1

A study of Human

Resource Management in

Ranbaxy Laboratories Ltd.

SUMMARY

Submitted to

M.J.P. Rohilkhand University, Bareilly

For the award of the Degree of

DOCTOR OF PHILOSOPHY

In

COMMERCE

2007

Supervisior Research Scholor

Dr. B.N. Chaurasia Miss Shallo Maggo

Reader,

Department of Commerce

Hindu College,

MORADABAD

Summary of the thesis entitled "A study of Human

Resource Management in Ranbaxy Laboratories Ltd." submitted

by Miss. Shallo Maggo, under the supervision of Dr. B.N.

Chaurasia, Reader, Department of Commerce Hindu College,

Moradabad.

2

SUMMARY

In the first two chapters of the thesis the researcher has given the introduction on Human

Resource Management and its theoretical foundation.

Human resource management relates to a strategic and coherent approach to the management

of an organisation’s people contributing towards the attainment of business objectives. It involves a set

of interrelated policies with ideological and philosophical orientation, and forms a business focused

approach to manage people for competitive advantage.

As Armstrong observes, the Human Resource Management emerged in the mid 1980s when

two models were evolved by academics in the USA: “matching model” and the ‘Harvard framework”.

The matching model specifies that HR systems and the organizational structure must match with

organizational strategy. Likewise, the founders of Harvard framework stressed the need for coherence in

Human Resource Management policies. They were first of point out that the Human Resource

Management belonged to the line managers. As Beer et al. assert, human resource management involves

all management decisions and act ion which affect the nature of the relationship between the

organisation and its employees - its human resources. The problems of historical personnel management

can only be solved when general managers evolve a viewpoint of how they intend to see employees

involved in and developed by the enterprise, and up to what extent Human Resource Management

policies and practices may facilitate those goals.

For example, general managers may make decisions regarding introduction of new technology

or a new financial strategy. These Human Resource Management decisions fall beyond the purview of’

the personnel functions. There is an urgent need for a long-term perspective in managing people and

consideration of people as potential assets rather than merely a viable cost.

Similarly, Walton, another Harvard professor, observes that the Human Resource Management

model is composed of policies which promote mutuality, i.e. mutual goals, mutual influence, mutual

respect, mutual rewards and mutual responsibility. The theory is that policies of mutuality will stimulate

commitment which, in turn, will provide both better economic performance and greater human

development. Thus, the Harvard framework specifies that the Human Resource Management is a

concern of management in general rather than the personnel function in particular.

Some of the UK versions of the Human Resource Management model are those proposed by

David Guest, Karen Legge and John Storey David Guest has further developed the Harvard model

stressing four policy goals: (1) strategic integration, (2) high commitment. (3) high quality, and (4)

flexibility.

Karen Legge specifies three elements of Human Resource Management as follows:

o HR policies should be integrated with strategic business planning and used to reinforce an

appropriate (or change an inappropriate) culture.

o Human resources are valuable and a source of competitive advantage

o Human resources can be tapped most effectively by mutually consistent policies which

promote commitment and foster a willingness in employees to act flexibly in the interests of

the adaptive organsation’s pursuit of excellence.

John Storey specifies four elements of Human Resource Management as follows:

o A set of beliefs and assumptions.

o A strategic thrust embodying decisions about people manage me at.

3 o The central involvement of line managers.

o Dependence upon a set of levers to determine the employment relationships.

“Human Resource Management is regarded by some personnel managers as just a set of

initials or old wine in new bottles. It could indeed by no more and no less than another name for

personnel management, but as usually perceived, at least it has the virtue of emphasising the virtue of

treating people as a key resource, the management of which is a direct concern of top management as

part of the strategic processes of the enterprise."

Management of human resources is a new field of study embodying behavioural science

knowledge relating to the working of line and staff officials and union leaders to motivate and develop

employees in attaining organizational goals. The human resources approach to the management of

employees represents a significant measure of utilising human resources to accomplish organizational

goals through the application of behavioural sciences and experimental psychology. The interaction of

social, psychological and cultural factors in organisations tiave assumed significance from the standpoint

of this approach. It is a highly comprehensive field involving the use of numerous concepts such as

personnel management, personnel administration, labour relations, industrial relations, manpower

management and employment relations. Definitions of these concepts will enhance the understanding of

this field.

Yoder et. a1. lucidly differentiate different concepts used in manpower management.

According to them, “Manpower means people involving both employers and employees, and manpower

management refers to direction and control of human resources in employment situations". The term

"labour management” can be used "manpower management, but it should be kept in mind that the latter

does not mean simply managing of rank-and-file employees or merely the management of union labour”.

The term personnel management can also be used for the manpower management, but it should be

remembered that the latter is not merely limited to the management of employees as individuals

excluding collective bargaining with unions.

Overall, as Heneman et al observe, personnel/human resource management is concerned with

improving contributions of people towards the effectiveness of the organisations. Their contributions can

be assessed in terms of specific personnel/human resource outcomes; attraction, performance, retention,

attendance and satisfaction.

Human resources (HR) function in an organisation is concerned with facilitating effectiveness

of all human resources (white and blue collar workers) and related units in the organisation: individuals,

roles, dyads, teams, inter teams, unions and the total organisation.

The main function of HRD is to design systems and instruments the development of all the

organizational units, create and sustain the culture the organisation decides to develop, give data-based

feedback on implementation of the systems, develop competencies needed at various levels, analyse

organizational (especially personnel) practices from t he point of view of HRD values, suggest ways of’

advancing humanisation and effectiveness of the organisation and respond to line managers’ needs by

designing and using organisation development (OD) interventions.

Management of human resources is of utmost significance from at least three stand points -

social, professional and individual enterprise. In view of the widening scope and the utmost significance

of Human Resource Management in India, the Human Resource Management department in industrial

organisations has a high status.

The third chapter has been devoted to research methodology and tools of research adopted for

the development of the thesis. Here the researcher has discussed the practical aspect of research

methodology used for the present study. It discusses all about methodology, techniques, research design

4 and processing and analysis of data. The researcher has first of all developed upon the theoretical

narration of research and various concepts related to research.

The present research project is a combination of descriptive. analytical, exploratory and

empirical research designs. It makes use of primary as-well-as secondary data. Primary data are collected

by the use of different research tools like personal visits to the organisation interviewing people at work,

administering questionnaires, face to lace discussions with the officials of Ranbaxy Laboratories Ltd.

The researcher has planned a comprehensive and stratified questionnaire consisting of about 40

questions on various aspects of human resource policies distributed to about 200 persons consisting of

workers, supervisors officials and managers.

The fourth chapter discusses the various Human Resource Accounting valuation models. The

common fifth and sixth chapter depicts organisational profile and human resource management in

Ranbaxy Laboratories Ltd.

In the Pharmaceutical Industry of India, Ranbaxy Laboratories has achieved phenomenal

success in the present times especially after eighties. Today Ranbaxy is a drug giant with interests

ranging from pharmaceuticals to diagnostics, fine chemicals, animal health care. R&D activities. bio-

technology and biological research and other innovative programmes with a turnover exceeding Rs.

2500 crore (2005-2006) per annum; the company is now country s third largest pharma company after

Glaxo and Cipla.

Ranbaxy has approximately market share behind Glaxo's 5.50% and Cipla Laboratories about

4. 60%. Ranbaxy has made its place in the Indian market and is adopting many survival, growth, change,

development & diversification strategies. At present Ranbaxy manufactures over 410 products in 12

production lines.

The company that started its pharmaceutical business with a small factory in 1973. crew in

less than 30 years. into India’s topmost pharmaceutical complex. It made a modest start by

manufacturing life-saving drugs for human beings. It slowly progressed along the value chain beginning

with basic-drugs and changing to value added generals.

Late Shri. Parminder Singh, one of the three sons of Bhai Mohan Singh played a key role in

the running of his father's company, Ranbaxy Laboratories Limited for over a decade. He was

responsible for transforming a small company into an industry leader with global ambitions. Bhai Mohan

Singh stepped down as chairman of Ranbaxy in April, 1993 and transferred the ownership of his

company to his son Parminder Singh. Now the resent dynamic and vivacious M D, Mr. Tejender Khanna

is putting his labour to make Ranbaxy a leading pharmaceutical industry in India.

Ranbaxy Laboratories Limited one of the leading public sector undertakings, has successfully

implemented its Human Resource Management programme and has achieved worthwhile results. The

basic principle of Human Resource Management philosophy is the belief in: (i) human resources; and its

development; (ii) optimum utilisation of human resources; and (iii) a harmonious balance between

business strategy and Human Resource Management strategy i.e., strategic planning and FIRM should

go hand in hand. Ranbaxy adopt the leading consultant Dr. M.B. Athreya's model of strategic

management and organisation development.

According to this model, OD & Human Resource Management efforts may tend to be wasteful

exercise, if there are no opportunities to utilise the development of human capability. Similarly, all

strategic options in terms of business plans will remain unfulfilled or paper projects at the most, if

human resource are not made available to implement them.

The importance of Human Resource Management as a catalytic agent of growth has been

increasingly recognised in Ranbaxy Laboratories Limited. The following three factors may be

5 considered while examining the recent Human Resource Management efforts in Ranbaxy

Laboratories Limited.

• Competition in all areas of business operation has put considerable pressure on management to

improve productivity, quality and reduce cost. Success in this direction requires a dynamic

FIRM strategy.

• The introduction of new computer- aided technology and fundamental change in the

manufacturing process has caused the need for developing new skills to suit the demand of

new technology.

• To-day's better trained and better educated managers’ have stressed the emergence of new

work values where they have more opportunities to make contribution and to be recognised.

• Human Resources are the most important assets in the organisation.

• Unlike other resources, human resources can be developed and increased to an unlimited

extent.

• A healthy climate, characterized by the values of openness, enthusiasm, trust, mutuality and

collaboration is essential for developing human resources.

• Human Resource Management can be planned and managed in ways that are beneficial both to

the individual and organization.

• Employees feel committed to their work and organization if the organization prepetuates a

feeling of belongingness.

• Employees are likely to have this feeling of the organisation if it provides for their basic needs

and for their higher needs through appropriate management styles and systems.

• Employee commitment is increased with opportunity to discover and use one’s capabilities and

potential in one’s work.

It is every manager’s responsibility to create a healthy and motivating work climate and to set

examples for subordinates to follow.

Ranbaxy believes in the motto ‘Putting people first’. In order to sustain its success and renew

its products, Ranbaxy has focused on the people behind its products and not on the products themselves.

The strategy framed by Ranbaxy is around core intellectual or services competencies.

Ranbaxy has focused on people, i.e., both employees and customers. The strategy has been to

recruit locally in host countries. The company has succeeded in creating multicultural portfolio of human

resource skills.

The training in the organisation shifted from mixed participant groups to work groups. This

has increased focus on people that create and perpetuate such knowledge.

As part of Ranbaxy’s ongoing commitment to produce high-tech quality drugs and

pharmaceuticals that cater to the specific needs of markets around the world, the company has applied

rigid quality measures at every stage of manufacturing at their plants.

Good quality remains the commitment of every employee at Ranbaxy : from careful selection

and analysis of raw materials to meticulous testing of finished products to meet stringent in-house

standards that goes beyond the pharmaceuticals to ensure customer satisfaction.

To meet growing international business requirement, a programme to set up new facilities for

the production of bulk drugs pharmaceutical dosage from basic chemicals and intermediates has been

under implementation to fulfil its aim on quality.

Chairman says, “At Ranbaxy, we are on corporate journey. It is a long and winding road that

has brought us from a domestic company with a few hundred employees to one that now aspires to be an

6 international pharmaceutical company. Our mission is clear and our values well articulated. We

give shape to our dreams.

The researcher presents his findings in the last chapter of the thesis. The present phase is

summing up phase giving analysis of the finding, conclusions and suggestions.

The present discussion also gives the idea of emerging concept of good corporate governance

to achieve managerial excellence. The concept of good corporate governance is gaining momentum

these days. The researcher has conducted the preset research with a strong focus on innovation. It is

hoped that this study will focus on innovations that encourage further researches.

The researcher has developed a bank of ideas and innovations as a resource of further progress

in similar studies. Ranbaxy Laboratories Ltd. is a giant pharmaceutical company with newer concept of

public responsibility and good corporate governance.

Research evidences, observations and findings of this study indicate that the company is

fulfilling fully the social responsibility, social ethics and social audit.

Ranbaxy is famous for its focussed marketing, better net working and innovative products

position and Ranbaxy is at the leading edge in its global pursuits. To create something of value, the

imagination must soar, unfettered, it must fly like a bird in search of new horizons.

Ranbaxy Chairman Sri Parminder Singh, said some days before going to his heavenly abode.

“No amount of assets, capital, inventory, financial reserves, sophisticated technology, plant, process,

product or wealth of any kind that an organisation builds can match the treasure of its human resource".

Shri Tajendra Khanna - Chairman, Ranbaxy - 1999 spoke in his message to the shareholders,

“As we approach the WTO deadline of January 1, 2005, for aligning our domestic patent laws to

conform to the TRIPS Agreement (Trade Related Intellectual Property Rights), it is clear that domestic

pharmaceutical companies will have to rely more for their future growth on developing new products

from their own research and development efforts and less on producing and marketing of reverse

engineered drugs.

Ranbaxy places the highest importance on Human Resource Development for its future

evolution. The development of a highly motivated, innovative, alert, forward looking and ethically

committed team of managers, supervisors and production shop floor, marketing and administrative staffs

will play a key role in ensuring the Company’s future progress. The recent initiative of changing the

Performance Appraisal System to make it more interactive and to better gauge the achievements and

potential of staff members, is a step in this direction.

In my messages to fellow Ranbaxyian's I have stressed the need for maintaining the highest

standards of honesty and ethical commitment as well as diligence and alertness in the pursuit of assigned

tasks. I have also invited innovative suggestions from all members and suggestions will be considered

carefully on merits, irrespective of the level from which they happen to originate.”

Similarly we can quote Dr. D.S. Barar, CEO & Managing Director of Ranbaxy regarding

human resources policy of the company in the following lines :

“In our quest to become international, the importance of a solid home foundation cannot be

over emphasised. I have no empirical evidence of a company that has demonstrated vibrant international

presence with low visibility at home. We have been fortunate to realise this early in our journey and

absorb a vision that required us to build a portfolio of competencies and strengths that we would later

leverage abroad.

Today, Ranbaxy has emerged as a leading pharmaceutical company on the Indian firmament

with a second largest market share. The company enjoys an enviable reputation amongst the medical

fraternity for its high standard of ethics and quality. Around our core strength of anti-infectives where

7 some of the best recognised brands have led over decades, we have built more recent ones in

emerging therapeutic areas like Cardiovasculars, Central Nervous System and Nutritionals that reflect

lifestyle transitions in emerging markets. Supporting this expansion we have invested in world class

manufacturing infrastructure that leverages India’s comparative cost advantage and skilled manpower

while delivering international quality. As we fortify our presence further in this market, we are turning

our Indian learning into an international opportunity.

Ranbaxy is now a fairly well recognised international generic company. There are a few

generic companies with an international presence, but fewer still have embarked upon a complex, multi-

country operation from a developing country, with a vision that engulfs emerging and advanced markets.

Our audacious ambitions are balanced by limited resources but fueled by competitive entrepreneurial

energy. Our drive for internationalisation is guided by a well-planned Brand strategy that covers some of

the largest emerging markets like China, CIS, Central Europe and Latin America.

Simultaneously, Ranbaxy was the first company to move out of India to seize opportunities in

the large generic markets of USA, UK and Western Europe on the belief that no intent of

internationalization is complete without a presence in these markets. The M.D. Says "Our position today

is probably in the league of top 100 pharmaceutical companies of the world and our recent ranking as the

11th largest company in the international generics space (Source: Warburg Dillon Read, based on 1999

revenues of leading global generic companies) is a resounding endorsement of our strategic intent.

Recognition as Asia’s 2nd best pharmaceutical company (Source: Euromoney’s Asian Company ranking

poll) gives us the confidence that we seem to be doing all this the right way.

We are clear that the dominant share of our revenues for a considerable period of time will

continue to come from an ever-expanding global generics market. The driver for this effort has not been

so much the impending Product patent regime as the fact that the pharmaceutical industry is

fundamentally knowledge driven. Our belief that sustained growth in this industry can be achieved only

through continuous pursuit of innovation, is enshrined in the intent of our mission. After the initial steps

in this direction that created the necessary infrastructure both for research in novel drug delivery systems

and new drug development, we now have demonstrable evidence of the first stirring of success.

Chairman of the Company says "Our singular strength in the journey I have described, has

been our vibrant human assets. We have often faced intimidating odds in entering new markets and

moving into areas of innovative research. The undying spirit of our people and their intense competitive

and entrepreneurial energy sustained us through these odds. Their ability to steer through seeming chaos

in a diversity of new markets has progressively powered our growth. Be it with core business activities,

consistent support for operations or the spirit of innovation that drives research, Ranbaxy owes in no

small measure to the vitality of its workforce.

As we gradually transform our composition to a truly multicultural, multiracial team that I

personally count as Ranbaxy’s biggest achievement it is also, intuitively, its biggest challenge. To

integrate these ethnicities and cultures towards a solitary purpose while retaining our quest for new

perspectives will govern our future success.

Ranbaxy has been rated by doctors to be the best in popularity, service and products. This was

documented by a syndicated research titled, "Company and Representative Image” conducted by ORG

among doctors in India to asses the corporate image of pharma companies amongst the medical

fraternity. The research, based on a structured questionnaire, comparised face-to-face interviews across

12 Indian metros, mini-metros and class-one towns. 1,045 doctors were interviewed comprising of

General Practitioners (GPs) and Specialists (Physicians, Gynecologists, Orthopaedics & Pediatricians).

The survey was large-scale and tested product-related attributes such as good quality,

8 reasonable price, and easy availability along with company image such as strength and character. In

all these areas, Ranbaxy was rated as:

• Amongst the most salient Pharma companies in India along with Glaxo-Welicome and Cipla.

• The recipient of the highest number of mentions, very high on level o familiarity and overall

impressions.

• No. 1 pharma company in India.

• Extremely high for its promotional efforts, standard of detailing materials, educational

material, adequacy of product samples and usefulness of leave-behind literature.

• The best on overall impression, followed by Glaxo, Cipla, Pfizer and Smithkline Beacharn.

• No. 2 company by the specialists.

• Company representative is excellent.

The study concludes that

o There is professional management in the company.

o Ranbaxy Laboratories Ltd. enjoys sound industrial relations and human relations.

o There are nominal employees’ grievances in the organisation and there exists an enlightened

trade union and its leaders are responsible leaders.

o The company has normal human resource development programmes.

The company has satisfactory recruitment and selection policies of the people but promotional

policies and merit rating plans are unsatisfactory.

Thus, it is evident from above discussion that Ranbaxy gives top priority to its human

resources above all over other physical wealth, money inventory stock, financial reserves, capital

reserves etc. The human resource accounting in the organisation is in the form of recognition to human

dignity, human welfare, social security & above all human resource participation in management

programmes and decision-making areas. The top management is philosophy of understanding the value

of human resources is the real basis of the recognition of human resource accounting at the company.

The latest position of Ranbaxy can be seen in the following remarks of James Mathew

Ranbaxy’s first in-house developed R&D product - once a day dosage anti-infective drug Ciprofloxacin -

is expected to get government approval in a day or two, paving the way for its commercial launch in the

domestic market soon, ahead of the international launch of this drug by Bayer AG.

According to market analysts, the launch of the new drug is expected to add to the bottom line

of Ranbaxy significantly since the company, a leading player in the anti-infective segment, has been

suffering because of the sagging sales growths in this segment in the recent quarters. Ranbaxy is doing

well in all fields because its main thrust is on the development of human resources in the organisation. It

is hoped that the same philosophy of human resource development will continue by the strategic

management of Ranbaxy laboratories ltd.

The present study is a study in the field of human resource management. The researcher is sure

that it brings into light the true position of human resource management in Ranbaxy Laboratories Ltd.

Though there are several studies on various aspects on human resource management in Indian context.

As such, the researcher is sure that the present study is fact finding and pioneer and motivates and

stimulates further researches in this field.