The A V Birla group, also known as the Aditya Vikram Birla Group, is currently led by Mr. Kumarmangalam Birla. He is credited by corporate experts for transforming a $3.0 bn isolated multiple business house into the third-largest conglomerate in the country, with approximately $25.0 bn in less than ten years. This accomplishment was not only due to Mr. Birla's great business acumen as a London-educated CA & MBA but also by completely changing the organizational culture of a 150-year-old business house.
In 1995, Mr. K M Birla assumed leadership of the group after the sudden passing of Mr. Aditya V. Birla. Despite being a young and inexperienced 28-year-old, critics questioned his abilities, suggesting he lacked his father's business expertise and assertiveness. However, Kumarmangalam slowly initiated cultural changes through different policies, such as introducing a retirement policy
...in 1995. As per this policy, around 325 senior employees in their early 60s were obligated to depart from the organization within the next five years.
Around 400 young employees subsequently replaced the older ones, signifying a significant shift for the organization. In 1996, the group introduced a new corporate identity with a corporate logo - a rising sun. This logo was chosen to symbolize unity and optimism within the group. K. M. Birla emphasized how implementing this fresh logo played a role in uniting the various companies under the group's umbrella, reenergizing them and initiating transformative change. Additionally, K. M. Birla altered the group's recruitment process by giving priority to internal hiring.
In 1996, Birla made changes to the group's HR system, including hiring professionals from other companies for his management team. Additionally, he replaced the
Partha system of daily financial reporting with an "Economic value added model" that emphasizes profitability, asset productivity, and growth. Furthermore, Birla implemented the organizational health survey in the late 1990s to measure the "Happiness at work" index.
This operation was conducted to monitor employee satisfaction. Additionally, K. M. Birla introduced managerial modifications within the group. Previously, the hierarchy in the group was determined by seniority rather than merit, but K. M. Birla implemented a performance appraisal system and emphasized the importance of training to establish meritocracy. He also reviewed compensations and made changes in reporting.
He also implemented changes to the reporting system used within the group. The top 20 executives, who had significant responsibilities, were given the ability to report directly to K. M. Birla. This provided them with more autonomy to manage their businesses and also held them more accountable for their performance. This example demonstrates a successful handling of a cultural change within an Indian organization, specifically the succession of leadership to a son.
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