HR structure of the Company
Human resource management of a organisation can be highly influenced by various external factors like political, legal, economical, technological, environmental and others. All these external factor has different influence in the Human Resource operation and labour market. In this report the Kingfisher beer India has been taken to discuss the political factors of the India and the influences on the HR operation on this organisation (Armstrong & Taylor 2014).
Kingfisher is an Indian beer brewed under the ownership of United Breweries Group which headquarter is situated at Bangalore, India. Kingfisher Beer was launched in 1978 with market share of more than 36% among other alcohol based beverage. Currently, Kingfisher Beer India is available in 52 other countries. Kingfisher was ranked 198th as the India’s most trusted brands by Brand Trust Report 2012 (Kumar & Anand, 2013). The European arm of United Breweries in known as Kingfisher Beer Europe Ltd. (KBE), which has the headquarter in Maidstone, Kent, UK. After the death of Vittal Mallya in 1983, his son Vijay Mallya took the Kingfisher group. Currently, Kingfisher Beer Europe is one of the 10 fastest growing brands in the UK (Howard, 2014).
In this report, the impact of the political factors of India on the business operation of Kingfisher Beer has been analysed considering the exiting HR practices, structure and difficulties. The impact of political plan has been subdivided into three factors namely HR planning, Design and quality performance. The purpose of this report is to develop a set of recommendations for the company to cope up with the political impacts.
Human Resource is a major part of any organisational operation where the company can recruit, train develop and assess the workforce as per the business needs and the organisational structure while considering the value, aims, strategy and the tactics of the organisation. Kingfisher group follows a matrix based organisational structure for both of the part namely Kingfisher Airlines and Kingfisher beer. Kingfisher Beers however follows a flat organisational structure for the Marketing and sales department. This specific HR structure allows the organisation to gain more control over the employees as well as the operations. The Human Resource operation of Kingfisher follows the 4 key factors and there interrelations namely Organisation, Process, people and System (Buller & McEvoy, 2012).
Recently the collapse of Kingfisher Airlines the human resource of overall Kingfisher got effected especially the Kingfisher Beer. The organisational structure had to be also changed due to several external changes including economic, political, environmental and others. A huge unemployment from the dearth of Airlines the overall brand reputation got effected. It influence the relationship with labour market as well. On the other hand, due to a large amount of share in beverage business of Kingfisher, Heineken NV initialised some major internal changes within the Human Resource Policy and the operations.
Political factors
Beer is an alcoholic beverage with low alcohol percentage produced through the fermentation process on malted barley. From the era of “British Raaj” or British colonization, the preparation of fermented beverages has been widely practiced in India. The art of brewing of Europeans had been highly accepted by the Indian civilization. However, slowly the scenario was changing. In early 70’s, Indian Government froze the 26 beer breweries in across India through decreasing the industries production capacity (Jackson, Schuler & Jiang, 2014). From that time, no beverage company was permitted to either expand existing business or build new ones. This situation bounded the profit margin of Indian beverage industry. However, at the beginning of 1970, United Breweries Group began buying up all the breweries, which were possible to bring the tally uplifted up to 10. These breweries comprise many small and medium Breweries, which were inactive and partially paralysed from many years. At the same time, the political situation of India showed a new anti-alcohol pasture. United Breweries Group was the rare beverage business group, who was able to survive for the future of the Indian beer industry (Patterson & Hoalst-Pullen, 2014).
The Indian beverage market share especially the beer market has been rapidly growing since 2005 because of the positive impact of political changes and social perception. Some of the major political factor that is influencing the beer market in India are:
- India is the biggest democracy in the World with federal republic type government.
- Most of the political parties are concerned about binge drinking and anti-social behaviour
- At the beginning of the 21st century Indian government use increased demand for alcohol to increase the indirect tax revenues (Kramar, 2014).
- Changes in National and International Trading Regulations especially for alcohol based beverages
- The intervention of GST regulation in Indian taxation system in 2017 changed the entire business policies of alcohol industry
- Strong and Tight social policies and political regulation on alcohol consumption across India
Along with the workplace compliance standards, the human resources department of any organisation operates under a constant pressure to abide by the law and regulatory issues. All the regulations and compliances, which influence all processes of the HR department are enforced by the existing national or state level government. As per the constitutional regulations of India, these HR procedures comprise including hiring, training, compensation, termination, and others are considered under the regulations of business and labour regulation. Therefore, in any business organisation the Human Resource operation must be planned keeping the national labour policies and conditions in mind (Jiang et al., 2012). Avoiding any compliance or any breaches can cause serious penalisation or even permanent shutdown. Therefore, the political environment of India regulates the Human Resource operation of the Kingfisher Beer through legal interference. In order to be specific and reasonable HR planning of Kingfisher including recruitment and selection, placement, training, payroll, remuneration, employee relations and terminations are strictly governed by the constitutional provisions.
The employees cannot be controlled unilaterally by the HRM because the department has to comply the regulations and conditions imposed by the Indian Government, which also varies from time to time. As a result the Human Resource managers of Kingfisher Beer has to be concerned about the updated labour related laws, legislations imposed by the governments from state or central level (Howard, 2014). The major Legislation regarding the Human Resource policies of India are:
- Factories Act, 1948
- Trade Unions Act, 1926
- The Payment of Wages Act, 1936
- The Minimum Wages Act, 1948
- Employees State Insurance Act, 1948
- Workmen’ Compensation Act, 1923
- The Payment of Bonus Act, 1965
- The Payment of Gratuity Act, 1972
- The Maternity Benefit Act, 1961
- The Apprentice Act, 1961
- Industrial Employment (Standing Orders) Act, 1946.
Impact of HR Planning
One of the major operations of Human Resource management of any company is Job designing that refers the resource allocation, quality investigation, setting up criteria, selection constrains and remuneration. Each of the department has different Job profiles. The most common Job Profiles in any business organisations are the Accountants, Office Clarks, Front Desks Executives, Receptionists, Market researchers, Team Leaders, Managers, Administration staffs and others (Patterson & Hoalst-Pullen, 2014). Each of these departments has individual job design and requirements of constrains according to their position, purpose, responsibility and value. At the same time, the remuneration structure, Compensation ratio, health protection and other many faculties are changed for each and individual Job and designation (Wells, 2016). With this regards, the Human Resource of any organisation should design the Job role abiding by all the regulatory issues including The Minimum Wages, Employees State Insurance, Workmen’ Compensation, the Payment of Bonus, the Payment of Gratuity, Apprentice, Payment of Wages and others.
Figure 1: Impact of Political System on HR Practices
Source: (Patterson & Hoalst-Pullen, 2014)
The Job Designs also includes the shift timing and the additional overtime compensations. These procedures fall under the consideration of Hours and Wages regulation of India. Along with these operation based regulation the job design would also include the healthy cultural assurance process including the Equal employment, Sexual harassment prevention, Safety and health management, Union contract grievances and Disability accommodations (Howard, 2014). These are the Advanced Human Resource related laws that are being practices globally. At the same time the partial taxation system like Employee Provident Fund and direct taxation like Income tax are also under the consideration of Job design and planning of the Human resource department of any organisation. On the other hand, organisations seek employees from the labour markets which is also known as the demand for labour (Bhuyan et al., 2014). On the other hand, the labour market offers the workforce availability to organisations as per their demand, which is known as the supply of the labour. The political influence on labour unions also regulates the Labour supply and demand and all the associated activities. Moreover, the job design of Human resource is generally not subject to the only organisational control. It influenced more by the political, legal and labour market at the state and national level.
Political factors are one of the major influencers, which are significantly responsible for formulating the mission, vision and strategy of any company. The Kingfisher is not an exception while the political influences have to be taken under consideration. There are 3 major factors that determine the political influence on the organisational environment and quality of performance, namely politically biased workforce, interference of political parties in labour unions and updated performance improvement or appraisal policies. In case of Kingfisher the employee recognition, reword and appraisal play the major role to control the overall performance of the workforce (Bharwani & Mathews, 2012). The motivation and encouragement were the major priority for this company. Government did not imposed any additional regulation on the monitoring or supervising practice of organisation that allows the Human Resource department of the Kingfisher to execute both passive and active monitoring and feedback collection process. The technological revolutions, availability of workforce, third party recruiter are some of the major attributes of the employment-based infrastructure of the HRM of Kingfisher.
Impact on Job design
Figure 2: Factors Affecting HR Practices
Source: (Bhuyan et al., 2014)
The major external influencers that have huge impact on the cultural and work performance related aspect of the Human Resource Management of any company are the Organisational culture, Educated Human Capital, Economic System, political and legal interventions. Apart from that Alcohol policies, Taxation, Political Lobbying, Anti-Trust Issues are some of the major factors.
The HRM of Kingfisher should be more informed about legal compliances and policies regarding the taxation system, employee facilities, health and safety issues and others. The legal considerations should be the major concern while developing the job design, remuneration and labour market related policies. Apart from that, Kingfisher should train their marketing and sales staff about the new taxation system in India named GST. It will allow the company to operate the trading and other financial operation more smoothly. This training can be given either during the induction period or through on job training procedure or event based training methods.
Labour Unions are the most sensitive factor in any large level organisation that acts as the connection between the political and legal influences within the internal employees and work culture. Most of the time, labour unions are responsible for the unexpected strikes or internal conflicts (Howard, 2014). Therefore, in order to maintain a healthy and peaceful environment within the organisational workforce Kingfisher needs to maintain a strong and friendly relationship with the local and national level labour unions and influencer political parties.
Relationship with labour market is also important. It will allow the Human Resource Management of Kingfisher to execute legal complacence procedures. The labour market is the source of the employees. Therefore, Kingfisher has to maintain their strong portfolio with higher brand reputation to influence the labour market. It will allow them to satisfy their workforce demand by increasing the labour supply from the labour market (Kumar & Anand, 2013). The appropriate information about labour market will also allow the Human Resource Management of the company to get efficient and educated human capital.
There are various policies and legislative concerns that influence the related factors to the beer industry in India. Political lobbying is one of these factor that works within the internal operation of the workforce. Political Lobbying has become one of the most integral part of the alcohol business and beverage industry. Therefore, Kingfisher has to engage in intense lobbying in order to get Congress to pass favorable legislation from the national level government. As a large brewers Kingfisher should expend time and considerable financial resources towards the political lobbying for the passage of legislation. It will also help to qualify the company for the taxation discounts in the international trading, national business procedure and human resource.
Impact on Quality Performance
Conclusion
From the above discussion, it can be said that Human resource management of an organisation can be highly influenced by various external factors like political, legal, economical, technological, environmental and others. The impact of the political factors of India on the business operation of Kingfisher Beer is significant. Kingfisher group follows a matrix based organisational structure for both of the part namely Kingfisher Airlines and Kingfisher beer. The Human Resource operation of Kingfisher follows the 4 key factors and there interrelations namely Organisation, Process, people and System. On the other hand, due to a large amount of share in beverage business of Kingfisher, Heineken NV initialised some major internal changes within the Human Resource Policy and the operations. In early 70’s, no beverage company was permitted to either expand existing business or build new ones. However, at the beginning of 1970, United Breweries Group began buying up all the breweries, which were possible to bring the tally uplifted up to 10. The intervention of GST regulation in Indian taxation system in 2017 changed the entire business policies of alcohol industry. Avoiding any compliance or any breaches can cause serious penalisation or even permanent shutdown.
It can be also concluded that, the employees cannot be controlled unilaterally by the HRM because the department has to comply the regulations and conditions imposed by the Indian Government, which also varies from time to time. One of the major operations of Human Resource management of any company is Job designing that refers the resource allocation, quality investigation, setting up criteria, selection constrains and remuneration. the Human Resource of any organisation should design the Job role abiding by all the regulatory issues including The Minimum Wages, Employees State Insurance, Workmen’ Compensation, the Payment of Bonus, the Payment of Gratuity, Apprentice, Payment of Wages and others. Kingfisher has to engage in intense lobbying in order to get Congress to pass favorable legislation from the national level government. Relationship with labour market is also important.
References:
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Bailey, C., Mankin, D., Kelliher, C., & Garavan, T. (2018). Strategic human resource management. Oxford University Press.
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Howard, P. H. (2014). Too big to ale? Globalization and consolidation in the beer industry. In The Geography of Beer(pp. 155-165). Springer, Dordrecht.
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Kramar, R. (2014). Beyond strategic human resource management: is sustainable human resource management the next approach?. The International Journal of Human Resource Management, 25(8), 1069-1089.
Kumar, M., & Anand, M. (2013). Assessing Financial Health of a Firm Using Altman’s Original and Revised Z-Score Models: a Case of Kingfisher Airlines Ltd (India). Journal of Applied Management and Investments, 2(1), 36-48.
Patterson, M., & Hoalst-Pullen, N. (Eds.). (2014). The geography of beer: regions, environment, and societies. Springer Science & Business Media.
Wells, P. (2016). Economies of scale versus small is beautiful: A business model approach based on architecture, principles and components in the beer industry. Organization & Environment, 29(1), 36-52.
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