-
stood this phenomenon from the contin-
gency perspective of an Indo-Japanese joint
venture, Maruti-Suzuki. Som (2005) found
several issues relating to organizational rede-
sign, effective corporate responses, profes-
sional and employee-oriented modes of man-
agement, and a hybrid model of Indo-Japanese
HRM interventions to be critical for effective-
ness in the Indian context.
In the case of Lafarge, Som (2003) described
the detailed process of redesigning and imple-
menting its HR function. The article argued
that a well-articulated and integrated approach
requires (1) recruitment, selection, and induc-
tion; (2) retraining and redeployment; (3) a
performance appraisal system; (4) a compensa-
tion and reward mechanism; and (5) rightsiz-
ing to be aligned with the organization’s over-
all business strategy. It also reinforced that the
foundation of a value-added HR function is a
business strategy that relies on people as a
source of competitive advantage.
All the above studies threw light on the
competencies required for the new model of
HR that had borne fruit in organizations. But
few of the studies tried to understand and
elaborate on two critical issues: (1) the pecu-
liarities and defining characteristics of HR
models that are unique to a particular coun-
try or environment and (2) the main factors
that shape people management policies and
practices within the context of a specific
macroenvironment. Also, though the previ-
ous articles have discussed and elaborated on
redesign of organizations and HR functions,
few argued that a turbulent environment ne-
cessitated that organizations develop new
capabilities and that the role of HR is to re-
evaluate its competencies and develop new
competencies to help in organizations’ over-
all strategic redesign.
Methodology
This study is exploratory. Following Yin
(1994) and Eisenhardt (1995), I found an em-
Human Resource Management DOI: 10.1002/hrm
AT ADITYA BIRLA GROUP 551
bedded case-study design suitable for this
study and deemed a broad, qualitative method
suitable to study the phenomenon of HRM,
utilizing multiple sources.
This paper reports the find-
ings of a longitudinal case study [F]ew of the studies
of the third largest Indian con-
glomerate, Aditya Birla Group. I tried to understand
chose this business group for anal-
and elaborate on
ysis specifically because it is suc-
cessful in terms of financial per- two critical issues:
formance (i.e., it was a leader
within the industries it operates, (1) the peculiarities
was growing at a steady rate, and
and defining
had been profitable within indus-
try standards), it has an excellent characteristics of
reputation in India for HRM, and
it was willing to participate in the HR models that
longitudinal study.
I collected data over a six-year are unique to a
period in two phases from Decem- particular country
ber 2000 to February 2001 and
from January to March 2006. I in- or environment
terviewed more than 11 top man-
agers (including directors, regional and (2) the main
president, executive vice president,
factors that shape
vice president, general managers,
and country heads) and four se- people management
nior and middle management ex-
ecutives, including HR executives, policies and
using a detailed, semistructured,
practices within the
open-ended interview format. On
average, each interview lasted 1.5 context of a specific
hours to 2 hours. I extensively
evaluated archival data, company macroenvironment.
documents, media reports, consul-
tant reports, and sector reports.
Introducing Aditya Birla Group
The roots of Aditya Birla Group can be traced
back to the 19th century, when Seth Shiv-
narain Birla began trading in cotton in the
picturesque town of Pilani in the Rajasthan
Desert. It was here that Seth Shiv Narayan
Birla started trading in cotton, laying the
foundation for the House of Birlas.
Through India’s arduous 1850s, the Birla
business expanded rapidly. In the early 20th
century, the Group’s founding father, Ghan-
shyamdas (G. D.) Birla, set up industries in
552 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
critical sectors such as textiles and fiber, alu-
minium, cement, and chemicals. As a close
confidante of Mahatma Gandhi, he played an
active role in the Indian freedom struggle. The
luminaries of the Indian freedom struggle
often met at Birla House in Delhi to plot the
downfall of the British Raj. G. D. Birla found
no contradiction in pursuing his business goals
with the dedication of a saint, emerging as one
of the foremost industrialists of preindepen-
dence India. His grandson, Aditya Vikram
Birla, the Group’s legendary leader, soaked up
the principles by which G. D. lived.
A formidable force in Indian industry, Mr.
Aditya Birla dreamed of setting up a global
business empire at age 24. He was the first to
put Indian business on the world map as far
back as 1969. In the then vibrant and free
market Southeast Asian countries,
he created world-class production
It institutionalized bases, setting up 19 companies
outside India in Thailand, Malay-
the rule of three—to
sia, Indonesia, the Philippines,
be within the top and Egypt. Interestingly, for Mr.
Aditya Birla, globalization meant
three players in the more than just geographic reach.
He believed that a business could
world or at least the
be global even while based in
region—in each of India. Back in his home territory,
he singlemindedly put together
its businesses. the building blocks to make his
Indian business a global force.
Under his stewardship, his com-
panies rose to be the world’s largest producer
of viscose staple fiber, the largest refiner of
palm oil, the third largest producer of insula-
tors, and the sixth largest producer of carbon
black. In India, the company attained the
status of the largest single producer of viscose
filament yarn, apart from being a producer of
cement, gray cement, and rayon grade pulp.
The Group was also the largest producer of
aluminium in the private sector, the lowest
first-cost producer in the world, and the only
producer of linen in India’s textile industry.
At the time of his untimely death from pros-
tate cancer in 1995 at age 52, the Group’s
revenues topped $1.5 billion globally; assets,
comprising 55 plants, were $1.5 billion; em-
ployees numbered 75,000; and there were
600,000 shareholders. Most important, his
companies had earned the people’s respect
and admiration as one of India’s finest
business houses. Through this outstanding
record of enterprise, he helped create enor-
mous wealth for the nation and respect for
Indian entrepreneurship in Southeast Asia. In
his time, his success was unmatched by any
other industrialist in India.
After the untimely death of Aditya Vi-
kram Birla in 1995, Kumar Mangalam Birla
(Mr. Birla) started shaping, reshaping, and
redesigning his companies relentlessly (see
Table I).
From its diverse portfolio of textiles, ce-
ment, tea, sponge iron, aluminum, fertilizers,
shipping, carbon black, palm oil refining,
chemicals, and a clutch of small businesses,
Mr. Birla decided to focus on cement, alumi-
num, viscose staple fiber, and carbon black,
which he regarded as value businesses, along
with knowledge sector industries such as tel-
ecom, software, insurance, and branded ap-
parel. The Group grew and consolidated its
portfolio through a spate of acquisitions and
greenfield projects. About 25% of the reve-
nues came from textiles, a highly regulated
and fragmented sector with margins as low as
8% to 10%. In cement, there were two sepa-
rately listed companies where lack of syner-
gies was adding to the costs. The Group had
no competencies in refining and had made a
half-hearted foray into it. Mr. Birla could not
grow the fertilizer business because it was
highly regulated, obstructing plans of expan-
sion. The high cross-holdings within the
Group and the unplanned diversification
that came from the opportunistic responses
of the license raj made capital allocation
highly complex. Within 10 years, he steered
the Group to an $8.3 billion conglomerate by
focusing on market leadership and size in its
chosen sectors. It institutionalized the rule of
three—to be within the top three players in
the world or at least the region—in each of its
businesses (see Table II). It considerably re-
duced its dependence on its fiber business.
Today, the Group is a dominant player in
all of the sectors in which it operates, which
include viscose staple fiber, nonferrous metals,
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES AT ADITYA BIRLA GROUP 553

TABLE I Vision, Mission, Value, and Strategy at Aditya Birla Group

Vision
To be a premium global conglomerate with a clear focus on each business.
Mission
To deliver superior value to our customers, shareholders, employees, and society at large.
Values
Integrity—We define integrity as honesty in every action. We shall act and take decisions in a man-
ner that these are fair, honest, and follow the highest standards of professionalism. Integrity shall be
the cornerstone for all our dealings, be it with our customers, our employees, suppliers, our part-
ners, shareholders, the communities we serve, or the government.
Commitment—On the foundation of integrity, we see commitment as doing whatever it takes to
deliver as promised. Each one of us shall take ownership for our own work, teams, and the part of
the organisation we are responsible for. Through this value, we shall build an even sharper results-
oriented culture that is high on reliability and accountability. Our commitment is likely to make us a
formidable leader and competitor in every market that we are in.
Passion—We define passion as a missionary zeal arising out of an emotional engagement with
work which inspires each one to give his or her best. All of us are expected to be enthusiastic in the
pursuit of our goals and objectives. We shall recruit and actively encourage employees with a “fire in
the belly.” With this value, we hope to build a culture of innovation and breakthrough thinking, lead-
ing to superior customer satisfaction and value creation.
Seamlessness—We understand seamlessness as thinking and working together across functional
silos, hierarchy levels, across business lines and geographies. Each one of us shall demonstrate high
level of teamwork through sharing and collaborative efforts and garner the synergy benefits from
working together. Before we can truly benefit from a borderless world, we need to build a borderless
organization. We visualize free flow of knowledge and information across the group. I am reminded
of the words of my father, the late Aditya Vikram Birla:

Our search for knowledge is not limited to within the group.

We seek knowledge from every nook and corner, from our competitors, suppliers, cus-
tomers et al.
Even the worst-run units in India would have something to teach us. It is with this humil-
ity that we seek knowledge.

Speed—One step ahead always. We look upon speed as responding to internal and external custom-
ers with a sense of urgency. We shall continuously seek to crash timelines and ensure expeditious
completion of our tasks. Through this value, we hope to build an agile and proactive organisation
that is prompt to respond to the present and future needs of our customers.
Strategy
• Achieve leadership and profitability in markets in five years’ time (rule of three) by acquisitions,
brown-field and greenfield expansion.
• Differentiate yourself in the marketplace and become the preferred provider.
• Develop the assets and capabilities to achieve the above.
• If these cannot be achieved, we will re-assess the business plans and re-route resources to more
deserving businesses.
Source: Internal company documents, Mumbai, India.

cement, viscose filament yarn, branded ap-
parel, carbon black, chemicals, fertilizers,
sponge iron, insulators, and financial services.
Under Mr. Birla’s leadership, the Group be-
came a world leader in viscose staple fiber,
and it also grew to become Asia’s largest inte-
grated aluminium producer and the fastest-
growing copper company in Asia. It is the11th
largest cement producer in the world and the
seventh largest in Asia, where it is also the

Human Resource Management DOI: 10.1002/hrm

554 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

TABLE II Aditya Birla Group in 2006

Company Sectors/Products Country Some Competitors
Grasim Viscose staple fiber (VSF), India VSF: Lenzing (Austria)
rayon grade pulp, cement, Textile: Gap, Arvind Mills
sponge iron, chemicals,
textiles
Ultratech Cement India Cement: ACC-Holcim,
• Shree Digvijay Cement Gujarat Ambuja, Lafarge
Cement India
• Tanfac (JV)
India
PT Elegant Textile Industry Fluorine chemicals Indonesia
PT Sunrise Bumi Textiles Yarn Indonesia
PT Indo Liberty Textiles Yarn Philippines
Indo Phil Textile Mills Yarn Philippines
Indo Phil Cotton Mills Yarn Philippines
Indo Phil Acrylic Mfg. Corp Yarn Indonesia
PT Indo Ray Kimia Yarn Thailand
Aditya Birla Chemicals (Thailand) Carbon disulfide, chlor Thailand
(four companies merged) alkali & ECH, epoxy,
polyphosphates, sulfites,
peroxides
Thai Peroxide Chemicals Co. Ltd. Refined palm oil, palm Malaysia
olein, stearin, and PFAD
Pan Century Edible Oils Fatty acids and glycerine Malaysia
Pan Century Oleochemicals VSF Thailand
Thai Rayon Spun and fancy yarn Thailand
Indo Thai Synthetics Fabrics Thailand
Century Textiles Acrylic fiber Thailand
Thai Acrylic Fibre Thailand
Hindalco Non-ferrous metals India NALCO (National
• Indian Aluminium Company Aluminium Company),
Aluminum and copper India
Ltd. (INDAL) Sterlite Industries
• Bihar Caustic & Chemicals Fluorine chemicals India
Birla Mineral Resources Pvt Ltd. Copper mines Australia International Players:
Alcoa, PusAl, Hydro, BHP,
Rio tinto, Dubal, Codelco,
Gmexico, Mitsubischi
Aditya Birla Nuvo Viscose filament yarn India International in Carbon
(VSY), carbon black, Black: Cabot, Degussa
insulators, garments, and
International in Acrylic
textiles
Fibre: Mitsubischi Rayon,
• Indian Rayon
Fertilizer, urea, seeds, Japan Exlan, AKSA (Tur-
pesticides key), MonteFibre (Italy)
• Indo Gulf
• Birla NGK Insulators (JV) Insulators National:
• Birla Sun Life Insurance (JV) Insurance
Gujarat Narmada Valley
• PSI Data Systems Information technology
Fertilizers, Gujarat State
• Transworks IT-enabled services—BPO
Fertilizers, Bayer Crop-
• Birla Global Finance
Science, E.I.D.-
Continued on next page

Human Resource Management DOI: 10.1002/hrm

 EMERGING HUMAN RESOURCE PRACTICES AT ADITYA BIRLA GROUP 555

TABLE II Aditya Birla Group in 2006 (Continued)

Company Sectors/Products Country Some Competitors
Financial services Canada Parry (India), Nagarjuna
Softwood/hardwood pulp Fertilizers, Colour-Chem,
(for VSF) Rallis India, IPCL, Marico
Industries
AV Cell Inc. VSF Indonesia Mangalore Refinery &
PT Indo Bharat Rayon Carbon black Petrochemicals Ltd,
Liaoning Birla Carbon Co. Ltd. Acrylic fibre China
ICI India Ltd
Alexandria Carbon Black Carbon black
Alexandria Fibre Egypt
Thai Carbon Black Egypt
Thailand
ESSEL Mining Iron ore mining, noble India Mainly state-Owned
ferro alloys, nitrogen gas, companies
wind power generation
Idea Cellular Telecom India Hutch, Bharti Telecom,
Reliance, BSNL
Source: Internal company documents, Mumbai, India.

fourth largest producer of carbon black. The
company is the world’s largest single-location
palm oil refinery and the world’s number one
in insulators, with its joint venture with NGK
Insulators of Japan. In India, it is a premier
branded garments player, has the most en-
ergy-efficient private-sector fertilizer plants,
and is the second-largest producer of viscose
filament yarn, the number two private-sector
insurance company, and the fourth-largest
asset management company. It has a market
cap of $12 billion, employs 72,000 from 20
different nationalities, and 30% of its revenue
comes from operations in Thailand, Indone-
sia, Malaysia, Philippines, Egypt, Canada,
Australia, and China.
Redesigning and Redefining the
Group
The Aditya Birla Group decided to sustain
and grow its business where it had clear
strength, a dominant presence, and a per-
formance track record. This was in line with
its vision of being a premium conglomerate
with a clear focus at each business level and
relentlessly pursuing value creation. This
intent necessitated constant restructuring
of the Group’s portfolio and redesigning
and consolidating the businesses. The logic
underpinning consolidation had been the
push for market leadership, economies of
scale, productivity gains, and operational
efficiencies, coalescing into value-added
growth.
In the past 10 years, the Group grew
through acquisition, unlike in the past,
when it achieved growth through green-
field projects. The growth imperative
focused on value addition in industries in
which the Group operated rather than on
expansion of assets in diverse industries.
When Mr. Kumar Mangalam Birla joined
the Group, he sold off some megaprojects
such as paper, sugar, and steel that the
Group had embarked upon. Earlier, the
overall portfolio was predominantly fiber-
based businesses that were being replaced
by nonferrous metals and cement. The
share of textiles had since dropped from a
quarter of the Group’s turnover to below
5%, while the share of metals and cement
had increased to 62%. The Group had
branched out into consumer products, ser-
vices, and telecom, while the family for-
tune was founded on commodities. The
Group consolidated each of its businesses.
In the words of Mr. Birla:

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556 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
We still have a very strong presence in the
commodities sector, and I am very com-
fortable with that. But I see our Group as a
conglomerate. I am quite happy being in-
volved in a variety of businesses, provided
I am sure that we can attain a dominant
position in those businesses. So you’ll find
us now in mutual funds, insurance, and
branded garments. In fact, we’re the mar-
ket leaders in the branded garment busi-
ness. The focus has been on placing larger
bets on fewer businesses. We have legiti-
mate reason to believe that as a Group we
can soon enter the Fortune 500 list.
The Birla Group redesigned its portfolio
(see Figure 2). Mr. Birla brought the cement
businesses under the Grasim umbrella,
acquired L&T cement and renamed it Ultrat-
ech, and completed the change by moving
copper from Indo Gulf to Hindalco. Mr. Birla
acquired Indal to consolidate the nonferrous
metal business. Further redefining the Group,
he undertook a three-way merger of Indian
Rayon, Birla Global Finance, and Indo Gulf
Fertilisers. The new entity, Aditya Birla Nuvo,
has been called a conglomerate within a con-
glomerate. This landmark redesign, valued at
more than $100 million, was one of the major
consolidations of its kind in India and a major
step in creating shareholder value. It created a
company that captured opportunities in the
FIGURE 2. Redesign timeline of Aditya Birla Group
Source: Internal Company Documents, Mumbai, India.
evolving Indian economy through focused
value businesses, such as carbon black, viscose
filament yarn, textiles, and fertilizers, and
driving high-growth businesses such as gar-
ments, Information Technology (IT) /IT en-
abled Services (ITeS), financial services (life
insurance, mutual funds), and telecom.
Emerging Human Resource
Initiatives and Activities
Creating an Identity
The redesign process started in 1996, a year
after the death of Mr. Aditya Birla, under Mr.
Kumar Mangalam Birla’s leadership. The
Group launched for the first time a corporate
identity that would serve as its logo—“Ad-
itya,” which means “the Rising Sun.” Dr.
Pragnya Ram, Group Executive President,
Corporate Communications, summarized:
At that time when the organization was
going through turmoil, the symbol of the
Rising Sun brought different parts of the
Group together, helped us as an organi-
zation to reenergize ourselves, cross the
bridge, and to get started on the path of
change. The Rising Sun in a strange way
brought a new optimism and served as a
rallying point for the organization. That
really, in a strategic way, was the first pos-
itive step for us in our process of change.
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES
Notwithstanding the Group logo, the
Aditya Birla Group, as an entity, was un-
known, although the name Aditya Birla was
much vaunted. There was no brand recogni-
tion, so it was a challenge to attract the
brightest and the best talent to work with
the Group. Aditya Birla Management Corpo-
ration Limited (ABMCL) was created to com-
bat that issue. The Corporate Cell at ABMCL
is the Group’s apex decision-making body,
and it provided the Group companies’ strate-
gic direction. Mr. Birla is the nonexecutive
chairman with eight directors representing
the major businesses and the HR function
acting as a business partner and involved in
the Group’s ROI (Ulrich & Smallwood,
2005).
ABMCL hosts Active Centres of Excel-
lence, and its job is to think like a company
and not like a Group. Its role is to integrate
and coordinate the Group’s activities—inte-
gration of people, systems, and fungibility—
as if a company mandated them to create an
integrated entity. Within this framework,
Business Review Councils review the busi-
nesses’ strategy as well as their operating
performance. Each Group company has a
board of independent directors who have
expertise in related areas of that Group’s busi-
nesses. The board, which is accountable to
the company and the shareholders, provides
strategic guidance and ensures performance
through effective monitoring. ABMCL’s role
was to assist Mr. Birla in making decisions.
The Group logo and the ABMCL gave
employees ownership with the brand rather
than the family; that, in turn, moved the
Group from a paternalistic to a professional
culture. The management model under Mr.
Aditya Birla was a decentralized structure in
which there was little synergistic contact be-
tween the different Group units. To overcome
this and establish an institutionalized sharing
of best practices, Mr. Birla started the Birla
Management Centre in 1989.
Through such forums and the interven-
tions of the chairman’s office, the Group ob-
tained the benefits of its collective strength.
Under Mr. Birla, the Group developed a pow-
erful corporate center that does not com-
mand and control but leverages its strength
Human Resource Management DOI: 10.1002/hrm
AT ADITYA BIRLA GROUP 557
and resources and facilitates innovation. It
has clearly defined the Group values and the
corporate policies and practices on HR, com-
munication, and world-class manufacturing
that all Group units need to follow. In this
Corporate Cell mode, HR has studied and
implemented best practices within the
Group.
Dr. Santrupt Misra, director of HR, ex-
plained:
A great admirer of Jack Welch, Mr. Birla
modelled the ABMCL along the lines of
GE Capital. The ABMCL is the central
nervous system of the Group,
which allowed for individual
Its role is to
businesses to function to their
optimum under their respec-
integrate and
tive managements, while lev-
eraging the expertise of the coordinate the
Corporate Cell. About 20 busi-
ness leaders and those with Group’s activities—
Group-wide responsibilities
integration of
are housed at the headquar-
ters; they report directly to the people, systems,
chairman. Not even his secre-
tary is allowed to get between and fungibility—as
him and them. He gives them
if a company
complete freedom to run their
businesses but also holds them mandated them to
accountable for their perform-
ance. He has his own anten- create an integrated
nae and picks rare moments
entity.
to assess people. If you pass
muster at those points, then
you have his trust forever.
Organizational Restructuring
With the Group identity and his team at
ABMCL in place, Mr. Birla started deconstruct-
ing and reconstructing businesses. Bharat K.
Singh, Director, Business Strategy, and Dev
Bhattacharya, Strategy, explained that during
the time of Mr. Aditya Birla, most of the busi-
nesses were small units or split into small
units because licenses (during the license raj)
were difficult to obtain. Growth was stunted
in every way possible and competition within
India was self-imposed. The first priority for
any license was employment generation and
558 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
managing more employment. In 1991, with
liberalization, markets opened up, business
paradigms were redefined, there were pres-
sures from shareholders, and the main ques-
tion was, How does the Group operate as a
Group and not as an amalgamation of loosely
knit companies? Transition is never easy for
any company. The initial transition phase was
more externally driven (because of market
forces, customers, and shareholders) as the
shareholders wanted a certain amount of clar-
ity and understandability. In the early 1990s,
the Group started transitioning to a profes-
sional organization for the sake of stakehold-
ers’ interest (mainly employees). It was pain-
ful, was compelling, and entailed
a learning process. At the begin-
To do away with
ning, financial markets did not
the babu culture so view the restructuring process
kindly, but restructuring contin-
prevalent at Birla ued with a focused business strat-
egy in the key business areas. The
companies, Mr. Birla Aditya Birla Group was a pioneer/
launched a 360- leader in changing the mind-set of
a large, diversified, family-owned
degree performance Group to a focused, professionally
managed conglomerate.
appraisal program The structure of the Group is
entirely divisional; it is unit based;
that allowed
that gives it high clarity but creates
managers to confusion and contradiction at the
top because there are 20 to 25 dif-
question even his ferent businesses. The governance
role of the Group with corporate
leadership style.
functions is at the conglomerate
level. Mr. Birla is responsible for
the corporate functions. This interplay of sup-
port/corporate function has been improved
with the new structure. There is more ac-
countability and responsibility at the business
head level, though people sometimes feel pro-
prietary but not necessarily entrepreneurial.
Figures 3A and 3B show in detail the organiza-
tional structure before and after redesign.
The businesses have been consolidated by
product structure and report to one business
head, rather than in the earlier structure, in
which similar businesses reported to different
business heads. The country head was done
away with, and the overseas operations were
structured by the different businesses. Mr. Birla
hand-picked the heads of the businesses and
the next level of direct reports. The unit
presidents have freedom to run their opera-
tions under the overall supervision of the
business heads. Mr. Birla only gets involved
monthly or quarterly and provides freedom
to make operational decisions. Certain other
processes like world-class manufacturing have
also been institutionalized so that the entire
Group focuses on preparing itself for external
competition and benchmarking itself with
the best in the world. To motivate people for
competition and to share their best practices,
systems like annual awards have been insti-
tuted in which the units showcase their
achievements and are publicly recognized for
their excellence.1
Cultural Heritage of Marwari Family
Businesses
In traditional Marwari business families in
India, scions are not expected to have a mind
of their own. Typically, they are expected to
continue family traditions and customs and
play the benefactor babu.2 It is very hierarchi-
cal, usually with no woman in the top eche-
lons, and has a prevalent control-and-com-
mand management style. To do away with
the babu culture so prevalent at Birla compa-
nies, Mr. Birla launched a 360-degree perfor-
mance appraisal program that allowed man-
agers to question even his leadership style.
Complacency at Aditya Birla Group is not
tolerated. No one doubts Mr. Birla’s ability to
expand his empire, even though concerns
remain about uncertainty related to line of
reporting and accountability. Despite the del-
egation of authority, people still prefer to
wait for Babu’s orders directly. Changing this
mind-set is Mr. Birla’s biggest challenge now.
His answer to the unprecedented chal-
lenges has been simple: He has assembled an
impressive group of professionals; he listens
to them and empowers and delegates, while
he himself scans the environment to antici-
pate changes. Implementing the HR policies
that were needed for the new business envi-
ronment, Mr. Birla let go 350 vice presidents
above age 60 in one day, something unheard
of in those days. Most of these people were
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES AT ADITYA BIRLA GROUP 559

A
Birla Management Center
Chairman: Kumar Mangalam Birla

Managing Director Directors

• Aluminium
• Textiles
• Carbon Black, HGI, Essel Mining,
MRPL & Malaysian Operations
• Viscose Staple Fibre
• Thai & Indonesian Operations
• Finance
• Power & Financial Services
• Chemicals & Rayon
Group Companies

Hindalco Indian Grasim Indo Gulf Thai Carbon Birla AT&T

Industries Rayon Industries Corporation Black Communications
Chemicals &
Rayon
Insulators
Carbon Black

B
Aditya Birla Management Corporation Ltd.
Chairman: Kumar Mangalam Birla

Board of Directors Corporate Cell

(Provides group-wide services and acts as
consultants to Group companies)
Technology, Strategy, & Services
Communications
Finance
Corporate HR
Information Technology
Legal
Management Audit
Corporate Affairs and Development
Safety, Health, & Environment
Strategy and Business Development
Management Services
World Class Manufacturing
Group Companies
Economics

Grasim Hindalco Aditya Birla Nuvo Idea International Joint

Ultratech Indal Indian Rayon Cellular Operations Ventures
Indo Gulf (etc)

FIGURE 3. (A) Organization structure of Aditya Birla Group, 1999. (B) Organization structure of Aditya Birla
Group, 2006.
Source: Internal company documents, Mumbai, India.

loyalists who had worked for Aditya Birla for
years, so the womb-to-tomb3 policy came to
an end. Along with Santrupt Misra, the HR
Director (hired from Levers in 1996), Birla
introduced a pathbreaking retirement policy
that saw 325 senior executives between the
ages of 62 and 65 step down after years of
service. Together, they then built a team by
hiring senior people from outside, a marked
departure from the past.
In Mr. Birla’s words:
When I took over as chairman, people in
the Group were about twice my age. I had

Human Resource Management DOI: 10.1002/hrm

560 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
great respect for them personally (a strong
100,000 workforce with an average age of
58), but I also felt the need for change.
The company was in mourning. At meet-
ings, seniors, who had worked with my
father, would frequently break down and
cry at the mention of his name. For me
this was traumatic. I felt that if people
never retired, then there was no
place for younger people to rise.
This was a change So it was important to institute a
retirement policy. I also felt that
in mind-set as it
the company should instil meri-
shifted the focus tocracy rather than compliance,
the so-called kith-and-kin policy.4
from day-to-day So, I instituted a policy that vet-
ted all applications from family
operational focus
members of existing employees.
to the concept of None of this made me very pop-
ular, but I thought it needed to
added value vis-à- be done and now, I think people
are much more accepting of the
vis cost of capital
policy. Also, I replaced the pratha
5
and risk associated system … with cash value added.
This was a change in mind-set as
with the business. it shifted the focus from day-to-
day operational focus to the con-
cept of added value vis-à-vis cost
of capital and risk associated with the
business, and it had substantial implica-
tions on communication and training
throughout the Group.
Management Style: Intellectual
Curiosity at the Top
Mr. Aditya Birla built a substantial part of the
Group, especially the overseas operations,
from scratch. He was involved in many of
these businesses from conception, formulat-
ing the strategy for them, implementing the
projects, and running them on a day-to-day
basis. His management style was very much
hands-on with respect to management and
operations. He motivated his workforce by
interacting with them and would review and
oversee the operations personally. Despite
his active involvement, he ran the business
in a decentralized style; business heads had
responsibility and authority for running the
business in their style. This resulted in differ-
ent businesses being run in different man-
agement styles. The earlier organizational
structure consisted of different unit heads
reporting to certain business heads based on
the growth emanating in a particular corpo-
rate entity or region. The Group had a life-
time employment policy; people rarely
moved from one business to another. Unifor-
mity across businesses was therefore never
possible because microcultures existed within
the Group. The level of delegation varied
widely, depending on an individual’s per-
sonal relationship with Mr. Birla. Though the
overall Group objectives had certain com-
mon themes, the Group was managed in a
decentralized fashion.
Under Mr. Birla, the size of the businesses
increased considerably, and the business en-
vironment changed. Since he delegated the
day-to-day operations to the business heads,
he only got involved in strategy formulation,
decisions impacting the long-term growth of
a business, large capital expenditures, and
HR-related matters. He institutionalized the
HR processes so that the Group’s senior-level
appointments and movements are done in
joint consultation with businesses and HR.
Common HR policies pertaining to such
things as recruitment, interunit movements,
job bands, compensation, and welfare have
been put in place to bring uniformity to the
Group’s work and culture.
As the Group redesigned itself from a
paternalistic, centralized, decision-making
system to a decentralized, consensus-based
process, it worked on making decisions in
Business Review Councils to have a seam-
less integration between and within busi-
nesses. Decision making in conglomerates
tends to be slower. But the new organiza-
tional design is expected to preempt any
such impediment, and empowerment and
speed of decision making will rival the
competitors’.
A. M. Naik, L&T’s “never-say-die” chair-
man and managing director, commented,
“Mr. Birla’s style, very simply put, is to win
over the person across the table with a lot of
patience. He just won’t give up. He is very
charming and friendly even in the thick of
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES
negotiations. He gets exactly what he wants
by actually winning you over.”
Summarizing, Mr. Birla reflected:
Compared to my management style, I
think my father was more hands on. My
style is much more to give people free-
dom to do their own thing. As long as
they deliver, I don’t like to get involved.
They should have the freedom to do
what they think necessary. I am available
if they need me and I will hold them ac-
countable, but I will not interfere need-
lessly. People used to say that when my
father phoned somebody, then that per-
son would stand up while answering the
phone. He was great at bilateral motiva-
tion and contact. My style is more group
oriented. I like motivating groups of peo-
ple. However, much as we have changed,
we continue to constantly reinvent our-
selves. We are not a family-run business.
Building Human Capital
The growth required the next push to be on
the people front. In 2002 the Group created
a management talent pool that identified
more than 200 managers as performers and
put them on a fast track. With the goal of
providing for systematic and structured pro-
cesses for career growth, the HR department
trained more than 100 managers as job ana-
lysts and another 100 as job evaluators. With
this evaluation, 5,000 jobs were evaluated,
resulting in the formation of 11 distinct job
bands. In addition to this, the HR Depart-
ment continued to enhance the quality and
the pace of the institutionalization of the
systems and processes that embraced the en-
tire life cycle of the employees’ engagement
with the organization. Several new initia-
tives were instituted to enhance employee
well-being, particularly in training, succes-
sion planning, health care, educating their
children, and other critical aspects that
would have a significant bearing on em-
ployee performance. Setting bigger chal-
lenges and giving incentives to achieve them
was the key to preparing the organization for
growth. Consistently, the Group contempo-
Human Resource Management DOI: 10.1002/hrm
AT ADITYA BIRLA GROUP 561
rized a talent pool through lateral inductions
across all levels. The HR department estab-
lished a Group Management Trainee Scheme
that helped recruit entry-level managers from
reputable business schools and academic in-
stitutions. To track employee satisfaction,
the Group institutionalized the process of
Organisational Health Survey, which is a
globally well-regarded tool (see Table III).
Dr. Santrupt Misra, director of HR and IT,
said:
We had to invest in capability develop-
ment. Some of us thought it was a waste.
But we had to prepare the Group for glo-
balization and to gain benefits from In-
dia’s economic liberalization. In some
ways, we changed everything little by
little. Later we changed [a] few things
completely but never thought
of changing the core of the
Our resources are
company, its values, the re-
spect for individuals that the
world class, and
company fosters, empowering
people, bringing in innova- in some sense, we
tion, and the emotional con-
nect that the employees have had to destroy some
with Aditya Birla. It symbol-
of the old cultural
ized that we as a Group were
committed to people invest- mind-set of a family
ment. Our resources are world
class, and in some sense, we organization.
had to destroy some of the
old cultural mind-set of a fam-
ily organization. We brought in internal
competition to rekindle outside competi-
tion. It enabled people to believe in the
system and process that we put in place,
and employees could see that they can
apply, without asking permission from
their boss or without personal requests.
It was open and transparent. It created
turmoil on one hand but signalled that
changes were going to happen. We pro-
moted teamwork, moving away from is-
lands of power centers, [and] participated
extensively in business school campus
activities and recruitment. HR was a stra-
tegic partner in this change process from
the very beginning. Our efforts had been
well received by the industry peers.
562 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

TABLE III HR Awards and Honors

• The Aditya Birla Group figures high in the Hewitt Associates ranking of the “Best Employers in
India.”
• Our Group has been ranked as one of the “Great Places to Work In” by Business World Growtalent
Magazine. The Group’s joint venture concern, Birla Sun Life Insurance Co. Ltd., was ranked ninth in
the same study.
• Thai Rayon Public Co. Ltd., our company in Thailand, is the fifth best employer (2005) in Thailand,
according to Hewitt.
• Thai Carbon Black and Indo Thai Synthetics, our overseas company, rated as best employers in
Thailand in 2003 by Hewitt.
• PT Elegant Textiles, yet another of our Group companies, ranked best employer in Indonesia and
fifth best employer in Asia in 2002 by Hewitt.
• Attrition rate of 1 percent for 2004–2005 is one of the lowest in the country.

Mr. Birla’s comment on the ingredients for current and future success
I believe our most important asset, one that is not reflected in any of our balance sheets—consti-
tutes our people. We endeavour to attract the best of talent, create an enabling environment, link our
rewards systems to performance. We recruit people with high levels of energy and enthusiasm.
Behind our Group’s considerable achievement lies the intellectual and emotional commitment that
our people bring to their work. Besides operational efficiency and project management skills, honed
under the most demanding and competitive conditions, it is the spirit of entrepreneurship and the
way that our people bond cohesively with the Group, which is at the core of our ongoing success.
I know it will continue to be the pivot for our future success.
Source: Internal company documents, Mumbai, India.

Humanistic Attitude to eke out a sustainable livelihood, em-

The Group inherently believed in the trustee-
ship concept of management and portrayed
itself as a value-based, caring corporate citi-
zen. A part of the Group’s profits are plowed
back into meaningful welfare-driven initia-
tives that make a qualitative difference in the
lives of marginalized people. These activities
were carried out under the aegis of the Aditya
Birla Centre for Community Initiatives and
Rural Development that Ms. Rajashree Birla
spearheads. For corporate citizen activities,
the Group has received prestigious national
and international awards. According to Ms.
Rajashree Birla:
For us in the Aditya Birla Group, Corpo-
rate Social Responsibility (CSR) is very
much a part of the overall business portfo-
lio. We work in around 3,700 villages and
reach out to approximately 5 million peo-
ple every year. Of these, more than 60%
live below the poverty line.… We have a
strong team of 250 people who work to
raise literacy levels, take health care to the
hut-step of the villagers, and train them
power women, provide basic amenities,
and espouse social reform. Our second
project is on a partnership with Habitat
for Humanity International—an interna-
tional NGO working in the areas of hous-
ing for the marginalized section of society.
The third community work is promoting
widow remarriages and dowryless mar-
riages. In 2005, more than 500 widows
have been remarried. Together with this,
we run 45 schools and 16 hospitals. We
annually spend about US$18 million.
Weaving the Future: The Emerging
Challenges
Over the last 10 years, the strategy of redesign-
ing the organization worked very well. During
that time, the Group pulled off a string of ac-
quisitions at home and abroad. The Group was
reasonably professionalized, with systems and
processes and a strong brand identity gaining
over the long-placed paradigm of loyalty over
competence. It geared itself to compete in a
global marketplace.

Human Resource Management DOI: 10.1002/hrm

 EMERGING HUMAN RESOURCE PRACTICES
With these events, the Group seemed
well positioned to selectively acquire busi-
nesses and technologies from Europe and the
United States, where companies were strug-
gling to cope with rising costs of manpower,
environmental cleanup, and overhead. Ac-
cording to Mr. Birla:
We can see a discernible shift in supply
chains to Asia, which present enormous
opportunities for us to consolidate our
hold on some of these industries, glo-
bally. We are now in the phase of re-
scaling, re-scoping, and re-designing the
supply chain integration to gain access
and growth in these markets. Being a
conglomerate, we seek global growth in
multiple businesses simultaneously, and
this leads to several management chal-
lenges. The complexities facing us today
are multifold: global competitive pres-
sures, changes in technology, changing
customer requirements, demanding in-
vestors, and businesses competing for re-
sources.
Collectively, the Group faced some chal-
lenges. The first challenge was developing a
global corporate mind-set within a family
owned business that had a history strongly
rooted in India. It was important to ask
whether the company wanted to be a true
multinational corporation (MNC) or just an
Indian company operating internationally.
Being a true-blue MNC was only partly
about geographic spread. It was more a
mind-set of leveraging resources seamlessly,
eager to build unique capabilities to tran-
scend the barriers of language and cultures
to create value. It was about being global in
attitude without letting go of the compa-
ny’s roots. The second challenge was to be
responsive to local cultures, on one hand,
while commanding brand equity abroad.
Without recognition it was difficult to ac-
cess talent—the key resource to making the
company global. The third challenge was
the respect of the values the Group epito-
mized. These values were a moral contract
between the employees and the organiza-
tion and went beyond business and eco-
Human Resource Management DOI: 10.1002/hrm
AT ADITYA BIRLA GROUP 563
nomic transactions. The fourth challenge
was the Group’s ability to morph commod-
ity businesses into customer-centric busi-
nesses—for example, from cement to ready-
mix concrete, from aluminum to foil. Going
downstream, closer to the consumer, might
be the only way to insulate commodities
from business cycles.
According to Debu Bhattacharya, man-
aging director, Hindalco, Aditya Birla Group
has four major challenges: (1) greenfield
and brownfield growth, (2) the ability to
adopt new cutting-edge technologies along
with developing appropriate bandwidth to
carry out a large number of proj-
ects in remote locations, (3) As India’s gross
funding, and, most important,
domestic product
(4) people. As India’s gross do-
mestic product (GDP) was grow- (GDP) was growing
ing at 8% to 9% a year, the main
challenge for any corporation in at 8% to 9% a
India was going to be to attract,
nurture, and retain the right year, the main
professionals, and, more impor- challenge for any
tant, to keep them motivated for
the right challenges. Indians had corporation in India
run businesses very successfully
both in India and in developed was going to be
economies. With easy adaptabil-
to attract, nurture,
ity that Indians had demon-
strated over the years, it will not and retain the right
be difficult for Indian compa-
nies to turn global. Indeed, the professionals, and,
Group’s experiences, as well as
more important, to
the recent acquisitions abroad
by Indian companies, justify this keep them motivated
confidence. According to Debu
Bhattacharya: for the right
challenges.
To be successful, there is a say-
ing—if you want to catch fish,
you have to get wet. As Indians we have
confidence in our abilities, we are clear
what we want to do, and we are commit-
ted in our endeavor to make this Group
a world-class company be it [an] MNC or
a Fortune 500 company.
Nurturing leaders is a challenge for most
emerging Indian MNCs. Leadership can be
nurtured if trust can be built with higher re-
564 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010
spect for verbal communication and tolerance
for genuine mistakes. Respect comes when
70% to 80% of the business decisions are
right. If there are no mistakes, it means there
was no decision taken. If everything is run by
set systems and processes, technically, this
will dampen entrepreneurship,
risk-taking ability, and speed in
The first implication decision making, which were the
original strength of the Birla
of the case study,
Group.
therefore, is that On nurturing future leaders,
Sanjeev Aga, Managing Director,
HR must design Aditya Birla Nuvo, explained:
and redesign We have to change orbits—be-
come top-notch and do things
effective methods
differently. Strategy, structure, sys-
to anticipate tems—these hygiene factors will
take us thus far but will also restrict
the needs of the us after a point. In the businesses
and times in which we operate,
current business
systems and processes cannot sub-
stitute [for] people capabilities. We
environment (though
want processes to be institutional-
they might be ized but not fossilized. We have to
facilitate and filter to attract and
difficult to implement retain talent. We are striving to be
a class act but are not yet there. We
and might hurt the
can extrapolate and grow, but to
organization’s core). be world-class, we have to change
orbits, not necessarily disruptively,
but it will certainly be a very con-
scious effort coming from the heart.
Lessons for Emerging HRM
Paradigms in the Indian Context
Clearly, the implications of the Aditya Birla
Group case study (and the experience of
other emerging MNCs) revolve around the
use of HRM as a strategic and innovative tool
aligned to the changing business dynamics of
the environment. Although a single, longitu-
dinal single case study, the present case study
might not be generalizable, but it holds a
number of potentially important lessons for
researchers and practitioners who are or will
be trying to understand the emerging HRM
practices in large business groups within the
Indian context.
Aditya Birla Group’s transformation and
successful redesign focus on consistency,
trust, and commitment toward the organiza-
tion’s people and HRM practices. The first
implication of the case study, therefore, is
that HR must design and redesign effective
methods to anticipate the needs of the cur-
rent business environment (though they
might be difficult to implement and might
hurt the organization’s core). In challenging,
liberalizing business environments like India,
the nature of HR itself demands that organi-
zations develop new capabilities and that the
role of HR is to reevaluate its competencies
and develop new ones to help in organiza-
tions’ overall strategic redesign.
The second implication of this study is to
develop top-management commitment, cre-
ate a shared identity, and translate this com-
mitment and identity through mission, vi-
sion, goals, and business strategy into
practices. At Aditya Birla Group, the impact
of the Rising Sun as a symbol brought the
different parts of the Group together and
helped reenergize it to cross the bridge and
get started on the path to change. The name
“Aditya Birla” made an emotional connec-
tion that was woven through the Group to
create an integrated whole. In a strange way,
the Rising Sun brought new optimism and
served as a rallying point for the organiza-
tion. That, in a strategic way, was the first
positive step to start the process of change.
The third implication focuses on the im-
portance of HR’s role as a business partner that
participates in the organization redesign. At
Aditya Birla Group, the HR Director sits on the
Board and on the Group’s apex committees.
The fourth implication reinforces the role
of HR in change management and explains
how and to what extent the HR practices can
be redesigned to create a meritocratic culture
that supports the change process and spear-
heads the change momentum. At Aditya Birla
Group, new HR initiatives were taken, all with
a clear focus on institutionalizing systems and
spawning leaders and entrepreneurs into the
very innards of the organization.
The fifth implication follows the need of
the organization to import new skill sets; at-
tract, nurture, and retain the right profession-
Human Resource Management DOI: 10.1002/hrm
 EMERGING HUMAN RESOURCE PRACTICES
als; and, more important, to keep them moti-
vated for the right challenges to transform
employees into a winning team. To use an
analogy from the game of cricket: A team
needs not only several good batsmen, but also
players who can take good catches, if it is to
remain a winning team. Aditya Birla Group
has redesigned itself from a very homogeneous
group of people with a striking similarity in
backgrounds to a more heterogeneous and di-
verse entity—and, in some ways, a melting pot
of culture—while retaining its distinct identity
but changing the organization’s genetic code.
The sixth implication is the emerging role
of HR in the organization’s corporate gover-
nance processes that nurtures openness and
transparency and puts a premium on integ-
rity. This fosters a high degree of ownership
and, consequently, entrepreneurship backed
by significant empowerment. Experimenta-
tion, risk taking, and innovation can then be
a manifestation that absorbs a global dimen-
sion and mind-set.
The seventh and final implication is the
role of HR in developing a humanistic and
corporate socially responsible organization
that gives back and improves the society.
Conclusion
This case study explained how an emerging
Indian MNC redesigned itself within a span
of 10 years through its HR function to keep
up with the accelerating pace of change in
the external and internal environments.
Within a hypercompetitive and turbulent
environment, HR itself demanded that the
organization develop new capabilities
aligned to the organization’s business strat-
egy. Within this framework, the role of HR is
to reevaluate its competencies and develop
new competencies that provide return on
intangibles (Ulrich & Smallwood, 2005).
Within this framework in the context of
India, this article elaborates on some of the
peculiarities and defining characteristics of
HR practices unique to India and some of
the main external and internal factors that
have shaped the attitudes, work systems,
and strategic and HR skills of Indian organi-
Human Resource Management DOI: 10.1002/hrm
AT ADITYA BIRLA GROUP 565
zations in the context of the liberalized
Indian environment.
Notes
1. Outstanding performance is recognized by confer-
ring aspirational awards such as the Aditya Birla
Awards, the Chairman’s Award for Lifetime Contribu-
tion, Exemplary Service, Outstanding Leader, Excep-
tional Contributor, Distinguished Achiever, andYoung
Professional. Awards like Anubhav—The Case-Study
Competition—and Rananiti, a mind-game for Man-
agement Warriors, heighten the sense of competi-
tion and organizational excellence. The Leadership
Development Centre, called Gyanodaya; E-learning
network; internal knowledge portal, called Adityadi-
sha; Management Journal, called Aditya; and the
in-house magazine, called Aditya Kiran, collectively
improve connectivity, communication, and team
spirit.
2. In babu culture, the head of the company is always
looked to for direction and decisions.
3. The womb-to-tomb policy meant that there was no
fixed retirement age. Loyalists of the family stayed on
with the company as many years as they could work
and be of help to the company (similar to the age-old
Japanese system). When they could not work any-
more, they would request the babu to guarantee their
children a job in the company.
4. The kith-and-kin policy meant guaranteed jobs for
family members in the Group. It happened that if one
son was very bright, he went to work for an MNC. The
other son, if he was not good enough for anywhere
else, was sent off to work for the Group.
5. The pratha system was a manual system suited for
relatively small production systems for determining
input costs such as plant capacity utilization, energy
consumption vis-à-vis daily cash profits as com-
pared to budgeted profits. G. D. Birla had developed
the system of accountability based on pratha, in
which each company in the Group had to draw up a
series of informed estimates of how much it would
cost to manufacture a particular volume of produc-
tion, sell it, and meet a profit target based on this
estimate. The amount of capital it takes to support
the manufacturing was also taken into account. On
the other hand, CVA was calculated as (gross cash
flow) minus [(Cost of Capital) minus (Gross Cash in-
vestment)] that led the Group to focus on profitabil-
ity, asset productivity, and growth.
566 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

ASHOK SOM is professor and associate dean of the Global MBA program at ESSEC Busi-
ness School. He is the founder of the India Research Centre at ESSEC. He received his
Ph.D. from the Indian Institute of Management, Ahmedabad; an MSc and MTech from the
Indian Institute of Technology, Kharagpur; and a bachelor’s degree from Presidency Col-
lege, Calcutta, India. Ashok’s three main research areas are in organization redesign, inno-
vative HRM, and creative industry innovations in Asia. His research has been published in
Human Resource Management, International Journal of Human Resource Management,
Asia Pacific Journal of Management, Thunderbird International Business Review, Euro-
pean Business Forum, to name a few. He is Adjunct Faculty at IIM Ahmedabad (India)
and Visiting Professor at GSB, Keio University (Tokyo); Tamkang University (Taiwan); and
AUT University (New Zealand). He was the winner of the EMFD Case Writing Competition
2008. He was nominated as one of the 2000 Outstanding Intellectuals of the 21st Century
in 2008–2009. He received the Pride of HR Profession Award awarded by the World HRD
Congress in February 2010. His book Organization-Redesign and Innovative HRM was pub-
lished by Oxford University Press (2008) and International Management: Managing the
Global Corporation was published by McGraw-Hill, UK (2009). He is a regular speaker at
international conferences and consults with European and Indian multinationals.

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Human Resource Management DOI: 10.1002/hrm