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Hema Ravichandar, head of human resources at Infosys, has the goal of ensuring that the company would be included on the Top 10 lists of both Best Performing Companies and Best Employers by 2007. To achieve this, Ravichandar must determine whether the problems at INFOSYS are serious and if there is a need to continue or discontinue some of the HR policies.
Thomas J. DeLong; Jaya Tandon; Ganesh Rengaswamy
Harvard Business Review (406010-PDF-ENG)
October 31, 2005
Case questions answered:
- Are the problems at INFOSYS serious enough to warrant close attention?
- As Hema Ravichandar, do you feel that you need to continue or discontinue some of the HR policies introduced?
- What advice do you have for Ravichandar?
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Case answers for Infosys (A): Strategic Human Resource Management
Introduction – Infosys (A): Strategic Human Resource Management
Hema Ravichandar, head of human resources, was given a new and aggressive milestone to reach: ensure Infosys is on the Top 10 lists of both Best Performing Companies and Best Employers by 2007. No large organization had ever been able to achieve this distinction because of the tension between the need to control costs for financial performance and the expenditure required for employee satisfaction. Ravichandar was aware of the humbling experiences of the past that made Infosys cognizant of the difficulties ahead as it transitioned from a small to a large company.
1. Are the problems at INFOSYS serious enough to warrant close attention?
The problems at INFOSYS indeed require very close attention. Being knocked off its perch as the Best Employer is a red flag that needs attention, considering that INFOSYS had been the poster boy of the Indian IT industry.
The workforce at INFOSYS has been growing at a rapid rate (44% year on year) and this kind of growth can lead to the creation of distance between the management, the managers, and those managed. INFOSYS in a sense had over branded themselves and people joining them did so with great expectations’. Any downside to this created a sense of betrayal and a break in the psychological contract. The psychological contract refers to the unwritten set of expectations of the employment relationship as distinct from the formal, codified employment contract. Taken together, the psychological contract and the employment contract define the employer-employee relationship.
Originally developed by organizational scholar Denise Rousseau, the psychological contract includes informal arrangements, mutual beliefs, common ground, and perceptions between the two parties.
The psychological contract develops and evolves constantly based on communication, or lack thereof, between the employee and the employer. Promises over promotion or salary increases, for example, may form part of the psychological contract. Managing expectations is a key behavior for employers so that they don’t accidentally give employees the wrong perception of action which then doesn’t materialize.
Employees should also manage expectations so that, for example, difficult situations or adverse personal circumstances that affect productivity are not seen by management as deviant. Perceived breaches of the psychological contract can severely damage the relationship between employer and employee, leading to disengagement, reduced productivity, and in some cases, workplace deviance. Fairness is a significant part of the psychological contract, bound up in equity theory – employees need to perceive that they’re being treated fairly to sustain a healthy psychological contract.
INFOSYS was the first Indian organization to hand out ESOPS and the early employees of INFOSYS had received tremendous returns on their ESOPS. Over the years ESOPS had…
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