Case Of Texas Instruments

STRATEGIC HUMAN RESOURCE MANAGEMENT: CASE OF TEXAS INSTRUMENTS (INDIA)1 Background The Indian arm of Texas Instruments, TI (India) started operating in 1985. TI become the first multinational to set up such a facility in India with TI (India) being one of TI’s largest R&D centres outside the United States. Since then the organisation has grown to more than 900 employees by May 2004. The Indian operation is well recognised through out the global network of TI. This centre has been able to create innovative chip designs and has added value by bringing forth newer and innovative products. TI (India) works in the areas of digital signal processing, analog and mixed signal devices, micro controllers and logic devices. The work is more inclined towards hi-end technology and caters to the needs of the clients who demand faster and radically newer innovation. The strategy of the organisation is: “Creating ‘Value’ by producing products and technologies that make us and our customers sustainably different from the competition; Growth by competing in high-growth markets; and Stability by providing consistently good financial performance.” TI (India) is recognised for its professional HRM. It was ranked as #1 “Great Place to Work” in the survey conducted by the Businessworld and Grow Talent in the year 2003. HR Department The HR department at TI (India) is managed by nine employees headed by the Director – HR. It has a mix of functional and business structuring. The main functional sub-divisions are compensation, sourcing and training and organisational development. The team manages these sub-divisions and the HR sections of individual business units. 1

Prepared by Sandeep K. Krishnan, student, Fellow Programme in Management and Prof.Manjari Singh, for class discussion only. The authors would like to acknowledge the support of Mr. V. Kartikeyan, Director – HR at Texas Instruments, India for support for the case study. The authors would also like to thank the HR department and other employees who spent considerable time with the authors in discussing various issues related to the development of the case. Teaching material of the Indian Institute of Management, Ahmedabad, is prepared as a basis for class discussion. Cases are not designed to present illustrations of either correct or incorrect handling of administrative problems. Contact email : [email protected] / [email protected]

Figure 1 shows the organisation of the HR department at TI (India). The specific HR issues and needs of a business unit is taken care by the business HR manager looking after that unit. The organisation of the HR department along the generalist and specialist lines has helped in operational efficiency. This helps HR professionals to understand the specific needs of the business units and respond effectively by taking proactive actions. This structuring enables better communication and support from the line managers. SHRM Process The executives in the HR department understand the importance of aligning the activities of the department with the business goals. Mr. Kartikeyan, Director – HR conceptualises the strategic HR as “aligning the people strategy towards the business needs”. He comments that the competitive advantage of Texas Instruments lies in the knowledge base of its highly talented employees. Since the firm operates in an industry where cutting-edge work in the field of technology is done, acquiring and managing talent and is critical. This involves three critical questions: ‘how to get them?’; ‘how to get them to do what they are supposed to do?’; and ‘how to keep them?’. The stated vision of the HR department at TI (India) is “To be a strategic business partner of TI (India) operations in all aspects relating to managing people and human resources. We commit to do this by constantly being a ‘customer-aligned’ organiation and pursuing excellence in all our initiatives and endeavours.” The people strategy of TI (India) is given in Figure 2. The mission of the people strategy is to build an organisation that would help employees to excel in the work place. People strategy indicates the importance given by the organisation to the employees as a strategic competitive resource. The strategy is to get the best people, grow people to be their best, and challenging and engaging people to give the best they have to offer. The people management at TI is based on the philosophy that ‘Great Leaders’, ‘Great Work’ and ‘Great Rewards’ will make the employees work to the best of their ability for the organisation. The strategic alignment of the HR department aims at striving towards becoming the “CEO’s closest ally”. This involves clear understanding of the business context and ability to formulate and implement the people strategy according to business needs. At

TI, HR department is given due significance through representation in top management team involved in strategy formulation and implementation. The leadership team in India designs the strategy for the year based on the broader direction provided by the worldwide team. Representatives of the various business units and functions are part of this leadership team. Mr. Kartikeyan, Director – HR represents the HR department. He provides information regarding the organisational context and external market that influence the strategy formulation and implementation. The representation of the HR department ensures that the people related issues are adequately informed. Director – HR views these avenues as an opportunity where HR department can add value and take the role as a business partner. He observed, “The representation in these forums reminds that HR has a responsible role to play as a business partner”. Thus the representation of HR department in the top management teams ensures that it gets opportunity to be strategically proactive. The major activities of the HR department are planned according to the overall business strategy for the year. This helps in direct translation of the business strategy into HR strategy. The key result areas for the HR department that are drawn from the strategy are prioritised annually. The top management provides support in terms of resources for the initiatives of the HR department. The HR department has prioritised its activities and use of resources according to the strategic importance. Most of the activities that are more administrative and operational in nature are either automated or outsourced. The organisation uses HRIS software that helps to reduce the burden of record maintenance. The use of HRIS has helped to get better information for decision-making and the HR staff can devote more time for managerial and strategically important activities. The critical HR functions like performance management are done online. All the employees have online access to their records through the HRIS. The other major area where the HR department has worked on to improve productivity is outsourcing of operational and administrative jobs. This includes a large chunk of work related to recruitment. The outsourcing has helped to free the resources of HR department and also increase the efficiency of the whole process. The most critical aspect in the success of effective human resource management is the participation of line managers in the HR processes. In the HR management process at TI (India), line managers play an active role in recruitment and selection, performance

management systems, employee counselling and training. Ms. Sabari Madappa, the business HR manager for software centre for excellence explains, “The project managers and other line managers give equal importance to the weekly HR meetings as they give to the project related meetings. They show high degree of concern towards the issues related to HR management and participates actively in the HR related activities”. Illustration of the SHRM Process: For the year 2004, the Indian operation was identified as a potential area of growth for the wireless business by the TI worldwide team. As this was considered as a major strategic direction for the Indian operation, the leadership team in India was expected to formulate strategy supporting this broader direction. The Director – HR who represents the HR department provided information regarding the people sourcing issues associated with the growth of the India centre. He gave a picture of the labour market dynamics and possible sourcing strategies that can be looked into. The HR department, especially the HR manager concerned with sourcing, collected information that included the data on the availability of the required talent in the market, the current state of the campus recruitment and the strategies played by the competitors. In addition, HR department consulted concerned authorities at various units and other functions to understand the required competencies and possible training and development mechanisms that are associated with the growth process. Director – HR set the goals for his department regarding sourcing and developing the talent required for implementing the strategy. For the sourcing of the necessary number of employees for the growth, the HR department (especially the sourcing manager along with the Director – HR) designed the HR strategy to be followed. The targets were set as performance parameters for the concerned professionals and the various initiatives like outsourcing of the recruitment, boosting of employee referral schemes, etc. were taken to speed up the process of meeting high targets. Meeting the sourcing targets was considered to be the major performance target for the sourcing manager. However, since the sourcing was considered to be a major strategic objective of the HR department, meeting the target related to the sourcing was also considered to be a performance parameter for the department. Targets were set for each quarter and reviewed every month. Informal reviews of performance on the set targets were done every week.

HR Sub-Functions The success of the SHRM lies in integrating the various HR processes towards the common goal. The critical aspect would be the inter-linkages between sub-functions like compensation, performance management, training and development and career management. The three major divisions of the HR department at TI namely compensation and benefits, training and organisational development and sourcing plays critical role in the HR management effectiveness. Sourcing: As the organisation operates in an industry where quality talent is hard to find and there is enormous growth potential, recruiting is of high strategic importance. The organisation has hired consultants who look after sourcing of potential candidates after screening the resumes. The business units drive the recruitment at Texas Instruments. Each of the business units puts forth their need for manpower. This is sourced either through the candidate pool available with the organisation or they look from external sources. The jobs available at each of the business units are announced through the organisation intranet. This helps in internal sourcing and employee referrals. Employee referrals are regarded as a major source of recruitment. Fresh candidates are recruited through campus recruitment. Great work and good reputation in the campus has helped it to be one of the most preferred employers in the campuses it visits. The organisation typically adopts the strategy of building its own human resources. The organisation invests considerable efforts in training and development of the employees. It seldom goes aggressively in to the labour market to pick up experienced employees and hire them based on better pay. This helps in building a committed workforce that values the work and is rewarded for its association with the organisation through internal growth opportunities. The organisation uses rigorous interview standards that help in getting the right kind of employees with the desired technical proficiency and behavioural match. Advertisements of the vacancies are also published in leading newspapers. This helps in branding and increasing the public knowledge about the domains of expertise of the organisation.

The line managers help in recruiting the right kind of people they want. As a basic principle, TI understands that line managers best know the kind of the person they need and HR department should act as a sourcing agent to the business units. As far as this role is considered, HR department puts in considerable amount of efforts in proactively identifying the manpower needs of the business units and looking for the potential hires through sources like consultants. HR department realises that the use of technology for hiring process is poor. It is planning to improve online processes for recruitment especially in the areas of accepting the resumes and scanning them electronically. The organisation has also changed the name of the staffing function into sourcing, as basically the role is to provide the business units with potential candidates rather than staffing. Compensation and Rewards: In an industry where finding good talent and keeping them is critical, right compensation management plays a critical role. Ms. Lata Subramanyan, who heads the compensation and benefits function, feels that it is not just high compensation that matters in an organisation like Texas Instruments. According to her, “It is the great work and satisfaction at work that keeps people here”. The organisation scans the market and fixes its compensation and rewards schemes to the median of ongoing rate. This policy helps to give the employees fair rewards. The structuring of compensation also takes care of linkage to performance of the business and the individuals. The compensation is split in to various components that include a fixed cash component, ESOP, an array of benefits and a variable component that is linked to individual, business unit and organisation performance. A standard formula is used for calculating the compensation of Texas Instruments worldwide. The HR department interacts with the employees to understand the compensation dynamics in the market. This helps to position the compensation package according to the market standards. The organisation takes special efforts to ensure that they don’t loose good employees due to inadequate compensation. The HR department was even proactive in certain situations. For example, sensing that the competitors who have set up new facilities will be poaching the employees from a certain business unit offering better rewards, HR managers proactively communicated to the employees and restructured the compensation packages to meet the challenge posed by the competitors. The organisation also tried to

minimise the impact of business slow down on employees. High degree of cost control was initiated and no pay cuts or downsizing were done. Managing short-term crisis by clearly understanding the business situation and acting towards long-term goals helped the organisation to reduce the impact on the employees. The temporal measures of reducing benefits were employed to convey the bad business environment to the employees. Individuals who make innovative technological innovation or bring out technology patents are rewarded heavily by the organisation. TI (India) also holds the record of brining out most number of technology patents in the country. The organisation also rewards the teams that are recognised for their extraordinary contribution. The teams that have made substantial innovation in their output are given avenues for presenting their work. The teams making radically new innovations that add significant value to their units exhibit their outputs to a worldwide audience of TI. Performance Management: The Key Result Areas (KRAs) are specified for each departments and individuals that are cascaded from the overall strategy of the firm. The software solution that tracks and manages the performance management helps faster and efficient functioning of the same. The tool for performance management helps in setting KRAs, reviewing the progress, getting 360 degree feedback, developing individual development plans and reviewing the career goals and progress. Also since the performance management is a critical function that can determine the employee outputs and morale, training programmes are in place to help the managers and supervisors to understand the finer aspects of performance appraisal. The importance given to performance appraisal at TI is high. The ranking process in the performance management helps to identify the top, average and low performers. The feed back from the performance appraisal is linked to the compensation and training of the individuals. This helps in linking HR processes to the organisational objectives. Training and Organisational Development: The training and organisational development initiatives helps in building the competencies required for the organisation. As the organisation follows a people strategy that is based on building the competencies from within, the impetus on training is high.

The performance appraisal feedback and the associated individual development plan help in identifying the training needs. TI uses considerable internal resources for training programmes. As the firm operates in high-end technology industry, finding trainers is a difficult and expensive process. The employees also take the role of trainers in certain areas. TI worldwide offers numerous e-learning training courses through its internal website. This helps in getting newer information to each of the individual employees. The organisational development initiative looks at the major change management and development interventions. For example the organisation has taken up a series of leadership

development

initiatives.

This

includes

leadership

focused

training

programmes. The organisation also identifies team leaders who have problems in team management and provides leadership training. These initiatives help in strengthening the anchor of ‘Great Leaders’ in the people management model. Also, realising the scarcity of leaders in the organisation, lateral hires were made as an intervention. The organisation also gives impetus to extensive communication strategy to initiate major changes. Mr. Samir Dhond, who heads the training and organisational development function adds, “We are in the process of setting up a virtual leadership institute and is planning to have a competency based system in place”. Various team-building interventions are done. This includes review of the individual working in the teams and the overall relationship reviews among the team members. Supervisory surveys are done occasionally to understand issues in the supervisorsubordinate dynamics. Regular surveys are also done to understand the engagement of the team members in their respective groups. TI also provides opportunity for employees to take up higher education in the field related to the operation of the organisation. The organisation encourages the employees to do higher studies in specialised fields in well-known technical institutes like the Indian Institute of Science. The organisation through its “University Program” has also linked up with technical institutions and academia and takes up a role of a facilitator to develop Digital Signal Processing education programmes and courses. Career development: Managing the career development aspiration of the “Texins” – the term used to call a TI employee, is given due importance in the organisation. TI has formulated and

implemented a dual career path option for its employees. The managerial and the technical career ladders take care of the diverse inclinations of the employees. As the core of the organisation’s excellence lies in technological competence, the technical career is a much-coveted one. The entry into the core technical domain is comparatively difficult and involves an election process through councils and committees and welloutlined parameters for evaluation. The growth in the technical ladder is challenging to great extend and is highly rewarded. For example at top of the TI technical ladder world wide are the Fellows – who are considered to be the best 2% of the world wide technology leaders of the organisation. Growth in the technical ladder is highly rewarded through peer recognition and opportunities at work. Internal Recognition and Future Directions TI adopts the innovation strategy that is followed through the HR processes. This innovation strategy boils down to the acronym – “PPASE” – where the letters stands for Power, Performance, Area, Schedule and Effort respectively. Bringing new products that consume lesser power, area, time of operation and effort, which in turn translate into better performance, is the corner stone of competitiveness. The competitive advantage of TI is dependent on the technological innovations brought in terms of its product designs. This requires high degree of training to employees and selecting the best employees at the entry level. TI (India) focuses on getting the best candidates at entry level. These candidates have very little experience and are given extensive training in their respective areas of interest. Practices are also in line with the strategy of “building human resources”. The relationship is based on long-term commitment and the organisation in turn provides good compensation package at par with market trend and a well-defined and promising career path – both in technical and managerial cadres. The satisfaction of the internal customers – employees in other departments is the critical factor of success of the HR department. The employees feel that the HR department is doing a reasonable amount of work in enabling the work processes in the organisation. Mr. Mohapatra, a programme manager at the TI comments, “HR department here does not play the policing and controlling role. They play a good role as enabler of employee initiatives. Also they have done a good job by outsourcing some of the operational and non core activities”. The HR department also understands that to be a

good business partner, they should excel in the duties that are entrusted with them even if they are very administrative. However, employees also expect the HR department to be more proactive in understanding the market dynamics and bringing in better practices. For example, an employee commented that although competitors are having better ways of rewarding employees, the HR department is not trying to implement them or working out the possibility of implementing them. As Mr. Kartikeyan opines, “The HR team is really good at strategising, however when it comes to implementation, there is always scope for improvement in terms of execution efficiency”. Also, the process of review of the internal policies that are set by the HR department is slow. This occasionally causes confusion and resentment among employees. The HR department also tries to get the employee feedback, as it is core to understand their needs. The HR department facilitates the employee get-together and outings, which help in bonding among the employees. A newsletter ‘TINAMITE’ is published every quarter and is the voice of TI (India). ‘TINAMITE’ is an active forum for employees to share their technical knowledge and interesting experiences, take part in contests, and also get to know about their colleagues featured in each issue. Site meetings are conducted to convey organisation related information and for collecting feedback. HR department is also in the process of designing a sound career development process that can effectively accommodate the growth aspiration of the increasing number of employees. Better use of technology for the HR processes is actively pursued. As the organisation is growing, the challenge for the HR department is to keep the culture and morale of the employees going. HR practices and systems are to evolve and progress according to the needs of growth and innovation.

Figure 1: Organisation of HR Department at TI (India)

V. Kartikeyan, Director – HR

Business HR

Samir Dhond

Lata Subramanyam

Sanjay Bahn

Sabari Madappa

ASIC BSTC MSTC

Biz Services Sales

DSP AEC WTBU

Software development organisation SoCOE

Gulshan Walia Joshi

Functional HR

Samir Dhond

Lata Subramanyam

T & OD Compensation

Sabari Madappa Sourcing

HR Operations

Daniel Raj

Uday Gaondar

Rajesh Raghavan

Figure 2: TI People Strategy MISSION

Build a human organisation that works together to win in

(Why we exist)

the market place Win by •

Getting the best people

•

Growing people to be their best

•

Challenging and engaging people to give the best

•

they have to offer Great Work

•

Great Bosses

STRATEGIC RESULTS

• •

Great Rewards People that provide a competitive advantage

(What we will win)

•

Achievement of our business objectives

STRATEGIC INTENT (The game we are playing)

STRATEGY (How we play the game)