7HR001 Managing Human Resources Case Study

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Student Details

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1232696

Email

rdevinda@yahoo.co.uk

Assignment Details

Module name

Managing Human
Resources

Module Code
For the attention of

Due date

27th December 2013

Assignment title

Case study Analysis Taj Hotel Group

7HR011
Dr. Paschal Anosike

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7HR001 Managing Human Resources Case Study

Case synopsis
This case study examines the Taj Hotel group under the leaderships of two charismatic leaders,
Ajit Kerkar and Krishna Kumar, of different eras and describes the extensive changes made to its
Performance Management System (PMS). Kerkar has led the Taj group from 1970 to 1997 and
during his tenure the hotel group was thriving financially; however issues were raised due to the
inability of Taj group to uphold ethical standards of Tata conglomerate. As a result Kerkar was
replaced by Kumar in 1997, primarily to address the corporate governance issues. He
implemented a PMS at Taj in order to evaluate and award increments to staff members fairly.
With the rapid advancement in technology and emerging competition with the entrance of top
international hotel chains in to the Indian hotel industry, there were major shifts on how Taj
operates; including replacing the management structure and improving the service quality to
match with international standards. The entire case study is cemented on the Bhowmicks request
to re-consider the decision taken by Kumar to select a candidate for the General Manager
position at the Taj Kumarakom based on the test results of Career Development Committee
(CDC), thus placing Kumar in a dilemma whether to respect the decision of CDC or to ignore the
request of Bhowmick, who has groomed leaders throughout his tenure at Taj.

Theoretical Analysis
Human Resource Management (HRM) procedures have a direct impact on the productivity and
financial performance of any organization (Huselid, 1995). However, as a result of revolution of
information technology, rapidly changing business environment and increasing complexity of
operations, organizations are experiencing significant changes on how human resources are
managed thus HRM is currently perceived as a strategic partner in attaining organizational goals
(Lawler and Mohrman, 2003). Evolution from traditional personnel management functions to a
Strategic Human Resources Management (SHRM) system was evident during last few decades
and simultaneously, number of HRM roles has also signified new dimensions in managing
people; including viewing employees as sources of competitive advantage (Becker and Huselid,
2006; Wright et al., 2001). To create and execute strategic alignment in order to build long-term
success, Strategic Performance Management Systems (SPMS) are adopted by most organizations
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(Ulrich et al., 2001). In SPMS, the top management and other managers set specific objectives
for each division and individuals, considering the overall effectiveness and efficiency of
organizational functions and both qualitative and quantitative mechanisms are used to measure
performance of employees. Quantitative tools, including statistical formulas are used to measure
the achievements against set objectives. Qualitative tools are based on personal judgments and
inferences of different stakeholders of the organization. Balance Scorecard is one of tools used in
SPMS and it permits the management to view the organizations from various perspectives;
customer perspective, internal perspective, innovation & learning perspective and financial
perspective (Kaplan and Norton, 1992). Balance scorecard help managers to link long-term
organizational objectives with short term actions (Kaplan and Norton, 1996). Taj case study
provides the background to identify major issues and challenges faced by organizations during a
shift from a traditional HRM system towards a strategic PMS.
Evaluation of PMS at TAJ Hotel group under Kerkar and Kumar;
Kerkar had the ability to identify leaders and mentor them effectively. As recalled by a senior
executive, Kerkar had a nose for ferreting out who would be a good leader, and he could
effectively groom them (Taj Case study, p.2). This could be a reason for Taj group thriving
financially during the tenure of Kerkar. Kerkar was a charismatic leader and his charisma was a
great source of motivation to all employees and his vision was behind the growth of Taj. Conger
and Kanungo (1998) has suggested that inspiration, a sub-factor of charismatic leadership, help
in motivating employees. The intrinsic faith and mutual trust placed on Kerkar by Taj employees
was the main factor for high employee retention even though salaries were less compared with
market. The major drawback of Kerkars system was the unavailability of a structured, well
executed PMS. The discernable, informal PMS was based primarily on subjective criteria and
decisions taken were perceived bias. The rigid environment also led to create fiefdoms within Taj
group. There was no clear strategy for setting objectives for organization as well as for
individuals and this could reduce the morale and productivity of employees. Since promotions
and rewards were based on personal affiliations, there were no systematic carrier progression
pathways to individuals thus leading to de-motivation of employees. One of the advantages of
the Kerkars system is that it did not promote employee ranking through appraisals. Muduli

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7HR001 Managing Human Resources Case Study

(2011) described that in collectivist cultures, such as Indian culture, individual ratings and
increments are less concerned and performance based pay is discouraged.
Upon replacing Kerkar, Kumar initiated the Taj People Philosophy which included a formal
PMS and a mechanism termed balanced scorecard, to evaluate the employees fairly. The new
PMS helped Taj to align individual objectives to long-term organizational goals. Williams (2002)
suggested that this could create strong relationships between the organization and employees
since employees can observe how their contribution is impacted on success of the company.
Kumar ensure that clear goals and objectives are set in the form of Key Results Areas (KRAs)
for individuals at the beginning of each year so that everyone is clear about what tasks they are
expected to execute and how those tasks are required to be performed. According to Beardwell et
al. (2004), employees who precisely know what is expected, will perform better than individuals
who are unaware of their objectives. Unlike the old system where promotions were based on
personal relationships, under new PMS, progress of employees was measured against KRAs and
promotions and increments were awarded according to results of performance-appraisal system.
Deutsch (1975) suggested that individuals who perform and contribute more to the company
should receive a higher percentage of rewards than individuals performing less. As recalled by
one executive It was a big change to have people asking, where are you on your KRAs, not
how close are you to Krishna Kumar? (Taj Case study, p.3). This suggests that employees who
were outside the coterie of Kerkar were looking for a fair system for evaluation. Kumar
established the CDC and Potential Assessment Centers (PAC), which helped in creating career
progression pathways where individuals, whom were identified as high performers, were sent for
evaluation and trained them outside the area of work, so that they would be fit for general
managerial positions in future. However, the competition created through PACs resulted in
demoralization of individuals whom were not selected, yet they were considered as great
performers.
Reasoning behind implementing new system
There were several reasons for Kumar to launch a formal PMS. First reason was to address
issues with regards to not meeting ethical standards of TATA group. The new PMS helped to
build the transparency in monitoring, measuring and rating of employee performances and to

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7HR001 Managing Human Resources Case Study

build the ethical platform for promotions and increments while annihilating personal relationship
based rewarding in order to uphold the corporate governance standards demanded by the TATA
group. Pressure exerted on TAJ group due to external forces such as entrance of global
competitors and technologically demanding operations could also be considered as a critical
factor for Kumar to launch a formal PMS. He rotated even senior managers to learn new ways
of doing business thus to improve the quality of the service delivered and to break up fiefdoms.
Krishna Kumars stance on Bhowmicks request
According to my point of view, Kumar should grant Bhowmicks request and reconsider his
choice for selecting the candidate for the General Manager position due to several reasons.
Bhowmick is considered as a legend within the Taj group and has a pedigree of identifying and
grooming leaders for senior managerial positions. He has developed managers throughout his
career at different properties of Taj group. Bhowmick believed that new systems implemented by
Kumar did not capture all aspects being a good manager, for instance, personality and
resourcefulness and he further argued that great managers do not always follow procedures
(Taj Case study, p.6). This suggests that Bhowmick did not trust the CDC or the system in
selecting right candidates for right positions and therefore he could argue that his candidate is a
better choice than the individual selected by CDC. Brady (1987) proposed that managers are
required to make rational decisions which are not guided by rules and systems. Kumar knew that
not respecting the work autonomy and judgment of Bhowmick could result in de-motivation of
one of the highest ranked subordinates of the company. Kumar also knew the fact that Bhowmick
will be responsible for training and mentoring the chosen candidate; as such Bhowmick might
help the person nominated by him to become successful or choose not to help the person
designated by the CDC. Considering all above factors Kumar should reconsider his decision and
select the candidate nominated by Bhowmick.
However, there could be few implications as well in granting Bhowmicks request. If the
selection made by the CDC is not respected by Kumar, any future decisions made by CDC would
not be taken seriously by employees, thus could lead to downfall of the system. There could also
be a hidden agenda behind Bhowmicks nominating his candidate over the decision made by
CDC thus leading not to select the right person for the job.
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7HR001 Managing Human Resources Case Study

A or Star Players and new system
Star players always had a special attention from the Taj management even during the Kerkars
informal system and under the new system; the CDC has helped in grooming A players for
A positions. Huselid et al. (2005) argued that A positions in organizations have a direct
impact on organizational strategic management and add value by increasing revenue or reducing
costs and as such organization must systematically identify A players to fill A positions.
CDC helps Taj group in identifying high-level openings or the A positions and then
identifying suitable candidates through various evaluations. Groysberg et al. (2004) explained
that A players are intelligent, dynamic, charismatic and could predict changes while adapting
quickly. However, there could be risks associated with A players. They do not stay with an
organization for a longer period regardless of paying big salaries and group performance could
also get affected (Groysberg et al., 2004). Therefore CDC must carefully manage its strategies to
prevent de-motivation of star performers of Taj in order to prevent them from moving to
competitors.

B or Solid Players and new system

Organizations generally disregard the importance and value of B performers and this could
pose a risk to the long-term success of the organization (Delong and Vijayaraghavan, 2003).
Delong and Vijayaraghavan (2003) further argued that B players play the role of truth tellers in
an organization and helps in stabilizing the system in the presence of A players. Harnessing
and developing talents of Solid B players are important to an organization since their
contribution is vital in building competitive advantage. Under the Kerkars system, solid players
of Taj group only had a limited opportunity to develop their careers since promotions were based
on personal affiliations. But with the establishment of CDC and PAC, provides clear career
progression pathways to solid players while coaching them to recognize their true talents thus
giving opportunity to perform well. One of the main objectives of the CDC was to value the
importance and shaping the careers of solid performers. The formal PMS and its tools such as
Balanced Scorecard, ensure feedback is provided to solid performers thus enabling them develop
and improve so that they could be groomed for future managerial positions.

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7HR001 Managing Human Resources Case Study

The CDC must ensure that opportunities are provided, not just for Star performers, but also for
solid performers in order for them to grow and develop so that there will be a balance in the
system.
Conclusion
The Taj case study provides a platform to understand how organizational functions are
interrelated to HRM functions and how strategically executed PMS could align individual
objectives to organizational goals. It also discussed about the importance of setting objective and
goals up-front so that employees would understand what is required to be done to achieve
objectives. Balanced scorecard used as a performance appraisal tool in the PMS at Taj helped to
evaluate employees fairly. It could also helped in communicating and aligning organizational
goals and strategies at every level of the organization and enabling real-time learning
mechanisms with regards to providing feedback (Kaplan and Norton, 1996). Fair evaluation
system helped Kumar to build an ethical leadership at Taj and to maintain ethical standards of
TATA group.
Taj case study gave me an insight of challenges and issues faced by real life organizations and
various HRM tools used by organizations to manage such issues and gain advantage over a
competitive market. I personally found that this case study is interesting and challenging and
hope that it would be helpful for me in future when dealing with strategic HRM issues.

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References
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Becker, B. E. and Huselid, M. A. (2006) Strategic Human Resources Management: where do we
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Brady, F. N. (1987) Rules for making exceptions to rules. Academy of Management
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Conger, J. A. and Kanungo, R. N. (1998) Charismatic leadership in organizations. Sage
publications: California, USA.
Delong, T. J. and Vijayaraghavan, V. (2003) Let's hear it for B players. Harvard business
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Deutsch, M. (1975) Equity, Equality and Need: What Determines Which Value Will be Used as
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Williams, R. (2002) Managing employee performance: design and implementation in
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