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TRANSCRIPT
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Talent Management Challenges
faced byPublic Sector Enterprises in
India
AIMARobertBosch36thNATIONALCOMPETITIONFORYOUNGMANAGERS
THEME:ManagingOrganizational&ManagementChallengesinIndia.
Team: 1)JeeteshBansod
2)MansiDubey
3)SonalBansal
Organisation: BharatPetroleum Corporation Ltd.
Address: Plotno.A5andA6,Sector 1,UdyogMarg,
Noida201301
TelNo: 09650130278
FaxNo:
Email: [email protected]
Numberofwords: 3000
DateofSubmission: 20.07.2010
Signatureof aTeamMember
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TableofContents
Introduction.............................................................................................. 3
FindingsoftheSurvey&Analysis............................................................. 8
Recommendations.................................................................................. 25
CaseStudy............................................................................................... 28
Conclusion............................................................................................... 31
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Introduction
In Peter Drucker's article, "The Future Has Already Happened," the
authorpredictsthatthe"dominantfactorforbusinessinthenexttwo
decades,absentwar,pestilenceorcollisionwithacomet,isnotgoingto
beeconomicsortechnology. Itwillbedemographics." Peoplearethe
differentiatorswhenitcomestocomestocompetitiveadvantage.Jack
Welchfurtherpropoundedtheconceptofrightpeople intherightjob
whoareacompetitiveadvantage.Hesaid,Ifyoupicktherightpeople
and give them the opportunity to spread their wings and put
compensationasacarrierbehind ityoualmostdon'thave tomanage
them. But it is notassimpleandas admitted by JackWelch himself,
Mymainjobwasdevelopingtalent.
The term talent refers to a person that has demonstrated great
performanceandisseenashavingthepotentialtobepromotedatleast
two levels. While Talentmanagement is the additionalmanagement
processes and opportunities that aremade available topeople in the
organizationwhoareconsideredtobetalent,(Dr.EddieBlass,2007).
Itisaconscious,deliberateapproachundertakentoattract,developand
retainpeoplewiththeaptitudeandabilitiestomeetcurrentandfuture
organizationalneed
SHLssurveyof280HRmanagersreportedseveralchallengesfacedby
HRdepartmentsinvaryingordersofpriority(Pandit2007)(seeTable1).
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Table ChallengesfacedbyHRdepartments.Challenges PercentageRetentionoftalent 73%Identificationandhiringofrighttalent 53%Leadershipandmanagementdevelopment 50%Compensation 45%Staffingoravailabilityoflocalresources 44%Employeemotivation 38%Culturebuilding 36%Changemanagement 35%Successionplanning 31%HReffectivenessmeasurement 30%HRtechnologyandimplementation 12%M&Aintegration 11%Industrialrelations 6%TableI
OurreportlooksattheissuesandchallengesfacingPSUswithregardto
talentanditsmanagement,atopicwhichisparticularlyrelevantattime
whentheworldisfacinga`talentcrunch.
ThepublicsectorisinacrisisontheHRfront(TVMohandasPai,2006).
Inthenextfiveyearsaboutonethirdofthepublicsectoremployeeswill
retire.Thepublicsectorwith85lakhpeopleandaverageageof47
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48hasbeendownsizingand hasn'thired in15years.There's abig
challenge there, as the average age has crept up, and there is no
pipelineofyoungerpeople.And thepublicsectorbusiness isgrowing.
The pending wave of retirements and competitive recruitment
pressures from other industries are therefore the major challenges
perceived.
PSUsattractedhighlycompetentpeopleinthepast.Itusedtobea
prestigious
thing
for
engineering
graduates
from
leading
educational
institutionstojoincorporationslikeNTPC,BHEL,BEL,HMT,HALandthe
likeintheseventiesandeighties,(TVRao,2009).Theeraofseventies
wascharacterizedastheHRLeadershipErainPSEs.
Howevertherecenttrendsindicatethattheprivatesectorisbecoming
a preferable employer as compared to public sector because of good
compensation and better work environment. Also as indicated in a
combined study(TheNewManager,Leaders in the making,2008 )by
Deloitte&AIMA,thefollowingtheparadigmshiftscharacterizetheNew
IndianManagers:
ManagersPreLiberalization ManagersPostLiberalization
Knowledgeof rules, regulationsand
bureaucracy
GlobalOutlook
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Ability to work in hierarchical
environment
Manages innovation and
efficiency
Needtomanageunionsononehand
andbureaucracyontheother
SeeksEmpowerment
Little incentive for innovation,
efficiencyenhancement
Collaborates across
hierarchies,workslaterally
Littleappetiteforrisk Impatientwithbureaucracy
NationalFocus.Littlevisibilitytothe
outsideworld
Expects to be rewarded for
outcomesv/sinputs
Silofocused MotivatorandMentor
TableII
Companies are now looking at ways and means of providing a work
environmentwhichcaterstothecharacteristicsofNewIndianManager.
WhilePSUsarealsoremodelingthemselvestoattractandretaintalent,
the pace is not fast enough as compared to the opportunities being
presentedbytheprivatesector.Asperthefindingsofthestudy,thisis
leadingtoanincreasingchallengeinattractingfreshtalentandcausing
migrationofcurrenttalenttoprivatesector.
Asurveywasadministeredto80seniormanagementroleholders(HR)
invariousPSUswithobjectivesasstatedbelow.Outofapproximately
80respondentsinvitedtoparticipateinanonlinesurvey,approximately
50revertedgivingaparticipationrateof62.5%.Thecomprehensiveset
of talent management practices were focused which influence
employee motivation and commitment that lead to organizational
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performance.Itwastriedtoensurethatthequestionnairecoveredthe
broadestspectrumofvarioustalentmanagementaspects. Asaresult,
the questionnaire included items about the full range talent
managementpracticesandchallenges.
Objective
Toidentifyvariousupcomingchallengesoftalentmanagement
Toestablishupcomingtrendsintalentmanagement.
Toidentifythewaystoretainthebesttalent.
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FindingsoftheSurvey&Analysis
AwellknownMcKinsey&Companyreportcoinedtheterm"talent
mindset"todescribethe"fundamentalbeliefintheimportanceof
talent"thathighperformingorganizationsexhibit.Ifwelookatthecore
beliefdrivingthetalentmanagementinPSUsitshowsthatitismainly
skewedtowardstheaccelerationofdevelopmentofthehighpotential.
FigureI
This is the developmental perspective that proposes talent
management is about accelerated development paths for the highest
potential employees (Wilcox, 2005), applying the same personal
developmentprocesstoeveryone intheorganization,butaccelerating
theprocess forhighpotentials.Hencethe focus isondevelopinghigh
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potentialsortalentsmorequicklythanothers.Thisshowsthatstillthe
TalentMindsethasnotdevelopedtotheextenttowhichitqualifies
for the cultural perspective that believes talent management is a
mindset (Creelman, 2004), and that talent is needed for success
(Michaels, HandfieldJones, & Axelrod, 2001). This can be an
organization where the development of every individuals talent is
paramount and appreciated, and allowing people to explore and
develop their talent becomes part of the work routine, (Eddie Blass,
2007).
ItwasfoundfromthesurveythatmostofthePSUs(80%)nowhavea
talent management policy and talent mapping is a regular process in
these organizations. The talent management has been regarded as a
highlysignificantissuebyapproximately80%ofthelinemanagers.The
response of the senior managers to the significance of talent
managementintheirorganizationsisgivenbythegraphbelow.
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FigureII
Whenaskedaboutwhichfactorshavecontributedmosttothegrowth
oftheirorganizationsthenthefollowingthreeemergedasthemain
factors:
FigureIII
Itcanbeseenthatalthoughasoundbusinessstrategywhichliesatthe
core, ishighlyregardedbytheseniormanagersasamajor factorthat
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contributestogrowthatthesametimeitisthehighqualityemployee
underthestrongleadershipwholeadtothesuccessofthestrategy.
Talent management as mentioned includes whole gamut of activities
involving attraction, retention and development of talent. It was
therefore inquired which are the areas of strength and weakness in
terms of attraction, retention and development of talent across
managementcadres.
Attraction Retention Development
Junior
Management
Middle
Management
Senior
Management
FigureIV
ItisevidentthatPSUsneedtogearuponretentionofmiddleandjunior
management cadre otherwise in years to come when approximately
15%babyboomerswillretireinthenextfiveyearsand30%innextten
years%( as indicated by the survey respondents) a huge talent deficit
shallbecreated.
Weakness Strength
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FigureV
Itisseenfromthegraphabovethatthemajorchallengethatisfacedby
thePSUsaremainlythefactorsthatarecontrastingtoprivatesectorin
India. Thenumbersofjobgroups/gradesaremuchmoreforPSUsthan
anyotherprivatesectorcompany.Totopitallthepromotionis
generallytimebound.However,itstimeforPSUstoidentifytheways
togetoverthesechallenges.CompanieslikeNTPCandONGChavebeen
able
to
work
on
the
strengths
and
right
fit
talent
and
are
now
widely
acclaimedfortheirtalentmanagementpractices.DPEguidelinesnow
providealotofscopetoworkoutinnovativelyinthedefined
framework.
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FigureVI
FigureVII
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It isseen from the graphsabove thatmany professionalsbelieve that
retention is simply a matter of offering an employee better
compensationthananothercompany.
Money iscertainlyadriverwhenemployeesareconsideringachange.
AACE International project controls professionals indicate that while
compensation and benefits are important, there are things that are
even more important. Survey by AACE shows only 19 percent of
professionals
would
have
stayed
at
their
last
jobs
compared
to
24
percent who said they could have been retained if offered
development/advancement opportunities and 28 percent who would
have stayed if the culture/work environment was different. Therefore
the major dimension that PSUs need to work on is to improve their
attractiveness.Thereisadireneedtostrengthentheinternalbrandfirst
togiveastrongbasetotheExternalBrand.Theemployeeswithinthe
organization carry the image to external world.
FigureVIII
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The above chart indicates that the major focus area for the talent
management should be the junior management. It is imperative to
realize the needs of GenY so as to enhance their engagement levels.
Effortsshouldbemadeinthedirectionthatanemotionalconnectionis
established.InastudybyDeloitteDoYouKnowWhereYourTalentis?
ConnectingPeopletoWhatMatters,2008animportantpropositionon
the connection part has been touched. Three kinds of connections
matter most when it comes to performance: connecting people to
people in ways that promote personal and professional growth,
connectingpeopletoasenseofpurpose,andconnectingpeopletothe
resourcestheyneedtodogreatwork.Theconnectmodelisshownin
thefigurebelow:
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FigureIX
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FigureX
Itwas largely felt that thereneeds tobea focusedapproach towards
the employment strategies that should cater to the critical positions
which cannot be risked at any cost. Also the prospective employees
needtobemadeawareoftheopportunitiesandinnovationinPSUs.
StepsthatcouldbetakentoImproveEmploymentStrategy
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FigureXI
Withincreasedsuccessofliberalization,thecountryrealizedthatthere
isnoalternativetotalentmanagement.ThePSUshavecometoterms
withreality.Giventhedifficultiesincompensation,thereisa
recognitionthatPSUscannotcometocompetewithMNCsforsalaries.
TheyhoweverrecognizethattheirCTCsareunderestimatesofwhat
theyreallygivetotheiremployees.Thisrecognitioncoupledwiththe
reformsinPSUshasputpressureonthenewHRmanagerinPSUsto
create aperformancedrivencultureasshowninthefigureXI.Today,
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almostallPSUshaveDirectorlevelpositionsforHR.Thedirectivefrom
theDPEappealingtoallPSUstorevamptheirPMSsandmakethem
morerobustandtransparent,especiallyinviewoftheintroductionof
performancebasedpay,islaudableandmaygiverisetosome
innovationsandaccountability.
(TVRao,2009)
FigureXII
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A frequent problem arises when the high potential is not adequately
compensatedand therefore there isa requirement feltto rewardand
acceleratethehighperformersasshowninFigureXII.Asperthesurvey
reportby2nd
PayRevisionCommittee,44%CPSEsfavourforcomplete
autonomyinthepaystructure.Nearly66%oftheCPSEsfeelthatthere
shouldbebroadguidelinesforpaystructurebuttheissueoffinalization
ofperquisitesmaybelefttotheindividualorganization.SofarasPerks
are concerned, 58% respondents are in favour of autonomy in fixing
perks.44%oftheCPSEsareoftheviewthatasthepayandperksofthe
employees in the organization has to be generated through internal
resourcesthesemaybedecidedbytheindividualorganization.
For retaining the talent, About 33 % of CPSE`s have suggested better
pay packages, Perks & benefits like offering ESOPs, Profit linked
incentives etc will help, 32 % have asked for continuous training &
development efforts forupgradation of technical skills and remaining
(35 %) have said that they should be given higher status, more
autonomy & better services condition along with full responsibility &
accountabilityof theirrelatedarea.PSEsare losingtheirmanagement
levelemployeestotheprivatesectorduetononcompetitivepaylevels.
To recruit the top in thejob market, companies must understand the
localsalarymarketandwhatcompaniesareoffering Indianrecruitsto
ensurecompetitivesalarylevels.Asthedemandfortalentcontinuesto
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increase,thecompanieswhichdonotoffercompetitivesalarypackages
risklosingtalent.
Following are the obstacles pointed by the respondents
preventing talent management programs from delivering
fromdeliveringbusinessvalue
Percentage 20% 40% 60%
Seniormanagement
dontspendenough
highqualitytimeon
talentmanagement
12.73%
Linemanagersarenot
sufficientlycommitted
topeople
development
12.73%
Organizationissiloed
anddoesntencourage
constructive
collaborationand
sharingofresources
9.09%
Linemanagersare
unwillingto
differentiatetheir
talentastopaverage
orunderperformers
14.55%
Seniorleadersin
organizationdonot
aligntalent
5.45%
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managementstrategy
withbusinessstrategy
Linemanagersdonot
addresschronic
performance
effectively
9.09%
SuccessionPlanning
and/orresource
allocationarenot
enoughtomatchright
peopletoroles
29.09%
CEOand/orsenior
teamdonothavea
sharedviewofmost
pivotalroles
5.45%
Others 1.82%
TableIII
AnothersignificantconcernforthepublicsectorasshowninTableIIIis
succession:asseasonedprofessionals leave,whowilltaketheirplace?
Attractingexperiencedtalentisdifficultintodayscompetitiveclimate.
Other industries have initiated aggressive marketing and attraction
strategiestoacquiretoptalent.Seniorleadersacrossthepublicsector
understandthesechallenges,andarebeginningtorespondeffectively.
AnalysisofCriticalPositionsinPSUs
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Themostcriticalpeople/talentissuesfacingPSUs
Percent 20% 40% 60% 80% 100%
Retainingkey
talent16.22%
Developing
leadership
talent
27.03%
Attracting
specifictypesof
talent
8.11%
Attractingnew
talent 12.16%
Keepingupwith
marketneeds9.46%
Managing
diverse
workforce
5.41%
Increasing
demandsfor
worklife
balance
10.81%
Managing
virtual/remote
work
arrangement
1.35%
Compensating
forinadequate
skills
1.35%
Retirementof
babyboomer
generation
4.05%
Increasing
workforce
diversity
4.05%
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TableIV
Mostcriticalrolesintermsofattractingandretainingemployees
Question Score1(very
critical)2 3 4
5(not
critical)
1. Project
Management
2.000
2. Technicalwork 2.222
3. Business
development
1.583
4. Projectlead 2.462
5. Field
operations
2.174
6. Researchand
development
2.593
7. Innovation 1.760
8. Businessunit
leadership
1.500
9. Senior
management
1.480
10. Programme
Management
2.520
TableV
CriticalPositions
as shown in Table
V
are the senior leadership
positions.However the leadershipdevelopment isan important factor
that would help in reaping the benefits of the critical positions. PSUs
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today require leaders who can initiate process of transformation by
bringing transformativeshifts in the mindset, outlook and perspective
of their followers with their visionaryappeal.Gill et al. (1998) believe
that the new post bureaucratic organizations will require
transformationalleadershipthatenablesflexibility,horizontalnetworks,
high trust relationship, adaptability to change and uncertainty,
innovation and empowerment of employees. Their leaders in the
competitiveenvironmentneedtobetransformationalwhoareableto
protect their vision powerfully and create support for it maintain a
momentum and empower others to take responsibility for realizing
their vision (Vishalliand Kumar, 2004).This requiresparadigm shift in
leadership.
Recommendations
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Themajorfindingscanbelistedasbelow:
There is high level of attrition being recorded at the juniormanagementlevel
SeniorManagementRolesaresignificantlyimportanttodelivertheresultsanddrivethejuniorandmiddlemanagement.
There is a dire need for image overhaul and to increase theattractiveness
Culture with a talent mindset needs to be developed whichvaluesperformanceanddrivesengagement
Focusedapproachtowardsmanagementofrighttalent
Toaddress
to
the
above
pain
points,
it
is
suggested
that
the
following
actionspoints(FigureXIII)tobetakenuponpriority.
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FigureXIII
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CaseStudy
NTPC(source:EconomicTimes,June,2010)
Thepower
major
employs
about
25,000
die
hard
loyalists,
whotakeprideinthe35yearoldbrandanditsempowerment
attributesandarediehardloyalists.Callitbrandingthrough
inspirationsettinguppower stations in record time, lighting
everyfourthbulbinthecountry,manpowerproductivityetal.
Thatmayexplain theultralow0.9%attritionand thehighly
efficient0.82mantomegawattratio.
The company's 22 townships are a major draw. These are
fullyequipped townships with schools, hospitals, swimming
pools, auditoriums, stadia and the works, which are owned
andmaintainedbythecompany.
NTPCshuns from lateralhiringatmiddleandsenior levels. It
preferstorecruit"actionoriented"peopleoverthosewhoare
"articulate". So far as policies go, along with the Right to
Information, NTPC regularly uploads them on the company
intranet and strives to create a transparent culture. And to
blur the linebetweenexecutivesandnonexecutives further,
it has a quality circle at the plant levelwith awell laid out
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Whilethequalitycirclelookstheregionalas
wellasthecorporatelevel.
Whilethecompanyisnowdevelopinga
pipelineofleadersforkeyleadership
positionswithitshomegrownLeadership
AssessmentandDevelopmentSystem
(LEADS),ithasalsocomeupwithasystem
ofrewardingexemplaryideasfromwithin.
The
Idea
Portal
of
NTPC
(IPoN)
and
NTPC
OpenCompetitionforExecutiveTalent
(NOCET)aresterlingexamples.
WhileIPoNdealswithin-housesuggestions
onproductivityimprovement,NOCETis
morefocused,whereinthechairmanand
directors
throw
up
theme/s
for
the
year,
for
whichinnovativesolutionsaresoughtfrom
employees'teams.
participation forumthe core of the quality circle is the plant
council. While the company is now developing a pipeline of
leaders for key leadership positions with its homegrown
LeadershipAssessmentandDevelopmentSystem(LEADS), ithas
alsocomeupwithasystemofrewardingexemplary ideas from
within. The Idea Portal of NTPC (IPoN) and NTPC Open
CompetitionforExecutiveTalent(NOCET)aresterlingexamples.
While IPoN deals with inhouse suggestions on productivity
improvement,NOCET
is
more
focused,
wherein
the
chairman
and
directors throw up theme/s for the year, for which innovative
solutionsaresoughtfromemployees'teams
We see that NTPC has leveraged on the strengths and have
achieved in high engagement levels of the employees.
Development of talent and Innovative practices clubbed with
seniormanagementcommitmenthasworkedwondersforNTPC.
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ONGC(source:CorporateIndianCompanies:ForgingNewTalentPipelinesandCreativeCareerPathwaysNovember2008SHRMIndia)
ONGCis aleadingoilexplorationandproductioncompany,
rankedNo.1inAsiaandNo.3globally(Platts250GlobalEnergy
CompaniesList2007),withinterestsinrefining,liquifiednatural
gas,powerandpetrochemicals.ONGC,theonlyIndian
corporationintheFortuneMagazineslistofWorldsMostAdmired
Companies
2007,
operates
in
18
foreign
countries
throughitswhollyownedsubsidiary,OVL,andhasaworkforce
ofaround32,800employees.Asastateownedlistedcompany,
OilandNaturalGasCorporation(ONGC)hastraditionallyoperatedonthepracticeoflifelongemployment.Yet,keepingin
syncwiththechangingmindsetsoftodaysyoungpeople,ONCGnow
offers
four
year
term
appointments
at
higher
remunerations
tomeetthedemandsoffrontlinefieldoperations,aswellas
reemploymentofformeremployees.Further,withanoverall
focusonthecompanysyoungworkforce,ONGCoffersdevelopmentopportunitiesandchallengingassignments.ONGChasalsointroducedanewcareeroptionthedualcareer
ladder.ONGChaskeptpacewithchangingscenariorealizingthe
expectationsforGenYandatthesametimeengagingpeople
acrossalllevels.
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Conclusion
PublicsectorHRneedstoworkharderatsellingitselftoattracttalent.
ThecasesofNTPCandONGCclearlyshowhowdespitehaving similar
challengesasfacedbyotherPSUs,theyhavebeenabletocarveaniche
amidstpublicaswellasprivatesectorindustries.
The sector has to combat the negative perception that itsjobs are
inferior to those in the commercial world, said Thomas Burke. "The
private sector is seen as dynamic and fastchanging," he said. "Unlike
thepublicsector,itisregardedastheplacewhereambitiouspeoplego
to work". A cultural change encompassing performance orientation,
transformational leadership, and strong leadership pipeline and
challengingassignmentswouldbeimperativesforPSUs.
The public sector must work with a focused approach to reap the
maximum benefits. Talent Management needs to be addressed on
priority to meet the challenges posed by rising talent demand supply
gapandsurvivingintheageofexcessiveglobalcompetition.