Study of Change in HR

Policies at Maruti Suzuki Ltd

By

Rayagonda (pgp26332)

Gaurav Hans (pgp26342)

Neha Kumar (pgp26353)

Rohit D (Pgp26363)

Manjunath (pgp26373)

Vineet Singh (pgp26383)

Riku Sayuj (abm07023)

 MARUTI SUZUKI LTD -
TIME LINE OF EVENTS
• 1971 - A company called 'Maruti limited' was incorporated under Companies Act

• 1977 - Maruti limited' goes into liquidation.

• 1981 - The Indian Central government salvages Maruti limited and starts looking for an active collaborator,
Maruti Udyog Ltd was incorporated under the Indian Companies Act, 1956

• 1982 - License and Joint Venture Agreement(JVA) signed between Maruti Udyog Ltd. and SMC of Japan

• 1983 - Maruti 800, a 796 cc hatchback, India’s first affordable car, is released in the market, Production was
started under the JVA commences.

• 1987 - Liberalization of the economy opens new opportunities but also brings more competition

• 1992 - Suzuki increases its stake in Maruti to 50 percent, making the company a 50-50 JV with the Government
of India the other stake holder, turning Maruti into a non-government organization managed on the lines of
Japanese management practices.
Maruti Suzuki: Glimpse of Last
25 years
•Phase 1: 1983 SMC-24% Govt of India 76%
Market Dominance
Product Orientation
Trade Union Perspective
•Phase 2: 1995 SMC - 50%, Govt of India – 50%
Prod., M&S & Peoples Perspective
Emergence of Competition
Customer Orientation

•Phase 3: 2007; SMC - 54.2%; Listed on Stock Exchange

Intense Competition
Emphasis of Engineering Capability
Market Orientation & Talent perspective
 Change in Mission

• When Maruti commanded the largest market share, business focus was to “sell what we produce”.

"Fuel efficient vehicle with latest technology".

"Leader in domestic market and be among global players in the

overseas market".

"Creating customer delight and shareholders wealth".

‣ Focus on customer care has become a key element for Maruti.
‣ Increased service perspective
A Clash of Cultures...
 Common Problems
Work Culture
Classical Example of balanced mix of Indian & Japanese culture & management styles:
•disconnect between parent company culture and the local context
•Misunderstanding due to lack of sensitization of local social structure & cultural context
Compensation & Benefits
•Relatively low annual salary increase compared to indian context
•Job Security - People Orientation
•Relocation, No Increase, Salary Cuts,
Managing multi cultural teams
•Equal participation with ability of sensitive listening and inter personal relationships

 Example - Young recruits from India & China

 Changes in Organization
Manager Salaries - Manager salaries were increased but still not close to that of
private companies
 
Successor Planning - Indian PSUs give importance to qualification and seniority
for promotion. Japanese firms look for personal confidence and trust.
 
Liberalization of Economy - Maruti had to cater to changing customer demands
and this promoted decentralization of authority.
 
Delay in decision making - Any decision taken by board had to be approved by
the ministry. Senior management had very less technical expertise
 
Effective control of the company - SMC got control over day-to-day
management of the company
 
 Changes in Organization
Self sufficient - This change in policy meant that Maruti had to send
people to SMC for training every year

Surplus manpower - This was solved by voluntary retirement scheme

offering good amount of money.

New plants - They Pitched plants against each other to compete on

productivity and quality 

Shop Floor changes – Introduction Routing Process for new recruits

– Attrition came down dramatically

Service centre – mechanics - Customer service mechanics were

highly specialised. To increase parity and accounatbbility the
mechanics became genaralists.
 Infusion of Japanese Culture

• All the employees ate in the same canteen. They commuted in the same buses

• Maruti adopted the norm of wearing a uniform of the same color thus giving an identity

• Attendance increased to approximate to 94-95%

• The plant had an open office system and practiced on-the-job training, quality circles

• Kaizen activities, teamwork and job- rotation were undertaken

• Near-total transparency was introduced in the decision making process

• These practices were unheard of in other Indian organizations but they worked well in Maruti

• Transparent Recruitment & Selection process- Focused Induction Program – The objective of this
program is to facilitate smooth induction of the new employees
Organizational Chart
 Changes in Organizational Structure

The Company evolved a multi-tier management structure and the concept of paired leadership
model. At the same time, it was ensured that:

Control and implementation of Company's strategy is achieved effectively

Information regarding the Company's operations and financial performance are made available
adequately

Delegation of decision making with accountability is achieved

Benefits of new organization structure

• Improved clarity & focus on key management issues
• Harmonization leading to reduced compartmentalization
• Improved coordination across functions
• Improved speed in decision making
 The Marriage turns Sour - Problems & Rectification

•Post 1999, the market structure changed drastically. Just before this change, Maruti had
wasted two crucial years due to managerial conflicts

•After fall in market share they redesigned their strategies and through their parent company
Suzuki they learned a lot.

•The organizational restructuring cost was relatively inexpensive as Maruti had its strong
Japanese practices to fall back upon.

•The Suzuki culture has been a tremendous gain for Maruti for the last 25 years.
•It was a judicious mix in the JV relationship. The typical capabilities were with Suzuki
Japan, not with Maruti. Similarly, facets of marketing, sales and HR were with the locals.

•Contributions from both the partners were used to the optimum levels
To Sum up… Let us Get back to The UK Giant and the
“Owner of Moov”
 Conclusions & Recommendations

Conclusions
• HR issues should not be neglected while having any merger or acquisition because
Human resources are the real assets of any organization.
•Keep track of the Human issues in all the 3 phases of the M&A, so that no issue
remains unfocused
•Employee communications, retention of key employees and cultural integration are the
most important activities in the HR area for successful M&A integration
Recommendations
•Companies should put their best people in charge while implementing M&A
•HR department should be included in all decision making right from the start to the end
•Retaining your key personnel should be given priority