Human Resource Management Practices at the National thermal Power Corporation (NTPC) in India

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Case Details:

Case Code : HROB073
Case Length : 24 Pages
Period : 2000-2005
Pub. Date : 2005
Teaching Note : Available
Organization : National Thermal Power Corporation
Industry : Utilities
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Analysts wondered what made NTPC so special that it could attract talent in an environment of high paying software companies and also other multinational players operating in India.

NTPC was not only India's largest thermal power generating company but was also the sixth largest thermal generator⁸ globally, and the second most efficient in capacity utilization in the world in terms of Terrawatt hours (TWh).⁹

According to analysts, NTPC changed the oft-held perception that as a public enterprise it would have a laid-back organizational culture. NTPC had a high focus on training and development and merit was an important consideration for career growth. Its achievement was particularly noteworthy as it had successfully developed a challenging work culture even though it was 90% government-owned.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Background Note

NTPC was set up in the year 1975, as a thermal power generating company, with a view to augmenting power generated by the State Electricity Boards (SEBs)¹⁰ in order to bridge the wide gap between the demand and supply of power in the country.

At this time, the total ownership of NTPC rested with the Government of India (GoI). In the 1980s, the company established thermal power stations across the country. In 1987-88, NTPC was among the first public sector enterprises to start a Memorandum of Understanding (MOU) system¹¹ with the GoI.

In the year 1991, the Indian economy witnessed two major trends, that of liberalization and privatization. The GoI encouraged the entry of private players as power utilities. In 1991, NTPC faced a crisis with the arrears of SEB dues increasing continuously and the World Bank¹² refusing to lend further funds to the company. The company experienced a severe liquidity crisis and employee morale had hit rock bottom...

Excerpts >>

8] As per a study conducted by A. T. Kearney, a global consulting firm, in 2002.

9] As per a study (based on 1998 data) by Datamonitor, a UK based research and consulting agency.

10] Each state in India has a State Electricity Board that caters to its power generation needs.

11] The MOU system referred to here, is a freely negotiated document between the government as the owner and a specific PSU. It is supposed to clearly specify the intentions, obligations and mutual responsibilities of both parties. The system attempts to move the management of PSUs from management by controls and procedures to management by results and objectives.

12] The "World Bank" is the name that has come to be used for the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Together these organizations provide low-interest or no-interest loans, and grants to developing countries. NTPC was the single largest company in India to receive concessional loans (around $4 billion of funding from 1975 till 2005) from the World Bank.