Shree Ramkrishna Exports (SRK) PDF

IIMA/HRM0260 Shree Ramkrishna Exports (SRK): Quadruple Bottom Line Approach to HRM On the evening of October 22, 2022, Kaka 1...

IIMA/HRM0260 Shree Ramkrishna Exports (SRK): Quadruple Bottom Line Approach to HRM On the evening of October 22, 2022, Kaka 1, the founder and chairman of Shree Ramkrishna Exports Private Limited (SRK), Surat, India, watched his employees leave the factory as he stood by the window in his office. The employees were in a festive mood after receiving their generous annual bonus, and were bidding adieu to each other before the company closed for the Diwali2 break. With sparkling eyes, Kaka continued to watch his employees rejoice. He reminisced his journey of how a school dropout, born to a family of farmers in a non-descript village in rural India, had built a firm that was one of the most reputed names in the diamond cutting and polishing Industry. SRK is a diamond procuring, cutting, polishing, and a jewellery design and sales company. Established in 1970, it is a family owned and managed company in Surat, city of Gujarat, India (Surat is popularly also known as the diamond city of India). Eventually SRK expanded and became officially incorporated as a private limited company on April 02, 2012. Over time, SRK evolved from a family business to being a professionally managed, leading Cut and Polishing Diamond (CPD) firm in India3. Its registered office is in Mumbai global. It is renowned for nurturing people centric policies and ethical business practices. Indian Diamond Industry centre for diamonds, accounting for over 90% of polished diamond manufacturing globally.4 According to India's Gem & Jewellery Export Promotion Council (GJEPC), the diamond sector employs more than seven million people and most of the occurs in Surat.5 Most of the entrepreneurs in this industry hail from Saurashtra region (situated on western coast of India) and Palanpur district of Gujarat state. Diamond factories in India can be categorised 1 Kaka: The term is employed to refer to the male sibling of one's father or to an older male who serves as a paternal figure. 2 D riumph of good over evil. 3 As of March 2023, SRK was a USD 1.8 billion family-owned private conglomerate employing more than 6000 highly skilled employees, with two diamonds cutting and polishing units in Surat. 4 TPCI: Trade Promotion Council of India. (2021, October 13). Indian diamond Industry: From a rough patch to a glittering performance - India Business & Trade, an initiative of Trade Promotion Council of India. https://www.tpci.in/indiabusinesstrade/blogs/indian-diamond- industry-from-a-rough-patch- to-a-glittering-performance 5 GJEPC India. (2020, October). Cluster Mapping Study of the Gems & Jewelry Sector in India. National Council of Applied Economic Research. https://gjepc.org/pdf/Cluster-Mapping-Study-of-the-Gems-&-Jewellery-Sector-in-India.pdf Prepared by Prof Jatinder Kumar Jha, XLRI, Prof Biju Varkkey IIMA and Ms. Virangi Shah, Research Associate IIMA. Contribution of Ms. Ashini Patel and Sunny Wadhwania, RA during the initial stage of documentation is acknowledged. Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for classroom discussion. The authors were provided with information by the company to aid in the development of the case, but no direct funding was received from the company. Dr. Nirav Mandir, CHCO and team provided all support. It is important to note that this case does not serve as an endorsement or provide primary data, and it does not aim to illustrate the correct or incorrect ways to handle administrative problems. © 2023 by the Indian Institute of Management, Ahmedabad. Any reproduction or transmission of the publication, including electronic, mechanical, photocopying, recording, or any other means, without permission is strictly prohibited. 2 of 26 IIMA/HRM0260 as semi-organised. Many home-based, micro small and medium sized units operate by employing either family members or with 10-20 Ratna kalakars6. A few large formal organisations like SRK lead the sector. For many years, Indian CPDs have been striving to lower manufacturing costs by directly sourcing rough diamonds from mining companies. Since raw diamonds are not mined in India, the CPD industry is dependent upon import of rough diamonds. The Russian 7 is one of the major suppliers of rough diamonds to India. Alrosa directly supplies rough diamonds to local companies in India, which earlier had to be imported from centres such as Belgium and Israel that added to the cost of manufacturing.8 De Beers, another large supplier of rough diamonds, sells the roughs through either auctions or its global sight holder sales. A significant number of Indian companies have made it to the list of De Beers sight holders,9 including SRK. Brazil, Israel, Russia, Canada, Angola, and South Africa are prominent raw diamond producing (mining) countries,10 whereas India, Belgium, Israel, China, and others are cut and polishing countries. The Indian diamond cutting & polishing industry underwent tremendous transformation with the advent of technology. Manual processes were automated to a great extent. However, diamond cutting & polishing continues to require the manual touch of skilled industry is directly dependent on the number of skilled ra in diamond valuation. They are therefore also known as Liquid Knowledge Worker11. However, despite the craftmanship possessed by the ratna kalakars, there have been instances of massive lay-offs due to unprecedented events like the recession and the pandemic12. A few companies that were able to trade-off between workforce retention and downsizing, and adopted pro-labour retention practices, bounced back stronger post the economic recession.13 SRK is one such firm that grew multi-fold post-recession. Trust is the basic fabric of business relations in the diamond industry. Since the beginning of diamond trading, transactions have been carried out based on trust rather than formally written contracts. Stones worth millions of USD are traded based on verbal agreements and transported with minimal security. Trust based business practices are promoted through -based business network.14 In India, most of the entrepreneurs are either from the same community or the same region which helps to build a business networking based on trust within the community or region. Often business houses 6 Ratna Kalakars: The term commonly used to refer to skilled individuals who specialise in cutting and polishing diamonds is "Artistic Workers," highlighting their craftsmanship in the diamond industry. 7 Alrosa: It is one of world largest Russian companies engaged in exploration, mining, producing, and selling of rough diamonds. Link to http://eng.alrosa.ru/ 8 Russia resumes export of rough diamonds to India. (2022, March 16). The Economic Times. Retrieved October 3, 2022, from https://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/russia-resumes-export-of-rough-diamonds- to-india/articleshow/90277593.cms 9 De Beers sightholders list can be viewed at https://www.debeersgroup.com/sightholders 10 Where Are Diamonds Mined? Countries That Produce Diamonds. Hobert M. King (n.d.). https://geology.com/articles/gem-diamond-map/ 11 Jha, J. K., Pandey, J., & Varkkey, B. (2018). - engagement of liquid knowledge workers: Moderating effects of psychological contract. Journal of Global Operations and Strategic Sourcing. 12 Thomas, M. R. (2016, December 9). 20,000 diamond workers jobless in Surat: Ratnakalakar Sangh. The Times of India. https://timesofindia.indiatimes.com/city/surat/20000-diamond-workers-jobless-in-surat-ratnakalakar-sangh/articleshow/55898537.cms 13 Varkkey, B., & Kumar, R. (2013). Keeping the sparkle on: Workforce retention in Indian diamond cutting and polishing firms during economic recession. International Journal of Organizational Analysis. 14 Indu, R. (2011). Emergence of Informal Sector Firms in International Business (No. WP2011-02-01). Indian Institute of Management Ahmedabad, Research and Publication Department. 3 of 26 IIMA/HRM0260 strengthen their professional ties by extending it to the personal and social realm by way of marrying next of kins in the business community. Journey of SRK started with the entrepreneurial spirit of Govind Dholakia who came to Surat cutter in Surat had insisted that Kaka join him. They lived in a small room which once used to be a stable for horses. He began working in a small diamond cutting unit with INR 103 as al to learn polishing made him master the skill of cutting and polishing. Eventually, in 1970, Kaka partnered with his co-workers Bhagwanbhai Patel, and Virjibhai Godhani to start a diamond cutting and polishing partnership firm named Shree Ramkrishna Expo employer helped the trio to set up the business and assisted them with other requirements. K : , we purchased rough diamonds from a dealer and were supposed to polish the diamonds, and produce a yield of 28%, thereafter, return them to the dealer. However, working skilfully, we were able to yield 34%. When I returned the higher yielded polished diamonds to the dealer, he told me that a higher than the standard yield will create confusion in the market and create problem for other cutters and polishers and asked me to produce yield 28% only. Confident of my skills, I decided to not buy rough diamonds from the dealer but directly from the market. I met a broker and asked him to take me to the market for a deal. I went to the market with Rs 500 in my pocket. The market required a minimum purchase of 10 carats which then costed Rs 910 and further Rs 10 was to be given as brokerage. Once the deal was done, I instantly gave Rs 500. For the outstanding payment of Rs 420 the trader suggested that the broker will accompany me home and on I can hand him over the balance from there. The problem was there was no money at home. Rs 500 was all I had. However, on returning home, Virjibhai came to the rescue. He asked his wife to give Rs 200 that he had given her for household expenses, he loaned Rs 200 from his neighbour, and Rs. 20 he gave from his wallet. The three partners together ran the business effectively and made generous profits. However, in 1983, SRK lost Virjibhai to adenocarcinoma. Thereafter, in lieu of his share in the firm, his two sons were inducted as partners. However, in 1995 to create more space for growth of the partners, the twenty-five years old partnership came to an end. In the process of dissolution of partnership, all mutually agreed that the brand name was to be retained by Kaka. Kaka redeveloped the existing factory into a four-storey building and upgraded the existing technology with laser machines and computer-based management systems. In due course, various family members including his younger brother Arajanbhai Dholakia, nephews Rahul Dholakia and Jayanti Narola joined SRK. In 2003, SRK expanded and diversified into the jewellery segment. Jewel Goldi, a flagship jewellery affiliate of SRK was set up in a Special Economic Zone in Mumbai, to cater to national clientele (See Annexure 1, for the comprehensive chronology of SRK's progression). 4 of 26 IIMA/HRM0260 Organisational Structure iness strategy emphasis. The company gives the flexibility to its employees to display creativity and innovativeness. SRK follows a structure that facilitates direct reporting to immediate functional head along with indirect reporting to the related head of respective business portfolio. The entire hierarchy is bifurcated into 13 levels. L1 to L4 executives constitute top management and are largely from the family, L5 to L6 constitute Senior Management, L7 to L8 forms Middle Management and L9 to L13 constitutes Junior Management. These levels are decided based on business portfolio, seniority, and the education level of the Individual. Level 1 stands for the highest authority and the chain goes until Level 13 at the bottom of the pyramid. Kaka occupies the Top position (Level 1) in the organisation as founder and chairman of SRK and has three direct correspondents: Arjan Dholakia (Entrepreneur- Administration), Jayanti Narola (Entrepreneur), and Rahul Dholakia (Entrepreneur). Further each correspondent has several direct reportees from relevant functions, and each has further reporting officers and executives. Annexure 2 provides a visual depiction of the organisational structure, starting from L1 and extending to L5. This structure provides flexibility for the business portfolio heads and executives. At the same time, all levels are integrated. As a diamond crafting and exports company, work is fragmented into various divisions and processes that require the highest level of control and integration of all processes to bring efficiency and agility in the production. Guiding Philosophy and Core Values Since inception, the company adopted a Responsible Leadership Model. The philosophy and core values of SRK are rooted in Kaka's principles of life and business. Throughout his life, Kaka has wholeheartedly embraced the teachings of holy books like 'Ramayana' and 'Shrimad Bhagwat Gita', as well as the wisdom of spiritual leaders such as Shri Morari Bapu and Dongreji Maharaj, which have influenced his approach to conducting business. SRK quotes is guiding philosophy as: self. Great purpose starts with oneself first being humble, then having a desire for the welfare of the employees, and ultimately working for the welfare of the society at large. Generosity served with love can lead a child towards knowledge, the needy towards optimism, a community towards values and the world towards enlightenment - SRK Website15 As a result of the stated philosophy, the core values for SRK while taking any business decision includes trust, transparency, ethical business practices, humility, credibility, excellence, and social consciousness. Making the Next Gen SRK Ready It is common in the diamond polishing community, particularly the one hailing from the Kathiawar region of Gujarat (popularly known as Kathiawadi), to involve family members 15 SRK- Crafting Pure Brilliance Since 1964. https://srk.one/ 5 of 26 IIMA/HRM0260 including extended relatives and distant cousins in the business. Often all members stay together as a community. The family members spend time together over food, attending religious discourses, and other gatherings; these gatherings act as an opportunity for the younger generation to learn from their elders. ues in the coming generation of successors, the younger generation are trained from an early age. Shreyans Dholakia, the director and brand custodian of SRK, and son of Kaka, used to work alongside Kaka, since the age of ten. He used to spent his school vacation and other off days in the office to learn about the business and SRK values. Shreyans mentioned: Involving children from family into some aspects of business at a young age allows them to observe and comprehend different aspects of managing a business. As part of this process, we encouraged them to attend both domestic and international trade fairs, where they are assigned minor tasks, such as serving water and organizing exhibitions. Moreover, before formally joining the business, Kaka asked the next generation to go incognito to a different town and survive by doing odd jobs for several weeks. They are given a token amount to meet initial expenses and no contact with the family is encouraged during this time. Through this process Kaka ensures that his children/grandchildren/relatives born with silver (diamond) spoon understand the struggles of an unfortunate person. The kins not only learn to value money, but also comprehend the foundation of the core values of SRK. philosophy and his journey to success is known globally, he is frequently invited by industry as well as various academic institutes to share his insights. Interestingly, Kaka puts these platforms as an added value imbibing exercise for his kins. Kaka quotes: along with me to the talks. Whatever I have to say to them, they get to hear it while I am Kaka created SRK for a larger purpose, which is beyond profit. He tried to train the next generation so that the SRK philosophy and core values would remain intact perpetually. Quadruple Bottom Line Approach: 4 Ps at SRK n four pillars viz. Purpose, People, Planet and Profit. SRK is a purpose driven organisation, and it has well established processes, policies, practices to achieve the purpose of the organisation. Purpose : o Validity and efficacy of the straight path of honesty and ethics in achieving success in the world. 6 of 26 IIMA/HRM0260 o Faith in God as an invisible force that runs this world and whatever that lies beyond it. o The essential role of the family system for the growth of individual communities and society16. Thus, in a nutshell considers planet, people, and profitability as three forces that must be balanced for conducting business. Missing out on any one of these forces may prevent SRK from achieving its purpose. People s all possible stakeholders, employees, customers, government, and society at large. SRK is a reputed name due to its people centric policies and community-oriented initiatives. The People Management Practices of S like Indian family values, encourages mutual respect for all as the first step aap 17 and when calling by name, using the suffix of bhai/ben"18 for men and women, respectively. The philosophy of mutual respect is communicated at the time of induction. Mutual respect is one of the criteria in appraisals, and its non-adherence may attract chastisement. Kaka himself greets every employee with a namaste and folded hands. In fact, all formal communication from SRK begin Moreover, Kaka never uses the rather he refers to them as Ratna Kalakars. As a result, these practices instilled respect and helped in building employee relations akin to a family. Kaka always motivated employees by sharing his rags to riches journey to boost the confidence of employees to go beyond all constraints to achieve their dreams while contributing towards excellence of SRK. Kaka explains his personal philosophy as: nothing, He keeps repeating to all employees, n all of you can repeat it or do An in-house entrepreneurship program to groom experienced artisans has been set up and functions as a business development/ outsourcing hub. Interestingly, Kaka strongly believes that doing business ethically is the best way to compete in the long run. The Human Resource Department at SRK is referred to as Human Capital Department (HCD) and acts as a trusted business advisor. All employees in SRK are given opportunities for learning various skills (domain specific vs. cross functional), working in different departments/sections of their choice and taking new initiatives to improve existing processes. SRK trust-based culture extends to providing a favourable and congenial work environment in addition to various monetary and non-monetary benefits to employees. 16 Diamonds are forever so are morals, G. Dholakia (2022), Pg 2 17 Hindi: a second person pronoun to address someone with respect) 18 or alike. 7 of 26 IIMA/HRM0260 According to Kaka: business, but you must turn your business into a family. Each employee of my company is a family member and that is why together we can achieve anything. SRK encourages its employees to focus on social capital (value relationships) both within and outside of the workplace. Kaka himself maintains cordial relationships with all stakeholders (government, bureaucrats, district administration, industry leaders, spiritual leaders, academic institutes, NGOs, and various other interested parties). SRK always welcomes visitors to the facility and offers the highest level of hospitality. The company has also organised public events in Surat with noted political personalities to Surat including the former President of India, Ram Nath Kovind, the Prime Minister of India, Narendra Modi (then Chief Minister of the Gujarat), Mr. Om Prakash Kohli (Former Governor of Gujarat in year 2014-2019), Mr. Rajnath Singh (Minister of Defence of India), etc. An employee at SRK quoted: have possessed the highest owed us to work. At the same time, if somebody is sacked from SRK then it becomes very difficult for the employee to get jobs in city as people know, SRK has zero tolerance for unethical Employees feel proud to work in a well-connected and reputable organisation. In addition, SRK is also engaged in community development activities (refer the corporate social responsibility section). Planet SRK, as a value driven organisation, has committed to create an environmental impact by achieving social goals beyond mandatory compliance. The company has built green buildings, which provide world class working conditions and a hygienic workplace. In 2015, -of-the art crafting facility was recognis by USGBC) - Leadership in Energy and Environmental Design (LEED). In 2019, both crafting units - SRK Empire and SRK House Platinum Green the highest level of rating by USGBC-LEED). In 2020, both crafting facilities were ranked USGBC. SRK has also achieved multiple internally recognised certifications regarding quality (ISO 9001), environmental standards (ISO 14001), occupational health and safety (ISO 45001, previously known as OSHAS 18001), food safety (ISO 22000) and energy management (ISO 50001). In 2019, SRK became the first gems and jewellery company worldwide to achieve the PAS 7000 certification for its Supply Chain Integrity and Traceability in-house grading process SRK Grading System (SGS) is ISO 24016 certified which ensures its worldwide credibility. 8 of 26 IIMA/HRM0260 Profit Kaka says: SRK -being and environmental goals with profitability of the business. SRK lays the foundation of creating profits on two aspects, quality, and quantity. Quality is of great significance for SRK along with controlling the cost of production by ensuring adequate quantity. Moreover, Kaka believes that wealth and prosperity are earned through hard work, not by adopting unethical means. SRK implemented a rule which was articulated during 1995 while restructuring the company. The day-to-day operations of the company were being handed over to the second generation, and Kaka declared that no diamonds from SRK shall be sold above market rate. Buyers put their trust while buying from SRK. If a customer leaves, he/she will not ever come back. Hence, maintaining ethical business practices is of paramount importance. Kaka claims: I (through SRK) have cheated anyone, I will happily leave the business Kaka further elaborates: e repeatedly say, wealth creation is only a small part of success. If you think I am one of the richest men and that I can have anything, I want you to reconsider your thoughts. When I was diagnosed with deadly liver disease requiring a transplant, I was reduced to nothing but a beggar, begging for life. No amount of wealth could have delivered me a liver at my doorstep. SRK strongly believes in channelising the profits made. Profits, apart from being ploughed back in the business, are used for dedicated ventures to serve the society and other stakeholders. This quadruple bottom line approach of SRK had differentiated it from across all the industry players. Human Resource Management Practices at SRK A formal Human Resources department at SRK was set up in 2003; prior to this, the HR functions were handled by other related departments. After establishment, the HR team was primarily looking after legal compliances and administrative work such as maintaining attendance records, salary disbursement, incentive calculation and maintaining personal files of employees, etc. Gradually, the scope of the HR department started expanding as various activities under social compliance & corporate social responsibility significantly increased along with growth in business & employee base. The HR department required professionals trained in the domain of human resources management and social welfare. At SRK, where the guiding philosophy centred around serving the planet and its people, HR professionals who could 9 of 26 IIMA/HRM0260 manage a were essential. With support from the top management, the transformation of the HR function was initiated in 2008 with the appointment of Dr. Nirav Mandir, who eventually became the Chief Human Capital Officer of SRK. Mandir recalls his first interaction with Kaka: The first interaction with Kaka was exciting as well as surprising. Kaka candidly told me, you are well qualified, and you may know many things about HR Functions, but at SRK we have our own culture to adhere to, and the most vital aspect of SRK is to recruit anyone who is culturally fit. We do have our own management style that we can surely work together if you Mandir was in dilemma for a few days. On one hand, he was excited to join a well- established company known for its social and ethical people-oriented business practices and on the other hand, he was asked if he could attune himself to the culture by overcoming & streamlining his past professional experiences. Mandir had handled the HR functions in very distinct organisational contexts, particularly organisations with more formal HR processes unlike SRK. Nevertheless, he decided to accept this as a challenge and turned up to understand the different outlook of handling HR with new perspectives. Mandir made up his mind to join SRK and began with documenting the various initiatives taken by SRK i.e., employee welfare in terms of its generous compensation package, healthy and safe working environment, numerous social welfare activities, and best manufacturing practices required for various ISO certifications, social compliances & management audits. His biggest challenge was to balance two different styles i.e., the people management style practiced by SRK with industry wide transformational & strategic HR practices. Kaka had been handling people related issues personally since the inception of SRK. Any worker could discuss his issues with Kaka directly by setting up an appointment. Mandir further recalled: , the initial challenge for me was to create value proposition for HR Department. I was looking forward to get support from Kaka and top management to transform the existing systems from Traditional HR to Strategic HR. Transformation from personalised and semi-formal HR process to advanced and more mature HR processes crossed another path breaking milestone in 2016 when we extended the Voluntary PF Coverage (Social Security Cover) to the entire staff including contractual workforce (More than six thousand workforce). Probably, this was the first of its kind of employee initiative in India where even contractual workforce were given voluntary PF Coverage. Mandir continued: HR philosophy statement of some of the companies indeed talks about transparent, ethical, and caring people practices but we at SRK believe in execution rather than just claiming. We extended the social security coverage to each employee as we care for our people. Normally, contractual workers are hired for reducing production cost, but we do not differentiate between permanent and contract employees when it comes to protecting their interest by paying their wages and employment benefits. This shows how committed we are towards our HR philosophy of considering employees as a part of our family. It was remarkable decision of management to extend the voluntary PF Cover to more than 35 10 of 26 IIMA/HRM0260 The extension of much needed social security coverage to all employees sent out a concrete message to the employees about their importance to the organisation. This initiative boosted the trust of employees in SRK people policies. When the entire diamond industry was heavily relying on contract workers to reduce costs and improve flexibility, SRK eliminated the wage disparity between contractual and permanent employees by covering everyone under the PF contribution scheme. As a result of caring people policies, attrition rate for all cadres is negligible and much lower than the industry average. Explaining this phenomenon, Mandir stated: The attrition rate of managerial staff stands around 0.4%, and for blue-collar workers it is around 1.1%. The reason behind this is, they consider themselves as Mandir recalls the HR transformation journey: were able to strategic HR. This transformation took almost 10 years to get to the present status of Human Capital Department from Human Resource department. Today, I can proudly say that we have always set a benchmark in the Gems and Jewellery Industry by being a people-centric company. Our motto is to serve people who are giving a hand to us for growing our business. They are indeed Furthermore, identified queries and grievances are resolved quickly along with the transparent culture through open HR polices and processes. The open-door policy is still religiously followed by Kaka and Human Capital Department where any employee can directly share their concern and get a fitting solution. However, Kaka admitted that due to his other engagements and travel schedules, the frequency of meeting employees and personal visits to the shop floor had reduced. The Human Capital Department proudly echoes their commitments towards creating employee centric policies and processes through the slogan Recruitment and Selection SRK has a very well laid down recruitment and selection process handled by the HCD. Recruitment process of both administrative staff and technical staff is guided by organisational philosophy that emphasis -driven processes and behaviour Unlike many firms, SRK focuses on cultural fit along with core competencies required for the job. Those already inclined towards core values of SRK (integrity, respect for fellow human beings, social consciousness, trustworthiness) are preferred for employment. From the ini , the preferred recruitment tool. The selection process involved interactions with a team of experienced potential candidates. For many years, Kaka personally attended the interviews of candidates but currently the next generation of the family is actively involved. One of the artisans recalls his selection experience: an interview about my sal 11 of 26 IIMA/HRM0260 Kaka believes that when an employee has a pre-conceived notion about salary and working n of it. If there are no expectations and if the employee lets the company work over a period, one will end up earning far more than one ever expected. One of the employees from Finance Department recalls his experience: finance after completing my 10th. Kaka assessed my knowledge and dedication for studies then he supported me in my studies. After becoming a Chartered Accountant (CA), I joined SRK, but he offered a low salary to assess my commitment for the work and SRK. Later my salary background rather relying on previous organis the diamond cutting & polishing industry works on trust, regional referencing is common in recruitment for respective positions. In addition, Kaka believes in SATVIK lifestyle (a simple life, non-consumption of tobacco/alcohol, eating healthy food, doing regular exercises to maintain fitness and mental well-being, practicing spiritual style with social consciousness, etc.). While selecting staff (both managers and artisans), the management assesses the habits and lifestyle of the potential candidate. People with addictions (alcohol, smoking, tobacco, pan masala and similar substance) or a history of such habits are discouraged to join SRK. For over 60 years, SRK has vigorously promoted a policy of No-Addiction. At present, each one of the 6000+ employees live an addiction free life. SRK gives great focus on the physical and mental well- being of employees along with development of various skills and value driven behaviour. Another interesting over experienced candidates from another company especially for technical domains. Mandir explained the rationale for recruiting freshers cal side. We do not encourage recruiting someone who already has experience in the diamond industry. We do this because the process adopted by our company is unique and we believe that training a e-train one. Apart from that, whenever there is a vacancy or expansion, we also promote internal transfer and promotion in a lateral Moreover, Kaka believes freshers are tabula rasa i.e., a blank slate that is easy to carve. SRK, being a value driven company, emphasises cultural fit over other parameters in selection. Therefore system more easily than experienced professionals. Currently, new workers are largely recruited through SRK Institute of Diamonds (SRKID)19 where young interns get their certification and on-site training in diamond cutting, polishing, and grading. Post certification, if the interns are found a suitable fit for SRK culture, they are given an employment offer. 19 SRKID website can be accessed at http://www.srkid.in/ 12 of 26 IIMA/HRM0260 Referrals from employees are used for recruitment of both freshers and experienced candidates. In addition, campus recruitment is conducted for various administrative inistrative cadre. Online tests assessing -how, language, psychometric assessment, and subject knowledge are administered. Shortlisted candidates are further screened through group discussion and technical interview followed by behavioural interviews. Based on the performance of the candidate across all selection rounds, the final job offer is made. Family background and social experience of the candidates is discussed in detail to assess the cultural fit with SRK. The culture and the values of SRK are communicated strongly to all hires, apart from conversations with and other leaders, display boards and art gallery of office building highlights the journey of SRK and Kaka through AVs, and various posters. A large section of the reception lobby is dedicated for displays various accolades received by the company. The coffee- the ly with the A Comprehensive Compensation Structure: Financial and Non-Financial Benefits SRK uses a broad five group classification system for employee compensation depending on where they work, viz manufacturing workers, office workers, manufacturing managers, administration staff, and office management. The compensation structure includes components such as basic pay, DA (Dearness Allowance), HRA (House Rent Allowance), education allowance, and OWA (office ware allowance). Additionally, depending on the individual's salary scale, they will be eligible for additional financial incentives such as leave travel allowance, helper allowance, personal pay, and reimbursements like medical, mobile and conveyance. The manufacturing employees receive a separate component called production incentive, which is in addition to the components mentioned before. Apart from the above, employees also receive other benefits like gratuity, statutory and additional annual bonus, employer contribution to EPF (Employee Provident Fund) and ESIC (Employees' State Insurance Corporation). SRK has earned a reputation of being a generous employer that goes above and beyond to meet the diverse needs of its employees. SRK supports its employees with a comprehensive benefits package that include a family Mediclaim policy and Group Term Life Insurance coverage of INR 2 million. Employees also have access to a free cafeteria where multi-course lunch, and light refreshments during breaks are served. Working family members, managers, all other levels of employees and guests have food in the same canteen. Regular audit of the canteen/kitchen is conducted which ensures that the food prepared is of best quality. SRK management believes that eating together instils the feeling of family and helps to generate loyalty towards the company.20 Besides, SRK also provide other non-monetary benefits to its employees which include, good working environment, social support during difficult times, two-wheeler, and helmets. Additionally, SRK also understand the importance of convenience, which is why they have an in-house help desk to assist employees with the issuance of important documents such as 20 Free food is also served in the Mumbai office of SRK. 13 of 26 IIMA/HRM0260 driving licenses, PAN cards, UID, voter IDs, passports, visas, as well as children's school identification and admission. Performance Management System Initially, the performance of artisans was determined based on their output and conduct in and out of the office. As the organisation grew and the clients insisted on traceability i.e., identifying the ratna kalakars involved in the CPD, the need for more formal PMS process was realised. Currently SRK follows a very robust and transparent performance management system for annual performance assessment of both managerial cadre and artisans. The performance appraisal method for managerial staff is subjective and Key Result Area (KRA) based which is aligned with organisational values. For artisans, performance appraisal is more objective. It is real time based as performance is measured daily against the predefined performance the the worth of the polished diamond depends upon the quality of cutting and polishing. Skilled and experienced artisans can influence the bottom line of the company hugely in a positive way, while on the other hand, slight negligence on the part of artisans (poor polishing, cutting, or breaking of diamond) may cause a loss of thousands. Therefore, work allocation along with polishing quality in enhancing the worth of the polished diamond plays a significant role. The 3Cs - cut, clarity and carat of the diamond performance appraisal. For individual performance assessment, various technical parameters are used such as carat (weight loss) or breakage after polishing, along with the quality of cut. Holding a diamond of these sizes for long hours requires a great level of concentration and dexterity. Efficiency and precision are equally important in this industry. In SRK, given the size of diamonds, the average artisan spends 12-14 hours cutting and polishing one diamond (See Annexure 3 for details on the diamond polishing process at SRK). Artisans sit in a cubical space of around 16 square feet, under bright lighting and magnifying glasses. Cameras monitor the movements of the artisans on the shop floor and the system also tracks the movement of the diamond from one workstation to another. The weight difference between rough and polished diamond is a very important criterion of performance assessment. Generally, the polishing process affects the weight of the diamond which affects the carat of the diamond. To encourage the artisans to avoid weight loss during polishing, incentives are linked with weight difference. The lower the weight difference and breakage, the higher the incentives. Another criterion for performance assessment is the quality of diamond cut. There are seven predefined categories regarding quality of cut viz. poor, fair, good, very good, excellent, double excellent and triple excellent21. All cut diamonds are graded internally through SGS (SRK Grading System) into the above-mentioned categories and further grading is validated externally from the Gemological Institute of America (GIA). Additional incentives for artisans are released after once the certification report from GIA is received. Individual performance is assessed on a monthly basis and consequently based on performance; a particular artisan is mapped to various groups. 21 Double excellent and triple excellent are specifically used to refer to diamonds which are larger than standard sizes and of high value. 14 of 26 IIMA/HRM0260 Each group member receives a specified amount as a final bonus. Performance based internal movement across various functions and groups reinforces the performance culture at SRK. One of the reasons for real time performance assessment is that the diamond cutting process is irreversible, hence, continuous feedback along with on-the-job technical training (short interval of 30-40 minutes) is given by supervisors to their artisans to avoid any mistake in cutting or polishing. All this information about performance is recorded and individual incentives and the total cumulative bonus is calculated for the year before the annual break that happens during the Diwali festival. Normally, all CPD units in Surat remain closed for around 20 days, post Diwali. SRK offers both group and individual performance-based incentives to its employees (See Annexure 4 for intrinsic details around allocation of rewards). Training & Development Over 50% of the workforce in SRK have attained formal education only up to primary school. As SRK is a skill-based business, it focuses more on the art (skills) instead of formal education. SRK opted for RPL (Recognised Peers Learning), under the programme of collaboration with GJSCI (Gems and Jewellery Skill Council of India). With this, employees have the opportunity to get certified in their respective field of expertise. Gaining formal recognition for their skills is a source of pride, motivation, and privilege for employees. By March 2023, all SRK's artisans are expected to possess the said accreditation. Employee training is also directed by clients. Kaka recollects a specific opportunity cum challenge presented to SRK by Tanishq22. Bhaskar Bhat, we were told that if Tanishq does not accept 5-6% loss on gold. If SRK had to grab this growth building and brand developing business deal, SRK would have to bring down the gold loss to 1%. Tanishq deal was important since it helps in growth and builds the brand. I was determined to collaborate with Tanishq and train my artisans to bring down the Under the guidance of Tanishq, artisans were trained on the job to develop competence on quality processes. Currently, Tanishq is one of the largest customers for an SRK affiliated company Golden Carat. Employee Engagement emphasises on expressing warm gratitude towards parents of the employees as they have indirectly contributed to the success of the company by sending their wards to work there. Kaka always says: equally important as my member himself 22 Tanishq: It is one of the prominent brands of jewellery retail stores in India. Backed by the Tata group. 15 of 26 IIMA/HRM0260 derived from the Bhagwat Gita, an annual spiritual event is organised for employees and their families. Kaka believes that human beings without values are beasts. The preaching of the holy text can guide employees to lead a good life. development. In addition, a buddy system has been created for employee engagement and enrichment. Employees are encouraged to share their knowledge with fellow colleagues. SRK organises an annual pilgrimage trip for select employees and their family members in the month of October/November. Employees travel together all the way to Rishikesh- Haridwar (pilgrimage places in India) from Surat by chartered train. Kaka and their family members also travel by the train, although they can afford flights.23 Kaka believes that travelling together with family members strengthens the team bonding of employees. SRK organises trips to other places for their employees and their family members too. The tour has multiple team building activities along with adventure & cultural activities. SRK also believes in celebrating the festivals with family. The company organises huge function celebration in the month of September/October). Employees with their families join the founding family in such festival celebration where Dandiya is performed (form of Gujarati who attend the festivities range between 1000-1200. SRK organises regular health check-up camps, blood donation camps and yoga sessions for the employees and their families. There is also a sports complex where employees can play cricket and volleyball & as well as a gym. In addition, various cultural and sports activities such as Ram Katha, Bhagwat Katha and SRK Cricket League are organised at regular intervals for employees and their family members. Corporate Social Responsibility Kaka interprets CSR as: Kaka not only contributes to the economic growth of Surat, but also actively participates in community development. He has commenced various social initiatives in the field of health, education, energy, and water conservation. While the Companies Act 2013 mandates companies to spend a minimum 2% of its net profit on Corporate Social Responsibility (CSR) activities, SRK has been spending about 4.5% of its net profit annually towards CSR activities for over two decades. The fact that the company has been engaging in CSR activities even before the formulation of government rules is indicative of the value system ingrained in the business model. The company leadership reasons that diamonds are luxury products, with very little social impact, and hence, it owes society good deeds. SRK is one among the few gem and jewellery companies recognised for their CSR activities by the Gem and Jewellery Export Promotion Council (GJEPC). 23 SRK is an investor in Ventura Airlines which provides chartered air services. 16 of 26 IIMA/HRM0260 Kaka has been bestowed with several awards in recognition of his outstanding efforts rat Municipal Corporation (SMC) in 2004 and the Sardar Vallabhbhai Patel Award from the Sardar Vallabhbhai Patel Foundation, New Delhi in recognises people who have executed their roles with extreme sincerity and dedication in the fields of youth development, sustainable growth of the downtrodden during precarious situations, scientific and technical development, education, industrialisation, etc. CSR activities are a point of focus for the company leadership. Kaka himself spends an hour every day, from 10:00 am to 11:00 am, in the Trusts and institutions connected with CSR. Apart from overseeing activities, he personally interacts with those seeking assistance, and devotes considerable office-time to CSR related affairs. An important CSR activity is the Nanduba Medical Centre, established in 1990 and administered by Shree Ramkrishna Charitable Trust. The objective of the centre is to provide affordable healthcare services, including consultation with specialist doctors, at highly subsidised consulting charges. The centre has been able to rope in the services of over fifty specialist medical professionals who have pledged their time to the social cause. Patients have to pay a nominal fee of Rs. 50 to avail the OPD services at centre. Kaka strongly believes in the philosophy Vasudhaiva K (The world is one family Foundation (aka SRKKF) and has impacted the society significantly since its inception (see annexures for various social welfare activities). Moreover, in 2006, with the objective to honour artists and social contributors from diverse a late mother. Luminaries such as Sam Pitroda, Verghese Kurien, Sudha Murthy, Ratan Tata, His Holiness The 14th Dalai Lama, Kailash Satyarthi, AS Kiran Kumar, Sonam Wangchuk are some of the many that have been conferred the Santokbaa Humanitarian Award. jubilee of arriving in Surat. The SRK family came up with 50 different ways of benefiting society which were to be executed over a few weeks. Each week carried a special motto, be it deaddiction oath ceremony, training sessions for police fraternity, municipal councillors and teachers, traffic awareness and more. Being a Caring Employer 2008 was an indicator for tough times ahead and tough decisions for all industries, including the diamond industry. While many factories being shut down, various others laid off their staff, but SRK decided to do otherwise. Kaka recalls: always been committed towards the welfare of our staff along with the families from the very first day of the existence of SRK. In the year 2008 when, even globally organisations were laying off their staff, we did not lay off a single member. Rather we had made different arrangements by investing their time into reskilling & performance enhancement. When they supported us during good times how we can leave them during 17 of 26 IIMA/HRM0260 difficult times. They are our family members and family members need to be given extra care when they face any difficulty. We did the same Another challenge was the Government of India declared a nationwide curfew on March 22, 2020, followed by the historical lockdown owing to COVID-19. Four days prior to that, i.e., on March 19, 2020, while Dr. Mandir was in Hyderabad, he was asked by Kaka to attend a board meeting on an urgent basis to take a decision on the then on-going matter of Covid-19. He rushed back to Surat from Hyderabad on March 20 and attended the board meeting along with top management. The meeting addressed the issue of a possible lockdown that may be on its way. By then many countries had declared lock down and speculation about the Indian government also doing the same was high. In the meeting it was decided that SRK will be proactive, and as a precautionary measure, SRK will close operations of both the units (Surat & Mumbai) on the very same day. Since, SRK had marketing affiliations in Hong Kong and Shanghai, it received live updates about COVID-19 situation which helped to make the decision. However, before closing SRK developed a communication channel to keep in touch with employees. It created a helpline for over 6,000 employees over the most accessible communication channel, i.e., WhatsApp groups. To , many tips related to health and hygiene prescribed by the government were shared regularly over WhatsApp Groups. All employees were also provided with contact details of in-house doctors for guidance or support in an emergency. Engaging the workforce during the lockdown was a critical challenge. Since SRK deals in physical products, unlike the service industry, it was not possible to run remotely. The SRK team worked out ways to engage employees at home. The company initiated multiple virtual cultural events to engage staff members. Various soft skills & behavioural sessions were conducted for employee arranged to maintain zeal of enthusiasm. All employees were paid a fixed component of the compensation during the lockdown. According to Mandir: ssing the boundaries of our organisation, our to add glitter to the entire clan of mankind and contribute generously to make this earth a safer, healthier, and happi applauded by the industry for not laying off a single employee in the recession during the year 2008-2009. Also, during the pandemic of 2020, SRK extended social security to contract workers. Thus, it earned a reputation as a generous and caring employer in the region. Way Forward: Emerging Business, People and Organisational Culture related Challenges Emerging challenges for the industry include, firstly, the supply of rough diamond stones. Existing mines will eventually get exhausted and new mines are not being explored in large quantum. Secondly, the proliferation of lab grown diamonds in the market also posed a challenge as SRK only dealt in natural diamonds. Thirdly, CPD industry has been facing a lack of sustained supply of skilled workforce because of occupational switch by diamond artisans and difficulty in attracting young talent. 18 of 26 IIMA/HRM0260 Another major challenge facing the company is the ability to sustain its core work culture. SRK was known for its value driven work culture inculcated and promoted by Kaka. Like any firm, succession planning is a critical decision as the success of the organisation is influenced by the capabilities of the people at the helm. In an organisation like SRK, where critical business and people related decisions are taken in consultation with Kaka, it was not easy to find a deserving standalone successor with a similar leadership style. However, SRK has a very well laid down and robust process of inducting family members into leadership roles. Kaka pondered over following issues: young generation would sustain the existing work culture of SRK? Should SRK go for hiring outsiders for top leadership positions? In addition to challenges pertaining to succession, Kaka wondered: would this industry design employee value propositions to create a sustainable pool of young artisans? Would this industry be able to understand the evolving expectations of a young workforce? 19 of 26 IIMA/HRM0260 Annexure 1 Comprehensive Chronology of SRK's Progression Year Milestone 1964 At the age of 13, Shri Govind Dholakia (Kaka) began his journey from a small village in Saurashtra, Gujarat. He started out as an apprentice to a diamond cutter. 1970 A diamond crafting company was set up by Kaka and his two partners in the name of Shree Ramkrishna Exports (SRK). 1977 Kaka embarked on his inaugural business trip to Antwerp with the intention of procuring rough diamonds, which in turn led to the expansion of his business and the exploration of fresh opportunities. 1980 Together with his partners, he established a factory equipped with essential machinery and favourable working conditions. With the dedication and efficacy of all the partners, the business thrived. 1988 The Shree Ramakrishna Charitable Trust was founded with the objective of venturing beyond diamonds and business. 1989 Kaka initiated the V. N. Godhani School exclusively for girls in Surat, with the aim of promoting education for girls. Additionally, the school offered discounted rates to those in need. 1993 SRK is committed to supporting the Green Revolution and promoting cleanliness by enhancing Surat's reputation as a Clean and Green city in India, thus advocating for the concept of a "Clean Surat and Green Surat". Govind Dholakia and his associates formed a group dedicated to voluntary service towards achieving this goal, known as the "Welcome Clarity Club". 1995 All partners collectively made the decision to separate and establish their individual diamond companies. 1996 The factory was revamped by Kaka who transformed it into a four-story structure and introduced advanced technology such as laser machines and computer-based management systems. The factory accommodated a workforce of 1200 skilled craftspeople and 500 staff members. 1997 The establishment of a "Relief Centre" on the premises of V. N. Godhani English School aimed to aid individuals who are socially and economically underprivileged. 2002 SRK recognised by the Gems and Jewellery Export Promotion Council (GJEPC) for their exceptional export performance in the cut and polished diamond category. 2003 Kaka ventured into the jewellery industry and diversified his business by establishing Jewel Goldi, a jewellery production facility located in SEEPZ, Mumbai. The primary focus of this unit was to serve customers throughout the country. 2004 SRK was bestowed with the De Beers Sight holder certificate. 2006 The SRK Grading System (SGS), which evaluates diamonds based on 17 parameters, was introduced. This grading system is comprehensive in nature. 2008 Fixed Price Policy was introduced. SRK launched its First e-commerce portal: srkexport.com 2010 SRK launched its second-generation website with additional user-friendly features. 2010 SRK was recognised for its overall excellence in the category of Cut and Polished Diamonds by Gems and Jewellery Export Promotion Council (GJEPC). 2011 Opening of 'SRK Empire', one of the largest factories in the industry featuring cutting-edge technology and machinery. SRK introduced a mobile app for its trade portal. SRK was conferred with the Champion Award by FedEx International Business League. 2012 SRK developed an in-house research and development centre, Shree Ramkrishna Institute of 20 of 26 IIMA/HRM0260 Diamonds (SRKID) to cater to the increasing demand for trained and skilled artisans. Entrepreneurship 2013 SRK Team was conferred by UBM Asia with JNA Awards for Employer of the Year, Manufacturer of the Year (Diamond Cutting & Polishing) and Sustainability Initiative of the Year SRK was recognised as Best Exporter of the Year by Gems and Jewellery Export Promotion Council (GJEPC). SRK was recognised for Excellence in Cut and Polished Diamonds - Large (3) for year 2012- 13 by Gems and Jewellery Export Promotion Council (GJEPC). 2013 SRK received ISO 50001 certification for Energy Management. 2014 Kaka addressed 100 scientists from ISRO. SRKID was declared as the only authorised institute for vocational training in Gems and Jewellery Industry by the Government of Gujarat. SRK was conferred with JNA Awards for Manufacturer of the Year Diamond Cutting & Polishing and Sustainability Initiative of the year by UBM Asia. K Lifetime Achievement Award 2014 for his contribution towards Global Diamond Industry. - -Atlas Dyec Ahmedabad Management Association (AMA). SRK Knowledge Foundation- the CSR arm of SRK was founded. SRK was recognised with the Forevermark association. SRK became member of the Dominion Diamond Mines and recognised with Alrosa Alliance on meeting high standards of business conduct and for possessing a keen insight into the diamond market. SRK won awards for multiple categories- Most Socially Responsible Company and Exporter of the Year by Gems and Jewellery Promotional Council (GJEPC). 2015 SRK was conferred with JNA Awards for 3 Decades of Excellence, Industry Innovation of the Year, and Outstanding Enterprise of the Year India by UBM Asia. SRK was conferred with the 13th FGI Excellence Award by Federation of Gujarat Industries (FGI) for contribution in Corporate Social Responsibilities. SRK received certifications for ISO 14001 for Environment Management, ISO 45001 for Occupational Health and Safety Management and ISO 22000 for Food Safety Management. 2016 - Cutting & Polishing and SRK was recognised as the Most Socially Responsible Exporter of 2015 by Export Credit Guarantee Corporation of India (ECGC). The First lecture of the Annual IIMA-SRK Lecture Series was organised at IIM campus, Ahmedabad. Shri Raghuram Rajan, former Reserve Bank of India (RBI) Governor, delivered a SRK was recognised with the CanadaMark Association. 2017 SRK was conferred with JNA Award for e-Supplier of the Year by UBM Asia. SRK re-launched its brand and corporate identity and launched new generation of websites under srk.one which functioned as a platform to enable customers to get maximum benefits. SRK introduced the virtual reality experience. 2018 ire During his visit, he closely observed diamond processing technologies and conveyed compliments to 21 of 26 IIMA/HRM0260 SRK team. SRK moved to a new office location at Bharat Diamond Bourse on May 16, 2018, with an additional array of value-added services for customers. The President of India, Ram Nath Kovind, visited SRK during the SantokBaa Humanitarian Award function of 2018. was certified with LEED Platinum Certification by the United States Green Building Council (USGBC), becoming the first manufacturing facility in Asia to be recognised with the certification. SRK celebrated the 10th anniversary of the inception of its digital eco-system. K - Ahmedabad. SRK introduced Digiplot - a feature to grade diamonds virtually. SRK was recognised as Rio Tinto Select Diamantaire. The second lecture of the Annual IIMA-SRK Lecture Series was successfully held at IIM, Ahmedabad. The American economist and Noble Laureate (2007), Eric S. Maskin, delivered a 2019 SRK organised 15th Cricket League in January. Professor (Dr.) Partha Dasgupta, Frank Ramsey Professor Emeritus of Economics, spoke about 'Human Well-Being and Economic Accounting' at the Third Annual IIMA-SRKKF Lecture Series held at IIM campus, Ahmedabad. SRK launched its The Footprints was awarded British Standards Institution (BSI). With respect to this certification, SRK has achieved 1 st position in the Gems & Jewellery industry; globally, 3rd position amongst all sectors in India, and 21st position amongst all sectors globally. SRK was recognised as Best-in-Class Employer by Gems & Jewellery Skill Council of India (GJSCI). 2020 Kaka was felicitated with the Honorary Doctorate Degree in Philosophy (D. Phil.) by Indus University, Ahmedabad for his exemplary contributions through his selfless social welfare work and innovative sustainability pursuits. Prof. Eric A. Hanushek, Senior Fellow at the Hoover Institution of Stanford University, spoke e Fourth Annual IIMA-SRKKF Lecture Series held at IIM, Ahmedabad. SRK introduced an innovative diamond packet. SRK launched the New SRK.one App. awarded LEED Platinum Certification by United States Green Building Council (USGBC). 2021 diamond crafting facility at Surat was 1 Green Building by Arc Leaders and Performance Platform. 2022 released by Penguin Random House India. Promotion Council (GJEPC). ndia. Source: Developed by authors based on information provided by the company 22 of 26 IIMA/HRM0260 Annexure 2 Source: Developed by authors based on information provided by the company 23 of 26 IIMA/HRM0260 Annexure 3: Diamond polishing process at SRK PROCESS FLOW CHART FM GOODS (Receipt of Rough, Rough Assortment, Rough Processing, Manufacturing, Valuation, Grading, Final Assortment, Dispatch to DTC for Marking) INPUT PROCESS OUTPUT 1.0 PURCHASE OF ROUGH DIAMONDS Rough diamonds received Manufacturing Purchase of Rough Diamonds at Surat requirements from Approved Supplier Import invoice / Kimberley Market trends of demand Inspection and acceptance of Process Certificate goods offered by Approved Supplier 2.0 ROUGH STOCK CONTROL Check weight and quality of Rough diamonds issued Rough diamonds received rough diamonds for FM processing at Surat Inward in stock system Stock records updation. Maintain stock of rough diamonds in secure manner 3.0 ROUGH PROCESSING Galaxy/Helium (Initial Planning) Planning / Marking FM makeable diamonds Rough diamonds issued ready for polishing for processing Unprocessed diamonds needed FM Lot Received Records of Weight loss at Cleaving / Laser Sawing various stages Boiling Process Further process up to FM makeable stage 4.0 MAKEABLE STOCK FM makeable diamonds Makeable issued for CONTROL ready for polishing manufacturing Allot packet no. for sub packets and issue for rough processing Records of issue of Issue goods for manufacturing Makeable diamonds 5.0 CUTTING AND POLISHING Carry out respective operations Inspection for quality / location of defects FM eligible diamonds FM polished goods Girdle polish Polish Pavilion, Crown Boiling Process Final Inspection 24 of 26 IIMA/HRM0260 25 of 26 IIMA/HRM0260 Source: Developed by authors based on information provided by the company 26 of 26 IIMA/HRM0260 Annexure 4 Details about allocation of rewards The raw stones received in the company are categorised based on the 4Cs i.e., cut, colour, clarity, and carat. Raw stones are procured in bulk from global suppliers, by expert purchases. Procurement is a centralised activity and expertise is held closely by the family. Based on the 4Cs, the base price (minimum worth after cutting & polishing) of the rough diamond is entered into the system. Different internal groups are invited to assess the quality of the rough diamonds and quote its potential worth post cutting and polishing. The diamond is allotted to the highest bidding group. This bidding process for diamond allotment creates healthy competition among various teams. The performance of the individuals and group is assessed through the ERP system where standard of performance for each process is defined. The group is rewarded with a certain percentage of amount excess of the baseline price of allotted rough diamonds. For example, baseline price of rough diamond is fixed at USD 500 and competing group quoted USD 700. After cutting and polishing, the worth of diamond is assessed to be USD 700. Therefore, the group will receive a percentage of the additional amount quoted i.e., USD 200 (x% of USD 700 - USD 500=USD 200). In case the group is unable to provide value against what was quoted during the bidding process, then double penalty is charged from the incentives of that group (2x of (USD 700-USD 500 = USD 200)) and this amount is given as a reward to the next lowest bidding group who did not get the said allotment. For senior and experienced workers, SRK also runs a model of professional partnership i.e., profit share as reward. Senior employees/ratna kalaka company. The decision is taken by the board after through reviews of track record, character, and capabilities. They move from a salary-based system to a profit-sharing system. This approach increases ownership mentality and serves as a retention tool. Their share of profit is re-invested in SRK itself and they can claim the corpus at the time of exigencies or retirement. A fixed amount for meeting monthly expenses for self and family can be drawn from the company and the amount is adjusted against profit pool. Source: Developed by authors based on information provided by the company