Shree Cement Limited:

Cementing the People First Agenda

 Introduction:

Shree Cement Limited (SCL) is a traditional Indian firm involved in Cement Manufacturing which has
over the years also diversified into Power production and distribution. SCL was established in 1979 in
Beawar in Rajasthan when its first cement plant was installed with the Bangur family being its
promoter. The organization was a driven by a closely knit team of board of directors and promoter’s
family members and followed the traditional Indian management practices. The organization was
unique in two ways:

 It combined the traditional “Indian Way” of doing things with innovative initiatives and latest
trends in contemporary management.
 It had a People First: policy and treated all its employees, their family members and the
community as a one big family: Shree Pariwar. Employee happiness, satisfaction

This uniqueness was also a great competitive advantage that SCL had over others and this led to the
company growing at a rapid pace becoming the largest cement manufacturer in norther India by
2013. Shree Cement Limited started its Cement manufacturing from Rajasthan but soon expanded to
different states of India by having its Clinker Manufacturing units and power generation units in
Rajasthan, Grinding Unit in Bihar and Integrated unit in Chhattisgarh.

 Strengths of Shree Cement Limited

Shree Cement Limited followed a very prudent business model not just by valuing its employees and
their family members but also valuing the community, surrounding and ecosystem they were a part
of. It followed a triple bottom line approach with special focus on economic, social and environmental
benefits and was considered a sustainability champion due to its efforts towards environmental
performance.

It considered people as its biggest asset and its slogan “Willing people, Winning organization” clearly
showcased this intent. It gave its employees a lot of freedom in decision making and strived to
promote entrepreneurial mind-set amongst the employees by celebrating both success and failure.
There was no blame-game culture and the organization’s policies and structure allowed its employees
to take bold decisions, many of which benefited the organization greatly.

The strong emphasis on employee engagement and participation along with ownership of outcomes
led to a significant improvement in innovation and process improvements and gave the company a
competitive edge over its competitors. On many occasions the organization was able to leverage the
high employee motivation and commitment and achieve unimaginable results. It was able to reduce
its raw material costs, meet and challenge industry environmental performance benchmarks, achieve
technological breakthroughs and much more by investing in Human resources and its most vital asset.

 Challenges faced by the organization

The strong growth of the organization coupled by growth in industry and Indian economy in general
was not without hiccups. While Shree Cement Limited was able to maintain its family like values and
 cultures owing to co-location of most of its employees in townships or within the same city, it was
starting to face difficulties as it started expanding to different states and locations.

Capacity expansion and additions and diversification into power sector also led to an influx of new
employees. On-boarding of such new employees and acclimatising them to the traditional values and
family culture of the organisation was a difficult task. It was also a matter of concern whether the
mechanisms of bonding and community that had worked till now will work on a large national scale.

Due to the growth of the Cement industry in general a lot of career opportunities also surfaced outside
of SCL for the existing employees to pursue and this led to an increase in attrition rate. Increase in
attrition was a big concern for Shree Cement limited as it took time resources and effort to develop
and groom the new joiners and when they leave the company all the knowledge, resources and time
invested in them goes along with them adversely affecting the organization.

There were also issues with SCL’s performance management system as there was not much reward
for high performance by way of higher benefits, remuneration or salary hikes. Shree Cement Limited
did not use a normal bell-curve distribution for compensation and increment decisions and followed
the policy of maintaining the salary of employees at the same level within a narrow range, so as to
avoid differences in incomes and living standards adversely affecting teamwork. Many of the high
performing employees in the company used to get frustrated as they felt that the low performing
employees in the organization were getting unjust pay and their efforts were not rewarded enough.

As the organization grew several such small issues surfaced and indicators of emerging dissatisfaction
became apparent. The organization, thus, decided to hire the consulting firm Ernst and Young to
conduct an employee perception survey to find out the root cause of such issues and decide on actions
to address the issues.

 Observations from Employee Engagement Survey

The employee engagement survey was conducted by E&Y after several interactions with senior
managers and group discussions on what information to capture and which dimensions to include in
the survey. The survey focussed on three major areas: Satisfaction, Engagement and
Meaning/Happiness. There were several sub areas that were also considered relevant and important
to get a feedback or opinion on like: Compensation, PMS, Physical working conditions, Career
development, Company culture, Company mage etc.

Through the survey the firm also wanted to find out what percentage of employees were engaged,
fence-sitters or actively disengaged and it was observed that 78.3% of the employees were highly
engaged. This in itself is a very big achievement for the firms as on a global scale companies usually
have 60-65% employees with high/moderate engagement. However, overall engagement doesn’t
mean that all areas of the organization are working as intended. Digging deep into sub area wise
engagement levels data it was observed that some areas had very high levels of employee engagement
while other areas, which were equally important, had much lower levels.

Based on this survey the senior managers decided to undertake 18 improvement projects to address
the various areas which had feature low in engagement levels. The organization now had to decide
how to go about implementing these projects and which areas of survey to address and focus on first.

 Areas of improvement
 The survey highlighted that several areas were performing well with respect to employee engagement
levels like company culture, company image, purpose and challenge. It also highlighted several areas
which affected job performance strongly and which were not having high employee engagement
scores like performance management system, compensation, personnel and administration, physical
working conditions.

The management realized that each and every area had its own importance and affected the
organization in a certain way. Performance management system had a direct impact on productivity
and motivation of the employee and this had the lowest level of engagement making it a serious
concern. Compensation and career development have a direct impact on extrinsic motivation and
performing poorly in these areas as compared to the competitors could very well be a reason for
higher attrition rates.

Other areas like autonomy and working relation had an intrinsic effect on employees and were also
needed to build up teamwork, ownership mind-set and promote individual decision making, all of
which are essential for innovation and technological/process improvements.

Physical working conditions and personnel and administration also were important hygiene factors
which could well improve employee productivity and organization’s ability to deliver results.

 Way Forward

After analysing the survey results and assessing the weak and strong areas the management now
needs to put in serious effort and resources to implement the 18 suggested improvement projects if it
wants to bring about a positive change.

It also needs to specifically focus its efforts onto the two main areas which have been found severely
lacking and affect the organization success and its ability to deliver results the most: Performance
Management System and Compensation and career development. Some of the changes which the
management can bring about to induce a positive effect in the above mentioned areas are as follows:

Performance Management System

 Devise onboarding programs to acclimatize new joinees with the organizations culture and
values
 New employees to be made aware of their roles, responsibilities, standards of evaluation and
expectations
 Goals and objectives should be made clear, specific and challenging
 Do periodic performance evaluation and communicate feedback in a clear and prompt manner

Compensation and Career Development

 Introduce team based rewards and benefits for high performance rather than individual pay
hikes.
 Recognize and appreciate the work done by high performing employees at regular intervals
 Provide training to employees based on their interest areas and long term career goals.

Once the organisation is able to improve employee engagement in these areas it can then divert its
attention and resources to the areas like physical working conditions and personnel and
administration which are also important to achieve an institution that leads from the front and sets a
milestone in the industry by considering Human Resources as its most valued and prized asset.