Human resource management practices and cultural dimensions in India

India is the world's second-most populous country with 1.2 billion people, and has a workforce of 502.1 million, which means that there are a lot of workers and it can be difficult to generalize working conditions with this many workers and in such a diverse country. There are some unique labor force characteristics worth taking into consideration. The first is diversity -- India has many different cultures, religions and languages. There is a high degree of economic stratification. There is a large pool of child labor, estimated to be 26.9 million. Only around 2/3 of Indians are literate. The nation's median age is around 27, so the workforce is fairly young (CIA World Factbook, 2016). The largest employers are government agencies, such as the national railway system, and many Indian states have histories of socialist or even Communist leanings, as does the country as a whole.

Legal Framework

The legal framework for HRM in India is messy, and complicated. Theoretically based on the system inherited from the British, and therefore not too far from the American system, and close to the UK, Canadian and Australian ones, India's system also bears the influence of Hindu or Muslim traditions and the unique Indian social context (Rao, 2015). This can make it somewhat less predictable than it otherwise should be. As such, the legal system has traditionally been poor with respect to its ability to defend workers' rights, leaving such matters into the benevolence of the employer, for better or for worse (Cooke & Saini, 2015). There is a case to be made that strategic HRM principles will become more important going forward, because the legal environment will continue to be poorly-developed but competition for talent will increase as the country's economy improves.

Lessons for Foreign Firms

There are many differences between HRM practices in India and HRM practices among foreign firms. For example, while HRM practices have a certain homogeneity in the West, they can be very different among different types of firms in India. Private enterprise is often very capitalist, and the most modern of firms may have HRM practices that are relatively similar to those of Western companies, but smaller firms, family-owned companies and government will tend to have very different HRM practices (Sita, Petrick & Gupta, 2000). There are also distinct differences in different industries, and depending on the age of the company in question. In essence, it can actually be very difficult to pin down what HRM practices exist in India -- they all do, but it depends on firm ownership and industry type at the very least (Budhwar, 2000). In most companies in traditional industries such as manufacturing, however, Indian firms do not view HRM as a part of strategy. With such older companies, more traditional views of HRM as a line function predominate, and this will be reflected in how these companies deal with their employees as well (Budhwar & Sparrow, 1997).

Recruitment practices for foreign firms need to focus on what appeals to the modern Indian worker. Whatever HRM practices might exist in government or older companies, Indians expect that a Western approach. Human resources should therefore be treated as resources or assets, compensated according to competitive market principles and incentivized the same way (Holtbrugge, et al., 2010). Offshoring to India requires local assistance, because it can be difficult to understand the nuances and contexts inherent in Indian culture. Increasingly, however, Indian workers favor incentives. These serve to increase competition among workers and they serve to spur motivation for better performance (Pereira & Anderson, 2012).

Foreign firms are also influencing HRM in India. Incentives for performance are becoming more common. It should be noted, however, that Indian firms prefer to innovate their own incentives, rather than adopt those of the parent company, in part because Indian subsidiaries prefer to operate at arm's length. Interestingly, however, Indian firms are less likely to perform a cost-benefit analysis on their innovations for incentives, something that can be challenging for foreign firms working with Indian subsidiaries in particular (Jain, Mathew & Bedi, 2012).

Conclusion

Though the legal system for HRM in India is based on the British model, it is infused with Indian religious and cultural context. Ultimately, this system is relatively weak, which has allowed different companies and organizations to develop their own visions of HRM in India. Older companies, government entities and smaller firms tend towards more traditional approaches, with HRM as a line function. Foreign companies and newer ones, especially in the country's burgeoning technology industries, are trending towards strategic HRM. While this is in its infancy in India, there is also evidence that Indian managers prefer to interpret HRM concepts for the unique Indian cultural context. Thus, it is sometimes difficult for foreign companies operating in India to impose their own HRM models on the country effectively. All told, HRM is probably more complex in India than anywhere else, because of how much it varies between organizations and how it prefers to exist as a syncretic vision of Western and Indian traditions, rather than simply accepting a Western vision of strategic HRM.