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Employee Poaching: A Case from Sheetal Structurals Private Limited*

CASE STUDY, HUMAN RESOURCE MANAGEMENT
ET Cases - GSMC, 13 Pages
AUTHOR(S) : Kamlesh Kumar Mishra General Manager, M/s. Sheetal Structurals Private Limited, Deepika Upadhyay Assistant Professor, Christ University, Hari Shankar Shyam Head of the Department (Marketing), School of Business Studies, Sharda University

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Employee Poaching: A Case from Sheetal Structurals Private Limited

 

It was a normal working day on December 24th 2014 and both the units of Sheetal Structurals Private Limited (SSPL), a tower manufacturing company based in Baghpat, India, were functioning smoothly. In the afternoon, the management was informed about the sudden resignation by the head of Production & Planning Department. It was pretty unexpected move by the head of the department. Next day, two more people from two different departments also resigned with no prior information. Abrupt resignations by three people within a span of two days were not anticipated by the management. The event severely impacted the day-to-day operations of the company.

The first resignation came from Rajesh Srivastava (Srivastava), the head of Production & Planning department. This department is the nerve center for any tower fabrication unit. The department ensures optimal utilization of resources through efficient material planning. It is also responsible for preparing the material procurement list based on tower specification and quantity. After the raw materials are received, they are released to the fabrication department as per their requirement (Exhibit I). Srivastava cited availability of better opportunities outside SSPL as one of the key reasons for his exit and requested to be relieved from duty within a week. It was difficult for the management to relieve Srivastava at such a short notice..............

Sheetal Structurals Pvt. Ltd.

SSPL is a transmission and telecom tower manufacturing company, located in Baghpat, UP. The company was founded in 2006 by a group of entrepreneurs led by Sanjay Jain (Sanjay). The company was formed to manufacture telecom towers to cater to the needs of upcoming telecom industry, which was a booming segment at that time. The company was also eyeing the vast demand created by rural electrification work being undertaken by the Central as well as State Governments. The company was unable to tap the market in the initial two years of its operations and turned into a sick unit by the year 2008 and later on it had to shut down its operations..............

Important Departments at SSPL

In the ‘transmission tower manufacturing’ industry, different steels are used. Strength of tower depends on its structural design, fabrication quality and steel used. These three important pillars of tower strength give importance to Commercial, Raw Material and Production Planning departments. In the revived SSPL, commercial was divided in two parts, one for procuring raw material and another for consumables procurement. Raw material was steel angles/plates and zinc........

Finding the Cause

Senior management was worried about the unprecedented resignations of three departmental heads within a short span of time. It was highly unlikely to be a mere coincidence that all three of them decided to leave the organization at the same time. In order to understand the situation better, the management started conducting one-on-one sessions with remaining senior members..............

The following appeared to be likely reasons:

• Lower compensation as compared to the industry standards: Lower compensation package of SSPL was identified as one of the most important reasons for its employees to shift job.....................

• Well informed and capable managerial and technical staff: SSPL was better than other companies because of training opportunities and broader exposure............

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Challenges for the Management

While trying to restore smooth functioning of the organization, the management of SSPL was faced with the following challenges:

• Maintaining Business as Usual (BAU) Operations: Maintaining normalcy in operations in the affected departments was the first priority for SSPL. The vacuum created by two departmental heads...........

• Retaining Talent: There were other departments and key positions that could be a target for employee poaching. It was a challenge to keep the flock together and maintain smooth operations..............

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Strategic Action Plan

• Work study of individual departments: It was decided to study the contentment level among the employees of all work stations involving internal teams............

• Reframing the terms and conditions of appointment of employees: The company decided to look into the terms and conditions of appointment of its existing employees with immediate effect.................

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Assignment Questions

I. Is it ethical on the part of employees to leave their organization without following proper procedures? If yes, why?
II. Does Human Resource department of any organization play an important role in generating confidence in its employees towards their employer?
III..................

Exhibits

Exhibit I: Organization Structure of Sheetal Structurals Pvt. Ltd.

Exhibit II: Tower Manufacturing Process at SSPL

Teaching Note Preview

Employee Poaching: A Case from Sheetal Structurals Private Limited

 

Synopsis

Sheetal Structurals Private Limited (SSPL), a tower manufacturing company based out of Baghpat, India, was established in 2006 for manufacturing telecom towers to cater to the need of upcoming Telecom Industry. As of 2014, the company was focused on manufacturing Electric High Voltage Transmission Towers for Power (electric) transmission. Its key customers included State Electricity Boards and Power Grid Corporation of India Ltd. SSPL was a subsidiary of Shyama Power India Limited (SPIL), a leading name for transmission line projects in the North Eastern States. SPIL acquired SSPL in 2006 to extend footprint in the tower manufacturing space.

On December 24th 2014, normal operations of the company were hit when three department heads resigned within a span of 24 hours. The events started with the resignation of Rajesh Srivastava, Manager, Production & Planning Department, followed by the resignations of Uttam Sharma (Uttam), Assistant Manager, Material Department and Manish Kumar (Manish), Manager, Finish Yard & Dispatch Division. All three of them cited availability of better opportunities outside the firm as one of the key reasons for their exit and requested to be released from duty within a week. Sudden exit of three department heads would have had a serious impact on production activity within the plant. Hiring proper replacements could take months as the company operated in a niche industry and experienced professionals were not easily available. To make the matters worse, SSPL was working on a strict deadline to deliver a batch of towers to its largest client, Power Grid Corporation of India Ltd.

Management investigated the case and found that a new upcoming tower manufacturer in Ghaziabad had lured away the employees through promises of better compensation. To minimize the impact on manufacturing activity, management decided to adopt a short-term strategy of identifying top talent within the organization and elevating them to handle the responsibilities of the employees who had left. In the longer term, the management decided to take corrective measures in the form of establishing a formal human resource department and strengthening the HR framework.................

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Abstract

Human resource is considered as the life line for any manufacturing plant. Sheetal Structurals Private Limited (SSPL) is a tower manufacturing company based in Baghpat, Uttar Pradesh. Three managers from production and planning department, raw material department and dispatch department respectively, resigned from the company one after the other because of the job offers made by an emerging competitor based in the National Capital Region. All of them were qualified and experienced. Since the industry operates in a niche segment and not many experienced professionals are available in market, hiring new workforce immediately was not feasible. In absence of any HR policies with respect to notice period and other legal implications of sudden resignation, the employees of SSPL were quite vulnerable to poaching by its competitors. The event had a severe repercussion on the day-to-day operations of the three departments. The unprecedented resignations called for an urgent damage control and throwback on the policies and procedures adopted by the organization. The organization also adopted preventive measures to retain its existing workforce.



Pedagogical Objectives

  • To understand the importance of HR practices and policies regarding recruitment, notice period, workforce retention in a manufacturing organization
  • To ponder upon the role of motivational factors in retention of existing employees
  • To discuss and debate on the ethical code of conduct among employees regarding job hopping
  • To debate on the topic, “Is satisfied employee a myth”?

Case Positioning and Setting

  • This case study can be used in BBA, MBA and Executive Development Courses with HR specialization
  • The case study intends to help develop an understanding on the importance of HR policies regarding recruitment, adherence to compulsory notice period, retention strategies and motivational factors adopted by any organization


* GSMC 2017, IIM Raipur

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