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HR Management in PSUs has Certainly Become Very Challenging Interview with V. C. Agrawal, Director (HR), IOCL

How do you spell ‘HR’?
Conventionally, ‘HR’ is still referred to as ‘Human Resource’ but the approach towards this resource has completely undergone a change over the last one-and-a-half decades. It has emerged as the most valuable and most sought-after resource and has been placed on a higher pedestal over other factors of production.

Human resource is no longer referred to as a numeric entity; it is referred more in terms of competitiveness and competencies. 

How do you see the impact of HR management on the growth of a company?
The employees of any organisation form the corner stone of success. The job of HR management is to extract the best out of the employees and simultaneously equip them with the best possible way so that they can give their best and contribute to the growth of the organisation.

In the past two decades, IndianOil has increased its refining capacity by about 109%, its pipelines capacity increased by a whopping 175%, and the growth in marketing activities was about 79%. We could achieve this fete with a reduction in manpower by about 10%.

In addition to increase in throughput, IndianOil had taken several steps during the past decade to diversify into both upstream and downstream activities, especially in the field of petrochemicals.

In petrochemicals, IndianOil has already captured 38% market share in Linear Alkyl Benzene (LAB, used in detergent manufacture) and the product has been exported to Indonesia, Turkey, Thailand, Vietnam, Norway and Oman. An integrated Paraxylene/Purified Terephthalic Acid (PX/PTA) plant for polyster intermediates is already in operation at Panipat, while a Naphtha Cracker with downstream polymer units is coming up at Panipat. Similarly IndianOil has made its presence felt in the Gas Business and also in oil exploration & production.

This has been achieved without any addition to manpower and by continuous interventions like business process reengineering, business unit restructuring, consolidation, decentralization, etc, which are an integral part of our progressive HR management practices.

What improvement do you suggest in the managerial activities in the future?
The managerial activities in future need to be in tune with time – this is the basic ingredient of success. The management has to be more cautious about the changes taking place in the business environment and continuously assess what impact these changes may have on the competitiveness of the organisation’s business. It has to continuously monitor the technological environment for adoption of new technologies. While sectoral competency and leadership will be important, the companies will have to look for both organic and inorganic growth opportunities.
In the emerging globalised scenario, there will be more of consolidation across the industry. Because economies of scale will matter more in facing the competition from global players who leverage heavily on their scale and size of operations. So what we are seeing in the airlines industry could soon be a reality for other industries also.

Do you think that there is a need for change of attitude of HR management?
As it is said, ‘Change is the only permanent thing in the world’, the HR concepts and practices also need to metamorphose with changing times, and, more importantly, the changing nature of business challenges. Over the last one-and-a-half decade, the Indian business scenario has undergone a rapid change.

The new business challenges outline a new agenda for HR management – an agenda focussing on championing competitiveness. HR management needs to focus more on the deliverables of their work rather than doing their work better. HR management needs to articulate its role in terms of value created. The following changes in the attitude of HR management, in my opinion, will be helpful for building organisational competitiveness:

Old Attitude   
New Realities
Anyone can do HR. HR activities are based on theory and research and HR professionals must master theory and research.

HR practices have evolved over time. HR professionals must see their current work as part of an evolutionary chain and explain their work with less jargon and more authority.
HR management deals with the soft-side of the business and hence not accountable. The impact of HR practices on business results can and must be measured. HR professionals must learn how to translate their work into financial performance.
HR focusses on cost, which must be controlled. HR practices must create value by increasing the intellectual capital. HR professionals must add value. Reducing cost is secondary.
HR’s job is to police policy and patrol the organisation’s health and happiness. HR function does not own compliance. The functional managers do. HR exists not only to make the employees happy, but committed also.
HR is HR Management’s job. HR work is as important to line managers as are finance, strategies and other business domains. HR professionals should join with managers in championing HR issues.

What kinds of HR policies are being adopted in your company?
IndianOil adopts a progressive HR policy – the theme for which is maximising employee engagement. An ‘engaged’ workforce helps improve business performance in terms of the company’s growth as well as customer satisfaction.

He/she understands what the business is trying to achieve and feels motivated to help make it happen.

Actions have also been initiated to positively discriminate the performers from non-performers in terms of compensation. We have implemented an e-
Performance Management System and on the basis of the scores obtained through this measurement system, a part of the performance- linked incentive is paid to individual officers. It has been a departure from the previous system of paying team-based incentive.

The policies have also been made simpler and people-friendly. To mention a few – the LTC rule has been simplified; the leave rules have been rationalised, earned leave that exceeds the ceiling level of 300 days gets automatically encashed now.

How is your work culture different from that of other oil PSUs?
The work culture in IndanOil is based on its core values of care, innovation, passion and trust. In our work culture, care stands for concern, empathy, understanding, cooperation and empowerment. Innovation implies creativity, ability to learn/unlearn, ability to adapt/absorb, ability to be flexible, ability to lead change. Passion signifies deep commitment, dedication, pride, inspiration, ownership, zeal and zest. Trust stands for delivered promises, reliability, dependability, integrity, truthfulness, transparency and honesty.

In terms of diversities, IndianOil’s scale of business operations is much bigger and wider compared to other oil sector PSUs. IndianOil has about 500 units spread across the length and breadth of the country, which are at least three times more that the number of locations other oil PSUs are handling. In terms of manpower also, IndianOil’s strength of 30,000 is only second to ONGC. The differences in work culture arise out of such diversities in operation.

Within the organisation also there are differences in work culture across divisions like Refineries, Pipelines and Marketing. Research & Development division would have a different work culture than that of rest of the divisions.

IndianOil has also merged its subsidiary, IBP Co. Ltd., which has been a 99-year-old company with its own work culture. Keeping in mind that most of the mergers have run through rough weather because of differences in the culture, IndianOil has been very cautious about it and is taking all precautions to see that the people from the merging entity do not feel alienated in the new set-up.

While IndianOil ventured overseas and set up in its offices in Sri Lanka and Mauritius, it took the route of ‘multi-domestic’ approach, as far as cultural integration is concerned. It never tried to impose its work culture inIndia in those two countries. In fact, a unique work culture gradually took shape there, which is a blend of IndianOil’s and the local work culture.

What factors may affect your HR policies in the future?

Like all the business entities, IndianOil is also facing new challenges such as:


Redefining value chain for business competitiveness

Protecting profitability through cost optimisation and growth

Building new capabilities, mastering new technologies

Attracting, retaining and measuring competence and intellectual capital

Business transformation and process re-engineering.

All the above factors may affect our HR policies in future. Besides, the future business strategies of the organisation, the structure of the organisation, the emerging systems, skill, the staff we are going to recruit and emerging style and culture of conducting business will decide our future HR policies.

Where Do IndianOil’s HR strategies stand today?

The HR management strategy in IndianOil has always been people-centric and it is this HR strategy that produced a considerable number of industry leaders not only in the oil & gas sector but for other industry segments also. The present HR strategies of IndianOil tend to achieve:

Positive discrimination in favour of performers

A higher employee engagement

Attract and retain the best talent available from the campuses and also from the open market

Continuous skills upgradation through structured training & development
Besides a holistic and comprehensive compensation package, IndianOil offers its members a challenging career across the full spectrum of the petroleum business through career path plan, job rotation, etc. By virtue of this, IndianOil has amassed a high quality knowledge-worker base in the industry, and is proud to have been providing talent to all new entrants in the business.

What is the Human Resources Management scenario in India, mainly in PSUs? Do you think that it is on the right track?
The human resources management scenario in India and also in PSUs has certainly become very challenging. We are facing challenges in attracting and retaining talent and also keeping our HR policies and practices in tune with the changing time.

The Indian economy is currently at an all time high. The services sector, led by IT and IT-enabled services, is on a hiring spree. The manufacturing sector has also bounced back and recruiting heavily for manning its expansion. The Indian education system, it seems, is yet to be fully geared to produce enough qualified manpower as per the need of the industry.

The average salary level in India for the same skills set has risen by about 15% over the last year and this is one of the highest in the world. The PSU salaries have not risen in line with the industry trend and particularly for the senior level officials, the differences are quite striking.

However, the overall scenario in IndianOil as far as the human resources management is concerned, is quite comfortable. Attrition rate last year had been about 2% in the executive cadre, which is in no way alarming if we compare with private sector and leading MNCs. However, the attrition rate is a little higher in the initial three to four years of joining the company, particularly among the campus recruits. Several of them take up assignments outside the petroleum industry. Very few, in fact, join petroleum MNCs and private players.

The attrition rate, though low currently, is certainly an area of concern, particularly when several petroleum MNCs and private sector players are entering the field in India. As the largest downstream major in the country, we are aware that IndianOil will be a major poaching ground. But we are initiating several interventions to keep this attrition rate under control.

IndianOil has also taken initiative towards ‘employer branding’ exercise to ramp up its image as a better career platform for attracting fresh talent. 

What are the major initiatives you have taken to improve an employee in IOCL?
The following major initiatives have been taken by IndianOil for improvement of employees:

Rewarding performance:
There was a felt need to differentiate and reward superior performance based on a set of well-defined performance measures. This was done to create a substantial individual performance orientation in the Performance Incentive Scheme across all grades since no other element of pay had a significant linkage with performance. As promotion opportunities are narrow in the higher grades, individual weightage was designed to motivate even those high performers who may not get the promotion opportunity despite of good performance.

Implementation of a robust performance management system:
Rewarding performance required a robust performance management system. There was also a need to rationalize the roles and establish job equivalence to sharpen the performance differentiation. It was achieved by implementation of e-PMS in IndianOil.

Measuring employee engagement:
IndianOil recently undertook an Employee Engagement Survey with professional help from International Management Institute, New Delhi, to gauge the job and career satisfaction levels of 11,000 strong employees in executive cadre of IndianOil.

The main objective of the survey was to assess the level of employee engagement and to identify the drivers of employee engagement. In the survey, the drivers like benefits, stakeholders, job content and co-worker were found to be well looked after across all the four divisions surveyed in IndianOil. A few other drivers were identified, which require some improvement.

Based on the findings of the survey, an action plan has been drawn up, which on implementation will definitely have a positive impact on areas like work-life balance, decision-making, HR alignment, etc.

Survey among new recruits:
In another initiative, I have also personally mailed a questionnaire to newly recruited employees to get an understanding of their aspirations and satisfaction level. On the basis of the feedback we have taken initiatives to improve the ‘on and off’ worksite facilities. Realising their need for improving the cash component in the total salary, a number of simplifications and improvements have been introduced in perquisites.

Creating a learning organisation:
In order to create a learning organisation and to facilitate the desire for young recruits to acquire higher qualifications, IndianOil has introduced a scheme for sponsoring its employees for part-time MBA at leading management institutes in the country.

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