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Amara Raja Unlocked

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182 views33 pages

Amara Raja Unlocked

case study

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nida.khan
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© © All Rights Reserved
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This document is authorized for personal use only by Bipllab Roy, of Christ University till 28 August, 2025.

It shall not be reproduced or distributed without express written permission from Indian Institute of
Management, Ahmedabad.

IIMA/HRM0241

The Amara Raja Group (A): Building HRM Capabilities


On January 12, 2018, B. Jaikrishna, President, Group Human Resources (HR), of Amara Raja
Group (ARG), attended a meeting of its apex leadership body, the Amara Raja Corporate Council
(ARCC), to review the group’s progress towards achieving its “Vision 2025” targets. Two years
earlier, on December 20, 2015, the group’s founder and Chairman, Ramachandra Naidu Galla,
had unveiled his 10-year vision for the organisation at its 29th Foundation Day celebration. He
publicly stated that ARG was targeting a turnover of INR 600 billion and a workforce of 60,000
employees by 2025.

At the review meeting of the corporate council, Galla reiterated his aspiration to improve
employment generation and expand the group in line with the values articulated in the group’s
manifesto, “The Amara Raja WayTM”. Later, on his way out of the conference room, Galla signalled
to Jaikrishna that he wanted to meet him for a one-on-one chat. Jaikrishna had been working to
align the HR function with the objectives of the various business units and the larger Vision 2025
goals, but this had not been an easy task. Jaikrishna knew he would have to present Galla with a
well-thought out plan for making HR a valued strategic partner and enabler in ARG’s Vision 2025
journey.

Vision 2025

ARG’s “Vision 2025” was as follows:

Through the Amara Raja WayTM, we will be an INR 60,000 cr. [600 billion] Group,
redefining businesses to deliver high social impact, by anticipating future trends,
building preferred brands and leveraging talent and technology.1

Galla’s son Jayadev (Jay), the Vice Chairman of the group, said: “The six businesses run by the
group are highly poised for growth, given the strategic plans of these businesses and the talent
pool we have. The group will continue to grow and look forward to its 100th Foundation Day
celebrations.” He added: “ARG is all about its distinct values and culture, collectively
documented as ‘The Amara Raja Way’ TM, which took inspiration from my grandfather Paturi
Rajagopala Naidu. This value system has been a building block of the group since its inception.”

1 Turnover of INR 60,000 cr by 2025 – Amara Raja Group Chairman, Ramachandra Naidu Galla reveals {Translation].
(2015, December 21). Andhra Jyothi. Retrieved from http://epaper.andhrajyothy.com/805955/Andhra-
Pradesh/21.12.2015#page/6.

Prepared by Professor Biju Varkkey, Indian Institute of Management Ahmedabad and Ms. Farheen
Fathima Shaik, Fellow Programme in Management (OB & HRM), Indian Institute of Management
Tiruchirappalli.
Logistic support from Amara Raja Group for development of this case is acknowledged.
Cases of the Indian Institute of Management, Ahmedabad are prepared as a basis for classroom discussion.
They are not designed to present illustrations of either correct or incorrect handling of administrative
problems.
© 2019 by the Indian Institute of Management, Ahmedabad.
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Management, Ahmedabad.

2 of 33 IIMA/HRM0241

As part of its Vision 2025 journey (Exhibit 1b), ARG had decided on an intermediate target of INR
180 billion in turnover by March 2020. Within this five-year timeframe, ARG also planned to build
new capabilities across the group, enhance infrastructure across its plants and offices and create
an in-house management development centre. Foraying into new businesses such as the
healthcare sector, establishing a multi-specialty hospital in the city of Tirupathi by 2018 and
commencing international operations were also on the cards.

In 2015, the group’s annual turnover per employee was approximately INR 4.38 million. The goal
was to take this figure to INR 10 million by 2025 (Exhibit 1a). In order to achieve this stiff target,
Jaikrishna would have to revisit the group’s HR policies to develop an approach that would
support the changing strategies of each business. He said, “What has brought us here will not
take us there [to achieving Vision 2025].” (Exhibit 1b).

Galla had founded the Amara Raja Group as a family-owned enterprise, primarily to achieve the
twin objectives of rural development and non-migratory employment creation. Galla set up
Amara Raja Power Systems Limited (ARPSL) as the group’s first industrial enterprise. Later, he
established Amara Raja Batteries Ltd (ARBL), which became the group’s flagship company with
its “Amaron” brand. From the very beginning, ARG regarded its employees as important
stakeholders. Several of its earliest recruits continued to work at ARG, even after three decades
of growth and diversification. One 25-year veteran of the company said:

We are a family at ARG. We are always there for each other and we all know that
the company will take care of us. ARG is just like our mother, taking care of us like
its own child. Once you are a part of it, you do not feel like leaving. A new
employee is new only for a week, and then becomes a part of us.

Jaikrishna added:

In this organisation, you find almost everyone deeply involved in and attached to
their work. Often, during the shift transitions, we see one set of operators not only
ensuring that the work has been completed as required, but also cleaning their
work areas/machines in order to facilitate the handover to the next operator.

Though the founders were employee-focused and maintained personal relationships with many
of the staff, in reality, the formal human resource management (HRM) function and leadership at
ARG had lacked stability until Jaikrishna came on board as the group’s HR Head in 2005. Until
then, employees with a management background had handled the HR activities across the group
companies in addition to their primary job roles and responsibilities. Two HR heads, including
the consultant who initially helped ARG develop its people management processes, had laid
down the foundation for the HR function.

Jaikrishna recalled, “Though several group companies were functional for years, a formal HR
office had yet to be established at the corporate level. However, statutory welfare officers2 and
administrators were present at the plant level.” It was Jaikrishna who streamlined HR activities
across the organisation, creating separate HRM departments at the company and group

2The Factories Act. 1948, Section 49 requires all factories employing more than 500 workers to employ a welfare officer.
Qualifications, duties and service conditions of the welfare officer are prescribed by the state government.
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Management, Ahmedabad.

3 of 33 IIMA/HRM0241

(corporate) levels. He won the support of senior leaders and managers, including Jay and Galla,
for this transformation by focusing on the big picture and the idea of people being a strategic
asset for ARG. In 2015, Jaikrishna’s department had more than 59 professionally qualified
management level employees distributed across six group companies, the corporate office and an
independent HR shared services department. Galla was very appreciative of Jaikrishna’s
contribution, saying, “Some people adjust to the environment rather than bringing about a
change, and sometimes a strong personality like Jaikrishna can bring about the change.”

The Galla Family

Ramachandra N. Galla was born in 1938 in Petamitta village in Chittoor district, Andhra Pradesh.
His parents were farmers. He was the only one of his siblings to pursue higher education and
start a business instead of following in his parents’ footsteps. He earned a Bachelor’s degree in
Electrical Engineering from Sri Venkateshwara University, followed by a Master’s in Applied
Electronics from Roorkee University. He went on to pursue a Master’s degree in System Sciences
from Michigan State University (US). He started his career with the US Steel Corporation in
Pittsburgh, Pennsylvania as an electrical engineer, and spent 18 years working in power systems
at various nuclear and conventional source power generating stations across the US. Galla
recollected:

My family was observing what I was doing with some curiosity, because that is
not something they had wanted me to do or had guided me to do. However, I was
interested in it, and they gave me moral support. They were happy and
appreciated the fact that somebody from the family was doing something
different.

Galla married Aruna Kumari,3 the daughter of freedom fighter and parliamentarian P. Rajagopala
Naidu and Amaravathi. The couple had two children, Ramadevi Gourineni and Jay. After 18
years in Chicago, Galla returned to India in 1984 with his family to start a firm that would make
a social impact in his home state. He sold his house in Chicago, closed his bank account and
surrendered his US citizenship, leaving no room to reverse his decision. Galla recalled: “I was
well settled in Chicago, but I constantly thought of becoming an entrepreneur. My father-in-law
was my biggest inspiration in that decision.”

While in the US, Galla observed that industries typically were not set up in overcrowded cities or
congested places, but in sparsely populated areas. Over time, the industry contributed to the
development of the area. In India, on the other hand, industries were located near big cities and
metros, a decision often based on the industrialist’s convenience. He felt that all that an
industrialist was interested in “was to open an enterprise and reap the benefits”. He believed that
when industries were established in developed urban areas, they had to draw their workforce
from the people who already lived there or from migrants who had moved from villages to these
cities for employment.

3 Aruna Kumari (born 1944), earned a B.S. in Computer Science. She worked for Chrysler Corporation (USA) as a
computer programmer and the head of MIS in the sales division. On her return to India, she followed the footsteps of
her father and entered politics. She was a Minister for Geology and Mines in the Government of Andhra Pradesh and
the Member of Legislative Assembly for Chandragiri constituency in Chittor district in Andhra Pradesh.
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4 of 33 IIMA/HRM0241

Cities attracted migrants from rural areas for two major reasons: one, income from agriculture,
the main source of livelihoods in rural India, was seasonal and subject to the vagaries of nature;
and two, cities were perceived as offering a better quality of life. However, migration weakened
the workforce that supported agriculture, a highly labour-intensive activity. Galla was
uncomfortable with the existing model and firmly believed in creating a “non-migratory
employment” model. This thinking shaped the core purpose of ARG. Galla said, “I did not start
this business to make money. I am neither a businessman nor an industrialist. The initiative was
a rural development experiment to create avenues and access to opportunities, and through that,
enable the transformation of rural society.”

Galla initially wanted to establish the company at Rangampet, near the village of his birth.
However, in the 1980s, Rangampet lacked even the most basic infrastructure, leading Galla to
choose Karkambadi village in the same district as the site for his company. Karkambadi was
located near the famous temple town of Tirupathi, and consequently had relatively better
infrastructure and connectivity. It was also located midway between Bangalore and Chennai, the
two most important metro cities of South India, with access to a national highway. He named his
new firm Amara Raja.4

To reduce business risk, Galla wanted to enter an area where there were already some players; at
the same time, he wanted his company to be technologically advanced. After thinking through
various options, he decided his first company would be Amara Raja Power Systems. He said:

I wanted the technology available in India to move from today’s technology to


futuristic technology, of which uninterruptable power supply (UPS)5 was one such
product. The existing products were priced at nearly INR 100,000 for 1 KVA6 at
that time. The available UPSs were generations behind technologically.

Young people, both male and female, from neighbouring areas joined the new company. Its first
employee was M. Parthasarathi, who continued to serve the company for many years. He had
joined Amara Raja as a typist-cum-clerk and had helped Galla set up the office. Other early
employees included Galla’s personal driver Kumar, who was still with him, and Naren Reddy,
Amara Raja’s first experienced engineer and former employee of the Indian Space Research
Organisation (ISRO).

In February 1985, RNG ventured into manufacturing batteries in collaboration with US-based
Gould-National Batteries Technologies, which provided the technology for manufacturing valve
regulated lead acid (VRLA)7 batteries. With the introduction of superior quality batteries, the
new company, Amara Raja Batteries Limited, changed the face of the Indian market.8 ARBL

4 The words “amara” and “raja” translated to “eternal leader”. The name was also Galla’s mark of respect to his mentor
and father-in-law and mentor, Paturi Rajagopala Naidu, who had been deeply attached to his late wife Amaravathy.
5 Uninterruptable power supply/ uninterruptable power source (UPS) provides emergency power supply when the

input power source fails. UPS differs from an emergency power system or a generator since it provides near
instantaneous protection from power interruption.
6 A volt ampere is one unit used for representing apparent power in an electric circuit.

7 Valve regulated lead acid (VRLA) batteries are low-maintenance rechargeable batteries and do not require regular

addition of water to the cells.


8 During the 1980s, the telecom sector in India was in its early growth stage, and there was a need for transmission

towers in remote areas. Telecom exchanges required maintenance-free and environment-friendly batteries for easy
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5 of 33 IIMA/HRM0241

became the group’s flagship company and went on to launch its “Amaron” brand of
maintenance-free automotive batteries.

Jay joined ARG on December 9, 1991. He began his career at GNB Chicago, ARBL’s original
technology partner, where he worked in service operations, applied engineering and later in
international marketing and sales. Later, ARBL entered into a collaboration with Johnson
Controls, USA, a global industry leader serving a wide range of customers in more than 150
countries.9 In 1991, ARBL floated an initial public offering (IPO). This generated considerable
interest in the group. Jay recollected:

It was important for us to be known, not just to our employees but also to all our
stakeholders. We had to explain why we exist so that they could appreciate why
we were doing certain things and why we were doing these things in a certain
manner.

Mission, mantra, way of thinking, philosophy — call it whatever you want. Our
core purpose was to introduce all our stakeholders to the way we think and why
we exist!

The same year, ARG worked closely with an external consultant to develop its core purpose
statement. This exercise led to conceptualising and articulating the core purpose, mission and
philosophy of ARG, which was “to transform our increasing spheres of influence and to improve
the quality of life by building institutions that provide better access to better opportunities, (goods
and services)10 to more people … all the time.”

The Amara Raja Way TM

In 2006, the group decided to elaborate on its core purpose in terms of specific values. “The values
were expected to give a defined direction to all employees, in order to enable them to take
decisions, execute them and grow,” said Jay.

Galla, Jay and Jaikrishna decided to involve all business leaders and managers across various
levels in the effort to define ARG’s values and future path. They appointed an external consultant
to facilitate an exercise titled “Future Search Conference”. Through extensive deliberations
involving all the employees and other stakeholders, they identified the factors that had made
ARG successful thus far. The consensus was that by upholding those same values, ARG could
continue to be successful over the long term.

The company formalised its five core values as “The Amara Raja WayTM”. They were innovation,
excellence, entrepreneurship, experience and responsibility. Each value was represented by a
colour, element and state of mind (Exhibit 2a).

installation and operation. Amara Raja won the government contract to supply compact batteries with no gassing, acid
spillage, or maintenance even though they did not have a two-year working record, which was the government norm
for selecting batteries. This was the first breakthrough success for ARG.
9 In 2000, Exide, ARBL’s competitor, acquired GNB, ending the relationship between ARBL and GNB.

10 Goods and services was excluded from the core purpose in 2017.
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6 of 33 IIMA/HRM0241

ARG changed its logo in 2011 to incorporate all five colours in a swirling pattern that represented
a dynamic circle of unparalleled energy (Exhibit 2b). As part of the effort to institutionalise and
communicate “The Amara Raja Way”, every employee received uniforms (shirts and pants for
men, sarees/salwar-kameez for women) in the five colours. All employees, regardless of rank, level
and profile, were educated (“not trained,” according to Jaikrishna) about the values that the
colours represented within ARG. They could choose the colour they wanted to wear on a
particular day depending on which value they wanted to represent on that day. Everyone, from
leaders to factory workers, wore their uniforms both in the factory and on occasions when they
represented ARG externally. One worker stated:

Unless you ask a person his or her designation, you wouldn’t know. Everyone is
treated equally here. As workers, we feel dignified and respected. You know, even
our chairman wears the same uniform. I have previously worked in other
companies and I felt like a worker there, but here, I feel like a part of this company.

Every business unit and branch office displayed these values in their reception areas. All
employees participated in the annual Amara Raja Way acculturation programmes conducted
across the group (Exhibit 3).

Alignment of Culture and Values

“We are not an ordinary organisation: We are a professional, quality-oriented and employee-
driven organisation. There is responsibility and ownership in everyone,” Galla had written in the
book The Amara Raja Way, which was given as a part of the induction kit to every new employee.

Galla recalled:

Even when we started our first factory near Tirupathi, we wanted to create an
impact on both the business and society. We wanted our employees to know that
we treasured their well-being and were committed to creating positive
experiences. Over time, this attitude has seeped into the work culture at the
organisation and is demonstrated by caring deeply for all the stakeholders. We
want to constantly expand the horizons of the ‘best experiences’ we can offer.

The work culture of ARG was entwined with the five core values as follows:

Innovation

“Innovation to us is proactively rebelling for better ways of doing things leading to newer possibilities.”11

Out-of-the-box thinking was encouraged and valued, and this empowering environment often
generated new and creative solutions. A marketing executive related the following example:

It was this penchant for innovation that pushed us to bring in a different


dimension to our marketing communication. We created animated advertisements
targeted at end consumers using characters made out of clay, known as

11 The Amara Raja Way TM, p. 42.


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7 of 33 IIMA/HRM0241

claymation, at a time when battery advertising was directed at dealers and people
with technical knowledge. This innovation went on to win many awards and
accolades for Amaron. It is a challenge and privilege to be in a marketing team that
constantly strives to do something original. 12

b. Excellence

“Excellence to us is continually enhancing our performance to consistently produce outstanding results


with lasting impact.”13

“Excellence is not a matter of luxury or ‘extra’ favour or contribution to the customer but an ‘essential’ for
being ‘special’ in what we do.”

Irrespective of level, every employee was motivated to excel in their work and push the
boundaries. A senior leader gave the following example:

We were still a new set up then, and we had to pitch against the China team for a
collaboration with Johnson Controls. Our team was relatively less trained than our
competitor, and we had about a month to prepare. But the team was very
determined to learn what was needed so that we would be confident about our
pitch. The good news is that it worked, and we were able to collaborate with
Johnson Controls even though we were a very young business then.

Over the years, ARG bagged numerous awards for excellence, including “Most Promising
Company of the Year” in 2017 at the 12th CNBC TV18 India Business Leader Awards, “Most
Effective Recruitment, Engagement, & Innovation Retention Strategy” in 2017 from CII, the gold
prize at the International Convention on Quality Control Circles (ICQCC) competition held in
Manila, Philippines in 2017, and the “Professional Excellence” award from the Institute of
Chartered Accountants of India (ICAI) in 2016.

c. Entrepreneurship

“Entrepreneurship to us is leading with courage and conviction to convert gaps into opportunities, create
wealth and contribute to growth.”14

Entrepreneurship as a value had a special place at ARG as it required both courage and a risk-
taking mindset to convert an idea into reality. The Amara Raja Way stated, “If a shop floor worker
spots an opportunity and takes risk to implement an idea aimed at achieving high results, s/he
has demonstrated entrepreneurship similar to a higher level executive who develops a brand idea
or market opportunity.”15

All employees were encouraged to contribute at least one idea every month. All the ideas were
thoroughly vetted. Those that were selected were applied in the businesses, and the idea

12 Ibid, p. 47.
13 Ibid, p. 56.
14 Ibid, p. 72.

15 Ibid, p. 73.
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8 of 33 IIMA/HRM0241

generators were rewarded. A worker said, “All of us are encouraged to share ideas. We also
receive an award if our idea gets selected. We feel a part of this organisation as opposed to just
being operators.”

d. Experiences

“Experiences to us are what we create for our stakeholders which make them feel part of something special,
leading to endearing relationships.”16

ARG believed that experiences were created on a daily basis. Each employee, at the time of
joining, had to submit personal details such as their birthday and information on their children,
spouse, parents, etc. This information helped their managers connect with them at a personal
level. They celebrated employee birthdays with a gift and a greeting card. An absence of more
than two days was considered a critical incident, necessitating an enquiry into the employee’s
wellbeing. Their families were also extended the same care and concern through activities such
as family day, medical care, scholarships for children, etc. A worker associated with the company
for about 25 years said:

My father had a heart attack three years ago, and the company took care of the
medical expenses through the medical insurance scheme. It also granted me leave
though there was a critical project going on in my plant, and my absence might
have had repercussions on the project. I felt bad initially for being away from work
and later felt so good that the company ensured that I was with my family at that
time. We know that the company will be there for us when we need.

ARG’s employee compensation plan had been devised in a way that allowed employees to reap
its benefits in times of need. Another worker shared:

I have been here for ten years now. The company treats all of us with great respect
and there has never been an instance of discrimination. My family is extremely
happy, as the company has provided a company sponsored superannuation
scheme.17 Many friends working in similar roles in other companies do not have
this benefit.

Workers addressed Galla as “my chairman” and ARG as “our company”. The socialisation
(induction) process was designed to align new employees with the Amara Raja Way as quickly
as possible. M. R. Rajaram, the Company Secretary, remarked:

I have known about ARG for a long time, even before I joined in 2013. The
accessibility and the space that I get here, the way the leadership team listens to
your views, the freedom that we are entitled to and the level of trust are amazing.
I have worked with both professional as well as family owned semi-professional

16Ibid, p. 88.
17The superannuation scheme introduced in 1995 was similar to a pension scheme. Ideally, an employee contributed
about 7.5% of his total income towards his pension and the company contributed 15% of the employee’s income. When
introduced, the scheme was unique because of the contribution from both sides. The scheme covered all managers,
staff and workers.
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9 of 33 IIMA/HRM0241

groups. I worked for 13 years for another family company, but I did not have this
sort of environment, where one feels comfortable from day one.

Decision making at ARG was a process of brainstorming and constructive criticism rather than a
directive process. A senior marketing executive of ARG said:

We take a lot of time to make decisions, but once decisions are made, there is no
looking back. I think that is the weakness and strength of ARG. Everything is very
slow at the start, but after reaching a certain point, it spreads like a virus. Even
today, we cross-audit departments and factories. We are trying to examine what
is good and what is bad, and we exchange criticisms on every aspect.

He added that this approach extended to customer interactions:

Customers don’t always know what they really want. As they share their
expectations with us, we create value for them by challenging their thinking and
collaboratively developing solutions. That is one of our strengths. We also
anticipate the future needs of customers and enable the organisation internally to
adapt, meet and exceed customer needs.

ARG believed in helping each individual employee harness their potential. The immediate
supervisor was expected to work with an employee to enhance performance. If an employee was
still not performing despite various efforts, management explored the possible reasons for it and
made suitable interventions. Communication within the organisation followed an open door
policy, where even the top management team was always accessible. This created a feeling of
confidence and comfort among employees. An employee remarked:

There’s peace of mind and nobody gets victimised here. In other companies, if one
is working in sales and doesn’t meet targets on time, the employee is fired even if
the reason for not meeting the targets was external and not in his control. Here,
it’s not like that. All perspectives are considered before any tough decision is
taken.

Though ARG nurtured a culture of supporting internal talent growth, it was open to inducting
new talent from outside. Galla said: “We have to bring in new talent, new ideas and new concepts
to fulfill our growth ambitions. The new people coming in should also adapt to the culture.
Without imbibing ARG values, merely coming in and performing is not acceptable.”

e. Responsibility

“Responsibility to us is the total ownership of our thoughts and actions in every situation to achieve
maximum common good in the best interest of Environment, Society, Customer, Supplier, Employee and
Shareholders.”18

Acting responsibly was interpreted in terms of the ability of employees to have a positive impact
on society through their roles. Employees, regardless of their level in the hierarchy, were expected

18 The Amara Raja Way, p. 102.


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10 of 33 IIMA/HRM0241

to be responsible, not only in terms of their individual key performance indicators (KPIs), but also
in a broader sense, which meant (a) recognising that all roles were interdependent, (b) respecting
people with care and concern, (c) being sensitive to the needs of others, and (d) doing the task the
right way, every time —whatever may be the task at hand.19

Corporate Social Responsibility (CSR) at ARG

ARG’s core belief was to work towards a larger cause, beyond profits. The company, through
charitable trusts and the social service activities of family members, had supported projects with
a strong social impact in the areas of agriculture, education, skilling, rural infrastructure,
irrigation, ecology, environment and rural employment generation. All ARG group companies
donated 0.2% of sales or 2% of profits (whichever was higher) towards social causes. This was a
practice that ARG had followed even before CSR was mandated by law.20 Employees, as
individuals or in teams, were also involved in CSR activities on a voluntary basis.

The Amara Raja Group in 2017

In March 2017, ARG had a pan-India presence with around 13,000 permanent and 4,000 contract
employees spread across five manufacturing locations. The corporate office was in Hyderabad
with 23 branch offices across India. The average employee age at ARG was 31 years.
Approximately 75% of its employees were from rural backgrounds, and 75% of employees were
either skilled or semi-skilled workers.

ARG comprised of six business verticals (see Table 2) and reported annual consolidated growth
of approximately 12%. The ARCC, headed by Galla, took corporate-level decisions for the group
and also implemented them (Exhibit 4). Operationally, individual business heads (MDs/CEOs)
were fully empowered to run their respective business units. Yearly sales had crossed INR 52
billion in 2016-17. ARG hired approximately 2,000 new employees every year. The group HR
function measured the experiences and engagement levels of employees in the company; it
collected employee feedback and conducted the “AR Speak Employee Experiences Survey” every
year. The employee engagement level had risen consistently over time to reach 85.36% at the
group level in 2016 and 85.81% in 2017.

ARG had emphasised “insourcing” as an integral part of its business model. Galla believed that
this model offered better control across the value chain, yielded more opportunities and was also
cost-effective. As a result, the company implemented forward and backward integration for
manufacturing batteries, leading to the emergence of multiple new business lines, all of which
were part of ARG.

19 Ibid, p. 107
20 Amara Raja Batteries Ltd Annual Report 2016.
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11 of 33 IIMA/HRM0241

Table 2: Amara Raja Group Companies

Source: ARG company records.

Human Resource Management at Amara Raja Group: Evolution

As ARG grew, independent departments such as Finance, Marketing, Human Resources (HR),
Supply Chain etc., also evolved, both at the corporate and individual business levels. The HR
department passed through various phases of evolution to reach its current state. The
evolutionary timeline of the HR department could be broadly categorised into three phases: the
first spanning from its inception to 1994, the second from 1995 to 2004, and the third from 2005 to
2017. Now, Jaikrishna was preparing for the fourth phase of HR evolution to meet the Vision 2025
targets.

Phase I (Personnel Department): (1985-1994)

During this phase, the department responsible for dealing with employee matters was called the
Personnel Department. The Manager heading the department reported to Galla and had very few
employees reporting directly to him. Since ARBL was the largest business at that time, the
department mostly focused on issues related to the battery business; this was evident in the
manner in which the policies were designed at that point in time.

Functions of Personnel Department

Apart from recruiting a large number of employees from local areas, the department’s activities
included maintaining attendance and payroll (subsequently computerised using FoxPro21), and
performance appraisal, which was done manually using a simple format. The department also
handled training and development, albeit on a small scale through in-house training
programmes. On some occasions, if the situation demanded it, select employees received off-the-
job training at specialised training centres. The company had sent a few engineers and workmen
abroad to learn about the operations and technology of the machinery used at the plant.

21 FoxPro was a text-based database management system (DBMS) and object-oriented programming language.
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The department maintained personnel files of employees with their basic information as per the
statutory requirements. Salaries of employees were computed taking into account Provident
Fund (PF), Employee State Insurance (ESI), gratuity and other statutory norms. During the early
days of ARG, the group companies, particularly ARBL, saw the formation of trade unions with
internal leadership and due consent from the top leadership. They primarily participated in
workforce-related decision making.

Phase II (Formation of HRM Department): (1995–2004)

In one decade, ARG had expanded to three businesses, of which ARBL was the flagship business.
Many of the policies and formats that had been implemented at ARBL were adopted by the other
businesses. For instance, ARBL’s decision to obtain ISO certification resulted in framing and
documenting all the policies and procedures according to ISO specifications across all the group
businesses. The ISO initiative impacted the existing HR framework within ARBL, which saw the
introduction of new formats for training, employee development and compensation, making
them both evidence-based and structured. At about the same time, some of the group companies
were becoming vulnerable to influences from external trade union leaders. These factors, taken
together, led the business leaders of the individual group companies to voice the need for an
independent, internal HRM department suited to business specific requirements.

The top management realised that the existing Personnel Department needed to become more
“proactive” than “reactive”. In 1995, acknowledging the need for change, ARG hired the same
consultancy firm that had worked on its core purpose to help revamp and restructure the
Personnel Department.

Reginald Hood, an employee of the consultancy firm who worked very closely on the
restructuring exercise, later joined ARG as its first group HR head. His appointment as General
Manager—HR marked a major milestone towards structuring the HR department. ARBL, as the
flagship company with the maximum number of employees and a national sales and service
footprint, continued to wield the greatest influence on the HR department’s activities.

The second phase also saw the institutionalisation of new HR practices and changes in existing
ones, such as the adoption of the cost to company (CTC) salary model, refinement of training and
development activities, streamlining of the recruitment process and introduction of a
performance management system (PMS).

a. The concept of CTC

The introduction of the CTC concept, positioned as “market-linked compensation” was the most
significant change. It received a mixed response from employees, as it replaced the previous
“gross salary per month” compensation structure, which did not factor the expenses incurred by
the employer to fund the employee’s social security (PF, ESI/medical, etc.) and other expenses.
While gross salary per month was used as a yardstick for performance-related increases, CTC
gave employees the complete breakup of their compensation package, and they invariably
received less money in hand. This perceived reduction was primarily due to the deduction of
taxes at source (income and professional) and the employer’s contribution to social security (i.e.,
PF, medical insurance, superannuation, etc.). These deductions caused confusion and concern
among many employees. As a result, the HR department made additional efforts to communicate
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that the market-linked compensation concept was all about CTC, which included contributions
made by the company as well.

b. Training and Development (T&D)

The T&D function evolved significantly during Phase II. The HR department held multiple
discussions with various line managers to devise monthly training plans for employees. The line
managers nominated themselves and their team members for different training modules. Apart
from technical, operational and quality training, behavioural and soft skill training was also part
of the curriculum.

c. Recruitment

The recruitment process was also formalised and structured. Earlier, employees had been
recruited primarily through referrals. The idea behind this approach was to hire local talent, and
thereby reduce migration for employment. The company was able to meet the shop floor
workforce requirements at its factory locations locally. However, hiring technical and managerial
level talent from the local areas was a challenge. In the second phase, apart from recruiting
internally, the company also began external recruitment through newspaper advertisements to
meet the business needs.

d. Performance Management System (PMS)

In the initial years, Galla knew all the employees of the company personally. The founder family
resided within the factory complex, and all employees were free to visit their home. Thus, while
immediate superiors assessed employee performance, it was the Chairman who ultimately
decided everyone’s annual salary increments. If he needed additional information, Galla directly
contacted the concerned line managers. Irrespective of the ratings, all employees were awarded
at least one unit22 of annual increment. Those who received higher performance ratings received
two to three units as increments. However, given the growing employee numbers and business
lines, ARG had to adopt a more structured assessment system to evaluate employee performance.
This led to the development of the PMS, a structured and documented process with explicit KPIs
and KRAs (key result areas) for everyone, including workers.

e. The HR Function

This phase was marked by the centralisation of the HR department. The Personnel Department
came to be known as the “HR team”. When a separate corporate office was established, the GM
(HR) operated from Chennai, whereas the HR team was based at the Karkambadi plant
(Tirupathi) and continued to handle the recruitment processes and HR activities for other
locations. At about the same time, the finance department was also undergoing a transformation.
With the setting up of the corporate office in Chennai, a qualified Finance Manager was hired to
head the finance department. The role gradually evolved from Finance Manager to General
Manager (Finance) and then to Chief Finance Officer (CFO). Other functions also underwent
similar changes during this phase.

22 Fixed amount of increase in salary.


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R. Nanda served as the General Manager (HR) from August 2003 to 2005, following Hood’s
resignation. When Nanda moved on, D. Naren Reddy, who was the Vice President of Supply
Chain Management (SCM), was given the additional charge of HR. The PMS system was refined
during this period. KPIs and KRAs were categorised by employee level (i.e., manager [M], staff
[S] and worker/operator [W]).

Phase III: (2005–2017)

Sometime around December 2005, Jaikrishna joined ARG as its first Corporate HR head. He had
an undergraduate degree in Economics and a Master’s degree in Social Work, specialising in
Personnel Management, from the Madras School of Social Work, Madras University. Jaikrishna
started his career as a management trainee in 1990 and worked for 14 years at the Chennai-based
conglomerate, Murugappa Group, both at its plants and at the corporate offices of various
businesses. He resigned from the Murugappa Group as the HR Head of a business vertical. He
subsequently served as the General Manager, Corporate HR of the CK Birla Group before joining
ARG as the Group HR Head.

In 2005, ARG’s sales turnover was approximately INR 3,010 million. Jaikrishna inherited a three-
member HR team (at the management level) that was supported by clerical staff located across
the plants and the corporate office. He recalled, “The HR department was still reactive rather than
proactive, as it would cater to business needs only when approached. Even though the
restructuring exercise of the HR function was initiated during the second phase, it had not been
completely implemented.”

Jaikrishna felt this gap had to be plugged for the efficiency and impact of HR department to
improve. He said:

I realised that this gap was having a negative impact. There was a lot that could
be done to increase HR efficiency and effectiveness, but there was neither any
strong demand from the line departments to do anything, nor was any action
being taken by the departments themselves. So, at one of the business meetings, I
made a proposal to induct more professionals in the department to create a
proactive and efficient HR function. The proposal received a lukewarm response
and was eventually accepted with some reluctance. The Vice Chairman and
Chairman, however, were fully supportive of the idea, since they wanted the HR
department to make a difference.

He continued:

HR’s focus shifted towards making the business objectives work — helping the
businesses achieve their objectives and acting proactively. We think of the role HR
can play to make objectives achievable, rather than just do whatever business asks
us to do. That was a change of mindset
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The major changes introduced during the third phase include:

a. Technology Enabling the Performance Management System

Jaikrishna began efforts to “technologise” the PMS system. When he came on board, the
performance appraisal exercise was regularly delayed, with the current year’s appraisals
completed only in the following year. The process flow was stuck for want of inputs from both
the middle and top management. From the managers’ point of view, the activity was too time
consuming, and therefore a low priority item. The HR department’s efforts to move the process
along, following up with managers and even escalating the matter to Jay or Galla when required,
had met with limited success.

Jaikrishna gave high priority to performance appraisals, communicating the need to review and
reward subordinates on time. He implemented a technology-enabled appraisal system with a
real-time tracking facility. This transformed the PMS process. Employees could simply log in to
the system and perform their own appraisals along with their team’s appraisals. This initiative
made performance appraisal a more timely exercise and resulted in a change in the way HR was
perceived at ARG. Most of the HR initiatives introduced during this phase were inaugurated by
either Galla or Jay and hence met with greater acceptability and less resistance.

The online PMS system, developed internally by a cross-functional team from the IT and HR
departments, was named Amara Raja Electronic Performance Appraisal System (ARePAS). A
supplementary tool called Amara Raja Electronic Individual Performance Planning (AReIPP)
allowed employees to record individual performance measures; this was automatically
integrated with the PMS in real time.

b. Introduction of Variable Pay for Performance (VPP) in the Compensation Structure

Although variable pay existed in the compensation structure, it was limited to the senior
management (i.e., Band I, which included the grade of Deputy General Manager (DGM) and
above). In the absence of a strong PMS, compensation was not linked to performance.
Consequently, everyone received the variable pay with no variance and in full, irrespective of
their performance. This lack of differentiation had impacted the work culture. Jaikrishna believed
that linking compensation to performance would help sow the seeds of performance orientation
in the organisation.

c. Introduction of Balanced Score Card (BSC)

Along with the VPP scheme, the HR department also introduced the balanced score card (BSC)
and linked it with rewards. Individual company and functional BSCs were first introduced,
followed by VPP linked measurement and performance rewards for all grades under the
management band.

This move was intended to reduce the overemphasis on sales and production, both of which were
easily and directly measurable, in the prevailing performance measurement culture across the
group companies. BSC increased the emphasis on the performance of senior level managers in
other functions as well, as the final VPP was dependent on group, company and functional
performance. According to Jaikrishna:
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Most of the HR initiatives were deployed horizontally for all the businesses, and
only a few were implemented in phases. BSC was introduced across the board,
and leaders started drawing up balanced scorecards for each business. Then, over
time, the norm was to have a BSC to become eligible for the variable pay. HR
supported businesses with the required training and other tools.

d. Training and Development

As a general observation, the communication skills of employees were not at par with industry
standards, and businesses were concerned about the gap. Hence, the HR department conducted
a series of communication capability building programmes to support the businesses. Both
employees and managers appreciated this move. HR subsequently introduced other themes and
encouraged managers to benefit from the varied offerings. It created an intranet-based online
training calendar so that employees could nominate themselves for various programmes with
their supervisors’ approval rather than wait for the latter to do so. These activities evolved into a
full-fledged Organisation Development and Learning & Development (OD & L&D) function at
the corporate level, headed by a senior level HR professional.

e. Revision of HR Policies and Transparency

The group policies and procedures were published on the internal HR portal developed during
the third phase. It was integrated with the company intranet, so that all employees could access
it. Earlier, only the HR department had access to this information, and even the simplest policy
was listed as “confidential”. The statutory ESI23 scheme applied to eligible workers; for the benefit
of those not covered by the ESI scheme, HR introduced a group level medical insurance policy
and group accident policy. The group policies were intended to remove inconsistencies and
anomalies in the system and ensure the well-being of all employees. ARG also introduced a
Medical Health Insurance scheme that was unique in the industry. Normally in an organisation,
the insurance coverage was higher for senior management and lower for workers. However,
ARG’s policy was designed in such a manner that coverage was based on the age of the employee
and not their grade: a 50-year-old executive and a 50-year-old worker received the same insurance
coverage. Jaikrishna recalled, “People felt they were being taken care of. They were happy about
it. This helped in building the credibility of the HR department.”

Initially, the superannuation scheme was available only to those who worked with ARG until
their retirement. However, the policy was amended so that any employee with a tenure of at least
two years was eligible to receive the employer’s contribution to the fund. At first, employees were
hesitant to contribute towards the scheme believing that it would only benefit them if they stayed
with ARG until they retired. They eventually warmed up to the idea. A long-time employee of
the HR department said, “People started feeling that it was not the length of the tenure [that
mattered] but the value of the contribution one made. That was a big thing for employees.”

23 Employees’ State Insurance (ESI) is a social security and health insurance scheme for Indian workers, which is self-
financed.
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f. Positioning HR as a Collaborator

Business reviews were perceived to be more important than HR reviews, both at the factory and
corporate levels. The group businesses did not consider the HR department as worthy of being a
collaborator in business decision making. The leadership viewed HR as a supporter and executor
of their instructions and demands and its primary function as being the fulfilment of statutory
obligations. Thus, decisions made at the business leadership level never involved the HR
department. Jaikrishna’s efforts to highlight the strategic aspects of HR helped it become an
integral part of business decisions. His people strategy model was at the centre of this change.

g. Introduction of the ”People Strategy Model”

Jaikrishna introduced the “People Strategy Model” (Exhibit 5) across the group in 2007. His aim
was to help employees understand business objectives and motivate them to be drivers of
sustained performance. The model focused on key areas that needed to be strengthened to
achieve the larger business objectives, namely, employee engagement, employee development
and employee performance, and it gained wide acceptance. Jaikrishna said:

People were clear that they had business objectives to achieve, and that they had
to perform. The question was how? The model focused on an invigorating work
environment, high levels of engagement and employee development as a crucial
requirement for sustained performance. The model helped in creating an
understanding that involving employees in training, undertaking focused
development initiatives and motivating them will increase their engagement,
leading to improved performance.

h. Formation of Talent Acquisition Cell and Business HR

Corporate HR had been responsible for hiring at the managerial/executive level since the latter
part of Phase II. During Phase III, the department set up a dedicated team called the “Talent
Acquisition Cell” (TAC) to handle managerial/executive recruitments across ARG. They began
campus recruitment and set a single date of joining for all the new entrants, followed by an
induction and orientation programme, in which either Jay or Galla and other business heads
participated. Given ARG’s growth requirements, talent acquisition soon became the top priority.

To cater to the specific requirements of individual businesses, Jaikrishna created the role of
Business HR (BHR). A senior level HR professional, designated as the BHR, headed the HR
function of every business. Their role was to spearhead human resources activities for their
respective companies. BHRs followed a matrix reporting structure. Operationally, the BHR
reported to the Business Head/ CEO of their respective company but also had dotted line
reporting to the Group President. HR. Jaikrishna modeled the structure of the HR department on
the Dave Ulrich Human Resources Model.24

24 Ulrich, D., Brockbank, W., Yeung, A. K., & Lake, D. G. (1995). Human resource competencies: An empirical
assessment. Human Resource Management, 34(4), 473-495.
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Current HR Structure

The restructuring and repositioning of the HR department at ARG underwent multiple iterations,
culminating in the emergence of HR as a strategic and proactive function for the group. In the
new HR structure (Exhibit 6a), three groups reported to Jaikrishna: Business HR (BHR), Centres
of Expertise/ Change Agents (COEs), and Shared Services (HR and Administrative).

While the new structure decentralised the HR function and made it responsible for supporting
business requirements, Jaikrishna strongly felt the need for coordination between the group
office, HR functionaries and businesses. He did not want the coordination process to be too rigid,
since that would defeat the purpose of creating the new structure. He formed the HR Council
(HRC), a 10-member team consisting of the COE heads, shared services head, and the BHRs and
headed by Jaikrishna himself. The HRC followed the model of the “Knights of the Round Table”
from the legendary tales of King Arthur (Exhibit 6b), with the core belief that everyone at the
table was equal and had the same right to put forward their ideas, opinions and suggestions
irrespective of their designation.

The basic functions of the HRC were to diagnose strategic people requirements for organisational
growth and develop and champion the associated initiatives, monitor the implementation of
policies and performance of HR processes and teams, and undertake specific measures to enhance
service excellence and ensure high performance.

Role of Business HR

BHRs were responsible for all HR activities and initiatives at the business level. The BHR and
their HR team supported and collaborated with the head of their business unit (BU) as well as the
line managers to execute HR initiatives. According to one BHR, “Because of the design, it is now
possible to align HR goals with business objectives and group objectives. The disconnects have
reduced.”

During the monthly HRC meetings, council members would consider the highest priority issues
across the businesses, and collectively brainstorm before taking decisions. BHRs looked to the
HRC for inputs and carefully considered their proposals. At the same time, a few line managers
remarked that the response time of BHRs had not improved. The key roles and responsibilities of
BHRs are given in Exhibit 7.

Role of Centre of Expertise

The centre of expertise was a group resource, responsible for supporting individual businesses
as well as the corporate office. COEs had dedicated teams in the following areas.

• Talent Acquisition (TAC)


• Performance Management System (PMS) and Compensation and Benefits (C&B)
• Organisation Development and Learning and Development (OD & L&D);
• Amara Raja Skill Development Centre (ARSDC).
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a. Talent Acquisition

The Talent Acquisition Cell handled the recruitment function across the group. Prior to its
formation, each business did its own managerial/ executive level and leadership hiring.
Jaikrishna centralised this activity under TAC to improve both processes and quality. TAC’s
prime focus areas included workforce planning for the group and recruitment and induction of
new employees. BHR took over from there, building the functional teams in close collaboration
with the BU Head and the respective departmental heads.

TAC recruited both laterally and through fresh talent induction under a scheme called “Nava
Prathibha” (Exhibit 8). TAC launched an e-induction programme under its “Engage, Discover,
and Experience Amara Raja” (ENDEAR) initiative to institutionalise The Amara Raja Way TM, The
e-induction programme was a highly interactive process that helped new employees understand
the group, company profile, people, policies and CSR.

b. Performance Management System (PMS)

ARG’s performance management system utilised the balanced score card described earlier.
Performance appraisals for the different grades, i.e., manager (M), staff (S) and operator (W),
followed different criteria (Exhibit 9). However, “attitude” and “leader behaviours” were criteria
that applied to every level and had higher weightage than the KPIs. They were seen as reflecting
ARG’s core values and reinforcing The Amara Raja Way.

Performance evaluation was a multi-layered process. A Performance Review Committee


comprising of all the leaders within a business reviewed the scores. This collaborative process
ensured fairness in evaluation across all functions and minimised biases at the direct supervisor
level. The committee evaluated and measured employee performance according to the bell curve
method,25 which was linked to rewards. Compensation for S and M grade employees was based
on industry standards.

c. Organisation Development and Learning & Development (OD and L&D)

The OD and L&D team was responsible for institutionalising the Amara Raja Way, internal
communication, employee experiences survey (AR Speak), employer branding, HR excellence,
development and execution of L&D calendars and other HR developmental interventions.

ARG conducted an AR Speak survey every year, in which employees at any level in the company
could speak their minds within the given dimensions (Exhibit 10). The OD & L&D team noted
every grievance and suggestion and evaluated whether they merited implementation. This in
turn substantially improved employee engagement levels at ARG (Exhibit 11).

As a part of organisation development, employees were assigned to one of 16 houses or groups.


Every house had an equal representation of trainees, workers, staff, management, temporary
staff, plant and non-plant staff belonging to different age groups, grades and genders. Each house

25Bell curve is a forced ranking system of performance appraisal to identify the “best” and “worst” performers so
that they can be either nurtured or discarded. As this curve is modelled around the normal distribution, it is called a
bell curve.
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comprised of employees from different departments, functions and companies, ensuring a blend
of people from different hierarchical levels and businesses. The idea behind the house system was
to promote a feeling of “oneness” among employees by creating positive experiences and
nurturing a collaborative culture across the ARG family. Every house was expected to actively
participate in all organisational initiatives, contribute towards the institutionalisation of the ARG
culture, uphold the group’s values, help create platforms for members to exhibit talent, engage
all its members equally, and uphold the team spirit.

Other employee engagement activities included the formation of quality circles, six sigma teams,
safety committee teams, canteen committee teams, suggestion schemes and CSR projects. In
addition, ARG conducted an annual sports and cultural extravaganza during the foundation day
celebrations. The OD & L&D team maintained separate learning calendars for W, S and M cadre
employees. As part of its total quality management (TQM) and total performance management
(TPM) initiatives, the Amara Raja Learning and Development Calendar (ARLDC) integrated
employees’ needs based on performance appraisal results across all levels. Identifying training
needs and measuring training effectiveness were integrated into an online platform called T-
Gauge, featuring a competence map based system and Kirk Patrick’s five levels of effectiveness
measurement. OD & L&D also created a self-learning portal, AR Engage, in addition to the HR
Internet portal.

d. Amara Raja Skill Development Centre (ARSDC)

ARG launched the ARSDC in 2014 under its CSR wing, the Rajanna Trust, with the primary
motive of creating the group’s own skill bank for the long term. The centre, located at Petamitta,
in Chittoor district, provided technical training to school dropouts and rural youth who were
unable to pursue higher education and were in need of employment. The Dean of ARSDC, M.
Vishwanathan, said:

We have a state-of-the-art campus and laboratory facility for students here. We


don’t charge students for their education, food or accommodation. Our vision is
“skilling rural India to make in India”. The students have a 10th or 12th grade
education and undergo an 18-month course at the centre. They are then absorbed
in ARG and encouraged to pursue further education. We don’t look for short-term
returns from this initiative; it serves the vision of the group, which is the
transformation and development of society.

As part of the curriculum, students also underwent on-the-job training at ARG for six months
and received a monthly stipend. After completing the course, they were absorbed as full-time
employees. ARG offered employment to all ARSDC graduates, but they were free to seek
employment elsewhere. ARG also offered a training programme for graduates of industrial
training institutes (ITIs) under the Amara Raja Trainee Scheme (ARTS). The 18-month
programme provided trainee workers with on-the-job training five days a week, along with a
monthly stipend and canteen facilities; the sixth day of the week was dedicated to classroom
training. On completing the course, the trainee was absorbed as a full-time employee with salary
and benefits.
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HR and Administration / Shared Services

The independent shared services division comprised of the HR, Legal and General
Administration departments. The basic function of this group was to design, develop and
implement systems and processes to deliver personnel and infrastructural administration,
statutory, and legal services to all group companies. This group was also technologically
equipped to meet administrative and legal requirements. For instance, the attendance recording
and leave management system (AR ALMS) ensured discipline in recording attendance and
submitting reports, which were accurate and error-free. The e-HR help desk (Sahaya Kendra)
addressed employee grievances with proper tracking and accountability. The e-travel booking
facility supported travel arrangements based on employee convenience, and e-capex handled
documentation-intensive capital expenditure purchases. The Head of Shared Services was part
of the HRC. The division operated on a cost reimbursement basis; however, it had plans to offer
its services to external clients on a commercial basis in the future.

Awards and Recognition

The HR department participated in various competitions at the regional and national levels to
benchmark the company’s practices with the industry. This enabled ARG to refine its policies and
procedures in line with the best in the industry. In March 2010, ARG participated in an external
onsite assessment for the first time, after adopting the Confederation of Indian Industry Human
Resource (CII-HR) Excellence Model (Exhibit 12). In 2014-15, external assessors from CII awarded
a “Strong Commitment to HR Excellence” rating to some of the group companies. In fiscal 2015-
16, ARBL participated in an external assessment and received the second level “Significant
Achievement in HR Excellence” award. ARG had also received several other external awards and
recognitions, including “Best Employer of the Year” in 2015 from the Employer Branding
Institute.

Views of HRC Members on the State of HR

The HRC saw itself as an integral part of the group businesses and believed that the business
heads shared this view. The HRC was responsible for framing policies and ensuring their
standardised implementation across the group. Every business had an HR head (essentially an
HR business partner), and in every HRC meeting, they put forward the ideas and propositions of
their business heads for discussion. This enabled coordination throughout the group. However,
as Guna Shekhar from the corporate HR team and HRC member remarked, there were challenges:

There is a major conflict in coordination. The CEOs of the businesses don’t hold
the full authority and freedom to implement customised HR policies and
procedures for their respective businesses. The policies and procedures have to be
accepted as a group and are discussed thoroughly by the HRC. This can create
friction between them and HRC members, but it is important to keep the group
together. The approach has also helped ensure that the group policies are in line
with our culture. Today, based on the changing environment and business needs,
we have developed some policies in line with the thinking of individual CEOs and
their respective company’s BHR requirements. We need to determine how much
the policies have to be customised to individual businesses.
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The business heads and leadership team of ARG depended on HRC to support their decisions.
Across all businesses, the HR implications of business decisions were discussed with the
respective HR team. HRC members believed that the council had gained credibility with the
business leadership over time. Sekar Jeganathan, Head, OD and L&D, said:

This credibility has been created and enhanced over the years by various initiatives
and improvements that HRC implemented across the group. Whatever we
implement, we stick to the timelines.

As the credibility of HRC increased, it became an integral part of the decision-making framework.
The ARCC and Growth Committee (GROCOM) 26gave an ear to the views of the HRC on HR
issues impacting the group or individual companies. As Jaikrishna said: “As a team, they know
that HRC really contributes significant value for them in terms of opinions, ideas and thoughts.
But that does not mean that they are happy with the current state of HR.”

Views of Business CEOs about HR

In contrast to the HRC’s views, the business heads felt that there was a gap between HR and the
business requirements. They felt that the BHRs identified more strongly with their role as
members of the HRC than as part of their respective businesses. Venkataramana Prasad Alam,
CEO of Amara Raja Electronics Limited (AREL) said, “They see themselves more as HR agents in
business rather than BHR. They do work here [at the company site], but I think deep in their
minds, they feel that they are on deputation.”

He also felt that though the role of BHR was well articulated in the job description, it didn’t
always translate as clearly into practice. He said, “How do you ensure that it is followed in spirit
in a matrix organisation structure like ours?” He believed that under the current structure of HR,
all of HR was being “herded” in the direction decided by Jaikrishna. Alam noted that in balancing
task and process orientation, the HR department was on the “extreme left of process orientation,
which was very rigid.” He also questioned ARG’s performance appraisal system, which he saw
as having a negative effect on employees rather than acting as an enabler. According to Alam:

In what is called the performance management system — with forced ratings using
the bell curve — the employee feels as though he is being judged and believes he
needs to defend himself. I don’t agree with that platform. It is demotivating rather
than alleviating.

Alam also sensed that the interventions by HRC might not be percolating fully through the
system and questioned the enabling effect of the parts that did get through. He added:

I see some thrust on streamlining the organisation due to the processes they have
introduced, which inadvertently has created bureaucracy. In my opinion, this
happens because of having a process orientation and no business orientation to go
with it. The BHR by its nature is still not in a position to inform the Group HR

GROCOM is a group leadership team comprising of MDs, CEOs and group function heads of the Amara Raja
26

Group.
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23 of 33 IIMA/HRM0241

Head or CEO that something needs to be done specifically within a group


company.

Another senior manager said:

Many business heads and unit level leaders feel that the BHRs are not well
acquainted with the businesses. They feel that the BHRs are burdened with so
many HR administrative activities, that it is almost impossible for them to get
involved in understanding the core business they belong to. Sometimes we feel
that they say what Jaikrishna wants.

There was also a prevailing view that HR could do more to build the leadership capabilities of
employees, particularly the management cadre. Vijayanand, CEO of ARBL felt that the managers
at ARG were functional technicians, but the current environment required the creation of
business managers. He explained:

Business-oriented thought processes, together with a person’s functional expertise


as a manager with an engineering background or a supply chain head or a
marketing person, will shape the future. We should always be aware that
something might come up as an opportunity or challenge as we go along. To
handle the situation, we should be able to have a team that is capable of
understanding the larger implications. Individuals should be able to look at the
complete picture. They have to evolve to take risks. Now, I see the trend where
managers can get into a shell very quickly to protect their self-interest. This is
where real business and HR partnership is required.

Naren Reddy, who retired from ARG as Head of Group Quality, was one of the oldest employees
at ARG. He was an engineer by profession and had joined ARBL in 1985. Reddy shared
Vijayanand’s view that employees at ARG were technically sound but lacked “managing and
leading” capabilities.

He suspected that the major reason for ARG’s inability to attract skilled employees with
professional degrees in management was due to the remote rural location of its facilities, which
could not offer the amenities available in big cities. He said:

Even though new schooling and healthcare avenues have come up in these
locations, there is still a lot of catching up to do. Newcomers compare themselves
with their college friends in terms of location, salary, infrastructure and growth
opportunities … The challenge is finding employees who are good and also good
enough to promote themselves to higher positions requiring managerial skills.
Due to the locational limitations, we may end up with a mediocre workforce,
particularly in support functions.

In the context of training programmes, some business heads felt that there was a lack of alignment
between the functional/technical training given to employees and the actual needs of the
business. They wanted HR to respond swiftly to requirements, while HR felt that often short-
term business requirements took precedence over training. On the plus side, business heads
appreciated that initiatives such as continuous improvement (CI), T-Gauge, and PMS and other
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24 of 33 IIMA/HRM0241

changes had helped move the group in a positive direction; however, they felt that overall, there
was much more to be done.

Views of the Chairman and Vice Chairman

Jay took over as Managing Director of ARBL in 2003. By 2015, when Jay was named “The Best
CEO” by Business Today,27 he was wearing two hats. He was actively involved in the management
of ARG as its Vice Chairman and CEO, and he was also an elected member of parliament (MP) in
the 16th Indian Lok Sabha28 representing the Guntur29 constituency in the state of Andhra Pradesh.
His role as an MP had become an equally important endeavour for him. Managing dual careers
was proving to be taxing, and he was concerned about the future of ARG. Galla, who had
expected to take a back seat when Jay took over the reins of ARG, was now back in the saddle, in
spite of his advancing age. Galla was of the view that the HR department was an important
enabler for the group’s performance. He believed that people were at the core of an organisation
and were non-substitutable. He was open to investing in the development of people to enable the
group’s growth. His prime expectation from the HR department was to create performers who
could help achieve Vision 2025. He said:

We need quality people; the HR function and the manager who needs the talent
should work together and bring quality people to the organisation. Once we have
people, we then need to build them and sustain their performance. We strongly
believe in building people, and the only person I don’t want to hire is a lazy and a
non-passionate one. If a person doesn’t want to work, doesn’t want to do anything,
what will you do with him? There is nothing you can do. Every other person is
acceptable as long as their attitude is right, and they want to work. Certainly there
will be some who will learn faster than others, and we need to recognise that.
Otherwise they will fly away.”

Recalling the early days of the company, Jay said that Galla was personally involved with every
employee in the organisation, and that became a part of the ARG culture. “The chairman had a
hands-on approach with every employee. The group grew, and the need to incorporate scientific
understanding to manage people processes was recognised. This triggered a different orientation
in the group and led to The Amara Raja Way.”

He recalled this as a critical time in the company’s history. Change was necessary, but it had to
be done without affecting the group’s growth. He recalled, “We were changing while growing at
30% CAGR as a group. It was like changing parts of an automobile while the engine is still on. It
was only by making the change that we would sustain. Else, we would not grow.”

27 Jayadev Galla. Vice Chairman & Managing Director, Amara Raja Batteries Awarded the Best CEO Award. (2015,
December 21). Financial Express. Retrieved from http://www.financialexpress.com/industry/jayadev-galla-vice-
chairman-managing-director-amara-raja-batteries-awarded-the-best-ceo-award/181979/.
28 Lok Sabha is the “House of People” of India’s parliament. It is also called the Lower House, the Upper House being

the Rajya Sabha or the “Council of States”.


29 Guntur is a city in the state of Andhra Pradesh in southern India. It is a part of the Andhra Pradesh capital region

which forms a major industrial corridor in India.


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25 of 33 IIMA/HRM0241

Jay recalled that during the process of concretising the core purpose and values of ARG, terms
such as “trust” and “loyalty” had been redefined. This changed the way employees also perceived
ARG. Jay said:
Earlier, employees were considered trustworthy if they didn’t lie, cheat or show
disobedience, and they were considered loyal based on their tenure in the
organisation. But neither of these qualities were related to performance. The terms
had to be redefined. Loyalty was no longer defined by the tenure of the employee
in the organisation, but the intent with which a person performed till their last day
of working with the organisation. It was redefined as loyalty to the work.
Similarly, trust was redefined in terms of commitment. If an employee says that
she will do some work, one can trust that she will do it and deliver it in the said
time with the same quality. It is not the same as accountability, rather it is about
the belief that a person will do what they promise. This helped us immensely.
Jay believed that HR was one of the most important partners at ARG. He believed that there had
been a generational change at all levels and that ARG was in need of leaders to drive this change.
Jay, being sensitive to the changing industry, said:
ARG is primarily a manufacturing organisation, but the concept of manufacturing
is facing tremendous changes today. The use of new technologies, such as artificial
intelligence, 3D printing etc., will change the future of the workplace. And we need
to be prepared for such a change to sustain in the future. For that, we must enable
ourselves to attract and develop the required talent pool.
HR Alignment for Vision 2025
Jaikrishna was concerned about HR and its future at ARG. He had observed that even though the
BHR heads had made specific contributions to business, there was still gaps. He said:
The very purpose of this restructuring was to reduce transactional jobs and focus
on transformational and value-adding HR activities. The purpose was to make the
Business HR focused on the strategic requirements of the businesses. The shared
services were created to take care of the transactional part, and they are doing a
good job. But I think that, ultimately, the value from HR has to be felt strongly by
the business heads and line leaders. Are we still there?
The BHRs were still saddled with more activities that were transactional rather than strategic. “Is
HR booming in ARG?” was a question that loomed in his mind. Jaikrishna had concerns about
whether the BHRs were focusing enough on being strategic partners and effective business team
members, and he had shared these concerns with the HRC and the larger HR team.
The business heads often complained that the BHRs and their team members were rarely seen in
the field or on shop floors, interacting with customers. However, Jaikrishna was not the sort of
person to disrupt the hierarchy and tell them what should and should not be done. Believing as
he did in autonomy and the decentralisation of work, he felt that doing so would amount to
intrusion. He did try to push them, but he wondered how long he could or should continue to do
so. How could he motivate the HR team members to do strategic HR on their own? What was
holding them back? He was in a dilemma. He wanted to have answers to these questions before
his tête-à-tête with Galla.
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26 of 33 IIMA/HRM0241

Exhibit 1a: Financial Performance of Amara Raja Group (2013-17)


AMARA RAJA GROUP
Financial Performance (2013-2017)
(in millions)
AMARA RAJA BATTERIES LIMITED
Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 53,172 46,907 42,113 34,367 29,589
Profit before tax 7,022 7,222 6,099 5,367 4,218
Profit after tax 4,785 4,894 4,109 3,674 2,867
Head count 6,304 5,395 4,550 3,834 3,465

MANGAL INDUSTRIES LIMITED


Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 7,080 5,600 4,413 3,333 2,798
Profit before tax 610 593 311 273 128
Profit after tax 462 392 219 178 76
Head count 2,139 1,822 1,272 1,100 941

AMARA RAJA POWER SYSTEMS LIMITED


Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 3,084 2,040 1,615 1,321 1,135
Profit before tax 298 135 32 16 8
Profit after tax 199 91 20 14 3
Head count 366 325 318 303 312

AMARA RAJA ELECTRONICS LIMITED


Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 1,873 1,606 1,731 1,278 2,436
Profit before tax (54) (131) 5 (62) 168
Profit after tax (39) (89) 4 (42) 113
Head count 395 485 493 420 415

AMARA RAJA INFRA PRIVATE LIMITED


Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 3,491 2,918 2,503 1,765 1,224
Profit before tax 440 350 405 197 195
Profit after tax 270 224 263 132 130
Head count 237 216 191 164 133

AMARA RAJA INDUSTRIAL SERVICES PRIVATE LIMITED


Particulars FY 2017 FY 2016 FY 2015 FY 2014 FY 2013
Net revenue 480 239 141 87 63
Profit before tax 35 15 8 0.3 1
Profit after tax 26 10 5 0.2 (0)
Head count 812 668 555 492 466

Note: The head count provided does not include trainees recruited as part of the Amara Raja Trainee Scheme
Source: Internal records of ARG.
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27 of 33 IIMA/HRM0241

Exhibit 1b: Amara Raja Vision 2025

Source: Internal records of ARG.

Exhibit 2a: Values of Amara Raja


Core Value Colour and Significance Meaning and Rationale
Innovation Colour: Burgundy Innovation was an act of rebellion; to rebel
Element: Space proactively was to create better ways of doing
Mind State: Synthesising things, leading to new possibilities. To Galla,
“With synthesising mind, our the very act of locating the first ARG plant in a
innovation is as limitless as remote location like Karakambadi was one of
space…”30 rebellion, arising from a great sense of
responsibility. According to him, it was a
proactive rebellion and not a reactive one.31
Excellence Colour: Magenta Excellence was to continually enhance
Element: Wind performance to consistently produce
Mind State: Disciplined outstanding results with lasting impact.
“With disciplined mind our ARG had received several accolades and
Excellence lifts all our pursuits awards in various categories since its
like wind…”32 inception, which can be seen as evidence of
excellence in many aspects of the business.
.
Entrepreneurship Colour: Orange Entrepreneurship was to lead with courage
Element: Fire and conviction to convert gaps into
Mind State: Creative opportunities, create wealth and contribute to
growth.
“With creative mind, we ignite This belief informed all of Galla’s major
the spirit of entrepreneurship business decisions. For example, by setting up
that grows and spreads like plants in rural areas, he gave the local people
fire…”33 and resources an opportunity to gain value

30 The Amara Raja Way TM, p. 54.


31 Jay also intended to introduce a “Bill of Rights” for employees, which would give every employee the freedom to

question work-related aspects of health, safety, environment, etc., and the freedom to invent, change and improve.
32 The Amara Raja Way TM, p. 71.

33 Ibid, p. 87.
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28 of 33 IIMA/HRM0241

Core Value Colour and Significance Meaning and Rationale


through employment, utilisation or
development.34
Experiences Colour: Blue Experiences were important in making
Element: Water stakeholders feel that they were part of
Mind State: Spiritual something special, leading to enduring
“With a spiritual mind we touch relationships.
souls like serene water by Jay believed that the organisation had to make
creating experiences that are every effort to create positive experiences for
long lasting…”35 each of its customers and stakeholders.

Responsibility Colour: Green Responsibility was the bottom line. It was the
Element: Earth essence of ARG’s core purpose, be it
Mind State: Respectful and responsibility to the environment, people,
Ethical society, country or community; it was a
“With respectful and ethical measure of the impact of the organisation.
mind, like nurturing earth we
fulfill our responsibility to
achieve inclusive growth…”36
Source: The Amara Raja Way TM, internal publication.

Exhibit 2b: Values of Amara Raja

Source: Internal records of ARG.

34Jay believed that rural people were the most enterprising and possessed a native intelligence that was highly value
adding. He understood that risks had to be taken with the right intentions and that one could not be afraid of the
consequences. He also believed that an enterprise had to have an “empowered feeling”.
35 The Amara Raja Way TM, p. 101.
36 Ibid, p. 115.
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29 of 33 IIMA/HRM0241

Exhibit 3: Values of Amara Raja

S.No “LIVING THE ARWAY” PROGRAMMES Count


1 Internal trainers 144
2 Programmes conducted for staff and management grade 44
3 People covered in S&M grades 1180
4 Programmes conducted for operative grade 20
5 People covered 11512

S&M Operators
Year No of No of people No of No of people
Programmes covered Programmes covered
2015-2016 22 616 13 7922
2016-2017 6 214 0 0
2017-2018 10 228 0 0
2018-2019 6 122 7 3590
Grand
44 1180 20 11512
Total

Source: Internal records of ARG.

Exhibit 4: Amara Raja Corporate Council

Source: Internal records of ARG.


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30 of 33 IIMA/HRM0241

Exhibit 5: People Strategy Model

Source: Internal records of ARG.

Exhibit 6a: HR Structure at ARG (Phase III)

Source: Internal records of ARG.


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31 of 33 IIMA/HRM0241

Exhibit 6b: HRC Metaphor (Knights of the Round Table)

Source: Internal records of ARG.

Exhibit 7: Key Roles and Responsibilities of BHR at ARG

Key Roles and Responsibilities of Business HR


• Recruitment and Selection • Policy Implementation and Diagnostics
• Training & Development • Customer Audits
• Time Office • HR Process Enhancements
• Employee Relations & Discipline • Grievance Handling
• Performance Management System • Statutory Registers
• Management Systems • Working Conditions
• Business Specific HR MIS • Local PR
• HR & A Budgeting
Source: Internal records of ARG.

Exhibit 8: Nava Pratibha Scheme

Source: Internal records of ARG.


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32 of 33 IIMA/HRM0241

Exhibit 9: Performance Appraisal Criteria for All Three Grades

WORKMEN STAFF MANAGEMENT


1. Performance Planning 1. Performance Planning 1. Performance Planning
2. Team Objectives 2. Role Assessment 2. Role Assessment
3. Objectives & Targets 3. BSCs/Objectives & Targets
4. Shared Objectives
3. Attitudes 4. Attitudes 5. Attitudes
4. Leader Behaviours 5. Leader Behaviours 6. Leader Behaviours
5. Performance Counselling 6. Performance Counselling 7. Performance Counselling
Source: Internal records of ARG

Exhibit 10: AR Speak Dimensions

Source: Internal records of ARG.

Exhibit 11: AR Speak Engagement Levels

Source: Internal records of ARG.


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33 of 33 IIMA/HRM0241

Exhibit 12: Process Followed by ARG

Source: Internal records of ARG.

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