Ref. No.

: HRM0043

The Line vs Staff Tussle at Hi-Speed Venture Technologies: Threatening the Companys Future?
Incorporated in 1997, Hi-Speed Venture Technologies (HSV) was the brainchild of Sumant Kumar (Kumar). Backed with 12 years of industry experience, Kumar was driven by the aim of making HSV a one-stop destination for the website development needs of Indian companies. Striving towards the same, he hired four team members, each of whom boasted of an excellent professional record. Owing to the persistent efforts of Kumar and his team, HSV got their first client in 1998. The companys client base increased to nearly 10 companies by 1999. The flourishing business made it imperative for the company to recruit new members with a strong need to revamp the organisation structure. While the four-team members were promoted as team leaders, eight new team members were also hired. Further, Kumar also felt the need to hire an HR manager to handle employee related issues and implement company wide HR policies. With the help of a well-known HR consultancy, Kumar went through an elaborate search process for a highly accomplished and efficient HR manager. With nearly 12 years of experience across various functions of HR, Amit Sharma (Sharma) emerged as the ideal choice. During the interview, Sharma highlighted decision-making ability and working independently as his major strengths. Further, Sharma asserted that he believed in taking initiatives and worked meticulously towards achieving them. With the new team in place, Kumar was confident that HSV would continue to climb the ladder of success. However, these aspirations were dampened by the brewing disagreements between his technical team leaders and Sharma. Sharmas approach of single-handedly designing and implementing the recruitment and performance appraisal processes made the technical leaders feel neglected. Further, they also felt that being a staff function Sharma should only act as a facilitator and not intrude into their domains. Kumar was not sure how he should resolve this conflict amicably without disrupting the companys prospects. Will this line vs staff scuffle thwart the companys ambitious plans?

This case study was written by Deepti Srikanth under the guidance of Dr. Nagendra V. Chowdary, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was written from generalised experiences. 2009, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. Background Reading: Chapter 1, xxxxxxxxxx, Principles of Corporate Finance (Brealey and Myers)

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HSV Technologies: Climbing the Ladder of Success

Established in 1997, HSV had emerged as a leading company in web designing industry in India. Founded by Kumar, HSV was dedicated towards catering to the website related needs of Indian companies across various industries. With 12 years of work experience as the web development manager in a reputed IT company, Kumar boasted of in-depth industry knowledge while being adept at handling teams. His affable character also earned him many friends across several companies, spanning across varied industries. Driven by the aim of fostering a culture of innovation and employee empowerment, Kumar majorly focused on the skills and past work experience while recruiting his team members. After 3 months of rigorous hiring and selection process, Kumar shortlisted four team members, all of whom had an excellent track record and relevant experience in web designing and development (Exhibit I). With the team size at HSV still being small, Kumar decided to shoulder the responsibility of handling the administrative as well as HR related issues. Kumar and his team worked relentlessly towards identifying potential clients and building strong customer relations. However, with many Indian companies being ignorant of the relevance and importance of web development, luring customers and building a sizeable client base turned out to be a tedious task. Kumar said, Many Indian companies are yet to understand and appreciate the benefits of having a captivating and interesting website. Despite our initial setbacks, we are optimistic that our efforts shall reap the desired results. Undeterred by their sluggish start, Kumar and his team decided to personally visit companies and demonstrate the benefits of having a customer-friendly and aesthetically designed website. After 3 months of persistent efforts, HSV succeeded in roping in their first client, Crescent Homes (Crescent), a countrywide chain of interior decoration stores, in January 1998. Impressed by the companys dedication to meet customer expectations and their focus on quality, Crescent referred HSV to a host of new companies, opening new business avenues for the company. By 1999, the company was catering to the website development and hosting needs of nearly 100 companies across the country. However, with the business flourishing, HSV felt the need to hire new members to shoulder the increased work pressure. Using this opportunity to mould HSV into an organisation with formal teams and clear reporting structures, Kumar decided to set up four technical teams (with two team members each) headed by his experienced and initial team members, Raina, Mathur, Sunita and Radhika , who were promoted as team leaders (Exhibit II). In consultation with and involvement from them, Kumar hired eight new team members, over a span of 2 weeks. Each of these teams was individually responsible for handling the end-to-end web development requirements of the companys clients. Kumar realised that it was no longer possible for him to look after the technical, administrative and HR issues at HSV. Further, the increased team size created the need for an HR manager to deal with employee related needs and demands. Realising the same Kumar, with the help of renowned consultancy, recruited Amit Sharma (Sharma) as the new HR manager for HSV.

Exhibit I Educational and Professional Qualifications of the New Hires

Age Work Experience (in years) 8 Working as the designing head for a reputed global IT company. Work Profile in the Previous Organisation Professional Highlights

Name

Educational Qualifications 32

Suresh Raina (Raina)

B.Tech from a Tier A engineering college

Single-handedly responsible for designing and developing the websites of many renowned Indian companies. His domain knowledge clubbed with his team management skills made him a respectable member in his organisation. Had risen in ranks in his organisation owing to his team building skills and industry knowledge. Awarded the most innovative website designer award in 1996 and 1997. Despite starting her career as a management trainee, she soon became the head of the technical department owing to her hard work, technical knowledge and people-management skills.

Sunil Mathur (Mathur) 30 7 Working as the technical head of a global IT firm. Working as the technical manager for a leading IT company.

M.Tech from a reputed engineering institute

32

Working as the web development manager for the past two years.

Radhika Verma M.Tech and gold medalist (Radhika) in web designing from a renowned institute 31 8

Sunita Thakur (Sunita)

B.Tech from a Tier A engineering college with a diploma in web designing

The Line vs Staff Tussle at Hi-Speed Venture Technologies...

Prepared by the author

The Line vs Staff Tussle at Hi-Speed Venture Technologies...

Exhibit II Organisation Structure at HSV

Director (Kumar) HR Department (Sharma)

Technical Team 1 (Raina)

Technical Team 2 (Mathur)

Technical Team 3 (Sunita)

Technical Team 4 (Radhika)

Prepared by the author

Having worked as the HR manager at Trisoft Tehnologies (Trisoft), a small player in the Indian IT industry, since its inception, Sharma had successfully handled a gamut of HR-related activities ranging from recruitment to performance appraisals. At 36, Sharma was a gold medalist in HR and Industrial Relations, with more than 12 years of work experience. His initiatives like cross-cultural training and workforce diversity management programmes were not only critical in shaping the work culture at Trisoft, but were also widely received and appreciated. The prospect of single-handedly setting up HR practices at a budding entrepreneurial venture appeared as a lucrative and demanding proposition for Sharma. Highlighting the same he said, ...handling end-to-end HR activities for a burgeoning start-up organisation is exciting as well as challenging. Having successfully handled the various facets of HR for more than a decade, I am confident of creating a success story at HSV. Sharmas initial endeavours in the company revolved around formulating detailed HR policies pertaining to leaves, salaries and company ethics among other aspects. Interacting constantly with Kumar, Sharma focused on understanding the essence of the technical teams at HSV. He also used these interactions to understand the companys business model and expansion plans. Combining these inputs with his vast experience, Sharma designed detailed job descriptions for the existing roles in the company. He also formulated induction programmes and training manuals for the new employees. These new rules and policies introduced by Sharma helped to inculcate a formalised organisation framework at HSV. Additionally, during this period, HSV continued to climb the ladder of success, bagging new clients and building its reputation as a quality driven web designing and hosting company. At the turn of the millennium, HSV had registered a profit of INR 200 lakh. Over the years, it also gained remarkable expertise in search engine optimisation achieving appreciation from many of their clients. It was also emerging as one of the most sought after web designing companies in the country.

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Encouraged by this success, Kumar had planned out an ambitious future for the company. Highlighting the same he said, HSV has a strong technical team supported by an experienced HR manager. Our growing client base has made it essential to expand our team while fostering a performance driven culture. The immediate focus shall be to nurture a highly motivating and rewarding work environment.

Brewing Line vs Staff Issues: Thwarting the Companys Dreams

To achieve the planned ambitions for HSV, Kumar called a meeting with his team leaders to discuss new company-wide initiatives relating to performance management, training and development and recruitment. Following was the conversation between Kumar and his technical team leaders: Kumar: Congratulations for the commendable job by your teams. Our growing popularity in the web designing, hosting and SEO technologies and the appreciation received from our clients is an indication of the same. However, I hope you all realise that the expectations from our company are higher than ever before. Raina: We all agree to that. In fact, we have all been brainstorming on chalking out an action plan to ensure the timely completion of these new assignments. Radhika: We have decided to distribute equally the new projects amidst our teams. But Kumar, to be able to deliver high-quality results within the stipulated time we shall have to hire new team members. Mathur: Our team members are already handling three clients each. Expecting them to concentrate on the new projects shall not be fair. We feel that having three new members per team shall help us handle the existing pressure while creating a bandwidth for efficiently shouldering future assignments. Sunita: In addition to hiring new members, there is a need to introduce certain performance evaluation methods. It shall help us to evaluate our team members based on their performance while being able to highlight their areas of improvement. Moreover, it shall also motivate our team members. Radhika: In fact, the performance evaluation should be introduced not only for the team members but for all the employees and the process should be introduced as soon as possible. As HSV prepares itself for the future, these appraisals shall help the company to reward performance while motivating team members to achieve better results. Kumar: I agree with all of you. I had been deliberating on similar lines and have even had a detailed discussion with Sharma regarding the same. Focusing on recruitment and using performance appraisal methods seem to be emerging as the immediate and pressing priorities for HSV. Raina: Absolutely Kumar. Our focus is not only on satisfying our existing customers but also on expanding our business by attracting newer clients. It shall therefore be imperative for us to expand our team while instilling a performance driven culture. Often these elements are overlooked or undervalued. But we all hope that as HSV grows, as an organisation, these matters become an integral part of the company.

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Kumar: I am glad that my team leaders are equally concerned and involved in building HSV as a holistic company. I shall update Sharma regarding our discussion. I am confident he shall be able to implement these new initiatives successfully. Having concluded this discussion, Kumar had a brief meeting with Sharma. The prospect of introducing practices like performance appraisals and performance-based rewards was a challenging yet exciting proposition for Sharma. With the aim of gaining an in-depth understanding of the roles and responsibilities of the new hires and to update them regarding the performance appraisal process, Sharma had an elaborate meeting with the team leaders. It was decided to conclude the hiring process within a span of 2 weeks while simultaneously introducing the performance appraisal process. A recruitment drive was conducted at HSV where aspiring applicants underwent a rigorous selection process, wherein their resumes were screened based on the educational qualifications and professional experience. Short-listed candidates had to undertake a rigorous 3 hour test. Candidates who cleared this test underwent a personal interview. Each of this stage was planned and executed single-handedly by Sharma. To understand the exact job roles of these new hires, Sharma held numerous detailed meetings with Kumar. Sharma said, Being the founder of the company, I feel that Kumar is the apt person to interact with while hiring new talent for HSV. Kumars technical knowledge combined with his industry know-how has helped me in understanding the nitty-gritty of the new job roles. Additionally, Sharma used his personal contacts in the IT industry to educate himself on the essential skills and qualifications expected from the new recruits. He also constantly interacted with the HR managers of other IT based companies to gain a deeper understanding of the qualities and skills required to hire. At the end of the 2 week recruitment drive, 12 candidates (three each for the four team leaders) were selected. Additionally, he also designed an induction programme for the new recruits to acquaint them with their job roles and familiarise them with the companys culture. Having completed the recruitment drive within the stipulated time frame and having designed and executed their induction programme, Sharma was certain that Kumar would be pleased with his performance. After the successful completion of the recruitment drive and the induction programme, Sharma focused his attention towards the performance appraisal process. Before commencing the process, he sent a detailed e-mail to all the team leaders, explaining the nature of the process and also the performance review templates that the team leaders were expected to fill-in and reply within 1 week. However, Sharmas approach was not received well by the team leaders. With Sharma designing and orchestrating both the recruitment and performance appraisal process, the team leaders felt neglected and were unhappy at not being involved in the implementation and final decision-making. The following was a conversation between the team leaders: Radhika: I am extremely unhappy about Sharmas style of working. I was expecting that we would be involved in the recruitment process as the new recruits would ultimately be a part of our teams.

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Mathur: Absolutely. Sharmas job is to facilitate the process. As line managers of the company, we should have been responsible for conducting the personal interviews. Sharmas duty as the HR manager is to assist these processes and not to make the final decisions. Sunita: Moreover, I am finding it difficult to work with the new members on my team. They are not well versed in the field of web designing and require constant guidance and support in completing the tasks assigned to them. In the midst of increasing work pressure and pressing deadlines, I was expecting these new recruits to ease my teams burden. On the contrary, I and my team members are now wasting time in training and educating these new hires! Radhika: Even the induction programme designed by Sharma was not in accordance with the demands of the job. The new hires were merely briefed about the nature of responsibilities using presentations without providing them any real time problems to work upon. Mathur: Its the same situation in my team. To make matters worse the new hires are unwilling to adapt to the companys web designing methods and processes. This reluctance to change is leading to frequent altercations and is leading to frictions within the team. If this continues the productivity of my team is bound to deteriorate. Radhika: If my team fails to meet the deadlines, I will not shoulder the responsibility. Sharma should have understood the practical demands of work before making these hiring decisions. Raina: Its the same story with the performance review process and templates. I am not convinced about the evaluation parameters set by Sharma. He lacks a clear understanding of the skills and expertise required by the technical team members. We were not even personally intimated regarding the performance review process. Instead, an email was sent regarding the same. Mathur: Prior to Sharmas recruitment, we were consulted for every major company related decision. Kumar valued our suggestions. However, off late, we have been reduced to the roles of passive spectators. Sunita: What is surprising is that even Kumar has not raised any objection to Sharmas style of working! This growing discontent translated into non-compliance from the team leaders. Mathur and Radhika only sent partially filled performance review forms. Raina and Sunita, on the other hand, e-mailed Sharma informing him their inability to fill the forms due to lack of time. This reluctance to cooperate strained the relations between Sharma and the team leaders. Additionally, the team leaders were not pleased with the performance of the new recruits and had constant arguments with them. To make matters worse, Sunita and Mathur had an altercation with Sharma when the latter highlighted their reluctance to cooperate in the performance appraisal process. Sharma said, I do not understand the sudden change in attitude of the team leaders. The appraisal process has been delayed owing to their non-cooperation. I have always delivered results within the promised deadlines and do not want to be held responsible for the delay caused by others.

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These differences gradually took a toll on the companys performance. Kumar had already taken an extension on the delivery date from two of the companys important clients. Though Kumar had been hearing certain incidents of the growing discontent between his technical leads and Sharma, he had not paid much attention on the same. Vexed by the brewing troubles Kumar decided to have a meeting with his team leaders and Sharma. The following was the conversation from the meeting: Kumar: Am sure you all have an idea regarding the purpose of this meeting. In the 4 years of our existence, its for the first time that the company has faltered in fulfilling its commitment. I was not expecting this from my team. Especially when we are at such a crucial juncture of growth! Mathur: All of us have also been disappointed with these delays in our assignments, especially when each of us has strived hard to nurture and build these high-performing teams. Kumar, we hope you do not doubt our dedication and diligence towards the company. Kumar: Mathur I have complete faith in each of my team leaders. However, I fail to understand that despite hiring the desired number of new team members why has the performance declined? Sharma has worked very hard to complete the hiring process within the stipulated time of 2 weeks. Sunita: But Kumar, Sharma had designed and implemented the entire recruitment process without involving any of the team leaders. As the new hires are not aware of the companys web designing processes, each of us along with our old team members is spending a considerable amount of time in training and coaching these new hires. The new hires have added to our work burden instead of easing it, so the productivity is bound to decline! Sharma: Kumar I had a detailed meeting with the technical leaders to understand the roles and responsibilities of the new hires before commencing the recruitment process at HSV. Moreover, each candidate was expected to undertake a rigorous selection process before being hired. However, I do realise that the team leaders are finding it difficult to coach and train these new members amidst pressing deadlines. I should have probably adopted a different style for the recruitment process. Kumar: But why is there a delay in conducting the performance evaluation? All of you had expressed interest in implementing appraisal systems for rewarding and motivating our team. So where is the problem? Radhika: Kumar we agree that Sharma has a vast experience in the field of HR but his technical knowledge is definitely limited. Then how can he alone design the performance evaluation templates and processes for judging the competence and skills of candidates who are expected to shoulder responsibilities on technical teams? Raina: Kumar, the same approach has been used while designing the appraisal process. The templates have been designed and mailed to each of us. No efforts have been made to collaborate with any of us while formulating the evaluation and assessment parameters! Sharma: As the HR manager, it is my responsibility to design the performance appraisal forms and templates. The parameters of evaluation have been formulated in accord with the roles and

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responsibilities of the technical team members. If I would have involved the technical team leaders at each of these stages, it would have hampered their existing work and day-to-day operations. Raina: We do not agree with this outlook Kumar. As a HR manager, Sharma was expected to facilitate and support the process not design and conduct it! Sharma: Kumar I think that the technical leaders are not willing to accept the changing paradigms of business. HR today is no longer a support function in organisations. I had joined this organisation with many expectations. I was sure that the team at HSV wants to nurture and build a world-class company for the future. However, if you feel that I have failed to deliver my responsibilities, I have no issues in resigning from my position. With the feud between his technical team leaders and HR manager intensifying, the future of HSV appeared murky to Kumar. Despite the hiring mismatch, Kumar was aware that Sharma was an experienced and able HR manager. He did not want to choose between his dedicated technical team leaders and a competent HR manager. Faced with these problems, Kumar found himself at crossroads. Was Kumar to be blamed for the current discontent between the line managers and Sharma? Will accepting Sharmas resignation solve the problem? Was Kumar unable to demarcate the roles and responsibilities of his technical leaders and HR manager? What approach should Kumar adopt to resolve the growing line vs staff dispute?