learning, values & beliefs

Submitted To: Submitted By: Ms. Manvinder Kaur Gurjeit Singh (Roll No. - 23)

Rajveer Kaur (Roll No. - 09)

MBA Ist Semester

Learning, Values & Beliefs


Learning

Introduction

Learning is one of the important processes determining the human behaviour. Learning is a key

process in human behaviour. It refers to a spectrum of changes that take place because of one’s

experience. Acquiring knowledge or developing the ability to perform new behaviors. It is common

to think of learning as something that takes place in school, but much of human learning occurs

outside the classroom, and people continue to learn throughout their lives.

If we want to explain and predict the behaviour, we need to understand how people learn. At the

time of birth, every human baby is equipped with the capacity to make a limited number of

responses. These responses occur reflexively whenever appropriate stimuli are present in the

environment. As the child grows and matures, s/he becomes capable of making diverse types of

responses. These include identifying the images of some persons as one’s mother, father, or

grandfather, using a spoon when eating food, and learning how to identify alphabets, to write, and

to combine them into words. S/he also observes others doing things in specific environmental

conditions, and imitates them. Learning names of objects such as book, orange, mango, cow, boy,

and girl, and retaining them is another important task. As one grows older, one observes many

events or objects, and learns their distinct features. Objects are categorised as ‘furniture’, ‘fruits’,

and so on. One also learns to drive a scooter or a car, to communicate with others effectively, and to

interact with others. It is all due to learning that a person becomes hard working or indolent,

socially knowledgeable, skilled, and professionally competent. Each individual manages her or his

life and solves all kinds of problems because of the capacity to learn and adapt.

P a g e | 1


Habituation, one of the simplest types of learning, is the tendency to become familiar with a

stimulus after repeated exposure to it. A common example of habituation occurs in the orienting

response, in which a person’s attention is captured by a loud or sudden stimulus.

For example, a person who moves to a house on a busy street may initially be distracted (an

orienting response) every time a loud vehicle drives by. After living in the house for some time,

however, the person will no longer be distracted by the street noise—the person becomes habituated

to it and the orienting response disappears.

Despite its simplicity, habituation is a very useful type of learning. Because our environments are

full of sights and sounds, we would waste a tremendous amount of time and energy if we paid

attention to every stimulus each time we encountered it. Habituation allows us to ignore repetitive,

unimportant stimuli. Habituation occurs in nearly all organisms, from human beings to animals with

very simple nervous systems. Even some one-celled organisms will habituate to a light, sound, or

chemical stimulus that is presented repeatedly.

Sensitization, another simple form of learning, is the increase that occurs in an organism’s

responsiveness to stimuli following an especially intense or irritating stimulus. For example, a sea

snail that receives a strong electric shock will afterward withdraw its gill more strongly than usual

in response to a simple touch. Depending on the intensity and duration of the original stimulus, the

period of increased responsiveness can last from several seconds to several days.

Thus, learning defined as “any relatively permanent change in behaviour or behavioural potential

produced by experience”. Changes due to practice and experience, which are relatively permanent,

are illustrative of learning.

P a g e | 2


Nature of Learning

Although, learning involves change, it may be good or bad from an

organizational point of view. People learn unfavourable and favourable behaviours i.e. to hold

prejudices. The change must be ingrained. Immediate changes may be only reflexive or a result of

fatigue may not represent learning. Suppose you are reading a book for sometime, a time comes

when you will feel tired. You stop reading. This is a behavioural change due to fatigue, and is

temporary. It is not learning. Some form of experience is necessary for learning, i.e. a child strikes

a matchstick on the side of a matchbox, and gets her/his fingers burnt. Such an experience makes

the child learn to be careful in handling the matchbox in future. Experience can acquired through

observation or practice, or indirectly, through reading. If this experience results in a relatively

permanent change in behaviour, we say that learning has taken place.

Theories of Learning

Describe the process by which we acquire different patterns of behaviour.

P a g e | 3

Learning

Classical Conditioning

Operant Conditioning

Social Learning


Classical Conditioning

It grew out of experiments to teach dogs to salivate in response to the ringing of a bell conducted in

early 1900s by Russian physiologist Ivan Pavlov. It states that—

Learning a conditioned response involves building up an association between a conditioned

stimulus and an unconditioned stimulus. When one stimuli compelling and the other one neutral

paired together, the neutral one becomes a conditioned stimulus and, takes on the properties of the

unconditioned stimulus.

A surgical procedure allowed Pavlov to measure the amount of saliva secreted by dog.

When he presented the dog a piece of meat, the dog salivated. When he withheld the presentation of

meat and merely rang a bell, the dog did not salivate. Then he proceeded to link the meat and the

ringing of the bell. After repeatedly hearing, the bell before getting the food the dog began to

salivate as soon as the bell rang. Later on dog learned to respond to salivate to the bell.

P a g e | 4


In Pavlov’s experiment, meat was an unconditioned stimulus that caused the dog to react in a

specific way. The reaction that took place whenever the unconditioned stimulus occurred called

unconditioned response. The bell was an artificial stimulus also called as conditioned stimulus.

Although it was originally neutral, after the bell paired with the meat, it eventually produced a

response when presented alone. Conditioned response was the behaviour of the dog that it salivated

in reaction to the bell.

Operant Conditioning

Operant conditioning is the work of B.F. Skinner. Skinner studied occurrence of voluntary

responses when an organism operates on the environment. He called them operants. Operants are

those behaviours or responses, emitted by animals and human beings voluntarily and are under their

control. Conditioning of operant behaviour is operant conditioning.

It argues that behaviour is a function of its consequences. It is likely to be repeated if the

consequences are favourable, or the opposite. The people will most likely engage in desired

behaviours if positively reinforced to do so, and the behaviour not rewarded or punished is not be

repeated. Operant conditioning is a learning in which behaviour learned, changed through its

consequences.

For an instance, assume your boss tells you that if you will work overtime during the next 3-week

busy season you’ll be compensated for it at your next performance appraisal. When performance

appraisal time comes, you find no positive reinforcement for your overtime. The next time your

boss asks you to do overtime, you’ll probably decline! If behaviour fails to be, positively reinforce

the probability that the behaviour will repeatedly declines.

P a g e | 5


Social Learning

Learning also takes place by observing others known as observational learning. Earlier this form of

learning called imitation. In many situations, individuals do not know how to behave. They observe

others and emulate their behaviour. This is also a form of learning is modeling. Watching models —

parents, teachers, peers, motion picture and television performers, bosses, and so forth. Albert

Bandura and his colleagues in a series of experimental studies found human beings learn social

behaviours through both observation and direct experience is social learning theory.

Albert Bandura, in one of his well-known experimental study, showed a film of five minutes

duration to children. The film shows that in a large room there are numerous toys including a large

sized ‘Bobo’ doll. Now a grown-up boy enters the room and looks around. The boy starts showing

aggressive behaviour towards the toys in general and the bobo doll in particular. He hits the doll,

throws it on the floor, kicking it and sitting on it. This film has three versions.

In one version, a group of children see the boy (model) being rewarded and praised by an adult for

being aggressive to the doll. In the second version, another group of children see the boy being

punished for his aggressive behaviour. In the third version, the third group of children are not

shown the boy being either rewarded or punished.

After viewing a specific version of the film all, the three groups of children were placed in an

experimental room in which similar toys were placed around. The children were allowed to play

with the toys. These groups were secretly observed and their behaviours noted. It was found that

those children who saw aggressive behaviour being rewarded were most aggressive; children who

had seen the aggressive model being punished were least aggressive. Thus, in social learning

observers acquire knowledge by observing the model’s behaviour, but performance is influenced by

model’s behaviour being rewarded or punished.

P a g e | 6


The influence of models is central to the social-learning viewpoint. Four processes been found to

determine the influence that a model will have on an individual:

1) Attentional processes — People learn from a model only when they recognize and pay

attention to its critical features. We tend to be most influenced by models that are attractive,

repeatedly available, important to us, or similar to us in our estimation.

2) Retention processes — A model’s influence depends on how well the individual

remembers the model’s action after the model is no longer readily available.

3) Motor reproduction processes — After a person has seen a new behaviour by

observing the model, the watching must be converted to doing. This process then demonstrates that

the individual can perform the modeled activities.

4) Reinforcement processes — Individuals are motivated to exhibit the modeled behaviour

if positive incentives or rewards are provided. Behaviours that are positively reinforced are given

more attention, learned better, and performed more often.

Learning through Reinforcement

Operant conditioning is a form of learning in which behaviour is learned,

maintained, or changed through its consequences. Such consequences, stimulus, or events are called

reinforcers, which increases the probability of the occurrence of a desired response. In simple word,

reinforcement refers to any process that strengthens a particular behavior—that is, increases the

chances that the behavior will occur again.

P a g e | 7


There are four basic types of reinforcements in organizations are:

positive reinforcement

negative reinforcement

extinction

punishment

Positive Reinforcement — is a reward for a desired behaviour. It must strengthen the probability

of repeating such behaviour in future. Positive reinforcements can be primary or secondary. Primary

reinforcers, which have direct beneficial consequences e.g. food, clothing and shelter. Secondary

reinforcers, which bring benefits but have different meaning for different individuals e.g.

promotion, recognition, and praise. The reward must match with the needs of the employee because

all individuals have different motivations for performance. The reward must be contingent upon the

type of performance. The timing of the reward, if it is administered soon after the desired behaviour

has occurred. The longer the delay in giving it, the less efficient a reward will be as positive

reinforcer.

Negative Reinforcement — takes place when individuals learn to avoid or escape from

unpleasant circumstances. It strengthens and increases behaviour by the termination or withdrawal

of an undesirable consequence. Under negative reinforcement, employee works hard to avoid or

escape from unpleasant consequences like reprimand from the boss. In work places, training, safety,

warnings, orientation sessions, and counseling help employees against negative consequences of

undesirable behaviour. For an instance, the manager may like his subordinates to come in formal

clothes to the work place and he may criticize individuals who dress informally or casually. To

avoid criticism, the employee may dress well to keep the manager happy. Thus, they are engaging

in desirable behaviour to avoid unpleasant consequences.

P a g e | 8

Encourage desirable behaviour by different approaches

Discourage undesirable behaviour through different approaches


Extinction — is maintaining behaviour. If rewards are withdrawn for behaviours that were

previously reinforced, the behaviour will probably become less frequent and eventually die out.

Simply ignoring the undesirable behaviour or desirable behaviour will become extinct if rewards

are stopped. For example, a college instructor, who wishes to discourage students from asking

questions in class can, eliminated this behaviour by ignoring those who raise their hands to ask

questions. Gradually hand rising will become extinct when it’s invariably met with an absence of

reinforcement.

Punishment — is anything that weakens behaviour and tends to decrease its subsequent

frequency. It is the most controversial method of behaviour modification and involves delivering an

unpleasant consequence contingent upon the occurrence of an undesirable behaviour. The

punishment process consists of application of an undesirable consequence or withdrawal of a

desirable consequence for an undesirable behaviour that has never been associated with the reward

before. Common forms of punishment are harsh criticism, withholding the pay, denying privileges,

demotion or taking away the freedom of the employee to do his job in his own way. The

management usually discourages application of any form of punishment and the positive

reinforcement techniques are preferred. For example, if an employee is reprimanded by his manager

for taking unauthorized work breaks, the behaviour may stop but only when the manager is around;

when the manager is not visible the breaks may occur once again.

P a g e | 9


Reinforcement Schedules

A reinforcement schedule is a rule that specifies the timing and frequency of reinforcers. Two types

of reinforcement schedules are continuous and partial.

Continuous reinforcement — reinforcing a desired behaviour each time it is demonstrated. For

example, in the case of someone who historically has had trouble arriving at work on time? Every

time he is not tardy, his manager might compliment him on his desirable behaviour.

Partial reinforcement — reinforcing a desired behaviour often, enough to make the behaviour

worth repeating but not, every time it is demonstrated. For example, people will continue to play on

slot machine even when they know it is adjusted to give a considerable return to the casino. The

intermitted payoffs occur just often enough to reinforce the behaviour of slipping in coins and

pulling the handle.

Partial reinforcement schedules are often more effective at strengthening behavior than continuous

reinforcement schedules, for two reasons. First, they usually produce more responding, at a faster

rate. Second, a behavior learned through a partial reinforcement schedule has greater resistance to

extinction—if the rewards for the behavior are discontinued, the behavior will persist for a longer

period of time before stopping. One reason extinction is slower after partial reinforcement is that the

learner has become accustomed to making responses without receiving a reinforcer each time.

There are four main types of partial reinforcement schedules:

1) fixed-ratio 3.) fixed-interval

2) variable-ratio 4.) variable-interval

Each produces a distinctly different pattern of behavior.

P a g e | 10


Fixed-ratio schedule, individuals receive a reinforcer each time they make a fixed number of

responses. For example, a factory worker may earn a certain amount of money for every 100 items

assembled. This type of schedule usually produces a stop-and-go pattern of responding: The

individual works steadily until receiving one reinforcer, then takes a break, then works steadily until

receiving another reinforcer, and so on.

Variable-ratio schedule, individuals must also make a number of responses before receiving a

reinforcer, but the number is variable and unpredictable. Slot machines, roulette wheels, and other

forms of gambling are examples of variable-ratio schedules. Behaviors reinforced on these

schedules tend to occur at a rapid, steady rate, with few pauses. Thus, many people will drop coins

into a slot machine repeatedly on the chance of winning the jackpot, which serves as the reinforcer.

Fixed-interval schedule, individuals receive reinforcement for their response only after a fixed

amount of time elapses. For example the clock-watching behavior of students during a class.

Students watch the clock only occasionally at the start of a class period, but they watch more and

more as the end of the period gets nearer.

Variable-interval schedules also require the passage of time before providing reinforcement,

but the amount of time is variable and unpredictable. Behavior on these schedules tends to be

steady, but slower than on ratio schedules. For example, a person trying to call someone whose

phone line is busy may redial every few minutes until the call gets through.

P a g e | 11


Values

Values are basic convictions that a specific mode of conduct or end-state of existence is personally

or socially preferable to an opposite or converse mode of conduct or end-state of existence. They

have content attribute that a mode of conduct or an end state of existence is important, intensity

attributes specifies how important it is, and judgement element that an individual’s ideas as to what

is right, good, or desirable.

A hierarchy based on a ranking of an individual’s values in terms of their intensity is value system.

A significant portion of our values we hold is established in our early childhood years — from

parents, teachers, friends, and others. For organisations they lay the foundation for understanding of

people’s attitudes and motivation and because they influence our perceptions.

Milton Rokeach a psychologist identifies two types of values and created the Rokeach Value

Survey. It consists of two sets of values. Terminal Values refers to desirable end-states. These are

the goals a person would like to achieve during his or her lifetime. The other is Instrumental Values

refers to preferable modes of behaviour, or means of achieving the terminal values.

The combination of terminal and

instrumental values an individual

has, create am enduring cluster

of values, which is his value

system. Our values and our value

system is the determinant of who

and what we are as an individual.

P a g e | 12


Case Studies

Case Incidence 1 —

The Flynn Effect

Given that a substantial amount of intellectual ability (up to 80%) in inherited, it might surprise you

to learn that intelligence test scores are rising. In fact, scores have risen so dramatically that today’s

great-grandparents seem mentally deficient by comparison.

First, let’s review the evidence for rising test scores. Then, we’ll review explanations for the results.

On an IQ scale where 100 is the average, scores have been rising about 3 points per decade,

meaning that if your grandparents scored 100, the average score for your generation would be

around 115. That’s pretty big difference — about a standard deviation — meaning that someone

who’s from your grandparent’s generation whose score was at the 84th percentile would only be

average 50th percentile by today’s norms.

James Flynn is a New Zealand researcher credited with first documenting the rising scores. He first

reported results in 1984, when he found that almost everyone who took a well-validated IQ test in

the 1970s did better than those who took it in the 1940s.

The results appear to hold up across cultures. Test scores are rising not only in the United States but

in most other countries in which the effect has been tested, too.

P a g e | 13


What explains the Flynn Effect? Researchers are not entirely sure, but some of the explanations

offered are:

1. Education. Students today are better educated than their ancestors are, and education leads

to higher test scores.

2. Smaller families. In 1900, the average couple had four children; today the number is less

than two. We know firstborns tend to have higher IQs than other children, probably because they

receive more attention than their later-born siblings do.

3. Test-taking savvy. Today’s children have been tested so often that they are test savvy. They

know how to take tests and how to do well on them.

4. Genes. Although smart couples tend to have fewer, not more, children, it’s possible that due

to better education, tracking and testing, those who do have the right genes are better able to exploit

those advantages. Some genetics researchers also have argue that if two people of different

intelligence mate, because the genes of the more intelligent mate is stronger, it wins out, meaning

the child’s IQ will be closer to the IQ of the smarter parents.

P a g e | 14


Questions & Answers:

Q) Do you believe people are really getting smarter? Why or Why not? Which of the factors

explaining the Flynn Effect do you buy?

Ans.) Yes, people are really getting smarter now a days. Technology is increasing the general

awareness of the population in every hamlet, village, town, and city. Many parents are now

aware of their children's holistic development of which they were deprived as children in

their times. This is due to exposure to different Medias. Present generation is getting better

education than their ancestors. Urbanisation and greater use of technology has increased the

intellectual level of the people than a century ago. Modernization and education have made

people more used to manipulating abstract concepts such as hypotheses. Now students are

test savvy, which helps them in giving better performance than their ancestors. Taking

regular “Test’s” does operant conditioning & learning through reinforcement. Count of

“less scorers” has reduced with better education practices. The number of smarter people has

increased over a time thus raising the overall average. People are not only getting ‘smarter’

they are developing specific cognitive skills. Better education and ‘Test hardened’ factors

explain the Flynn Effect. Other factors such as parents’ literacy, family structure, children's

nutrition, and health care explain that people are getting smarter than their ancestors were.

P a g e | 15



Professional Sports: Rewarding and Punishing the Same Behaviour

Baseball Commissioner Bud Selig has felt the heat for some time, and it’s not the kind a 90 mile per

hour fastball brings. When allegations of steroid use among some of Major League Baseball’s

biggest stars first surfaced, Selig argued that the league’s policy on steroids was “as good as any in

professional sports.” The policy? Random drug testing, with a 10-day suspension for first-time

offenders. Congress and the general public were not satisfied. So, Selig announced a tougher “three

strikes and you’re out” policy: A 50-game suspension for a first offense, a 100-game suspension for

a third. Players may incur fines as well. Other professional leagues have followed suit. The PGA

Tour even announced its own drug-testing policy, which began in the 2008 season.

But here’s the problem: The same system that punishes those who take performance-enhancing

drugs may also reinforce such behaviour. And, the current repercussions for players may not serve

as a strong deterrent. A fine of $10000 or a 10-day suspension may be a relatively minor setback

compared to the millions that can be earned for becoming an all-star power hitter.

Take Rafael Palmerio as an example. He tested positive for steroids. Though Palmerio insists he

took them inadvertently, the type found in his system (stanozolol) is not the kind found in dietary

supplements. His punishment? Palmeiro received a 10-day suspension and forfeited $167,000 of his

$3 million salary, and a banner celebrating his 3,00th hit was removed from Camden Yards.

Now consider all-time home-run king Barry Bonds. Bonds has set records, and made millions, by

hitting many home runs. Although there are widespread and detailed reports that he has taken

performance-enhancing drugs (particularly between 1998 and 2003, when federal agents raided the

company that was allegedly supplying him), the allegations have never been enough to get him

P a g e | 16


banned from baseball. His fame and fortune continue. Ant the rewards of hitting home runs are not

limited to the players. Revenues increased game attendance and sports merchandise, as well as a

team’s rising popularity and success, are incentives for players to perform at high levels and for

owners to reward them.

In the NFL, the situation is not much different. For example, Oakland Raiders safety Jarrod Copper

tested positive for steroids before the 2007-2008 season. His penalty? Suspension from the

preseason games and the first four regular-season games. Although a four-game suspension can

mean a large loss of income (the average NFL salary tops $1 million), such punishment still may

not prevent steroid use because the money that can be made from endorsements and winning games

can far exceed players salaries.

It appears that professional sports may be trying to have their cake and eat it, too. As we have seen,

behaviour that may lead individuals and teams to fame and fortune may also be behaviour that

demands punishment.

P a g e | 17


Questions & Answers:

Q) What type of reinforcement schedule does random drug testing represent? Is this type of

schedule typically effective or ineffective?

Ans.) Random drug testing schedule represent invariable intervals. As it is done unexpectedly,

athletes are unaware of the tests timings and unprepared. This is unlike a fixed variable

reinforcement schedule. Athletes have no chance to prepare themselves for the tests by

cleaning their system.

Q) Is it ever okay to allow potentially unethical behaviours, which on the surface may benefit

organizations, to persist? Why or why not?

Ans.) No, it is not ever “okay” to allow potentially unethical behaviors, which on the surface may

be benefitting organizations. For example, if a baseball player is taking steroids and doing

exceptionally well on the team of which the team is aware, team shall not perform well

without that player should that player be caught anytime. That player shall harm the team

even though; the player is causing more harm to himself. If the player gets caught, teams

perception in the minds of their fans changes. Complete team suffers due to one

insubordinate team player.

P a g e | 18


Q) What are some examples of behaviours in typical organizations that supervisors reward but

that may actually be detrimental to others or to the organization as a whole? As a manager,

what might you do to try to avoid this quandary?

Ans.) A behavior in a typical organization that supervisors reward but may actually be detrimental

to others or to the organization as a whole is baseball players taking steroids. When baseball

players take steroids to enhance their performance abilities, they are misleading their

managers and their fans. Initially, it may be rewarding because everyone involved gains

from the profitability, i.e. revenue from increased game attendance, sports merchandise,

increased popularity and success. Nevertheless, in the end, if caught it destroys the teams

reputation and loyalty of the fans diminishes.

As a manager, to avoid this quandary, I would do random drug testing to save the team

from bad reputation.

Q) If you were the commissioner of baseball, what steps would you take to try to reduce the use

of steroids in baseball? Is punishment likely to be the most effective deterrent?

Why or why not?

Ans.) As a commissioner of baseball, I would introduce heavy fines and ban the player for longer

duration to reduce the use of steroids in baseball. To reinforce this I would continue to do

random drug testing. Punishment is not likely to be the most effective deterrent. This will

only cause athletes to stop taking steroids for a certain period. Nevertheless, it will not stop

the usage of steroids.

P a g e | 19



EVA and Compensation Management System at Tata Consultancy Services

"The 'economic value added' model that we follow at TCS ensures that the compensation packages

of our employees are determined by the value they bring to the organization. The more they deliver,

the more are their rewards."

Tata Consultancy Services, Careers

The case examines the compensation management system at TCS based on

the EVA model. With the implementation of EVA based compensation, the salary of employees

comprised of two parts - fixed and variable. The variable part of the salary was arrived after

considering Corporate EVA, Business unit EVA and individual performance EVA. The new system

was implemented successfully and it helped the company identify the non-performers. The

company also benefited a great deal in retaining talent. However, it also received criticism from

several quarters for 'putting golden handcuffs on excellent performers.'

Introduction

TCS started operations in 1968, as a division of Tata Sons Limited, one of Asia's largest business

conglomerates, with a wide range of interests in engineering, telecommunications, energy, financial

services and chemicals. The initial journey in the IT business was not easy for TCS. During the first

two decades of its operations, TCS faced many hurdles due to the rigid government licensing

system, which made it difficult to import computers. The company had to pass through painful

processes. S. Ramadorai (Ramadorai), CEO, & Managing Director of TCS commented, "Consistent

with our position as the pioneer of the Indian IT industry, TCS is proud to be the first IT Company

to cross the two billion dollar milestone. Through our strategic initiatives, we have managed to

double our revenues in the last two years. We are alive to the challenges facing the industry and are

P a g e | 20


geared to enhance our leadership position." TCS aimed at earning revenues of US$ 5 billion by

2010. The EVA compensation model was used as a basis for giving incentives to employees and the

bonus declared was a part of improved EVA achieved. In the EVA model, the components of fixed

and variable pay were determined. Fixed pay comprised of wages and pension while the variable

pay had components like bonus, profit sharing, and stock option. During the first quarter of the

financial year 2005-06, about 1000 employees whose performance was not up to the mark were

asked to leave Tata Consultancy Services (TCS), the largest IT Company in India. HR experts

believed that this decision was based on the implementation of the EVA based model for assessing

employees' contributions, at the company.

The first two-year cycle of EVA had just been completed when the retrenchment decision was

taken. Those who were asked to leave had obtained low ratings in their performance appraisal for

two consecutive years, despite being under mentorship. At a time when IT manpower was in short

supply and IT and BPO companies were going out of their way to reduce employee attrition, TCS's

decision to retrench employees made headlines in several Indian news dailies. On April 19, 2005,

TCS announced its annual results for the fiscal 2004-05. The company declared total revenues of

US$ 2.24 billion and net profit of US$ 0.51 billion. TCS had been the first Indian IT company to

achieve the US$ 1 billion revenue milestone in the fiscal 2002-03. It continued its success story

when it became the first Indian IT company to earn revenues of more than US$2 billion per annum.

HR Policies

TCS gave utmost importance to its human resource function. The HR division acted as a facilitator.

The company had institutionalized all HR processes. TCS firmly believed that recruiting the right

people was the secret of success of any organization especially when the supply of talent was much

below the demand. The company believed in the premise that "good ideas can come from any level

of the organization and teams can do better than the individuals."

P a g e | 21


The mission statement of HR division at TCS states, "The role of HR is to provide the context for

energizing and developing people to play effective roles in ensuring that TCS becomes one of the

top global consulting firms. Towards achieving this we will identify, develop, facilitate, and

measure the human and technological processes in the pursuit of excellence. We will foster the

values of the TATA group."

EVA Model

TCS adopted EVA in 1999, when the company had a staff of around 15000, working at several

locations across the world. Through the EVA model, TCS aimed at creating economic value by

concentrating on long term continuous improvement. EVA measured operating and financial

performance of the organization and the compensation of all employees was linked to it. TCS went

in for the EVA as during that time, the company was not a public limited company and hence could

not have a stock option plan. There were several people who played an important role in the success

of the organization, who needed to be recognized. As there was no wealth sharing mechanism in

place, EVA was adopted to focus on continuous improvement rather than short term goals and also

to motivate employees. In 1996, TCS was organized into a three dimensional model: first dimension

comprising of industry practices, which included engineering, transportation and telecom;

second dimension comprising of service practices like e-business, outsourcing, technology

consulting; third dimension global and regional operating areas.

A business unit could be a part of a service, a practice, a geographical unit, or a combination of all

the three. Every unit was considered a revenue center and had its own EVA target. The units that

did not fall under the purview of any of these were corporate offices and research & development,

the costs of which were divided among all the units. Through EVA-linked compensation,

employees could claim stakes at three EVA levels - at the organization level, at the business unit

and the individual level. The individual was informed how he or she could contribute to the

P a g e | 22


EVA enhancement at all three levels. Revenues controlled EVA, capital and costs, and an

individual could contribute in any or all of these areas at all the three levels.

The Benefits

The benefits of EVA were realized across all levels in the organization. Employees became aware

of their responsibilities and their share in increasing the EVA of the unit and organization. All the

units could determine how they had fared against the targets. The bonus banks also helped in

sustaining performance from the individuals, with close relationship between pay and performance.

There was an increased sense of belonging among the employees and the employees were

motivated to increase their contribution as they were also equally benefited by the increase in EVA.

It was not just a performance metric but an integrated management process aimed at achieving long

term goals. One of the major benefits of implementing EVA in TCS was increased transparency in

the organization. The internal communication within a unit had increased considerably. The

decision making process became more decentralized.

The Drawbacks

The EVA-based compensation system received severe criticism during the initial years of its

implementation. Industry analysts commented that EVA concentrated mainly on return on

investments, due to which the growth of TCS could be restricted. In 2003, TCS caused uproar in the

IT industry when it reduced the variable salaries of employees by 10%. This was the initial impact

of EVA that was implemented in the company from April 01, 2003. The reduction in the variable

salary resulted in an overall reduction of monthly take-home salary for most of its employees.

P a g e | 23



How P&G Brought Back Herbal Essences

Procter & Gamble is one of the biggest, most powerful companies in the world, and it really wrote

the book on how to market, develop, and innovate in the whole area of fast-moving consumer

goods. It's a company watched by marketers and retailers far and wide. When Procter & Gamble

acquired hair-care company Clairol in 2001, it inherited a floundering shampoo brand. By 2004,

Herbal Essences, at the time nearly 35 years old and a mass-market hair-care brand for women, was

in a "long-term decline”. Herbal Essences is a classic example of a brand established around the

notion of being a little more natural, amid a range of products seen to be highly chemical. Marketed

to all women (or at least those who wash their hair), the line had gone stale, with little distinction

from the many competitors it shared on the drugstore shelf. The brand around the market had just

grown older. Its consumers had grown older and more affluent, and had started to migrate to

products that are more expensive. By 2006, P&G knew something had to be done with the tired

brand. Therefore, P&G first had to consider what its opportunity was and what its brand is, what its

relationship with customers is, and how to think about developing it.

The company had three choices; abandon it, divest it, or reinvent it and resuscitate it. Company

chose the third, putting together a small interdisciplinary team of R&D, marketing, and design

managers to help revive the hair-care line. The route chosen is to give Herbal Essences an

evolutionary step forward. One of the things P&G does brilliantly— is to start with the customer, to

understand the customer's relationship with that category, its products, and the way they're

purchased. It understands how products are used, how they appear in the store, and what those

products mean to customers' lives and their psyche.

P a g e | 24


The company thought the target group was interested in natural and herbal ingredients. To find the

right new, smaller target market for the brand P&G managers to jump-start innovation. They needed

to reset the "who," as P&G would call the new target consumer for the brand—Generation Y. In the

case of Gen Y, there really wasn't another hair-care brand that was really meeting their needs.

As a result, Herbal Essences is going to change the way it speaks to its customers. It's going to

change the way it appears to customers, and it's going to change the way that it might position itself

on the shelf compared to its competitors. It has to stand out and be clearly for that group of people

—those women, those customers who want to feel they're part of that generation. They redesigned

the packaging of the product to "fit" this more tailored market. The shampoo and conditioner bottles

are curved so that they literally fit together on the shelf. The nesting shape not only helped Herbal

Essences stand out from others on the shelf but also encouraged more young women to buy both

products, driving up conditioner sales.

To appeal to millennial, they updated the language on the packaging. Names for different hairstyles

were changed to more youthful phrases such as "totally twisted" or "drama clean." While P&G does

not break out sales figures on specific products, the company reported in a conference call soon

after the shampoo was re-launched that the brand was growing again, with sales growth rates in the

high single digits. Overall, Herbal Essences is a great example of breathing new life into a brand.

P a g e | 25

learning, values & beliefs

Documents