report on hr alignment in sap

8/14/2019 Report on HR Alignment in SAP

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2009

HR Alignment

to Business

Strategies in

SAP


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HR Alignment to Business Strategies in

SAPHRM Project

Faculty: Prof. T. N. KrishanSubmitted By:

Amit Kumar

Ashish Dennis Dean

Arshdeep Singh Makker

Vimal Mohan Jain

Ramakrishna Cheveturu


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Aniket Saxena

Girish kumar


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Contents

......................................................................................................................... 2

HR ALIGNMENT TO BUSINESS STRATEGIES IN SAP ................................................ 2

CONTENTS .......................................................................................................... 4

EXECUTIVE SUMMARY ......................................................................................... 4

METHODOLOGY .................................................................................................. 6

BACKGROUND TO SAP LABS ................................................................................ 7

BANGALORE A STRATEGIC LOCATION ................................................................. 10

EXTERNAL BRANDING ....................................................................................... 11

MAJOR STRATEGIES AT SAP ............................................................................... 12

PRODUCT RELEASE STRATEGY : .......................................................................................................13

GROWTH STRATEGY....................................................................................................................13PLATFORM STRATEGY...................................................................................................................13

INDUSTRY STRATEGY....................................................................................................................14

PRODUCT STRATEGY....................................................................................................................15

ALIGNING HR STRATEGY AND BUSINESS STRATEGY ............................................ 17

ITS PEOPLE MANAGEMENT AT SAP ..................................................................... 18

CULTURE AND PEOPLE MANAGEMENT ................................................................ 19

MANAGEMENT OF PEOPLE THE ROLE OF LEADERSHIP ....................................... 20

THE TALENT MANAGEMENT PROCESS ................................................................. 22

TALENT PLANNING......................................................................................................................23

EMPLOYEE PROFILE OF SAP LABS INDIA.............................................................24

TALENT SOURCING......................................................................................................................24

RECRUITING CHANNELS OF SAP LABS INDIA.......................................................25

TALENT EVALUATION....................................................................................................................27

HIRINGAND REASSIGNMENT...........................................................................................................29

PERFORMANCE MANAGEMENT..........................................................................................................29

RETAINING...............................................................................................................................30

COMPENSATION..........................................................................................................................31

2006 EMPLOYEE SURVEY RESULTS.................................................................................................32

APPENDIX ........................................................................................................ 33

Executive summary


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Businesses that aim to align their human resources strategy (HRS) with their business strategy

tend to be more profitable and more efficient than those that do not. This depends on: in the first

instance, understanding what the business strategy or strategies are; second, what constitutes the

HR strategy; and third, seeing if there is sufficient congruency.

When organizations are asked about strategy, it is tempting for the professionals to reveal theprocess as formal and considered, perhaps captured in boardrooms and strategic documents. But

the more critical, and more realistic, management and academic literature suggests that this

cannot be the case.

Theory too offers many approaches to the process; practice highlights the difficulties in achieving

alignment. Yet having greater congruity between HRS and business strategy is more desirable

than a situation where for example, an organizations pay and reward strategy does not encourage

the behaviors that deliver business goals.

This report takes SAP Labs HR policies into consideration and acts as an informed critique of

the organizational practices. The report tries to find out how the HR strategy of SAP Labs is in

line with its Overall Business Strategy. pa

By reporting on practice, it shows that a HRS does not operate in isolation and cannot be bolted

onto other organizational strategies very easily. The research evidence indicates an organic

process of development where HRS achieve strategic alignment through a process of trial and

error, with each new phase throwing up different problems and opportunities that need

addressing.

Focusing on making the organization a great place to work is as and sometimes more

important as other HRS outcomes. Cultural nuances mean that every organization, indeed insome cases every site, requires a bespoke approach within an overall strategic framework where

first the organizational purpose is clearly defined and then the organizational objectives carefully

delineated.

HR departments need to become far more literate in the language of business and financial

planning, improve their networking skills across the organization and understand that HR

strategy development works best when there is a strong cultural and business fit.

Each HR strategy requires the development of robust metrics that enable the HR department to

show before and after effects wherever possible. Some examples are reduced employeeturnover, new skills acquisition by staff, increased numbers of ideas and levels of innovation

through reorganization.


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Methodology

To come to a conclusion about the implementation of a policy o a strategy, the most important

thing is to measure the penetration of the policies and also the effects.

For measuring the effects and the consequences of the policies of SAP Labs, we have used both

the primary and the secondary sources.

Primary source:

As a primary source of information, who better could be informed than the employees

themselves? So we have systematically interviewed employees on the policies of HR at SAP

labs.

Secondary source:

Trying to find out about an IT company, what secondary resource could be better than the great

INTERNET? So we have used a couple of websites for inquiring about the best practices of HR

and also how are other companies trying to link them with their overall business strategies and in

comparison, we have mentioned the policies in practice at SAP Labs


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Background to SAP Labs

Since its foundation in 1998, SAP Labs India has expanded from a small development facility

with 100 members to the biggest R&D hub of SAP AG, outside Germany, with about 4,000employees in 2009. Its growth has become a phenomenon that still fascinates internal andexternal stakeholders. Today, SAP Labs India contributes to every conceivable area of productdevelopment, starting from research and breakthrough innovation right through to mission criticalcustomer support. As a pioneer in distributed software development, SAP Labs India hasattracted many visitors, ranging from government dignitaries and global customers to professorsand students

SAP AG:

SAP AG, headquartered in Walldorf, Germany, has evolved from a small German start-up to the

worlds leading international provider of enterprise software over the course of the last three

decades. Today more than 82,000 worldwide customers run SAP applications from distinct

solutions addressing the needs of small businesses and midsize companies to suite offerings

designed for global organizations. 1.1 The History of SAP AG The Beginning of a Story of

Success. SAP co-founder, Hasso Plattner, often enjoys recounting the story of how SAP might

not have come into being were it not for his efforts one rainy 2000 punch cards onto the wet

parking lot floor while transporting them from his car. These cards contained essential data vital

to the function of a newly developed standard business software software on which the eventual

creation of SAP depended. It took Hasso two days to dry the cards and rearrange them into theircorrect order. Had the cards been irreparably damaged, the development of the software, and by

extension the birth of SAP, might not have been possible (Ramge 2006).

Hasso and his colleagues Dietmar Hopp, Hans-Werner Hector, Klaus Tschira, and Claus

Wellenreuther, all employees of IBM at that time, made the decision to start their own company

when IBM rejected their recommendation to develop software designed to be used by several

users simultaneously.

Hasso recalled: We got the notion that within IBM we would never have the freedom necessaryto make this idea a genuine success. They launched their private corporation in 1972. Called

SAP (Systemanalyse und Programmentwickung Systems Analysis and Program Development),it was named after the project on which they had been working at IBM. The company had itsheadquarters in Weinheim, and its main office in Mannheim, Germany. Therefore, in the 1970s,while their competitors were still designing various products to tie different parts of a businesstogether, these enterprisingentrepreneurs were in the right place, at the right time, and with the right skills to develop asingle oftware system that would unite all of a companiesbusiness functions. Their primarybusiness concept, to develop standard application software for enterprises controlled through a


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centralized mainframe, was a ground breaking innovation. Designed to eliminate the need forindividualized end-user installation, and to make it possible to interactively process data in real-time with the computer screen the focal point, their system was a giant conceptual step forward inbusiness software.

Growth and Internationalization

In the 1980s SAP experienced a rapid growth and benefited from major developments in thesoftware sector: IBM presented its first ever personal computer, which was quickly shortened tothe acronym PC. Mainframes were more and more replaced by networks of medium-sizedcomputers, workstations, and PCs. Computers with drastically improved price-toperformanceratios entered the market and helped SAP to expand its customer base. The basic shape of aclient-server architecture was developed during this time. All these major inventions made theutilization of hardware easier through, for example, increased memory space providingtemporary storage for dialog information. During this boom time, due to its close relationshipswith customers, SAP continuously enhanced its already distributed program modules, and in

1982, released the SAP R/2 system. It was a major upgrade of the R/1 system and it was madecompatible with IBM as well as with Siemens mainframes and operating systems. With its R/2system, SAP claimed market leadership for large corporations, and was ready to conquer theinternational software market. At that time, fifty of Germanys one hundred largest industrialenterprises were already successfully using SAP R/2. Along with this success, SAP moved fromits office in Mannheim to an industrial park in the town of Walldorf where it occupied thecompanys first building, and began to operate its own computer center. This move united alldevelopment teams under one roof. On its 10th anniversary, SAP celebrated sales soaring by 48%, roughly equivalent to more than EUR 12 million.SAP planned for its major growth by designing country-focused versions of SAP R/2, which wasdeveloped to handle different languages and currencies. For example, with the development of aFrench version of the accounting module and with the foundation of subsidiaries in Denmark,Sweden, Italy, and the United States, SAPs international expansion took a big leap forward.

The Next Wave Labs in Bangalore and in Nice

By the end of 1997, SAP began wondering where to recruit all the people needed for itsambitious growth plans. The demand for SAPs products was still strong, the growth was doubledigit, but the products themselves were lagging a little behind the trends. Customer RelationshipManagement (CRM) had become much more than just a buzzword, as well as Product LifecycleManagement (PLM) and Supply Chain Management (SCM). There were previous niche playersgrowing more quickly than SAP (like Siebel or I2) who represented a true challenge to SAP, not

only in CRM or PLM, but also in its core application business. These new companies startedbuilding solutions around SAPs core functionalities and providing interfaces to integrate withcore modules of SAP. SAP responded with the New Dimension Campaign which gave itsclients an outlook and a promiseof future offerings in an effort to stall the competitions sales. Atthe same time, SAP was confronted by Internet hype, so it had to offer not only a compellingmarketing story around Business to Business (B2B) and market places, but it also had toconvince customers with its product story. Many customers were waiting to see how SAP wouldreact to these challengesand many of SAPs global clients purchase decisions were put on hold


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to see whether SAP would be able to emerge victorious from those competitive battles. In orderto add the urgently needed product features and offerings, SAP had to expand its developmentbase quickly. It went in two directions. First, SAP acquired other software companies in thosenew fields. It took over the sales-force automation software vendors and number two in itsmarket Kiefer and Veittinger to gain traction in the area of mobile solutions / CRM. It also

acquired Commerce One, a company that was considered a leading vendor in the promisingfield of Internet marketplaces. Second, SAP took the decision to grow beyond its current R&Dhubs in Germany, U.S. and Japan and open new labs at locations where talent would be easier tofind. As much as those acquisitions were successful insofar as the acquisition of new colleagueswith specific mindsets and skills into SAP, the products of those companies had to be changedquickly, due to their incompatibility with SAPs core offerings. However, these acquisitionshelped in the market in terms of mindshare, and it helped in the opinion of the analysts whorecognized that SAP did understand the trends and was investing in those crucial areas tocompensate. Most of the new employees who came with those acquisitions were integrated intoSAP, but a few left, as they could not find a suitable position in the new setup. Still, it took sometime to make all of them productive, and the capacity added through those takeovers was still notenough to satisfy SAPs hunger for talent. It was obvious to the board, that SAP would also needto grow organically in engineering capacity if it wanted to keep the promises made to all thosecustomers in the market with respect to future product offerings.

On November 13th, 1998, SAP Labs India was formally established in Bangalore. It started withabout 100 engineers in the field of CRM, middleware technology and localization, and the firstIBU developers were hired. At the same time, smaller teams comprising a handful of developerssited at locations like Thailand, Singapore or Australia were asked to either move to Bangalore orto different roles in their local subsidiary.


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Bangalore a strategic location

Strategically, SAP was now well positioned globally: it had significant development centers insome of its key markets like the U.S., Japan and, of course, Germany. At the same time, PaloAlto served as SAPs link to the Silicon Valley, providing the company with the necessaryintelligence on the latest IT trends that were certainly, to a large extent, originating from there.For hiring new talent across the globe, two more locations were now available in Nice andBangalore. This worked: within two years SAP was able to attract hundreds of new developers inboth new locations, which enabled it to close product gaps in the New Dimension Offers and inits e-commerce applications. At the same time, the global trend towards dedicated industrysolutions demanded a significantly stronger product offer as well. The oil & gas industry and thehigh-tech industry were the main financially strong industries, for which the standard R/3 productdid not completely meet the specific demands of their business. During this time, SAP initiatedprojects related to industries that were strongly present near the development facility. Forexample, in the Indian market there was a lot of requirements from big oil companies like

ONGC, Reliance and BPCL and this led to the formation of the oil & gas development team inIndia. SAP firmly believed that this proximity was vital, as it would provide necessary businessknowledge for the development teams.

Again it was Hasso Plattner and Peter Zencke, who headed some of those industry solutions andpushed the senior managers of SAPs global engineering to expand their development capacitiesto the new Bangalore location. Those were very crucial developments, since the distribution ofwork, specifically to a culturally diverse place like India, located in a different time zone, wassomething completely new to the company. While the managers accepted Palo Alto as a ecessityto be close to the valley, and Tokyo to be close to Japanese business practices, it was a noveltyfor SAP to do work in Bangalore and France that had always been done in Walldorf. For the first

time, development teams had to think of how to distribute work in a prudent and feasible way.Even more challenging was the cultural diversity which colleagues were asked to deal with. Allof a sudden, there was an amazing number of new colleagues roaming around in Walldorf,looking different and also doing their work in a different way.

Bangalore remained the only strong growth center of SAPs product development and gainedfurther significance after September 11th, 2001, when SAP went beyond the usual cost cuttingmeasures across the company and implemented, as well for the first time, a monetary budget fordevelopment instead of the usual headcount budget before. All of a sudden, the costs of thedevelopment locations became very important and Labs India could prove a significant costadvantage. Compared to the other locations, the factor was around 1:3 or 1:4. This further fuelled

the growth of the India Lab in comparison to Japan, France or the U.S., especially from 2003onwards.


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External Branding

In the field of external branding, a big step ahead in transforming into a global company was

made as well, when SAP hired Marty Homlish, Sony Americas marketing head, in 2000. Up to

that point, SAPs marketing had been more of an advertising budget, and it did not involve

consolidated global branding efforts. Actually, SAPs global brand image was rather shaped by

its capabilities and its people rather than by its marketing (which is quite acceptable up to a

certain point; however, there are also

some battles that are decided on the marketing front, not only on the product front). Marty

Homlish quickly realized that developing a global brand out of the rather provincial Walldorf

would not work. In this place, he would neither find the right people for his team, nor could he

talk to people from other agencies, market analysts, and so on. He therefore decided to move the

headquarters of SAP Global Marketing to New York, into the center of global advertising, and

into the center of global finance. This was he right move at the right time, since SAPs brand had

to reshape quite a bit, from the rather fancy Internet mySAP.com brand to its origin as a serious

partner of companies in doing business.

At the same time, he made sure additionally that globally a consistent Corporate Identity (CI) was

applied and followed in all internal and external communications. This way he ensured that

SAPs appearance was always the same, no matter whether one entered San Francisco Airport

and saw an SAP advertising, or if one visited the SAP Event Hall in Singapore. These measures

promoted global brand recognition quite a lot, and consequently SAP became ranked among the

worlds top 100 most valuable brands. Presently, it is among the top 50. In Germany, only the

BMW brand has a higher value which definitely is a great success. Given the increasing

competition and the increasingly difficult differentiation between the many products available,

the decision makers of SAPs potential customers do not want to go too deep into the product

details, and mostly are not even engineers. To a certain extent, they want to believe in a brand

promise and in the time, SAP has developed the credibility of its promise that: The best-run

companies run SAP. Recently, its product portfolio has been updated for SMEs: Not only for

large best-run companies, also for small ones. One cannot overestimate the value of a strong

global brand in the global competition. Large Chinese or Indian companies are cash-rich and they

often have products that are successful in global markets, but they still have branding

deficiencies. So when they go on an acquisition tour, they often do not go for a special addition to

their product portfolio or for a certain technology they need they are simply trying to acquire a

global brand to get on top of the competition. For example, when Tata bought Jaguar, or Lenovo

bought the IBM Thinkpad brand.


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Major strategies at SAP

From the http://www.sap.com/about/investor/inbrief/growth/index.epx

Organic growth The primary growth strategy is to continue to develop our ownproduct portfolio and our own base of direct customers by winning more customers and by

selling more to our existing customers.

Co-innovation Collaborating with customers and partners remains one of our centralpolicies. We are investing more in our partner ecosystem. This supports the development of

solutions built on the SAP NetWeaver technology platform and leverages sales forces to address

the various market and customer segments.

Smart acquisitions With targeted strategic and "fill-in" acquisitions that add to our

broad solution offering for individual industries or across industries, we gain specific

technologies and capabilities to meet the needs of our customers.

As per a report published by AMR, the SPA strategies could be divided into following five

categories.

1. Product Release Strategy

2. Growth Strategy

3. Platform Strategy

4. Industry Strategy

5. Product Strategy
http://www.sap.com/about/investor/inbrief/growth/index.epxhttp://www.sap.com/about/investor/inbrief/growth/index.epx


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Product Release Strategy :

SAP has traditionally released products and made major changes to underlying functionality on a

five-year schedule. So twice a decade, SAP's customer base faced a tough decision.

They could either ignore the product improvements that their maintenance fees had helped to

fund, or they could invest a significant amount of time and money in an upgrade project that is

often disruptive, expensive and deeply unpopular It became quite common for companies to

delay or defer releases. However, that approach carries enough risk and cost that most

organizations didn't dare go longer than eight to 10 years between upgrades.

Growth Strategy

In one of AMR reports, Shepherd writes that SAP has a business strategy that is fundamentallyfocused on organic revenue growth and that SAP has always been confident about its

organization's ability to develop new products and improve existing ones.

However, SAP execs also have realized that the company has needed to both expand its product

offerings to its customers as well as move into new markets. Shepherd writes that this market

expansion can be seen in getting new customers, expanding the product scope, moving into new

geographies and industries, and going after not just the large enterprises but the SMBs as well.

What SAP customers should realize is that, like its competitors, SAP derives most of its revenue

from its installed customer base. "Its objective is to ensure that customers never stop buyinglicenses, maintenance, and services," Shepherd writes. "SAP is constantly working to move ERP

customers onto the full Business Suite, and it has invested heavily in products aimed at

information workers who don't necessarily use transactional applications.

Therefore, customers should expect their SAP sales reps to be pitching: self-service applications,

financial and business performance management, Microsoft Office integration, and much of the

Business Objects' portfolio of reporting, business intelligence, and analytics, Shepherd writes

SAP understands that its customers are inclined toward a single vendor strategy," he notes, "and

it intends to capitalize on this tendency."

Platform Strategy

The roots of SAP's platform strategy back to 2003, when SAP packaged up its technology

components and unveiled the NetWeaver product set.

"The idea was that this technology and architecture would no longer simply be the invisible

engine that powered the application products, but that SAP could expose it as a platform and


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allow customers and partners to use it to extend SAP applications or even build brand-new

applications," Shepherd writes. "SAP had to build the platform anyway in order to develop its

service-oriented architecture (SOA)-based product line. Management believed that making it

publicly available would enhance SAP's reputation as a technology leader, and it could

potentially become an additional source of product revenue."

SAP has continues to refine and market the idea of a "business process platform," which is made

up of SAP's Business Suite applications, a repository of enterprise services, and the NetWeaver

technology platform, Shepherd notes. "While there is no indication of a groundswell of demand

for a business process platform," he notes, "NetWeaver has been successful." NetWeaver had

sales of nearly $1.5 billion in 2007, according to the report, and more than $450 million in

standalone software revenue.

What's important for SAP customers to understand, notes Shepherd, is that SAP customers "have

to use NetWeaver because their applications won't run without it, and, over time, they tend to

begin using the optional components, such as business intelligence, the portal, and integration,"he writes. "The attraction of tapping into the SAP installed base has encouraged a large number

of other software vendors to incorporate enough of the platform to gain the coveted 'Powered by

NetWeaver' certification. This market acceptance, SAP's continued enrichment of the modeling

and composition tools, and the services repository is building momentum."

Industry Strategy

One reason for SAP's success over the years was that executives realized the importance of

offering products to key vertical industries that had unique needs in their applications.

"Using a combination of internal and customer sponsored development, partners and cleverpackaging, SAP now has 25 separate industry solutions across a range of industries from mining

and manufacturing to higher education and financial services," he writes. "Many of these are

supported by product management teams, dedicated developers, and industry value networks

(IVNs) of customers and partners that collaborate with SAP on defining requirements and

building extensions." This strategy has enabled SAP to garner tons of market share in the oil and

gas, chemicals, and life science industries, according to the report.

Now, SAP is aiming to use the same "blueprint" in going after non-manufacturing industries,

such as retail, insurance, education, banking and public sector. "Over the next several years we

expect to see SAP devoting a great deal of effort to increase its presence and enhance theapplications in these segments," Shepherd writes. "It is also likely that SAP will use acquisitions,

investments, and partnerships to address industry requirements and buy some customers and

industry expertise."

As SAP aims to solidify its offering in these industries, Shepherd predicts that customers in

industries where SAP is very well established "may find that their enhancement requests have a


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somewhat lower priority than industries that SAP has designated as strategic." On the other hand,

he notes, "customers or prospects in those non-manufacturing industries are likely to find SAP

very willing to commit resources and sponsor joint development projects in order to fill holes in

industry applications. Companies in these industries that are willing to be highly visible

lighthouse accounts will have lots of negotiating leverage if they are willing to tolerate

applications that are still rather immature."

Product Strategy

Before 1999, SAP was known as a one-product company, which a much less confusing naming

convention for its products and releases (R/1, R/2, R/3).

"Since then, SAP has accumulated dozens of products with a bewildering set of options, variants

and names," Shepherd writes. "One of the reasons for this product proliferation is the software

industry consolidation that has resulted in large ERP vendors like SAP competing in many otheradjacent software categories, such as CRM, supply chain management, and product lifecycle

management." SAP has also brought to market other complementary products not named ERP

and not aimed at the CIO and IT but at the business users, he notes, in areas like performance

management, regulatory compliance and analytics.

It's critical that large enterprises, especially, must take a very long view of their application

strategy. "One of the important issues for large customers is knowing what happens after 2013,"

Shepherd writes. "The SAP Business Suite looks stable until then, and [customers] like the idea

of regular enhancement package releases rather than major upgrades. That said, they live in fear

that after 2013 they may be faced with another product transition like the one from R/3 tomySAP."

Shepherd predicts that the current Business Suite will remain SAP's flagship product line well

beyond the 2013 maintenance window. "While the mySAP.com product was officially launched

in 1999, development just recently completed on a fully SOA-based suite, and there are still a

significant percentage of customers that haven't upgraded from R/3," he notes. "Launching

another new product would unduly jeopardize that very important base. Furthermore, SAP is

under no pressure from its customers or its competitors to move to a new technology and it is

unlikely to be in the next few years.

As to SAP's Business ByDesign on-demand software offering targeted at SMBs, Shepherd writes

that SAP has many large customers that need a smaller and simpler application that can be easily

integrated to the Business Suite. "CIOs regularly face the question of what to do about

autonomous divisions, smaller sites in remote locations, new acquisitions, and joint ventures.

Incorporating them into the global, single instance of SAP is often an unpopular option that may

be financially or technically impractical."


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The "Business ByDesign, in either a hosted or on-premise form, should be much more attractive

to the users than the corporate system and yet much easier to integrate than a third ERP

application."


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Aligning HR strategy and Business Strategy

Studies into business and HR strategy (HRS) proffer no shortage of advice for organizations onhow to be strategic, and the importance of strategic alignment' between business strategy andhow people are managed. The business strategy of an organization refers to the expressedintentions of how managers expect to achieve particular business results over a stated period oftime.

A business strategy therefore deals with choices regarding how an organizations marketplaceactivities are configured to gain competitive advantage.

Strategies may include cost reduction, innovation, joint venturing, value added, rapid customerresponse or having a focus on quality. Businesses may be pursuing more than one strategy at anytime, and strategies may well be neither made explicit across the organization, nor wellunderstood. Internally, HR strategy and practice is just one key function, alongside finance, corebusiness areas and customer-facing services that can help a business obtain its strategic goals andperformance targets. For the purposes of this report, HRS is defined as asset of interdependenthuman resource (HR) policies and practices designed and implemented by a firm to achieve itsobjectives.

HRS therefore cannot be cocooned from changes in the marketplace. It is also subject to specificinfluences on human capital, such as new employment legislation and shortages in the labormarket. For HR strategies to succeed, it makes sense for them to be aligned with businessstrategies, or at the very least, not to have them in conflict. For example, having a competitivestrategy founded on innovation but a culture that is risk-averse will not bring about the requiredhuman behaviors to achieve objectives. Of course, achieving alignment of the kind we read aboutis rarely a stable destination.

Many organizations argue that the alignment being prescribed is not only difficult to attain, butdifficult to describe and measure. In practice it requires constant re-adjustment and severaliterations. The speed and subtlety with which aspects of business focus or competitive edge areexpected to change mean that supporting processes, such as HR management, must be fleet offoot rather than monolithic in their responses. In many organizations, it is strategic fit andagility that really keep things on the rails. Some argue, with some justification, that it is possibleto become too obsessed with strategic alignment as an end in itself. And if people in anorganization are having to think about this fit with any frequency, then it is probably missing

the point. The notion of organizations as flexible adaptive systems can have resonance here, andis being embraced by a number of academics and practitioners as they seek to break free from theconcept that organizations have to get all their structural and strategic ducks in a row beforechange can evenstart. However, having a set of HR policies and practices that is at odds with theoverall business strategy is also undesirable. Alignment may therefore be a case of achievinggreater overall coherency between HR and business strategy.


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Its people management at SAP

From the very beginning, SAP has taken the approach that its global values towards its

employees should hold good at SAP Labs India. At a local sales office in contrast, the

localization and the closeness to the culture of the local customers have a slightly higher priority.

Within the SAP labs network it was always felt that, due to the close global collaboration, one

needs to believe in the same principles, otherwise one would fail in this set-up. In the 1990s,

Klaus Besier the former head of U.S. Sales clearly said to the executive board: If you are in

Rome, you have to live as the Romans do. He said this with reference to the U.S. field

organizations, defending the fact that SAP Americas would always feel like a U.S. company

rather than like being a branch of SAP Walldorf. This approach surely worked for the field

organizations. When one sales manager in Singapore was asked about SAPs global values, he

said: Look, I have to bring in the numbers. As long as I sell, make my numbers and everyone inmy team overachievers the target we are successful. The team is happy and nobody will ask me

about how I did it, with self-drive, teamwork or responsibility. We do not care about

anything else. Nobody will ask.

Certainly SAP will always ensure that its global employees follow the same standard of behavior,the code of business conduct, which has to be observed everywhere in the same strict manner.The same applies to the guiding principles in book keeping (SOX standards) or the way how SAPis controlled internally. But there is no doubt that the local culture and people management havea much more local flavor in the field organization than they would have in any of the SAP labsaround the globe. The reason for this is easy to understand: If you are a sales executive in a

country, you usually spend your time with customers, local colleagues and preparing for demos.There is neither time nor need for traveling around the globe and meeting colleagues. This isdifferent in the labs. Here an extensive communication is of paramount importance for goodcooperation. How can one communicate, if there is no common base on how to do things, in whatquality levels to believe, and if we dont speak the same language? Many of the sales people inChina, Korea, and Japan may not speak a word of English, but this not may be required for themif they only talk to their local customers. However, if one works at SAP Labs in Shanghai, onecannot do any job in the global development network, if one is notable to talk, write e-mails, or phone other colleagues at a different location. Be it to clarify aquestion, address a problem, or just listen to some global roll-out information, language skills areimportant. People management is therefore an art in the global context, because on the one hand,

one needs to be able to meet the local expectations on how a company should work, in what itshould believe, and what should be, at the end of the day, the perks and benefits it offers. On theother hand, there are certain ways how a global cooperation just does things and manages itsprojects. Aligning those two worlds is the art of global management, and it does not only reston the shoulders of the local Managing Directors (MDs) or depend on the work of the HumanResources (HR) department, but even more on all middle managers, who have to bridge the gapbetween the global projects and their local execution.


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Culture and People Management

Like most companies, SAP has, strong and very well formulated values, which include, among otherthings, the belief in diversity and the belief that even two different cultures are able to work together

efficiently, so that the best of both comes out of it. However, as described above, a cultural misfit isvery often the reason for failure, may it be a failure of people, projects, and even complete products. In anR&D lab like SAP Labs India, different cultures come together for meetings on a daily basis, via differentmeans of communication. Those cultures do actually influence how productive a meeting can be orwhether the outcome is negligible. By 1995, the world was simple, and for becoming a good manager inproduct development at SAP, it was sufficient to understand how Germans think, develop software andcan be motivated. This has changed when India arrived on the map of the global SAP Labs and became aninfluential player. Intercultural competence became mandatory not only on the side of the Germans, butalso on the side of the colleagues working in India. Before some kind of understanding and agreement ofthe same standards was developed, a typical meeting between Indian and German colleagues could havehappened as follows:

Its 10:00 CET (Central European Time) in the morning. The meeting is supposed to start at 10:00. Thethree German participants have gathered in the video room in Walldorf at 09:59, wondering why thecamera in Bangalore is still showing an empty room. At 10:02, they start the meeting. No earlier than10:10, the first of the Indian colleagues arrives, being surprised quite a bit that the meeting has obviouslyalready commenced. With their thoughts still dwelling on the cricket match last night and on what they

had discussed over lunch, they try to concentrate on what is happening over there in Germany.Meanwhile, those colleagues in Germany have reached the third topic of the agenda, after the irst two(most important ones) had been finalized. At this point, they realize that the colleagues in Bangalore havejoined (it is10:20 and all three Indian colleagues are in the room now) and that it would make sense to

switch from German to English. Nevertheless, among themselves they would continue to talk in German,not bothering too much about what the colleagues in India would think. Finally it is 10:45, the Indian

colleagues have warmed-up. They are now fully alert and ready to contribute. The first questions are

asked towards the room in Walldorf. However, in Walldorf the conversation has changed towards lessimportant topics. One colleague has already left for another meeting, another gets up to get some Its10:00 CET (Central European Time) in the morning. The meeting is supposed to start at 10:00. The three

German participants have gathered in the video room in Walldorf at 09:59,wondering why the camera inBangalore is still showing anempty room. At 10:02, they start the meeting. No earlier than10:10, the first of the Indian colleagues arrives, being surprised quite a bit that the meeting has obviouslyalready commenced. With their thoughts still dwelling on the cricket match last night and on what they

had discussed over lunch, they try to concentrate on what is happening over there in Germany.Meanwhile, those colleagues in Germany have reached the third topic of the agenda, after the first two(most important ones) had been finalized. At this point, they realize that the colleagues in Bangalore havejoined (it is 10:20 and all three Indian colleagues are in the room now)and that it would make sense to

switch from German to English. Nevertheless, among themselves they would continue to talk in German,

not bothering too much about what the colleagues in India would think. Finally it is 10:45, the Indiancolleagues have warmed-up. They are now fully alert and ready to contribute. The first questions areasked towards the room in Walldorf. However, in Walldorf the conversation has changed towards less

important topics. One colleague has already left for another meeting, another gets up to get som. coffee.The remaining person would answer the questions in a more dry manner without much emotion, but

always repeating the same fundamental logic: We have always been doing it like this. This is how itworks here. For the Germans, the meeting is basically over, whereas in India it could just get started.Both sides leave the meeting being pretty much frustrated. The Indian colleagues are upset that they werenot allowed to contribute and that the German colleagues would not listen to them. The German


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colleagues are upset that the Indian colleagues did not contribute anything valuable to the most importantpoints and that they talked so much and so fast that actually, one did hardly understand a word.

This sample story is not exaggerated and the idea here is to show as to how even a simple issuecan derail a project. Incidents like this happened again and again until people on both endsunderstood how different they might think and behave and that there was no ultimate optimalway of doing things. There are many ways and as in conversations among Europeans, usuallythe most important things are discussed first, whereas in conversations among Indians, there is alonger warm-up time with casual conversation, before the core business topics are put on thetable. Hence, it is important to be explicit at times in communication and also be flexible to adoptdifferent working styles.

Management of People the Role of Leadership

Today, SAP sees itself as a global company, and management of intercultural teams is consideredone of the key elements of leadership at SAP. Aiming at diversity in leadership, SAP also strivesfor a manager team of diverse age, gender and ethnicity. Real talent does not know any barrier ofage, and therefore career opportunities and moves may be based not on tenure, but on capability.This is often easier said than done since all human beings enjoy the comfort of being surroundedby people who understand their way of thinking and who communicate in their mother tongue, sothat even nuances can easily be expressed and understood. There is no doubt, management inIndia is more about managing people because, for example, mostly young colleagues need moredetailed guidance and support to carry out their tasks. And as with many things, there is nosimple way to understand nor is there only one precise formula on how to do things. However, itis very clear that the responsibility of a manager for her or his team members reaches much

further than in a Western corporate culture. Managers in India are seen more as a father figureby young employees, and those expect their managers to coach, guide and advise during thecourse of a project in a very intensive and comprehensive way.

SAP managers working from Germany had to learn that many people issues in India have ahigher priority than they would have ever imagined from their German background. Whereasproject management skills can be seen as universal, and project execution runs pretty similaracross all countries at least in theory, the softer part of management in India comprises a lotmore aspects, for which many colleagues from outside of India were not prepared. One has toexperience it: to understand that in rare cases, a marriage can completely derail an employee, andto realize that the employees parents have a very large influence on his major decisions, may it

be the next career step, the choice of employer or of the life partner. Any family crisis wouldhave effect on the office life although this principle may be valid universally, in India there isalways a certain amount of drama involved, which really disturbs the individuals performance.Therefore it also becomes the managers issue.

One should not believe that leadership in India, and more specifically at SAP Labs India, hasdeveloped as something completely different from what is lived in Palo Alto, Walldorf orShanghai. There are certain core beliefs that are part of every leaders job in a global


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organization, or they should at least be part of it: setsmartobjectives, give timely feedback, havemeaningful career discussions, focus on delivery in spite of promising study opportunities, careeradvances, international internships and the like; and help the team members by means ofcoaching, mentoring or guiding them to build their networks, to learn, to get customer exposureand to communicate appropriately in an international environment, inside and outside the

company. However, there might be a difference in India: a little bit of real attention and one-to-one discussion can mean so much more than following an HR procedure from the beginning to itsend religiously.


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The Talent Management Process

Since its foundation in 1998, SAP Labs India has grown within 10 years from 100 people to alarge company employing more than 4,000 people. Many IT companies in India experienced

similar or even stronger growth, but the Bangalore market has also been rife with cases of failedIndian operations of multinational companies. Of course, these flops often resulted in a bad press,and many times, companies decided to rollback all of their India strategy.

SAP Labs India has learned to manage the dynamics of a constantly changing job market and thespecific behavior of the workforce in India. For achieving this goal, the Labs has invested earlyinto a strong and capable HR team as well as into extensive market studies to prepare for the nextmovement. These measures enabled the company to systematically synchronize with thechanging organizational priorities and thus, they ensured satisfaction of all stakeholders.

Though one would always expect a drop in quality when it comes to the selection and retention

of people in a rapid growth scenario, the reality has been different at SAP Labs. It was possible tomaintain a high standard due to the professional management combined with efficiently designedpeople processes. During the first years of SAP Labs India, these processes were simple, but thecomplexity slowly increased with the growth of the Labs.

Attracting, retaining, and managing the talent within SAP Labs


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For example, the business units processes had to be continuously fine-tuned, as with the growthcame different demands and expectations from the unit managers. The standard developer profileceased to exist; now SAP Labs would look at the same time for highly specialized technicalsoftware architects, consultants with customer focus, lawyers for IT law, software testers and soon. Thus, the internal training curriculum had to offer flavors of all these different demands,

which were usually worked out together with the relevant business units, whereas the veryspecific content had to be delivered always by the unit managers themselves.

Today, the talent management process at SAP Labs India contains six steps which are describedin the following.

Talent Planning

At SAP, high-level budget planning normally starts two quarters before the beginning of the nextfinancial year. During this period, business cases are reviewed and approved. The different Lines

of Business (LoBs) make assumptions on the respective revenues to be expected for the nextyears, and they estimate the operating expenses they will incur, in order to realize those revenues.An important part of those expenses are of course the product development costs, and in softwarebusiness is it predominantly the salaries of the software developers. Therefore, the amount ofpeople in the budget for the coming financial years, the so called headcount figure, is one of thekey planning variables in the overall budgeting process. It defines the growth or consolidation ofbusiness units and as a consequence, it also defines the growth or consolidation of particularR&D locations like SAP Labs India.

The template for new business cases specifically requires planning managers to specifyheadcount split in high cost and low cost locations. Because of this, planning guidelines clearly

contributed to the steep growth of Labs India, as now, for a given amount of budget, moredevelopers could be put on a project in India, in Germany, or in the U.S. Although the high level budget planning starts pretty early, there are numerous rounds of refinement and detailedplanning, before the executive board of SAP would approve the overall plans and budgets. Theseare then also part of market analysis and guidance. The real talent planning can start in a specificlocation only in the first quarter of a financial year.

Typically, a certain Line of Business would have completed and approved its global planning,and then it would approach SAP Labs India to help build new teams, extending the existing onesor in rare cases consolidating groups or programs. Normally it would ask for hiring support,consultancy for growth strategy execution, additional workspace, or advice on how to get the

right managers aboard to build an organizational unit. After that, requests are consolidated, andLabs management identifies one local manager for each Line of Business as the head of the Indiaoperation, to develop and take ownership of the whole team. Hiring the Indian head is mostlydone internally as the management wants to provide opportunities to existing employees beforescouting for talent outside the company. The Indian manager works closely together with aGerman or U.S. counterpart to execute the plan. Foreign counterparts act as the bridgehead in theLoB, as this person is the channel and gateway to all the other groups within the headquarters.The composition of the team is then finalized and specific skill requirements are identified.


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Several issues like the long-term goal of the Line of Business, the period of management, thetime line for hiring,job descriptions, the workplace, and hardware and software are finalizedbefore starting the next steps. This prevents teams from rushing into hiring without understandingthe long-term objectives, and thus getting the wrong profiles aboard. In the early days, most ofthis was done informally, just based on e-mail communication, but in the last years, these things

have changed to formal processes and detailed procedures

Employee profile of SAP Labs India

Most common qualification Bachelor of EngineeringAverage age 28 yearsAverage experience 4.5 yearsAverage SAP experience 2.1 years

Talent Sourcing

The actual hiring happens during the talent sourcing step. During the planning stage, the focus ismore on the size of teams or number of people to be hired, while the sourcing process focuses onthe composition of such groups. Usually, a small hiring team is formed, which consists ofexperienced colleagues from HR and managers from the hiring unit. This hiring team has todecide on the mix of the team members, in terms of hierarchy, competencies and experiencelevels. If a new team is formed at SAP Labs India, a standard ratio of one development managerper 15 team members is sought. This manager usually has 7 12 years of experience in theindustry and is supported by three or four experts with a minimum job experience of 3 5 years.The remaining team members are younger, either fresh graduates or graduates with one or two

years of experience. In case of a team extension, it is usually easy for the local manager to definethe requirements for the new candidate, and then proceed according to the standard process.Forming a new team to develop a new product from scratch, is more complex, though. In thiscase an even more elaborate hiring process is needed. Today, it is often not possible to get highlyexperienced engineers, as the competition for skilled people, depending on the cycle of the jobmarket, is quite intense, and they are fewer in number. Therefore, the structure of teams at SAPLabs has also changed. According to the fast growth of the Lab, the teams also became larger, therange of experience for all team members became higher, and the teams became more diverse. Ingeneral, SAP Labs recruits its employees through different channels, before they are grouped intoteams and are assigned to the different development or organizational tasks. In India, thefollowing channels are available to get talented people aboard:


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Recruiting channels of SAP Labs India

Channel Contribution of hires in %

1. Employee referral >50%2. Self initiated application and headhunting ~30 %

3. Campus Hiring


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or position beforehand. On the other hand, the expectations of candidates and managerscan be met much more accurately if the exact team and role is known to both sides inadvance.

4. Other channels like newspaper ads, bill boards, road shows and the like, are also used

occasionally, but usually to increase public awareness of SAP Labs India as an employer,rather than to hire large numbers of people through such means.

Today, e-recruiting is becoming more and more important in the hiring process. It is part of SAPHuman Capital Management and was developed in Bangalore by the ERP team. The tool is used by the Labs India HR team for sourcing talent. Prospective employees, head hunters, andemployee referrals can be captured directly from the job postings at SAPs Internet

Recruiting funnel SAP Labs India 2007


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Talent Evaluation

Anyone who is not familiar with Indian conditions is usually very surprised and at timesoverwhelmed by the response to job ads. And indeed, the numbers are impressive: even way back

in 1998, SAP received 4,000 applications for a single job advertisement in the newspaper. It wasvirtually impossible to search and scan all these CVs, as on the one hand, no decent desktopsearch tool was available at that time, and on the other hand, many hardcopy CVs were received.The number of applications for jobs at SAP Labs India has constantly increased, but one needs tokeep in mind that only 1 2 % of the applications result in a hire. For example in 2007, roughly83,785 profiles were processed. Out of these, 21,784 were short listed, and with the support of athird party firm, 17,343 were tested and interviewed. 5,000 made it into the second round ofinterviews with SAP managers. Finally, 1,288 of those applicants were hired. Even universities inthe Western countries do not administer tests to 17,000 candidates per year, which is a trulyHerculean task. The profiles often include false or exaggerated assertions about projects andexperience, and even though this can be found out easily in a short interview, a lot of time and

commitment is required to do all those interviews with the same diligence. The biggest threat inthis process is that the managers finally give up, and after 10, 15 or 20 disappointing interviews,they just fill the position. Thus, they may end up hiring the second-best person to fill the opening.For the company, this approach is dangerous in the long-run. Therefore, SAP Labs India hasrecently established afour eye principle to avoid hiring of mediocre engineers as a result of the project pressure and thelow availability of suitable candidates. Overall, for the selection of people for managementpositions, there are usually three options:

1. Promoting a colleague from SAP Labs India;2. Hiring a manager from the market (either from India or abroad);

3. Getting an experienced manager from another SAP Lab or from another LoB

Every company follows a certain approach for getting the best people into the top positions. Allof the options have some pros and cons, but SAP believes to a very large extent in thedevelopment of its own talent.

Normally, at the entry level, candidates have to pass aptitude and technical tests that are used asa mechanism for short listing. At times, one can even find such aptitude tests used by bigcompanies on the Internet, so candidates can use them in preparation. Whatever innovative wayscompanies may find to surprise the candidates with new questions, those candidates will findeven more innovative ways to beat the system. Nevertheless, even then they prove their

cleverness with various tactics to best selection mechanisms and in their preparation for theinterview. Still, interviewer should be smart enough to surprise the candidate with new questions.Young graduates are also interviewed based on the results of the aptitude and technical tests, butnormally the interview is kept lean.

For experienced candidates, the job interview typically starts with a brief introduction to thecompany, the location of the job, the position and the expected tasks. The candidates then explaintheir profile, starting with their family, schooling, college, career, and assignments. Usually a lot


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of emphasize is put on finding out the real motivation of the candidate to join SAP. After that, theinterview moves to the functional and technical part, and finally it ends with the candidatesquestions about the job, salary, and next steps. Job interviews at SAP Labs India are jointlyhandled by HR and the involved Line of Business, and if the candidate is suitable for the jobopening, the offer letter may be given to them immediately.

Satish Venkatachaliah, Head of HR between 2002 and 2007 recalls: The role played by the HRcolleague in the interview process was very crucial. While the hiring manager focused onquestions to check What the candidate knows? the HR colleague focused on finding out if thecandidate is the right fit for the company. HR was empowered by SAP to overrule any candidatefound unsuitable due to the lack of behavioral competencies despite being technically competent.Hence HR team had to be possessing high functional competence to add value in the talentassessment process.

It is also a practice in India to request the candidate to sign a so-called surety bond with theemployer, to stay for a fixed period of time. One can say that this is done to discouragecandidates who would leave the company immediately after training. If the employee still leaveswithin the stipulated time, the company will retain the bond amount. However, SAP has neverrequested new employees to sign a surety bond as it was felt unethical. One believed that if theright candidate was selected, this would immediately reduce the likelihood of that person leavingafter a short period. Such misfits or cases in which the new hires expectations were not met,are rare at SAP Labs, and the attrition quota in the first year is much lower than in the followingyears. However, there have been cases where employees left a few months after joining, or evenworse, they did not even show up on the first day of their contract. Candidates who do not appearon their agreed first day of work, typically accept multiple offers in their job search, and theyoften make their choice just based on the salary. In 2006, NASSCOM, Indias informationtechnology trade body, introduced the National Skills Registry to stop such practices and toenable networking among HR managers to learn about ill behaved candidates. This move washailed by the industry, but the process is not consistently followed by the IT companies. In 2007and 2008, in the mad rush for talent, many firms continued hiring ignoring the skills registry.

In 2008, 1,900 candidates were given official offer letters, and out of this, about 80 % finallyjoined SAP Labs India. These numbers obviously display the great challenge that SAP has tocope with in India. This quota is a very important figure in the sourcing process; the so-calledoffer-to join ratio indicates the attractiveness of the offer and the employer. Whereas in the firstfive years of SAP Labs India, that quota had always been 95 % and above, in the overheating jobmarket up to 2007, it dropped significantly. But from 2008 onwards, it got closer to the 90 %mark again, which the Labs management feels is a good figure to work with and to provide theLoBs with new talent. Satish Venkatachaliah adds: One has to say with a sense of pride that wein SAP Labs never negotiated salary offered to a candidate despite the thousands of offers thatwe made. My philosophy on this was a very simple one Be absolutely fair How could I havebeen fair to an employee, if I was not fair to him as a candidate. If a candidate could negotiatewell she or he would get a fantastic deal, if not, a very raw deal, and this isnt fair. I wouldensure that we made the best possible offer that we could (based on our framework) and nonegotiations.


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Once hired, all new employees at SAP Labs India go through several weeks of induction training.Furthermore, they are usually assigned to mentors who accelerate their integration into teams andprojects. During the first six months, new joiners are given a mix of classroom training, on the- job sessions, and virtual electronic training. Everyone follows a certain learning map to getstructured training. All these measures greatly help new employees become integrated into the

company and to become productive 6 9 months after joining. Most fresh colleagues are alsogiven the chance to travel to other development locations at least once in the first two years oftheir employment. This provides them with a good opportunity to develop their own networkwith experienced fellow employees. But later in their career, they are sent to other developmentlocations to learn more about the different working styles, and to develop close workingrelationships with other senior colleagues.

The hiring process with internal candidates is a different one. Internal candidates are requested toinform their current managers before applying for other teams, and HR has published clearpolicies to avoid cross team conflicts caused by poaching. They are also interviewed, but theprocess is a lot leaner when compared to external hiring. In addition to that, candidates are onlyeligible to move to another team after having spent at least three years in one unit. This rule helpsboth the management and the employees with their planning of workload, teams, and careers.

Hiring and Reassignment

Job rotation is encouraged to provide further career options and to give employees the possibilityto widen their knowledge and experiences. The internal job portal helps them to find new jobopportunities within the company. Finding a suitable position is no longer left to ones personalcontacts and networks. As many IT companies, SAP offers its engineers a wide variety of careerchoices from Sales and Consulting to R&D around the globe. To support these assignments and

transfers across countries, SAP has a globally valid and fine tuned Mobility Policy that sets theguidelines and standards for such international job movements. From Labs India, every yearabout 3 % of the overall workforce make use of the transfer opportunities to Europe or the U.S., afigure that is much higher than the corresponding figures in German.

Performance Management

At SAP Labs, new employees are given a six-month probation period. During this period, bothemployee and the employer are entitled with special contractual provisions to separate within ashort period. Employees are assessed during this period, and after those six months, HR provides

formal letters to indicate the end of probation period and the beginning of a permanentemployment. Until 2000, SAP employees in development did not have formal performanceappraisals. In Germany, the developers were generally considered to be competent in their tasks,without any need for the managers to tell them what to do. However, this situation has changedover the years, and today, performance appraisal is compulsory. Corporate goals cascade down todepartment goals, and individual goals that are communicated at the start of the year andreviewed at the end of the year. Progress is also reviewed for all goals, once mandatorily in themiddle of the year and optionally several times during the year. Basically, the performance


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appraisal, which is conducted at least twice a year, provides structured feedback to the employeesabout their own development, the way they have worked, the way they are perceived by othersand what their share of the overall success is. At the same time, the company is able to develop apicture of its star performers, on those who exceed the expectations (the top 20 % 30 %) oreven consistently exceed expectations (the top 5 %). The high performers and top talents of SAP

are identified once a year as a part of the talent management exercise, a so called calibrationprocess, in which the senior management meets to discuss detailed proposals which werereceived from middle management. As a result, special opportunities are provided to furtherenhance the contribution of the top performers. These contain special training programs andinternship opportunities, which offer participation in special projects. Meetings with seniorexecutives are arranged as well for strong potentials to improve their visibility to the topmanagement. The majority of colleagues do a very good and solid job in a demandingenvironment and meet expectations by the end of the year, but on the other side of the spectrum,there are also some who do not meet their managers expectations. If it is established that this isnot a serious problem (e.g. due to some family crisis at home) or it is not a manager-employeerelationship problem, then a special coaching and support program is provided for those poor- performing employees. This formal process is called Performance Improvement Program(PIP), and it is initiated together with HR to monitor the performance on a specific set of agreedand measurable short term goals. After a period of three months, the employees have eitherimproved and the PIP is stopped, or they have to leave SAP Labs.

To fill gaps in their skills and competencies, managers and developers alike are encouraged toattend at least five days of training per year. The respective managers are responsible that thesetrainings taking place effectively. Those can either be classroom trainings or sessions offered inthe learning portal, which provides learning maps and several on-demand e-learning sessions. Forspecial needs, SAP also provides mentors or personal coaches specifically to those where thecompany feels that they are part of the high potential pool.

Retaining

In India, it is quite hard to find employees who have spent their entire career in one IT company.By contrast, most of the employees in state-owned corporations, banks and government officesspend their entire working life with only one employer. In the IT industry, employees tend tochange jobs after 3 5 years, and this is seen as a healthy change. Professionals who stay withthe same employer for more than five years are at times considered as low performers and lessambitious people. However, this is definitely not SAP Labs Indias view: the company providesspecial loyalty incentives (like company cars) for those who stay with SAP longer than fiveyears, and when filling management positions, it gives preference to those with a long SAP

history. Most vice presidents at SAP Labs India have been with SAP more than 8 10 years. Andthe attrition quota in that segment is as well the lowest of all age of service groups. A specialfocus has always been on those young performers who tend to leave the job after one or twoyears, as they are a big challenge particularly for product development companies. Special careersteps and incentives have been created to retain those colleagues who may leave without havingbeen really productive and without having been able to show their capabilities.


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SAP Labs India also offers additional incentives like promotion hikes, company cars, annualvacation and stock options to retain its employees. The right mixture of performance-based payand loyalty-based incentives has worked out to be quite successful for SAP Labs India. Besidesthe compensation and benefits, there are of course many more retention tools available and usedby SAP Labs India, to remain an attractive employer: financial and administrative support for

higher education is given, rotating programs with other subsidiaries are available, and specialprograms for the top talents of the company are provided.

In spite of the above mentioned efforts, roughly 10 % of the entry level employees still leavetheir companies within their first year of service, which is typical in India. One has to learn tomanage this. The software industry in India has increased its salaries on average by 10 15 %p.a. over the last five years, because most companies saw attractive salaries as a precondition tomaintain a competitive position in the hot market for thebest talents.

CompensationThe compensation and benefits offered by the Labs are a very local matter, in which the labsmanagement plays an important role. The compensation is administered by the Labs in closeassociation with the Lines of Business. It is the responsibility of the Labs management to ensureequality in terms of compensation across the different lines. In a country like India where theinflation is high, the annual salary increases are mostly in the double digits. As the professionalenvironment is highly competitive, salary increases can become a contentious point. Employeesdiscuss their salary revisions most often with their peers and even decide to quit if they are notsatisfied. Hence, it is important to reward good performance and also to ensure fairness asperceived by the employees.

What are the perks besides working for a highly successful company? SAP offers competitivecompensation packages. Pay is partly performance-related, and benefits can include relocationexpenses, profit sharing, bonuses, stock options, discounted loans, retirement plan, health andaccident insurances, and sports and leisure facilities.

2009 India's prestigious Dataquest Awardswith its "Top Software Company" award for 2009. SAP was selected on

the basis of its outstanding performance in the past year.

2008 SAP Labs India recognized as one of the top 50 best workplaces in the country across various industry sectors

and ranked among the top five employers in the IT software category, according to the 2008 study "Best

Workplaces in India (conducted by the Great Place to Work Institute).

2007 SAP Labs India named among the "Top 10 Great Places to Work" (conducted by BusinessWorld).

2006 SAP ranked #39 among Barron's "World's Most Respected Companies," a highly prestigious roster of 100

companies rated on reputation.

SAP Labs India received "Recruiting and Staffing Best in Class Award" from the Institute of Management

Studies and Research.

SAP ranked #90 in BusinessWeek magazine's online ranking of "Most Innovative Companies."
http://www1.sap.com/about/newsroom/news-releases/press.epx?pressid=11910http://www1.sap.com/about/newsroom/news-releases/press.epx?pressid=11910http://www1.sap.com/about/newsroom/news-releases/press.epx?pressid=11910


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2006 Employee Survey Results

To gauge employee's level of satisfaction, SAP conducts an anonymous, biannual globalemployee survey carried out by an external provider.

With an 80% participation rate of SAP employees worldwide, the survey results indicated that:

91% believe strongly in SAP's products and services

90% believe strongly in SAP's goals and objectives

86% are proud to work for SAP

79% recommend SAP as a great place to work

72% state that SAP offers opportunities for personal development and growth


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Appendix

1. www.google.com

2. Managing Innovation from the land of ideas and Talent

The 10-Year Story of SAP Labs India Class Neuman and Jayaram Srinivasan

3. Hepse, G. and Wall.C. (1976), The demand for participation among employees,Human Relations, 29, (411-425).

4. Aghazadeh S.M. and Seyedian M. (2004). The high-performance work system: isit worth using? Journal of Team Performance Management 10 (3/4), pp. 60-64.Autospies Website (2008, February 12). GM Report Losses Of $38.7 BILLIONin 2007! Retrieved September 2nd

5. 2008 from http://www.autospies.com/news/GM-Report-Losses-Of-38-7-BILLION-in-2007-26439Bunkley N. (2008, April 12). G.M. Says Toyota HasLead in Global Sales Race. Retrieved August 30th

6. http://www.nytimes.com/2008/04/24/Business/worldbusiness/24auto.html?_r=1&ref=business&oref=sloginBuss D. (2008, June 17). Desperate ToDownsize: American Consumers Dash to Cheaper Fuel Sippers. RetrievedSeptember 4th

7. 2008 from http://www.autoobserver.com/2008/06/Desperate-to-downsize-american-consumers-dash-to-cheaper-fuel-sippers.htmlGeneral Motors Website

(2008). General Motors Corporate Information- About. Retrieved August 30th8. 2008 from http://www.gm.com/corporate/about/Kaplan R. and Norton D.

(1992).The Balanced ScorecardMeasures That Drive Performance. HarvardBusiness Review, pp 71-79

9. hrmba.blogspot.com

10. mbafin.blogspot.com

11. a2zmba.blogspot.com
http://www.google.com/http://www.google.com/

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