Human Resource Planning and Audit PDF

Human Resource
Planning and Audit
Arun Sekhri
Director, Search Right Consultants
Prof. Mahatma Gandhi Mission,
Institute of Management Studies and Research
Visiting Faculty
Institute of Technology and Management, Kharghar
Mumbai School of Business, Belapur
(Navi Mumbai)
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First Edition : 2010

Edition : 2012
Edition : 2013
Edition : 2016
Edition : 2017
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The Moving Finger writes; and, having writ, Moves on……
“We are in another critical moment: the transition from the industrial to the knowledge-based economy. We
have begun experiencing radical changes in the society as well as in the business.
Business, as we know, is disappearing. Companies are not selling products; they are selling experience. There
are no longer competitors, just better solutions and more choices that can be put together in more ways. In other
words, companies focused on competitors are focused on the past, not a future full of technological and demographic
opportunities and challenges.
In the new economic order, you don’t “empower” people. You help them measure themselves by their contribution
to the whole. You will attain the greatest results in business if you drop the word “achievement” from your vocabulary.
Replace it with “contribution.”
“Do you deliver the results by ‘contributing’ to the business of the organisation” Peter Drucker continues to
pose challenges to the human resource professionals, “is your HR strategy innovative enough to work well with your
business strategy? What is your company’s target role or influence in defining the emerging markets? What is the
scope of human resource offering to these markets? How do your opportunities fit with your business strategy? Do
you collaborate with your chief executive officer to set the course for the company and commit to the goals that will
define the company and its common business objectives? What is your strategy for investing in human capital and
knowledge for effective human resource planning?
The first sign of decline of a company is loss of appeal to qualified, able and ambitious people. Human Resource
must systematically develop people. They have to provide people with the means to make their maximum contribution
to the organisation’s success.
Human resource’s ‘contribution’ to become the company’s strategic business success partner is the best tribute
we can offer to Peter Drucker.
Conceptual Framework of Book
Human Resource in Search of Excellence

Realizing he was lost, a balloonist dropped down to ask directions. “Excuse me, but I’m a
little off course” he shouted. “I promised to meet a friend an hour ago; I don’t know where I am.”
A woman hollered back: “You’re in a hot air balloon hovering approximately 30 feet above
the ground. You’re at exactly 40 degrees, 22 minutes, and 21 seconds North latitude and 70
degrees, 30 minutes, and 33 seconds West longitude.”
“Amazing,” the balloonist replied. “You must be an engineer!”
“I am,” she replied, “How did you know?”
“Well,” answered the balloonist, “everything you told me is technically correct, but I can’t
use your information. I’m still lost and you haven’t been much help at all. If anything, you’ve
delayed my trip.”
The woman thought for a moment, then replied: “You must be from human resource
management.” “I am,” replied the balloonist, “but how did you know?”
“Well,” said the woman, “you don’t know where you are or where you’re going. You’ve
risen to your position due to a large quantity of hot air. You made a promise that you have no idea
how to keep, and you expect people beneath you to solve your problems.”
“In fact,” she said, “you’re in exactly the same position you were before we met, but
somehow it’s now my fault.”
Acknowledgements
Writing a book is similar to entering a long-term relationship with an obsessive partner. Throughout the six
months it took to write this book, life went on. The book demanded constant attention. I’d like to thank the people that
made it possible to focus on the book to the exclusion of nearly everything else. My wife, Neeru and daughters,
Sargam and her hubby Rahul (New Zealand) and Vandana supported and encouraged me throughout, even when I
was little more than a reclusive houseguest hunched over the computer in the study. Additionally, Neeru acted as my
editor as and when I needed her assistance. Rahul and friend Joi helped in designing the cover page of the book.
Thanks, all of you.
“If you want to make a new contribution, you have got to make a whole new preparation”, Shri. K. N. Pandey,
the partner of Himalaya Publishing House, told me during my meeting with him in the presence of my friend Shrawan
Kumar Srivastava, Sales Manager (Himalaya Publishing House) whom I owe gratitude for introducing me as member
of the HPH family and for helping and directing to complete the project. “I want you to write a very simple text book,
adhering to the norms and syllabus of the various universities and business schools, with lots of Indian examples and
case studies from industry to enable the students to internalise the concepts and real life events in the business”
K. N. Pandey concluded the meeting with his broad smile and a warm hand-shake.
Months later, I met Sudhakar Patil, Head of the Production, an unassuming and a generous personality, always
in readiness to extend his help. I shall always remember his cooperation and dedication to edit and finally produce and
print the book. I shall remember Nimisha Kadam, Deepali Bobhate and Sarita Pandey and the other staff members
in production for their valuable time they spent in desk-top operations and Mr. Joy Jacob for his brilliant editing. Once
again, thanks, all of you.
I say my thanks to Anuj Pandey, director, and Ms. Meena Pandey, publisher, Himalaya Publishing House, for
their useful suggestions and guidelines for writing the book.
I am very proud of my Human Resource students (MMS 2008-10) from ‘MGM Institute of Management
Studies and Research’, Navi Mumbai; Neha, Shalini, Shadab, Arshee, Sandhya, Shradha, Snehal, Pooja, Mridulika,
Megha, Rucha, Chitra and Neha Wankhede. Besides contributing to the contents presented in the various chapters of
the book, they arranged and conducted an interview with Raghunath Medge, President of the Nutan Mumbai Tiffin
Box Supply Charity Trust (Dabbawalas) and wrote it in the form of a case study in’ Strategic Planning’. I am
thankful to Shalini for giving her permission to include part of her project in the Chapter Eight of this book on ‘360
Degree Performance Appraisal System and its Linkage to Compensation in a Public Sector Undertaking’.
Asma Velani, my student from Human Resource (MMS 2008-10) from ‘Indira Institute of Business Management’,
Navi Mumbai, needs special mention. She has contributed a very detailed and a well researched subject (appearing
in Chapter Eight) on ‘Strategic Planning in Preparing Standard Operating Procedures (SOP) in Compensation and
Benefits’.
I am individually thankful to all my bright Human Resource students (PGDM-HR-2008-10) from the ‘Institute
for Technology and Management’ (ITM), Navi Mumbai, who have contributed part of their research projects on
Human Resource Audit appearing in the tenth, eleventh and twelfth chapters of the book.
I am personally obliged and thankful to Dr. Jack J. Phillips and Dr. Patti P. Phillips, the directors of ROI Institute
Birmingham, UK for their permission to use the various concepts of ROI in Chapter three of the book.
Dr. Linda Gravett, a Human Resource Management practitioner, founded Gravett and Associates in Cincinnati,
Ohio, USA. I acknowledge, with gratitude and thanks, her permission to quote some of her articles on Return on
Investment.
My thanks are due to Dr. John Sullivan, the well-known author, educator and provocateur and the chief executive
officer of Dr. John Sullivan & Associates, Pacifica, California, USA, whose articles on human resource planning find
space in this book.
I thank ‘The Drucker Institute - Claremont Graduate University’, Claremont, California, USA for having sent its
permission to quote Peter Drucker throughout the book.
News items, interviews, frequently asked questions, quotes of authors have been cited in the book from the
archives of newspapers and magazines and websites. I thank The Times of India, The Indian Express, The Economic
Times, Hindustan Times, Mint, India Today, Business Today, Rediff. Com, Google and Yahoo.Com.
My friends and colleagues in academics, who have encouraged, guided and helped me throughout deserve a
very special mention and profound thanks: Dr. A K. Dasbiswas, Dean and Dr. C.S Adhikari, Director, ITM Business
School, Prof. B.V. R Murthy, Deputy Director, and Ms. Genevieve Tandon, Senior Manager-Academics, Global
Leadership Centre, ITM, Navi Mumbai, Dr. C Babu, Director, YMT Institute of Management Studies, Navi Mumbai,
Dr. Ritu Bhattacharya, Director and Prof. Ashwini Arte, MGM Institute of Management Studies and Research, Navi
Mumbai, Dr. D Y Patil, Director, Suresh Parekh, Advisor- Placements and Corporate Relations, Bharti Vidyapeeth’s
Institute of Management Studies and Research, Navi Mumbai, Ms. Rupa Vasudevan, Director and Vijay Chandorikar,
Chairperson, Mumbai School of Business, Navi Mumbai and Prof. Vijay Handa, Director, Indira School of Career
Studies and Gahlot Institute of Management Studies, Navi Mumbai.
I thank all my well wishers: S. Naidu, Director, Naidu’s Academy of Developmental Studies, Mumbai, Neetu
Dixit, Librarian, MGM Institute of Management Studies & Research, Palekar, Librarian, ITM, Suryavanshi, Librarian,
Bharti Vidyapeeth’s Institute of Management Studies & Research, Prof. Mohan Das Pai, Prof. Tikku, Dean, and
Shelly Pandya, Human Resource Executive from Mumbai School of Business and many others close friends.
Author
DISCLAIMER
Publishing and republishing, reproducing, transmitting, storing or facilitating transmission and storage
of the contents of this book or any other information therein in whole or part thereof in any form
or by any means, verbal or written, electronically or mechanically for any purpose, other than
educational purposes, shall be in violation of the provisions of the Copy Right Act, 1957 and/or the
Information Technology Act, 2000.
The names used in the case studies are fictitious and bear no resemblance to any person, living or
dead, except those which are mentioned in the real-life case studies and were reported by the
visual, electronic and the print media as a part of their news coverage or the ones contributed by
the human resource students from the various management institutes. Any resemblance to actual
persons, living or dead is unintentional and purely coincidental.
In particular but without limiting anything here, we disclaim any responsibility for typographical
errors and/or any inaccuracy of the information contained in the book.
Education does not directly impact Strategic Planning.
It sharpens
the competencies and the skills necessary to manage
The Strategic Planning
How?
Read
Somerset Maugham’s story
“THE VERGER”
The Verger
There had been a christening that afternoon at St. Peter’s, Neville Square, and Albert Edward Foreman still
wore his verger’s gown. He kept his new one, its folds as full and stiff though it were made not of alpaca but of
perennial bronze, for funerals and weddings (St. Peter’s, Neville Square, was a church much favoured by the
fashionable for these ceremonies) and now he wore only his second-best. He wore it with complacence for it was
the dignified symbol of his office, and without it (when he took it off to go home) he had the disconcerting sensation
of being somewhat insufficiently clad. He took pains with it; he pressed it and ironed it himself. During the sixteen
years he had been verger of this church he had a succession of such gowns, but he had never been able to throw
them away when they were worn out and the complete series, neatly wrapped up in brown paper, lay in the bottom
drawer of the wardrobe in his bedroom.
The verger busied himself quietly, replacing the painted wooden cover on the marble font, taking away a chair
that had been brought for an infirm old lady, and waited for the vicar to have finished in the vestry so that he could tidy
up in there and go home. Presently he saw him walk across the chancel, genuflect in front of the high altar and come
down the aisle; but he still wore his cassock.
“What’s he ‘hanging about for?” the verger said to himself “Don’t ‘e know I want my tea?”
The vicar had been but recently appointed, a red-faced energetic man in the early forties, and Albert Edward
still regretted his predecessor, a clergyman of the old school who preached leisurely sermons in a silvery voice and
dined out a great deal with his more aristocratic parishioners. He liked things in church to be just so, but he never
fussed; he was not like this new man who wanted to have his finger in every pie. But Albert Edward was tolerant. St.
Peter’s was in a very good neighborhood and the parishioners were a very nice class of people. The new vicar had
come from the East End and he couldn’t be expected to fall in all at once with the discreet ways of his fashionable
congregation.
“All this ‘hustle,” said Albert Edward. “But give him time, he’ll learn.”
When the vicar had walked down the aisle so far that he could address the verger without raising his voice more
than was becoming in a place of worship he stopped.
“Foreman, will you come into the vestry for a minute. I have something to say to you.”
“Very good, sir.”
The vicar waited for him to come up and they walked up the church together.
“A very nice christening, I thought sir. Funny how the baby stopped crying the moment you took him.”
“I’ve noticed they very often do,” said the vicar, with a little smile. “After all I’ve had a good deal of practice
with them.”
It was a source of subdued pride to him that he could nearly always quiet a whimpering infant by the manner in
which he held it and he was not unconscious of the amused admiration with which mothers and nurses watched him
settle the baby in the crook of his surpliced arm. The verger knew that it pleased him to be complimented on his
talent.
The vicar preceded Albert Edward into the vestry. Albert Edward was a trifle surprised to find the two
churchwardens there. He had not seen them come in. They gave him pleasant nods.
“Good afternoon, my lord. Good afternoon, sir,” he said to one after the other.
They were elderly men, both of them and they had been churchwardens almost as long as Albert Edward had
been verger. They were sitting now at a handsome refectory table that the old vicar had brought many years before
from Italy and the vicar sat down in the vacant chair between them. Albert Edward faced them, the table between
him and them and wondered with slight uneasiness what the matter was. He remembered still the occasion on which
the organist had got in trouble and the bother they all had to hush things up. In a church like St. Peter’s, Neville
Square, they couldn’t afford scandal. On the vicar’s red face was a look of resolute benignity but the others bore an
expression that was slightly troubled.
“He’s been nagging’ them he ‘as,” said the verger to himself. “He’s jockeyed them into doing’ something, but
they don’t like it. That’s what it is, you mark my words.”
But his thoughts did not appear on Albert Edward’s clean cut and distinguished features. He stood in a respectful
but not obsequious attitude. He had been in service before he was appointed to his ecclesiastical office, but only in
very good houses, and his deportment was irreproachable. Starting as a page-boy in the household of a merchant-
prince he had risen by due degrees from the position of fourth to first footman, for a year he had been single-handed
butler to a widowed peeress and, till the vacancy occurred at St. Peter’s, butler with two men under him in the house
of a retired ambassador. He was tall, spare, grave and dignified. He looked, if not like a duke, at least like an actor of
the old school who specialised in dukes’ parts. He had tact, firmness and self-assurance. His character was
unimpeachable.
The vicar began briskly.
“Foreman, we’ve got something rather unpleasant to say to you. You’ve been here a great many years and I
think his lordship and the general agree with me that you’ve fulfilled the duties of your office to the satisfaction of
everybody concerned.”
The two churchwardens nodded.
“But a most extraordinary circumstance came to my knowledge the other day and I felt it my duty to impart it
to the churchwardens. I discovered to my astonishment that you could neither read nor write.”
The verger’s face betrayed no sign of embarrassment.
“The last vicar knew that, sir,” he replied. “He said it didn’t make any difference. He always said there was a
great deal too much education in the world for ‘is taste.”
“It’s the most amazing thing I ever heard,” cried the general. “Do you mean to say that you’ve been verger of
this church for sixteen years and never learned to read or write?”
“I went into service when I was twelve, sir. The cook in the first place tried to teach me once, but I didn’t seem
to have the knack for it, and then what with one thing and another I never seemed to have the time. I’ve never really
found the want of it. I think a lot of these young fellows waste a rare lot of time reading’ when they might be doing’
something useful.”
“But don’t you want to know the news?” said the other churchwarden. “Don’t you ever want to write a letter?”
“No, me lord, I seem to manage very well without. And of late years now they’ve all these pictures in the papers
I get to know what’s going’ on pretty well. Me wife’s quite a scholar and if I want to write a letter she writes it for
me. It’s not as if I was a betting’ man.”
The two churchwardens gave the vicar a troubled glance and then looked down at the table.
“Well, Foreman, I’ve talked the matter over with these gentlemen and they quite agree with me that the
situation is impossible. At a church like St. Peter’s Neville Square, we cannot have a verger who can neither read nor
write.”
Albert Edward’s thin, sallow face reddened and he moved uneasily on his feet, but he made no reply.
“Understand me, Foreman; I have no complaint to make against you. You do your work quite satisfactorily; I
have the highest opinion both of your character and of your capacity; but we haven’t the right to take the risk of some
accident that might happen owing to your lamentable ignorance. It’s a matter of prudence as well as of principle.”
“But couldn’t you learn, Foreman?” asked the general.
“No, sir, I’m afraid I couldn’t, not now. You see, I’m not as young as I was and if I couldn’t seem able to get the
letters in me read when I was a nipper I don’t think there’s much chance of it now.”
“We don’t want to be harsh with you, Foreman,” said the vicar. “But the churchwardens and I have quite made
up our minds. We’ll give you three months and if at the end of that time you cannot read and write I’m afraid you’ll
have to go.”
Albert Edward had never liked the new vicar. He’d said from the beginning that they’d made a mistake when
they gave him St. Peter’s. He wasn’t the type of man they wanted with a classy congregation like that. And now he
straightened himself a little. He knew his value and he wasn’t going to allow himself to be put upon.
“I’m very sorry sir, I’m afraid it’s no good. I’m too old a dog to learn new tricks. I’ve lived a good many years
without knowing’ ‘how to read and write, and without wishing’ to praise myself, self-praise is no recommendation, I
don’t mind saying’ I’ve done my duty in that state of life in which it ‘as pleased a merciful providence to place me,
and if I could learn now I don’t know as I’d want to.”
“In that case, Foreman, I’m afraid you must go.”
“Yes sir, I quite understand. I shall be ‘happy to ‘and in my resignation as soon as you’ve found somebody to
take my place.”
But when Albert Edward with his usual politeness had closed the church door behind the vicar and the two
churchwardens he could not sustain the air of unruffled dignity with which he bad borne the blow inflicted upon him
and his lips quivered. He walked slowly back to the vestry and hung up on its proper peg his verger’s gown. He
sighed as he thought of all the grand funerals and smart weddings it had seen. He tidied everything up, put on his coat,
and hat in hand walked down the aisle. He locked the church door behind him. He strolled across the square, but deep
in his sad thoughts he did not take the street that led him home, where a nice strong cup of tea awaited; he took the
wrong turning. He walked slowly along. His heart was heavy. He did not know what he should do with himself. He
did not fancy the notion of going back to domestic service; after being his own master for so many years, for the vicar
and churchwardens could say what they liked, it was he that had run St. Peter’s, Neville Square, he could scarcely
demean himself by accepting a situation. He had saved a tidy sum, but not enough to live on without doing something,
and life seemed to cost more every year. He had never thought to be troubled with such questions. The vergers of St.
Peter’s, like the popes of Rome, were there for life. He had often thought of the pleasant reference the vicar would
make in his sermon at evensong the first Sunday after his death to the long and faithful service, and the exemplary
character of their late verger, Albert Edward Foreman. He sighed deeply. Albert Edward was a non-smoker and a
total abstainer, but with certain latitude; that is to say he liked a glass of beer with his dinner and when he was tired
he enjoyed a cigarette. It occurred to him now that one would comfort him and since he did not carry them he looked
about him for a shop where he could buy a packet of Gold Flakes. He did not at once see one and walked on a little.
It was a long street with all sorts of shops in it, but there was not a single one where you could buy cigarettes.
“That’s strange,” said Albert Edward.
To make sure he walked right up the street again. No, there was no doubt about it. He stopped and looked
reflectively up and down.
“I can’t be the only man as walks along this street and wants a fag,” he said. “I shouldn’t wonder but what a
fellow might do very well with a little shop here. Tobacco and sweets, you know.”
He gave a sudden start.
“That’s an idea,” he said. “Strange ‘how things come to you when you least expect it.”
He turned, walked home, and had his tea.
“You’re very silent this afternoon, Albert,” his wife remarked.
“I’m thinking’,” he said.
He considered the matter from every point of view and next day he went along the street and by good luck
found a little shop to let that looked as though it would exactly suit him. Twenty-four hours later he had taken it and
when a month after that he left St. Peter’s, Neville Square, for ever, Albert Edward Foreman set up in business as a
tobacconist and newsagent.
His wife said it was a dreadful come-down after being verger of St. Peter’s, but he answered that you had to
move with the times, the church wasn’t what it was, and ‘henceforward he was going to render unto Caesar what
was Caesar’s. Albert Edward did very well. He did so well that in a year or so it struck him that he might take a
second shop and put a manager in.
He looked for another long street that hadn’t got a tobacconist in it and when he found it and a shop to let, took
it and stocked it. This was a success too. Then it occurred to him that if he could run two he could run half a dozen,
so he began walking about London, and whenever he found a long street that had no tobacconist and a shop to let he
took it. In the course of ten years he had acquired no less than ten shops and he was making money hand over fist.
He went round to all of them himself every Monday, collected the week’s takings and took them to the bank.
One morning when he was there paying in a bundle of notes and a heavy bag of silver the cashier told him that
the manager would like to see him. He was shown into an office and the manager shook hands with him.
“Mr. Foreman, I wanted to have a talk to you about the money you’ve got on deposit with us. D’you know
exactly how much it is?”
“Not within a pound or two, sir; but I’ve got a pretty rough idea.”
“Apart from what you paid in this morning it’s a little over thirty thousand pounds. That’s a very large sum to
have on deposit and I should have thought you’d do better to invest it.”
“I wouldn’t want to take no risk, sir. I know it’s safe in the bank.”
“You needn’t have the least anxiety. We’ll make you out a list of absolutely gilt-edged securities. They’ll bring
you in a better rate of interest than we can possibly afford to give you.”
A troubled look settled on Mr. Foreman’s distinguished face. “I’ve never ‘ad anything to do with stocks and
shares and I’d have to leave it all in your ‘ands,” he said.
The manager smiled. “We’ll do everything. All you’ll have to do next time you come in is just to sign the
transfers.”
“I could do that all right, said Albert uncertainly. “But how should I know what I was signing’?”
“I suppose you can read,” said the manager a trifle sharply.
Mr. Foreman gave him a disarming smile.
“Well, sir, that’s just it. I can’t. I know it sounds funny-like but there it is, I can’t read or write, only me name, an’
I only learnt to do that when I went into business.”
The manager was so surprised that he jumped up from his chair.
“That’s the most extraordinary thing I ever heard.”
“You see it’s like this, sir, I never ‘ad the opportunity until it was too late and then somehow I wouldn’t. I got
obstinate-like.”
The manager stared at him as though he were a prehistoric monster.
“And do you mean to say that you’ve built up this important business and amassed a fortune of thirty thousand
pounds without being able to read or write? Good God, man, what would you be now if you had been able to?”
“I can tell you that sir,” said Mr. Foreman, a little smile on his still aristocratic features. “I’d be verger of St.
Peter’s, Neville Square.”
Contents
1. THE GREAT HUMAN RESOURCE TURNAROUND 1 – 39
2. BASICS OF HUMAN RESOURCE PLANNING 40 – 57
3. RETURN ON INVESTMENT (ROI) IN HR PLANNING 58 – 75
4. CORPORATE MISSION AND VISION STATEMENTS 76 – 184
5. STRATEGIC HUMAN RESOURCE PLANNING 185 – 215
6. STRATEGIC MANPOWER PLANNING 216 – 250
7. STRATEGIC PLANNING 251 – 276
8. STRATEGIC PLANNING IN CORE AREAS OF HUMAN RESOURCE 277 – 427
9. STRATEGIC SUCCESSION PLANNING 428 – 456
10. HUMAN RESOURCE AUDIT 457 – 550
11. AUDIT OF HUMAN RESOURCE COMPETENCIES, STRATEGIES, SYSTEMS, 551 – 586

STRUCTURES AND FUNCTIONAL ROLES OF HUMAN RESOURCE
12. WRITING HUMAN RESOURCE AUDIT REPORT 587 – 627
APPENDIX 628 – 667
 CONCEPTS AND DEFINITIONS

 A WORD ABOUT MANAGEMENT GURUS
BIBLIOGRAPHY AND REFERENCES 668 – 673
AUTHOR INDEX 674 – 677

The Great Human Resource Turnaround 1
t er
ap
h
1
THE GREAT
C
HUMAN RESOURCE
TURNAROUND
After Studying this chapter, the students will learn the following
topics:
HPH
 Concept of Human Resource Turnaround.
 Holistic approach to Human Resource Turnaround.
 Compulsions of Human Resource Turnaround.
 Making Human Resource Business Savvy.
 Global Human Resource: A Competitive Advantage for Human
Resource People.
 Emerging Trends for Human Resource.
 Paradigm Shift One: From Non-Involvement to Involvement.
 Paradigm Shift Two: From Strategic Partner to Business Partner.
 Paradigm Shift Three: From Business Partner to Driving Business
Success.
 Paradigm Shift Four: From Talent Mis-Management to Talent
Management.
 Paradigm Shift Five: From Cost Centre to Profit Centre.
 Paradigm Shifts Six: Human Resource Development to Human
Development Resourcing.
2 Human Resource Planning and Audit
CHAPTER ONE
THE GREAT HUMAN RESOURCE TURNAROUND:
LEVEL ONE: HOLISTIC APPROACH TO HUMAN RESOURCE

HELP ASHOK LEYLAND AND OTHERS TO TURNAROUND 3 – 5
LEVEL TWO: HUMAN RESOURCE COMPETENCIES NEED TO BE 6 – 8
BUSINESSS DRIVEN
LEVEL THREE: MAKING HUMAN RESOURCE BUSINESS SAVVY 9 – 12
LEVEL FOUR: PARADIGM SHIFT: EMERGING TRENDS FOR HUMAN 13 – 39
RESOURCE.
LEVEL ONE
HOLISTIC APPROACH TO HUMAN RESOURCE HELP ASHOK

LEYLAND AND OTHERS TO TURNAROUND
THE NEWS WE CAN USE:

“A holistic approach to human resource management, processes and optimal utilisation of resource
have contributed to the turnaround at Ashok Leyland’s Hosur-I plant and ensured sustained increase
in profits during the current year,” said J.N. Amrolia, Executive Director, Human Resource, Ashok
Leyland Ltd. The plant, which had, till six years ago, been plagued by labour problems, is set to
sustain its profit, and witness increase in turnover during the current year.
“The turnaround has been achieved through strategic initiatives involving changes at every level
of management, increased employee involvement and structured communication exercises, removal
of non-performers, building collaborative union initiatives, competency building and employee recognition
mechanisms. Production processes had been revamped, optimising supply chain and rationalizing
resource and cost reduction.
These had contributed to significant enhancement in indicators of improvement such as production,
productivity, adherence to targets, positive relationship with workmen and profitability and above all
a total involvement of Human Resource in setting up corporate goals and their achievement,”
he said. Amrolia was addressing a workshop on competitiveness through quality, productivity and
human resource organised by the Employers Federation of Southern India.
G.S. Ramesh, Vice President-HRD, Hyundai Motor India Ltd, said that among the challenges
faced by the company was the bonding needed to be achieved between people from diverse cultures.
This had been achieved through cross-cultural exercises to enhance awareness and creating a
common platform of “Hyundaian’’ culture. Mechanisms for continuous communication, consultation
and participative management had been put in place, he said.
Bhushen Raina, Managing Director, who made the turnaround possible, changed the way
Tinplate Company of India Limited (TCIL of Tata group) used to do business. In twelve years,
renewed vision of the company’s aim to become an industry leader in value creation, servicing
packaging needs and creating a greener future. Sales/ production increased to 125%, exports touched
28% and employees’ strength reduced to 1715 through initiatives in leadership development, innovative
manufacturing and export strategies and the participation of human resource function in organizational
development activities at grassroot levels.
Such news, involving human resource function and its participation and contribution to corporate
turnaround – a positive reversal in the performance of a company or the overall market are real but
rare.
Do we need a human resource turnaround? The issue we face is pretty serious and real
but rare. Are we getting warning signals? Yes! So what are we up to? How are we planning
to face and resolve the issue?
EARLY WARNING SIGNALS OF DECLINE:

“Most ailing organizations have developed a functional blindness of their own defects. They are
not suffering because they can not solve their problems but because they can’t see their problems”
says John W Gardner (On Leadership 1990) Despite Gardner’s statement, it is genuinely difficult
to discern and diagnose company’s problems before they threaten the progress or even the very
existence of an enterprise.
A 2003 Mercer survey of 200 CFOS’ showed that 92% believed human capital management has
a great impact on customer satisfaction, 82% believed that effective management of human capital
has a positive impact on profitability and 72% believed that human capital practices impact innovation
and new product development. We face, for a change, some serious questions:
1. This is good news for Human Resource professionals. The world is seemingly ready to accept
everything the profession has to offer. But is everyone in the profession ready to deliver? No!
2. Is human resource like an ailing organization, the existence of which is under threat from its own
profile and contents? Yes!
3. Has Human Resource been able to move out from of its ‘Back Office’ image? No!
4. Are these warning signals real? Yes!
5. Is Human Resource at a crossroads, and shall either have to face up to the challenges
confronting organizations or becomes a marginal contributor to corporate success? Yes!
6. Do we really need a turnaround in human resource? Yes! Then; What are our compulsions for
a human resource turnaround?
COMPULSIONS FOR HUMAN RESOURCE TURNAROUND:
1. Operating Without Clear Strategic Plan:
Without the strategic plan, the human resource is almost guaranteed to have an unfocused
resource and multi-directional activities. The result will be a number of failures, some, that are going
to be seen as dumb ideas. A survey conducted by Society for Human Resource Management and
Balance Scorecard Collaborative, showed that only 34% Human Resource respondents indicated
that their executives viewed Human Resource as a strategic partner.
2. Poor Communication:
Often a plan is devised by the executive group and then it is not well communicated to the
organization. Hence, the execution is flawed leading to lack of success.
3. Refusal to Shift Paradigm with Changing Market Conditions:
Once a programme is underway in development, it generates a momentum all of its own and
people/companies are hesitant to make changes, particularly if one has ownership in it. What was a
good idea at the start becomes a dumb idea in a changed economy.
4. Absolute Lack of Business Knowledge:
Human Resource professionals neither understand and speak the language of business nor do
they contribute to the conversation around the strategy table.
5. Pride and Arrogance getting in the Way:

People are generally scared of Human Resource department because they take decisions
based on “who is right” not “what is right”. Human Resource means ‘power and authority’ and people
see this as being misused.
6. Human Resource Delivery: Human Resource People don’t run an extra mile
for their People:
Human resource professional must deliver human resource services seamlessly, if they don’t,
how can they ever hope to make strategic contribution to the business of an organisation?
7. Care about People: It is not everyone’s Cup of Tea:
Human Resource professionals who care about people are able to make strategic decisions that
are based on full understanding of how it will impact people.
“Human Resource! What is so great about human resource? Anyone can manage Human
Resource, even a graduate can handle Human Resource department, don’t worry about Human
Resource…” A CEO of a pharma company was heard telling his visitors from another company. This
is unfortunate, real but not rare, that right from top to bottom, from CEO down to an officer, all of them
not only feel but believe that anyone in the hierarchy can manage Human Resource.
SIMPLY SPEAKING…
People are attracted, selected and stay with professions that fit their self-image. How do
we change the human resource image in people’s mind? This is a huge undertaking for any
organisation or profession. Let us get ahead with our ‘case study’ in the next level to understand
the nuances of change of image and emerging trends in human resource.
LEVEL TWO
HUMAN RESOURCE COMPETENCIES NEED TO BE BUSINESS

DRIVEN
CASE STUDY: GEETA KAPUR & MANISH PURI:

Geeta Kapur, 38, Director – Human Resource, was looking at the absence and late coming
record of the managerial and the unionized staff of the corporate office and the factory of National
Petro Product Limited where she had joined 5 years ago. She was a post graduate in management
from Indian Institute of Management. She had an excellent track record of performance in human
resource and administration at various establishments like Pepsi, Britannia, Wipro and Larsen &
Toubro. She was known as a successful trouble shooter and managing disagreements in her field.
At National Petro Product, She had tried very hard to motivate the staff to be responsible and
get them all in line with some success to reduce the absenteeism, late coming, drunkenness and
mental lethargy. The average monthly rate of late coming and absenteeism stood at 14 and 19
percent respectively.
What caught her attention was the record of Manish Puri whose absence and late coming graph
was steadily increasing beyond the average rate of absenteeism in the organization.
Manish Puri is the officer in charge of documentation section of the Production Planning Department
with nearly twelve years of service both in the corporate office and the factory. His overall performance
was just satisfactory. He was relatively an introvert and showed little interest. His problem was that
he regularly planned and used his sick leave with a variety of short absences. Each of such
absence, one by one, seemed legitimate. As the officer in charge of documentation, his nuisance
value was very high as it meant that some one else had to search the concerned files and the
documents whenever he remained absent.
Geeta Kapur decided to talk to Manish and asked her secretary to send a message to Manish
to meet her in her office.
A few minutes later Manish walked-in to Geeta’s cabin.
“Manish, can we talk about you today first thing this morning”, Geeta asked him looking at him
curiously.
“Yes miss” he replied softly.
“How are you feeling lately?”
“Fine, absolutely fine”
“No problem at home”.
“Everyone has got problems” Manish replied with his eyes now staring at Geeta Kapur.
“What kind of problems do you have”?
“I got no problems”, Manish replied defiantly.
“I thought, may be you have some problems” Geeta replied.
“Why”?
“Because I notice that your sick leave has been increasing since last year and this year it is
very bad”.
“I am entitled to take sick leave. I have twelve years of service to my credit”.
“You are entitled to sick leave only if you are sick. But you seem to be sick so often”? Geeta
asked him, this time with little sternness in her voice.
“I can’t help if I am sick”.
“Well, your frequent absence causes us problems”.
“I do my work alright, don’t I”?
“When you are present, you do. But you have already missed thirty-two days this year”.
“I have earned the leave and I am entitled to take it also” Manish replied, trying to make his point
clear to Geeta.
“You are entitled to use the sick leave only when you are sick”.
“I am sick whenever I am absent”.
“Are you sure that there is nothing at home which makes you sick so often” Geeta asked him.
“I don’t know what you mean, Ms. Kapur, I get sick because I am not as healthy as others are”
Manish raised his voice.
“Your record, which is with me right now, shows that you are absent every fourth day without
any prior permission of your superiors” Geeta told him.
“Isn’t that what sick leave is for and to let me stay at home when I am sick, without losing my
pay.”
“But, you and couple of others in this company are the only privileged ones who fall sick so
often” Geeta retorted back to Manish.
“That is what I mean. Others get sick too. And when they get sick, they stay at home. I don’t
stay at home unless I am sick. I have worked for this company for twelve years and my record is
good” Manish told Geeta tauntingly.
“Well, your record is not good at all and I would like to see it improves fast”
“I can’t help when I am sick. My work record is good with this company. You cannot get rid of
me because I am sick little more than others who are lucky to be healthier” Manish told Geeta dryly.
“I did not say that we are going to dismiss you, I only want your record of absence to improve”
Geeta reassured him.
“Why are you putting this kind of pressure on me because I get sick more than others? I do my
best. I cannot help if I am sick”
“Manish, I am not getting rid of you. The only thing which I want from you is that you must
improve your attendance”
“I will try Ms. Kapur, but this is not the way to call me alone here and then threaten me of dire
consequences with termination of my services” Manish told her rudely.
“Look, Manish you are putting the words in my mouth. I never told you that I will terminate your
services. For last 30 minutes, I have been driving it hard to put some sense in your mind that it is
high time that you improve your record of absenteeism fast before it is too late. The company shall
take action against you only when it is convinced that you have failed to improve yourself beyond
doubt. Have you now understood what I wanted to tell you” Geeta asked Manish with suspicion.
“I have understood all of your intentions. I always thought that you were a very considerate
manager unlike others. But now I know that you are as good or bad as others are. I shall fight out
your intentions to get rid of me and I shall ensure that you even do not call me again in your cabin
and give threats like this. Just wait and watch” Manish suddenly got up and left her cabin without
waiting for Geeta to react.
Geeta looked at his record once again, shook her head and wondered as to why she could not
convince Manish. She was feeling miserable that she failed. Was it because she lacked skills to
handle Manish or was it the absence of strategic planning or was it a sheer lack of her counselling
skills or she did not clearly see the objective of meeting Manish or she thought it would be a cake-
walk to crack a grade six officer or she just took a casual decision to speak to Manish at the spur
of the moment and did not work out her strategies before Manish came in or she did not collect
strategic information about Manish or she did not give a pushing start to the conversation with Manish
to support her case or was it a too small a case to be managed at her level or she did not realize
that the conversation with Manish was getting out of her control and was turning meaningless or she
was not business like and allowed Manish to duck every warning and caution she gave him or
Manish was just impossible and she gave up to his non-cooperative and negative attitude or she did
not act street smart and was not diplomatic in her conversation with him or perhaps she did not want
a solution to Manish’s increasing absenteeism and waited for the termination of his services by
default or she simply thought that Manish would take her advice seriously and sincerely and improve
his record of absenteeism? The reason could be any one of these or all of these together. If nothing
else, Geeta could have been businesslike to convey to Manish to improve his score or perish.
SIMPLY SPEAKING…
The conversation of Geeta with Manish is a real life story of a high profile director of
human resource who left National Petro Products (names changed to protect the identify) a
few months ago. Manish continuous to enjoy his job with no change in his record of absenteeism
and late coming.
The story represents scores of Human Resource planners and professionals who are
satisfied with their level of mediocrity and their competencies, performance metrics and attitude,
are neither strategic nor are they business driven. This may be one of the several reasons why
we don’t see many of them making to the top as chief executive officers and managing
directors of corporate houses.
Managing Manish alone was not enough. Geeta had to be business driven in her
competencies and skills of managing people.
LEVEL THREE
MAKING HUMAN RESOURCE BUSINESS SAVVY
HUMAN RESOURCE NEEDS TO LOOK AT ITSELF MORE AS A BUSINESS:

The human resource function today needs to look at itself much more as a business, because
that is how executives are looking at it and expecting it to operate. Researchers at the University Of
Southern California Marshall School of Business propose a new business model for human resource
that will make it a strategic partner.
Edward E. Lawler III and Susan Albers Mohrman of the Center for Effective Organizations
propose re-conceptualization of human resource as providing three service lines:
1. The first is the basic human resource administrative services and tasks that are involved in
compensating individuals, hiring them, training them, and staffing positions in organization.
2. The second is that of a business partner, that helps business units and general managers
realize their business plans. human resource needs to provide advice and services concerning
organizational development, change management, and the articulation between human resource
management systems and business operations.
3. The third requires human resource to contribute to the organization’s strategic direction. In this
role professionals in human resource must understand business strategy and human capital,
and their relationship to organizational capabilities and core competencies to support long-term
success.
A key question is whether individuals who are currently in the human resource function
are capable of filling the business partner and strategic partner roles or not. Many human
resource professionals have never worked outside of human resource and as a result have a limited
understanding of what the business is about and what is the business strategy and human resource
strategy options are.
1. Building Human Resource Business Savvy:
“The human resource function will have to move out of its comfort zone,” Lawler states.
“human resource professionals must increase their exposure to business issues and employ
work structures that bring the human resource function together in partnership with the line
units and other functions.”
The research suggests that the human resource function has to make the same design choices
as any business about how to organize and deploy resource in order to deliver value to the customer.
“The generalist is close to the customer, representing the human resource function in the business
unit, and is responsible for tailoring and coordinating services provided by other parts of the human
resource organization,” said Susan Mohrman.
2. Human Resource at Crossroads:
The research suggests the “Human Resource function is a long way from being a high
value-added strategic and business partner that delivers high-quality transactional services in
a cost-effective manner, and knowledgeable and skilled business and strategic input. Further
it shows that human resource is slow to change”
Human Resource is at a crossroads, and will either have to face up to the challenges
confronting organizations or become a marginal contributor to corporate success.
3. Human Resource is Responsible for Transformation of some Indian Global
Companies:
Similar views are expressed by Nirmalya Kumar, co-director of Aditya Birla India Centre at
London Business School, who places more emphasis on human resource than marketing. It
does sound a tad surprising.
Asked about the role marketing played in the transformation of Indian companies into global
giants, Kumar says, “Marketing did perform its part, but what really played a key role in the
transformation of these companies was the way they managed their human resource and
global talent.” Kumar’s conclusion is drawn from research for his latest book, ‘India’s Global
Powerhouses: How They Are Taking on the World’
“While a Singapore or Dubai (based) company has the capability to manage expatriate
workforce, many Indian companies are still struggling with it.
The complexity of people management increases when businesses compete at a global level
and successful companies need to effectively manage, engage and align their global workforce,
which becomes exacerbated by geographical distance, time difference and language challenges as
well as (the) demands of local culture, rules and laws. Companies such as Unilever and Nestle SA
have a history of managing a diverse workforce, but many Indian companies do not have the experience
since the big growth story has happened only in the last 10 years. It’s a big challenge and it’s a
competence that companies will have to learn to become truly global.” Kumar adds “Bharat
Forge, Infosys, Essel Propack, Marico, Wipro, Mahindra & Mahindra are a few companies,
among several others, where human resource has been instrumental in transforming these
companies into global power houses”.
4. Human Resource People: Have They Lost the Art of Diagnosis? Answer is
“Yes”:
Human Resource Professionals have lots of ideas trying to simplify the most complex set of
academic theories, approaches and tools (you will find many of them in preceding chapters too) on
almost every concept. But yet, only four out of ten human resource professionals follow and practice
Human resource planning and practice business driven human resource management in their
organizations. NR Narayana Murthy, the founder Chairman of Infosys Technologies, in his book
“A Better India, A Better World” says “No matter how good an idea is, it has no value unless other
people understand it, embrace it as their own and help you to implement it.....That is why we at
Infosys believe in the adage ‘In God we trust, everybody else brings data to the table’….”
Nirmalya Kumar echoes similar belief “Each one of the profiled companies has had interesting
journeys in the road to becoming Indian multinationals. But if I have to pick one, it would be Essel
Propack Ltd, a company unknown to me till early 2006, when I was invited to run a workshop for
them. Essel people were full of ideas. They internalised every such idea which led them to consolidate
their relationship with Proctor & Gamble.
Essel Propack, led by Ashok Goel, is a world leader in laminated tubes with thirty-two per cent
market share and a supplier to consumer goods giants such as Procter and Gamble Co., Unilever
Plc. and L’Oreal SA. This revelation propelled me to find out if there were more companies like Essel
Propack.
The story of Essel’s evolution from a one-unit company in Vasind (in Maharashtra) to a global
leader in laminated tubes is the story of evolving with a partner. Essel followed P&G wherever it went,
and like most relationships, (this relationship) evolved through a series of accidents, opportunities and
mutual gain.” Kumar adds it with flavour.
5. Does Human Resource mean business: Answer is “No”:
“Human resource means business” said Yogibudhahnanda, Head of the Human Resource
(name changed to protect the identity) of a well-known temple trust in south India. “We, in human
resource, deliver services to our people. We employ around 2000 people. They get their salaries,
allowances, uniforms, food and other routine benefits in time. Everything here moves as planned.
Almost 200 people are involved in cooking and serving food to the staff in various shifts. Policies and
practices are decided by the trust and any wrong procedure or unjustified policy is immediately
rectified by the head of the trust. Any demand or grievance received from the employees is settled
across the table between the staff and the members of the trust” He looked at us and smiled.
“How do you manage to hire so many people” we asked him.” Well, we hire good people who
can be moulded and trained as per our need and who can grow with us. We have four peak and two
lean cycles of hiring throughout the year. The hiring committee consists of six trustees and the human
resource head. Most of our staff is educated up to 12th standard but we take graduates and post
graduates for managerial jobs. We hire from India, USA, UK, Nepal, Sikkim, Singapore and Hongkong.
We deal with diverse workforce. We have job profile for every category of staff. For example, I am
a past student of IIM Banglore and working here for last five years. My role profile is well defined and
I know what is expected out of me. With us, there are no shortcuts in Human Resource. We deliver
in every situation” he smiled again when he finished.
This is real but rare.
6. Human Resource always Get, Keep and Grow Good People? Answer is
“No”:
Sam Walton (Wal-Mart) told Colman Peterson, Executive Vice-President of Wal-Mart People
Division “Why not hire friendly upbeat people?” The final consideration was the “war for talent”. We
adopted a policy on hiring “Get, Keep, Grow” Coleman told journalists in press meet “on days
when my human resource problems appear to be overwhelming, I dissect them into these three
“buckets” for identification and solution. Those human resource professionals who GET good
people, KEEP good people and GROW good people are the real business partners in an
organisation”
“In my forty-eight years in the auto industry, I probably made six hundred speeches about
management. Since my retirement, I have made many more. And I have always said the same thing:
Here is what human resource management is about: Pick good people and set the right priorities”
says Lee Iacocca, former CEO of Chrysler & President of Ford Motors, in his latest book ‘Where
have all the Leaders gone?’
“In contrast to sophisticated production and manufacturing processes, Bharat Forge’s Baba
Kalyani’s approach to human resource management (HRM) was decidedly low-tech. Kalyani referred
to HRM as “people systems”. We have very simple employee integration process – we constantly
communicate, share information being very open. We involve employees actively in the company’s
activities and direction setting, and ensure that there is a strong community involvement on behalf of
the company. The entire human resource team is geared up to achieve this objective” Kalyani told
Nirmalya Kumar in “India’s Global Powerhouses “Moreover, human resource has been our
aggressive business partner in most of process integrations for our global presence. One has to have
a global mindset”
7. Gobal Human Resource-A Competitive Advantage: Are We Ready to Take
Off? Answer is “No”
If one has to compete in global economy, one need to develop a global mindset and this is
expected from every manager in every organization which is competing with the world. It is imperative
that Indian companies and their promoters learn to speed up their processes to integrate and embrace
a multi-cultural work force. Human resource needs to acquire global competencies to face the challenges
for India’s global multinationals. “The need to work constantly to open the organization’s windows
to the winds of new ideas and a multiethnic workforce…” Kumar Mangalam Birla, Chairman,
Hindalco Industries Limited continues “it is relatively simple to address cross-border issues
pertaining to technology, finance, markets and products but extremely difficult to cope with
challenges relating to human dimension. Being a true-blue multinational is only partly about
geographic spread. It is more about mind-set that wants to leverage resource seamlessly across
geographic boundaries. It is mind-set that is eager to build unique capabilities to transcend the
barriers of language and cultures to create value. It is about being global in attitudes without
letting go off your roots”
What kind of mind-set is necessary depends up on the competitive position and readiness of a
company. But human resource professionals cannot remain laidback for ever. Let’s cross over to the
next level to find out how and why should they shift paradigm to their advantage.
SIMPLY SPEAKING…
1. What matters for human resource to foster is the alignment and consistency in
understanding the strategy of the company across the whole organization. To meet the
challenges of today, Human resource needs to develop a new mind-set of enquiry and
support centered on the reconciliation of dilemmas, across the human resource spectrum,
and thereby, finally fulfilling its true identity. But it cannot afford not to be the ‘strategic
business partner’ in business if it has to shed its”back office” image.
2. A new paradigm for human resource is in the offing. Shift the focus from ‘ROI’ (Return
on Intangibles) to “ROI” (Return on Tangibles = Investment). Invest in people. They are
the real assets of human resource. There cannot be any strategic human resource
planning without them and their involvement and evolvement. Human resource has to
move out of its comfort zone and contribute to the corporate business module aligning
itself to the business goals of the company.
LEVEL FOUR
PARADIGM SHIFT: EMERGING TRENDS FOR HUMAN

RESOURCE
DABUR INDIA : CASE STUDY IN PARADIGM SHIFT:

In 1998, the 114 years old Ayurvedic and pharmaceutical products major Dabur India found
itself at crossroads. In the fiscal 1998, seventy five per cent of Dabur’s turnover had come from the
FMCG. Encouraged by this, Dabur family formulated a new vision in 1999 with the aim to make Dabur
India as the best FMCG Company by 2004. In the same year, Dabur planned to increase the group’s
turnover to Rs. 20 billion by the end of the financial year 2003-04.
To achieve this goal, Dabur benchmarked itself against other comparable companies such as
Nestle, Colgate-Palmolive and Proctor & Gamble. Dabur found itself lacking in many critical areas.
While its P/E ratio was less than 24, for most of other companies, it was more than 40. The net
working capital of Dabur was whopping Rs. 2.2 billion where it was less than half of it for others.
There were other indicators of an inherently insufficient organization including its operating profit
margins of 12% as compared to Colgate’s 16%, P&G’s at 18%. The return on net worth was around
24% for Dabur as against HUL’s at 52% and Colgate’s at 34%.
The Burmans realised that major changes were needed on all organizational fronts. However,
media reports questioned the company’s capability to shake off its family oriented work culture.
DABUR HIRED MCKINSEY:

Dabur hired Mckinsey in 1994 for organizational restructuring at a cost of Rs. 80 million.
Mckinsey’s three-fold recommendations were:
 To concentrate only on few businesses.
 To improve supply chain and procurement processes.
 To reorganize appraisal and compensation systems.
Following these recommendations, many radical changes were made with Burmans’ decision to
take a back seat and appoint professionals for running the day to day business.
In November 1998, Dabur appointed Ninu Khanna as the President from Proctor & Gamble.
ABB’s Yogi Shriram joined as Vice-president – Human Resource, Deepak Sethi as Vice-President-
Marketing & Sales-Health Care Division and Ravi Shivraman as Vice-President-Finance.
HUMAN RESOURCE TAKES DRIVER’S SEAT TO RESTRUCTURE:

Human resource took the driver’s seat. Yogi Shriram with Ninu Khanna decided to do a complete
overhaul of human resource systems and shift the focus from production oriented human resource
to people centric human resource applications and practices. Khanna extended all the corporate
support to Shriram to do the paradigm shift in human resource:
1. Compensation and its valuations were changed and key performance areas (KPA) were
introduced.
2. Performance appraisal and evaluation was based on achievement of targets and key performance
areas.
3. Concepts such as customer satisfaction, increased sales and reduced costs, return on
intangibles and return on investment and the shareholders value were introduced as yardstick
for appraisals.
4. Employees grievance redressal system was introduced followed by suggestion and welfare
oriented schemes.
5. Soft skills, sales and technical training programme were introduced on the basis of training
needs survey.
6. Company hired Noble & Hewitt consultants to formulate ESOP scheme. The scheme was
introduced for the senior people from the next financial year.
Restructuring seemed to have been extremely beneficial for all the employees. Besides improved
morale and reduced employees turnover, the strategic planning, structural and operational changes
in human resource created an overall ‘feel good’ sentiments’ in the company. For the first time in the
history of the company, it was a showcase of human resource.
Dabur’s sales increased to Rs. 10.37 billion in 1999-2000 from Rs. 9.14 billion in 1998-99 – an
increase of 13.5.%. Dabur’s profits also increased by 53% from Rs. 501 million to Rs. 770 million.
PARADIGM SHIFT AND TRANSFORMATION - DRIVEN BY AGENTS OF CHANGE: THOMAS

KUHN-1962:
In 1962, Thomas Kuhn wrote “The Structure of Scientific Revolution” and fathered, defined and
popularized the concept of “paradigm shift”. Kuhn argues that scientific advancement is not evolutionary,
but rather a “series of peaceful interludes punctuated by intellectually violent revolutions”, and in
those revolutions “one conceptual world view is replaced by another”.
Think of a Paradigm Shift as a change from one way of thinking to another. It’s a revolution, a
transformation, a sort of metamorphosis. It just does not happen, but rather it is driven by agents of
change.
For millions of years we have been evolving and will continue to do so.
Change is difficult. Human beings resist change, however, the process has been set in motion
long ago and we will continue to co-create our own experience. Agents of change are driving a new
paradigm shift today. The signs are all around us.
Dabur’s transformation did not happen just by itself. The revolution was driven by agents of
change – Burmans, Ninu Khanna, Yogi Shriram and all those who perceived a big picture of Dabur’s
growth over the years. At Dabur, human resource did not take the back seat. The metamorphosis
was lead by human resource. Paradigm shift at Dabur was inevitable.
Kuhn states that “awareness is prerequisite to all acceptable changes of theory” It all begins in
the mind of the person. At Dabur, the credit for thinking of change goes to Burmans when they
thought of transformation and decided to take back seat. The paradigm shift from a typical mechanistic
and manufacturing industrial house to an organic, service based, knowledge centred group was
visible at Dabur.
Change will continue. It’s the only true constant. Let’s move ahead and find out what are the
possible paradigm shifts to impact future of human resource function and professionals.
PARADIGM SHIFT FOR HUMAN RESOURCE:

1. FROM NON-INVOLVEMENT TO INVOLVEMENT
The increasingly global nature of competition requires that companies utilize all of their available
resource in order to survive and succeed. This has resulted in an emphasis on the alignment of all
functional activities of the company like finance, marketing, operations, etc. towards the achievement
of strategic business objectives. This will have impact on strategic orientation, core competence, and
involvement of human resource executives in strategic decision-making.
Higher involvement of human resource in organizational strategy is strongly related to perceptions
of human resource effectiveness, and its participation in economic and business decision-making.
This is what is expected from a CEO to involve human resource in strategic business planning
and expect human resource to deliver. But this is not happening because 80% CEOs and human
resource people don’t trust each other and critical issue of human resource involvement is neither
discussed nor it is debated as a matter of policy. At micro level, we have some examples to quote
and get comfort out of feel good factor.
Burmans of Dabur had a choice to take the back seat, restructure the organization and not only
involve human resource but gave it the driver’s seat to shift the paradigm from zero to hundred
percent involvement to turn Dabur to people centric organisation.
2. FROM STRATEGIC PARTNER TO BUSINESS PARTNER
The support against human resource management to this paradigm shift is:
A. Human Resource is not a small Business Unit (SBU):
 Human resource does not understand the business model.
 Human resource does not speak business language.
 Human resource does not provide return on investment on its own.
 Human resource does not sell its business acumen to others.
 Human resource is a support system.
The support in favour of human resource management for this paradigm shift is:
B. Human Resource has Strategic Inputs:
 Strategic workforce planning.
 Employee engagement.
 Strategic compensation and benefit planning.
 Retention strategies.
 Succession planning.
C. Strategies for Human Resource to Earn a Place in the Board Room:
 Artificial insemination: Inject Non-human resource people into key positions of human
resource.
 Sharpen the Saw: Send human resource people into other departments for short term
assignments.
 Profit Centre: Make human resource earn its own money and be self sufficient and help
them understand return on investment.
3. FROM BUSINESS PARTNER TO DRIVING BUSINESS SUCCESS:
PERFUMES & PETALS INDIA LIMITED: SUCCESS OF HUMAN RESOURCE IN MERGER
AND ACQUISITION: A CASE STUDY:
Perfumes & Petals India Limited is the manufacturer and the distributor of India’s leading
‘Chrysanthemum’ brand of ladies perfumes and toiletries. The company is listed on Bombay and
National Stock Exchanges. Within a period of five years, the company has made two acquisitions of
firms in the business of manufacturing and distributing ladies perfumes and toiletries.
1. First Acquisition: Some Pitfalls
The first acquisition was made using the traditional approach to due diligence, while the second
used the recommendations made by Human resource expert.
In the first acquisition, the human resource team was not intimately involved in the early stages
of the deal for two reasons:
1. Human resource lacked credibility as a contributing strategic member of the executive deal
team; and
2. “People” issues were not valued as highly as financial issues.
As a result, due diligence from human resource perspective was primarily devoted to discovering
the cost of retirement obligations, which could negate the deal or impact price. Human resource was
not given the mandate for integration until after the deal closed. And, because integration planning did
not begin until well after close, employees of the acquired company did not see themselves as part
of Perfumes and Petals India Limited. As a result they were not a part of the new vision for the
company; they remained uninvolved and separate in their activities and attitudes.
The gathering of data during the integration stage also surfaced cultural, contractual and labour
problems that, had they been identified early, may have affected the terms of the deal. Due to these
and other challenges, the actual integration process dragged on for a period of several years, preventing
the company from realizing the full value of the deal in a timely manner.
2. Second Acquisition: Involvement of Human Resource
Then the most important thing happened.
Before the second acquisition, the Chairman & Managing Director, Dr. Simranjeet Singh,
hired a new Vice-President. Human Resource, Ritu Sanyal, who had experience with acquisitions
and mergers and who knew that Human Resource needed to play a crucial role “early and often” in
the deal to make it successful.
She aggressively leveraged her experience to convince Dr. Singh that human resource should
be involved early and at a much deeper level. She told him, “I know from my experiences that human
resource sitting on the side lines and simply reacting to demands from operations and executive
leadership is a recipe for failure. Human resource needs to be an integral part of the deal team.”
Dr. Singh thought about what Sanyal had said. He decided to go ahead with a very different
approach on his next acquisition, which occurred less than a year later.
APPROACH OF RITU SANAYAL:

Sanyal’s human resource was on the “deal team” from the beginning and participated not only
in the financial due diligence, but used the opportunity to build a human resource integration team and
gather data for purposes of integration planning. For example, based on discussions with Dr. Singh,
her human resource team and some data mining, Sanyal identified the need to look at certain
employment practices and determined the need to conduct a compliance audit covering the target
acquired company’s employment practices and benefits programmes.
Sanyal’s approach uncovered some issues with the retirement plans and significant problems
regarding the classification of certain exempt employees — a problem Perfumes and Petals was able
to resolve, avoiding potentially huge liabilities and fines. Because such issues were detected early,
they also could be factored into the final purchase price.
Sanyal was happy that the new approach also allowed human resource to accelerate the integration
planning. At the end of Stage 3, when the deal closed, integration plans were ready to be executed
based on the business rationale for the deal — in a manner consistent with the integration of other
systems and programmes.
The plan was in place. Sanyal used this opportunity to communicate to both organizations’
workforces and laid out the plan in a clear and concise manner, managing the expectations of all
employees. The target firm’s employees felt, and subsequently acted, like part of Perfumes and
Petals much more quickly. The integration of the second firm was completed well before the integration
of the first firm.
Perfumes and Petals has just completed a very successful acquisition of a third firm. Ritu
Sanyal was promoted as President-Human Resource and named as one of the most successful
human resource professionals by a leading magazine.
Ritu Sanyal added value to the business success of Perfumes and Petals through her four key
competencies
 Understanding the business model.
 Business Literacy.
 Knowledge and understanding of functional areas within Human Resource.
 Skills of a strategic business partner.
4. FROM TALENT MIS-MANAGEMENT TO TALENT MANAGEMENT:
A. Mis-Management: Several Reasons
Retaining talent is a serious concern for organizations. Each time a talented knowledge worker
walks out of the door, they take valuable expertise and organizational knowledge with them. Why?
At the core of the problem is the fact that talent and their managers are often competitors who
are striving to climb the same ladder to higher levels of the organization. As a result, their personal
career interests are in direct conflict with each other.
A key source of this conflict is that people with talent come into organizations eager to learn,
grow and develop their careers as quickly as possible. To do this they seek opportunities that provide
them with real experience that lead to learning and growth. This includes hands-on experience where
they can make mistakes and then figure out how to correct them.
For managers giving talented juniors stretch opportunities can be risky to their own careers
because managers are ultimately responsible for the work product of their employees. If an individual
fails to deliver or makes a mistake on an important project, it is the manager who must answer for
the ensuing problems. Bosses become insecure when they see that their talented juniors are in
demand and get noticed by their super bosses.
And so the safest course for a manager is to err on the side of caution and limit the amount of
responsibility that they give talent until they are absolutely sure that an individual can handle the work.
The result is that talented juniors can end up spending months as apprentices and trainees to people
who are less capable than they but have more experience, or such a talent may be stuck doing
boring jobs that use only half of their brain.
SURAJ KAUL: CASE OF TALENT MIS-MANGEMENT:

Suraj Kaul who completed his MBA-Marketing from IIM-Kolkata, was hired by a prestigious
FMCG firm. He spent the first eight months on the job preparing Power Point Presentations. He
spoke to his boss, Shashi Pradhan, General Manager-Marketing. Shashi told him “Diamonds don’t
get a shine unless they go through a tedious diamond shining process. Similarly, you have to rough
it out before you graduate to a more meaningful work”. Suraj nodded in affirmation, did not react and
walked out of his cabin. Three months later, Suraj walked into Shashi’s cabin and handed him over
his letter of resignation. Shashi asked Suraj his reason for leaving. “Sir, last time you told me that
I am a diamond. I took it seriously. I am joining D’damas.” Fifteen days later Suraj left the firm to join
D’damas. Human resource was a spectator throughout and did not even hold the exit interview.
SIMPLY SPEAKING…
1. Today’s human resource is focussed mainly on its professional practice, which, like
accounting and sales, is important but incomplete.
2. People, intellectual capital, and talent are ever more critical to organizational strategic
success. This observation is so common today, that it almost goes without saying.
Digitization, labour shortages, growth through acquisitions, simultaneous downsizing
and expansion, workforce demographic changes, and globalization are just a few of the
trends that have made talent management a top priority.
B. TALENTSHIP & SUSTAINABILITY: CHALLENGES:
Both the paradigms throw up challenges to human resource professionals. Frustration with the
current state of traditional human resource, and hopes for something more, are reflected in questions
like these:
1. Why is there so little logical connection between our core business management processes
and our talent management processes? Our strategic planning, marketing, operations, and
budgeting processes connect deeply and logically with how we create competitive success and
shareholder value. Yet, at best these processes reflect only general talent goals like headcount,
labour costs or generic human resource programmes. At worst, people issues appear only as
a head count budget at the end of the plan.”
2. “We invest heavily in the latest human resource measurement techniques: human resource
scorecards, human resource financial reports, return on investment on human resource
programmes, and studies of how human resource programmes enhance attitudes, skills, and
abilities. Yet, these human resource measures seldom influence key business decisions, such
as acquisitions and entry into new markets. They provide little insight on how well we compare
with our competitors in creating competitive advantage through people. Can talent measures
truly drive business decisions and investments?
3. Ramesh Jhangiani, President of ‘Semantic Technologies’ puts it well: “I value the hard work of
human resource, but I worry that our organization may not know which talent issues are the
important ones, as against which are mostly tactical. I know how to answer that question in
finance, marketing, and operations. I’m not sure how to do it for talent. I wish human resource
had more to offer here.”
4. Human Resource spends a lot of time showing the value of human resource programmes. Yet,
in Finance, Marketing, and Operations we judge their value through results: How much they
help our leaders make better decisions about those resource to drive organizational effectiveness.
Why is human resource different?”
5. The recent surge in human resource measurement systems suggests that many believe the
solution lies in better metrics. Finance, marketing, and engineering appear to have better “facts
and figures” than human resource does. Human resource measurement systems typically
strive to show the return on investments in human resource programmes, or apply scorecards
and six-sigma techniques to human resource processes; however, research shows that two
important goals for human resource measurement, (1) to enhance decisions about human
capital and (2) to connect human resource to strategy, are rarely met (Corporate Leadership
Council, 2001; Lawler, etal., 2004).
6. Human resource measurement cannot solve the problem alone, because today’s measurement
systems typically adapt measures designed for other resource and apply them to human
resource. For example, six-sigma initiatives often apply accounting-based cost-efficiency or
operational measures. The best result is less costly and quicker the human resource processes,
but not necessarily better talent. At worst, six-sigma processes achieve gains in efficiency
(which is measured) at the expense of significantly reduced quality of talent (which is often
unmeasured).
7. The same pattern emerges when measures designed for finance, marketing, or process
improvement are applied indiscriminately to human resource. Examples such as ‘Human
resource accounting,’ ‘Human resource quality,’ ‘Human resource branding,’ ‘Human resource
balanced scorecards’ can be useful systems if applied properly (Jamrog & Overholt, 2004), but
they typically fail to address the fundamental challenge of improving talent decisions (Boudreau
& Ramstad, 2003).
C. EMERGING SOLUTIONS:
1. Design Human Talent Supply Chains:
 Replicate leanings from the manufacturing sector.
 Leverage technology to eliminate excessive human intervention.
 Think “talent mass production”
2. Evolve Talent Development from an Art to a Science:
 Move from skills to attributes.
 Assess online.
 Train holistically.
 Accredit candidates.
3. Build Infrastructure to Support the Supply Chain
 Career Centres, academies and hostels.
 Share burden of skill development between customers and candidates.
 Reduce total cost of talent sourcing and development.
4. Build Long-Term Partnerships:
Build long term partnerships for critical resource, human talent.
5. Develop Vendors:
Develop few vendors and lock them down with long term contracts. Either invest directly or
indirectly to deepen relationships. Encourage vendor to keep inventory for “JIT” resource.
6. Invest in Process Quality:
Invest in process quality (e.g., R&D in manufacturing sector) for long term gains.
7. Provide Forecast:
Provide forecasts (e.g., production/service schedules) to gain visibility into talent pipeline (by
days trained, assessment scores)
5. FROM COST CENTRE TO PROFIT CENTRE:
1. What is a Profit Centre or a Strategic Business Unit?
A. A Profit Centre or a Strategic Business Unit (SBU) is a business unit within the overall
corporate identity which is distinguishable from other business because it serves a defined external
market where management can conduct strategic planning in relation to products and markets. When
companies become really large, they are best thought of as being composed of a number of businesses
(SBUs).
B. In the broader domain of strategic management, the phrase “Strategic Business Unit” came
into use in the 1960s, largely as a result of multi-units of General Electric.
C. These organizational entities are large and homogeneous enough to exercise control over
most strategic factors affecting their performance. They are managed as self contained planning units
for which discrete business strategies can be developed. A Strategic Business Unit can encompass
an entire company, or can simply be a smaller part of a company set up to perform a specific task.
The SBU has its own business strategy, objectives and competitors and these may often be different
from those of the parent company. This approach entails the creation of business units to address
each market in which the company is operating. The organization of the business unit is determined
by the needs of the market.
D. Traditionally, thought of as a cost centre that is just putting an additional burden on the
company’s finances and acting more like an administration partner to the acceptance of human
resource as an investment centre, the road has been hard and long, but very fruitful in this span of
time.
E. Companies and CEOs are still in the process of realising importance of accepting the human
resource function as an investment centre, with the investment showing amazing returns over a
period of time.
2. Can Human Resource be a Profit Centre? Answer is “Yes”

Can human resource be a profit centre or a SBU? A place that earns its own revenues, a place
that makes profits just like the sales and marketing divisions, can it be a self-sufficient entity or even
more than that. A tough question to ponder over, but something that is of great importance to the
human resource managers and companies of tomorrow. The answer is ‘Yes’
3. Are There Examples to Prove it? Answer is “Yes”
A. Dhara Investment: The human resource development of this non-banking finance company
conducts technical and soft skills training programmes for other corporates.
B. Aura Management Services: The Company is in the business of consulting in Management
Information System and corporate turnaround. The human resource function, apart from giving back
office support to other departments within the company, is actively engaged in content development
research and publishes books and periodicals specially in developing and writing case studies in all
the areas of management such as human resource, marketing, sales, finance, projects, production,
brand management strategic and succession management.
C. Pooja Publications: The human resource department arranges and promotes education and
fairs, exhibitions and conferences & seminars throughout the year.
D. Durga Education Society: It runs coaching classes for tenth and twelfth standard students.
The human resource department develops and prepares reading material for distant education
programmes of various universities and business management schools.
E. Brinkman Packaging: The company is engaged in manufacturing stationery and packaging
products. The human resource department has recently got into consulting business in educating and
preparing corporates to introudce the concept of paperless office.
4. Turning a Cost Centre into a Profit Centre:
A. A cost centre may actually provide services that could generate a profit if they were offered
in the open market.
B. But in most corporate environments, cost centres are not expected to generate a profit and
operation costs are treated as overheads. Departments that are typically cost centres include
information technology, human resource, accounting, and others.
C. However, the complacent acceptance that some departments will always be cost centres and
can never generate a profit has changed in some companies. They recognise that cost centres can
turn into profit centres by taking the services they used to automatically provide to the company’s
other business units and making those services available for a fee.
D. The company’s other business units are then required to pay for the services they used to
get for free. But in return, they are allowed to go outside the company and contract with another firm
to provide those services. Likewise, the former cost centre may be allowed to sell its services to
other companies. The expectation is that this free market system will improve performance through
increased competition while increasing profits by turning former cost centres into profit centres.
5. Human Resource should Align Itself with the Organization’s Scorecard:
A. While the human resource profit-centre model sounds promising in that it seems to create a
quantifiable value proposition for the organisation (its own revenue generation), the organisation
needs to think about how this change will impact employees.
B. Under this model, human resource will need to manage marketing, sales and financial health,
while managers will have to think about human resource “best” practices and how to buy and apply
them.
C. This may not be the most effective use of the organisation’s skill sets because managers and
human resource will be required to focus on areas that are outside their core competencies. As a
result, their overall effectiveness may be reduced.
D. Areas of focus for human resource will also shift from needs-based to human resource credit-
based. As a result, employees may be impacted because they will only be able to use human resource
services if their business area has sufficient credits. Further, a company does not want to end up in
a situation where internal departments are competing with each other for human resource and possible
equalization of payments. Again, this would take the organization away from the key objectives and
impact company’s employee base.
E. Another potential impact on employees is the fact that items such as non-mandatory training,
health and safety, work-life programs and perquisites may fall by the wayside, affecting morale,
turnover and work-injury claims. This could also have an impact on the recruitment of future employees,
as they would be looking for these key offerings when deciding whether or not to join the organization.
F. A company also needs to look carefully at how profit will be generated using this model, since
it will be simply moving money already in the organisation from one area to another. As a revenue-
generating model, the organization will have to determine if this is a viable solution for the long-term.
G. One could do a great deal to show quantifiable human resource value by looking at a human
resource model that offers a consultative and strategic partnership role with management and align
with the corporation’s balanced scorecard. This focusses on numerous stakeholders (employees,
customers and investors) and shows performance on a number of dimensions.
H. Dave Ulrich, in Human Resource Champions, states that for human resource to be a
strategic partner with senior management, it must be equally accountable for all segments of the
balanced scorecard (not just the employee dimension). When it comes to the employee dimension
of the scorecard, he states that human resource needs to show intellectual leadership.
I. David Weiss, in High Impact Human Resource, sees the partnership role as human resource
professionals having meaningful and customer-focused conversations from a business perspective
(and not just a human resource perspective). He states that human resource will be able to deliver
value by integrating and assimilating information about the business; predicting and determining how
this will impact people, and creating people and organizational solutions that will increase the likelihood
that the business will meet customer needs by implementing its strategic objectives.
J. A human resource team can begin building credibility as a strategic partner by understanding
the needs of the business and how this will impact its employee base. They should be sure to provide
important human resource services that improve the lives of employees and allow them to best
service their customers. Also, human resource should work towards intellectual leadership and
understanding of all aspects of employee needs within the organisation. Finally, human resource can
prove its value to the organization’s executive team by aligning itself with all components of the
organization’s scorecard and regularly tracking and communicating performance.
6. Steps to Convert Human Resource to a Profit Centre/SBU:

1. Human Resource as a Profit Centre:
Here the human resource department has to compete with similar human resource service
providers to earn revenue.
2. Key Performance Indicators:
Develop a human resource scorecard to evaluate human resource as a profit centre model.
3. Competitor Analysis:
Understand the strengths and weaknesses of the competitors to leverage its own strengths.
4. SWOT Analysis of Internal Human Resource:
Compare and contrast the various internal human resource sub-functions like training and
development, staffing, compensation, and others.
5. Compete in Core Competency:
On the basis of previous evaluation selecting an area that is our core competence and using
that as a base for rolling out the human resource as a profit centre model.
6. Performance as desired:
a. Scenario 1: Yes
i. Full fledged rollout – Once the pilot run is successful, the model is extended across all
departments.
ii. Shift focus to other areas – Replicate the same model in areas of non-core competence.
b. Scenario 2: No
i. Human resource reverts to a support position – The human resource department is not
ready for the human resource as a profit centre model yet.
ii. Critical re-evaluation of internal systems – Try and rework the systems to make them ready
for the profit centre model.
7. Hire New People with Specific Skill Sets:
The profit centre model is taken to a new level wherein the human resource department starts
competing for external clients as well. To take this forward we need to hire people with the
required skill sets and simultaneously develop our internal team for the same.
8. Target Small Companies:
To start off, we target smaller external clients to ensure adequate ground work is done before
moving on to bigger clients.
9. Performance as Desired:
a. Scenario 1: No
i. Re-evaluate performance – Corrective action needs to be taken to improve performance.
b. Scenario 2: Yes
i. Hire more people – This is essentially done to build capability for handling bigger engagements.
ii. Target bigger clients – Once the required personnel have been hired and trained we can
move on to targeting bigger clients.
SIMPLY SPEAKING…
1. Transformation of human resource into a profit centre or strategic business centre is a
viable proposition subject to company’s philosophy and the volume of profit generation
and human resource aligning with the organization’s balance scorecard.
6. FROM HUMAN RESOURCE DEVELOPMENT TO HUMAN DEVELOPMENT
RESOURCING: HRD TO HDR:
CASE OF JAI SHIVARAMAKRISHNAN:
Jai Shivaramakrishnan is working with MB India Limited for last 3 years as General Manager-
Human Resource and Organization Development. The company is in the business of manufacturing
tin, plastic, rubber and paper packaging cans and roll seal closures (RSC) Aerosols, collapsible and
rigid tubes, industrial extrusions, crown corks, screw caps, R.C. pilfer-proof and other closures for
Hindustan Uniliver Limited, Colgate Palmolive, Godrej, Pepsi, Coke and many other big banner
business houses.
Mr. Jai Shivaramakrishnan is smart, aggressive, quick witted and creative. He is very popular
among the workforce because of his broad minded approach and smart human relations skills.
MB India factory is located in an eastern suburb in Mumbai. Its eastern and northern sides are
surrounded by small narrow streets, chawls and thousands of slum area huts where one comes
across a lot of dirt, filth and ‘waste’ all around. Western side of the factory opens to ‘Dharavi’. About
80% workers of MB India reside in the surrounding localities.
On 31st December 2006, when everyone in Jai’s office was preparing to leave the office to
celebrate New Year eve, Jai received a SOS from the factory that a worker named Santosh was
admitted in hospital as he was at the terminal stage of TB and had remote chances of survival. Jai
immediately rushed to the hospital but Santosh died before Jai could reach him. By January end
2007, five more workers died of TB and 15 others were admitted into infectious diseases NGK
Hospital for treatement of ‘Leprosy’ which was spreading at an alarming speed. As if this was not
enough, Jai was told by his staff that three prominent workers from RSC department were tested HIV
positive and the hospitals were refusing to admit them for treatment on the pretext that they did not
have infrastructure and amenities for treating HIV patients. Jai moved fast and got them admitted into
a nondescript hospital through his contacts.
While Jai was struggling to overcome these problems, he received an urgent note from Biman
Roy, the Director Human resource, from Kolkata asking him to move fast and come out with some
creative schemes to provide relief to the victims from these three deadly diseases and educate them
as to how to live healthy life. He asked Jai to take help from all government and non-government
organizations and agencies to tackle the problems.
Jai began thinking. Why have all these problems cropped up together? Is it a mere coincidence
or is there a bigger and deeper issue which has remained unattended? What has suddenly gone
wrong? Was it that the company was caught unaware and wasn’t ready to face and handle the
unexpected situations or was it just his own inability and incompetence responsible for his utter failure
in detecting such deadly infectious diseases? Has he wasted all his years in running after intangible
issues? Is it his single track thinking style which disables him from apprehending the reality side of
human resource development? Could he have prevented these situations by thinking out of the box?
WHERE TO GO FROM HERE?

Jai made up his mind and called up Biman Roy to clear his confusions and answer the questions
that were bothering him. Biman flew to Mumbai and got into one to one meeting with Jai. He told Jai
that such situations do arise and many a times all of them together. One needs to take a holistic view
of these problems and accept them as a part of work life. Problems do not pre-announce their arrival
but there are always tell-tale signs which alert us of their arrival. Anyone can observe these alerts
if one is careful about smelling the news and apprehending the problems and thus, take preventive
steps to handle them more effectively.
“But sir, is there any system available within human resource development gamut wherein we
may be able to predict or foresee, to the best of our efforts, these and such other hundreds of issues
which take a lot of our time as a result of which we are either not prepared to manage them effectively
or end up doing one thing at the cost of another,” Jai asked Biman, feeling little better and reassured.
“Jai, you need to innovate a system which may assist you in apprehending the problems and
finding the solutions. But no such system in human resource is fully secure or reliable because we
deal with human beings and issues surrounding their day to day work life which are uncertain and
un-predictable. Accidents, sickness, diseases, deaths and other such unfortunate events are integral
part of human life and need to be looked at from a very different perspective” Biman spoke slowly
to ensure that Jai understands the basic issues.
“What is that different perspective, sir” Jai was curious to know.
“Let’s have a cup of tea and relax a while before I explain to you about that different perspective”
Jai called up his secretary to order tea and snacks…
1. DIFFERENT PERSPECTIVE: HUMAN DEVELOPMENT RESOURCING (HDR):
“The new perspective is ‘HDR’ meaning Human Development Resourcing. We need to move
from Human Resource Development (HRD) to Human Development Resourcing (HDR). This needs
a paradigm shift in our approach to resolve problems and issues faced by our human resource whom
we claim our ‘tangible assets” Biman continued, “ the problems you faced in the health care recently
cannot be resolved just by admitting the sick employees in the hospitals and then wait to see who
survives and who does not. It is not only the cure or the prevention of a disease; it is all about a
bigger question “can we give our employees a disease free quality life which they deserve as human
beings? Human Development Resorcing comes to our aid in managing these and such other human
concerns, not only at organisational and/or national level but also globally”.
2. DIFFERENCE BETWEEN HUMAN RESOURCE DEVELOPMENT (HRD) AND HUMAN
DEVELOPMENT RESOURCING (HDR):
1. In Human Resource Development (HRD), we select our human resource and decide what
assistance they need from us to help them to change their vision, sharpen their competencies
and skills and multi-skilling, performance management, human relations, leadership effects and
their other abilities and capabilities.
2. In Human Development Resourcing (HDR), we first think of identifying, building and securing
resource for sustained development of human beings (human resource or human capital) such
as financial, economic, social, mental, psychological, spiritual and physical resource for overall
sustainable human development. The development areas include health, nutrition, education,
counselling, population control, enrichment and quality of life and empowerment of women
across the organization.
One of the most common misconceptions is to treat human development resourcing as being
synonymous with human capital and human resource development.
3. Human capital is a term coined by Schultz in 1960s which refer to the stock of skills and
productive knowledge embodied in people. Just as physical, capital (machines, equipment,
assets and so on) make a contribution to the national income, Schultz argued that individuals,
through the human capital embodied in them, also make a contribution to national income. Thus,
human capital and the human resource development framework that is based on the return on
investment, consider human beings mainly as a means to the end which contributes to higher
national income. The investment made in people in terms of education, health, nutrition is
justified in terms of the ‘rate of return’ it yields to the individual and the organisation as well as
to the family and society.
4. The Human Development Resourcing paradigm regards people as ends in themselves, and not
as means to an end. Human Development Resourcing (HDR) includes human, social,
environmental and economic development.
3. SIX SEGMENTS OF HUMAN DEVELOPMENT RESOURCING (HDR) :
There are six basic segments of human development resourcing:
1. HUMAN DEVELOPMENT: SEGMENT ONE
The concept of human development was introduced by Dr Mahbub-ul-Haq. Dr. Haq describes
the concept of human development resourcing enlarges people’s choices and improves their lives.
People are central to all development under this concept. These choices are not fixed but keep on
changing. The basic goal of development is to create conditions where people can live meaningful
lives. A meaningful life is not just a long one. It must be a life with some purpose. This means that
people must be healthy, be able to develop their talents, participate in society and be free to achieve
their goals.
Dr Mahbub-ul-Haq created the Human Development Index in 1990. According to him, development
is all about enlarging people’s choices in order to lead a long, healthy lives with dignity. The United
Nations Development Programme has used his concept of human development to publish the Human
Development Report annually since 1990. Dr Mahbub-ul-Haq and Prof Amartya Sen were close
friends and have worked together under the leadership of Dr Haq to bring out the initial Human
Development Reports. Both these South Asian economists have been able to provide an alternative
view of development.
Nobel Laureate Prof Amartya Sen saw an increase in freedom (or decrease in unfreedom) as
the main objective of human development. Interestingly, increasing freedoms is also one of the most
effective ways of bringing about development. His work explores the role of social and political
institutions and processes in increasing freedom.
According to Dr. Haq, leading a long and healthy life, being able to gain knowledge and having
enough means to be able to live a decent life are the most important aspects of human development.
Therefore, access to resource, health and education are the key areas in human development.
Suitable indicators have been developed to measure each of these aspects.
Very often, people do not have the capability and freedom to make even basic choices. This may
be due to their inability to acquire knowledge, their material poverty, social discrimination, inefficiency
of institutions and other reasons. This prevents them from leading healthy lives, being able to get
educated or to have the means to live a decent life.
Building people’s capabilities in the areas of health, education and access to resource is therefore,
important in enlarging their choices. If people do not have capabilities in these areas, their choices
also get limited. For example, an uneducated child cannot make the choice to be a doctor because
her choice has got limited by her lack of education. Similarly, very often poor people cannot choose
to take medical treatment for disease because their choice is limited by their lack of resource.
2. MEASURING HUMAN DEVELOPMENT: SEGMENT TWO:
The human development index (HDI) ranks the countries based on their performance in the key
areas of health, education and access to resource. These rankings are based on a score between
0 to 1 that a country earns from its record in the key areas of human development.
The indicator chosen to assess health is the life expectancy at birth. A higher life expectancy
means that people have a greater chance of living longer and healthier lives. The adult literacy rate
and the gross enrolment ratio represent access to knowledge.
The number of adults who are able to read and write and the number of children enrolled in
schools show how easy or difficult it is to access knowledge in a particular country.
Access to resource is measured in terms of purchasing power. Each of these dimensions is
given a weightage of 1/3. The human development index is a sum total of the weights assigned to
all these dimensions.
The closer a score is to one, the greater is the level of human development. Therefore, a score
of 0.983 would be considered very high while 0.268 would mean a very low level of human development.
The human development index measures attainments in human development. It reflects what
has been achieved in the key areas of human development. Yet it is not the most reliable measure.
This is because it does not say anything about the distribution.
The human poverty index is related to the human development index. This index measures the
shortfall in human development.
It is a non-income measure. The probability of not surviving till the age of 40, the adult illiteracy
rate, the number of people who do not have access to clean water, and the number of small children
who are underweight are all taken into account to show the shortfall in human development in any
region. Often the human poverty index is more revealing than the human development index.
Looking at both these measures of human development together gives an accurate picture of the
human development situation at organizational and/or national level. The ways to measure human
development are constantly being refined and newer ways of capturing different elements of human
development are being researched.
3. RESOURCING: SEGMENT THREE:
In human resource development, we first think of areas of development where people need
assistance from an organization such as developing leadership or communication skills and
competencies. In human development resourcing, we identify the potential areas which can support
us in pooling financial and monetary, physical and spiritual and mental and psychological resource
to aid our human development programmes.
The participation, in pooling the resource for implementing the pre-determined and identified
human development programmes, is sought from various quarters:
1. Organizational funding by monetary and physical resource which is popularly known as

‘corporate social responsibility’.
2. Governmental funding in private-public participation.
3. Non-Government Organizations (NGOs)
4. Philanthropic Trusts and Organizations.
5. Sewa Mandals and Non-Religious Organizations.
6. Educational Institutions and Trusts.
7. Non-Profit Organizations.
8. Community development Institutions and Associations.
9. Environmental Management Institutions.
4. CORPORATE SOCIAL RESPONSIBILITY (CSR): SEGMENT FOUR:
The role of corporates by and large has been understood in terms of a commercial business
paradigm of thinking that focusses purely on economic parameters of success.
As corporates have been regarded as institutions that cater to the market demand by providing
products and services, and have the onus for creating wealth and jobs, their market position has
traditionally been a function of financial performance and profitability.
However, over the past few years, as a consequence of rising globalisation and pressing ecological
issues, the perception of the role of corporates in the broader societal context within which it operates,
has been altered. Stakeholders (employees, community, suppliers and shareholders) today are
redefining the role of corporates taking into account the corporates’ broader responsibility towards
society and environment, beyond economic performance, and are evaluating whether they are
conducting their role in an ethical and socially responsible manner.
As a result of this shift, Corporate Social Responsibility (from purely economic to ‘economic
with an added social dimension’), has become one of the most important segments of Human
Development Resourcing.
MODELS OF CORPORATE SOCIAL RESPONSIBILITY:
1. ETHICAL MODEL (1930 –1950): One significant aspect of this model is the promotion of
“trusteeship” that was revived and reinterpreted by Gandhiji. Under this notion the businesses were
motivated to manage their business entity as a trust held in the interest of the community. The idea
prompted many family run businesses to contribute towards socio-economic development.
2. STATIST MODEL (1950 –1970): Under the aegis of Jawahar Lal Nehru, this model came
into being in the post Independence era. The era was driven by a mixed and socialist kind of
economy. The important feature of this model was that the state ownership and legal requirements
decided the corporate responsibilities.
3. LIBERAL MODEL (1970 –1990): The model was encapsulated by Milton Friedman. As per
this model, corporate responsibility is confined to its economic bottom line. This implies that it is
sufficient for business to obey the law and generate wealth, which through taxation and private
charitable choices can be directed to social ends.
4. STAKEHOLDER MODEL (1990 – PRESENT): The model came into existence during 1990s
as a consequence of realisation that with growing economic profits, businesses also have certain
societal roles to fulfil. The model expects companies to perform according to “triple bottom line”
approach. The businesses are also focussing on accountability and transparency through several
mechanisms. societal roles to fulfil.
5. CAPABILITY MODEL: This approach is associated with Prof. Amartya Sen. Building human
capabilities in the areas of health, education and access to resource is the key to increasing human
development.
DEFINING CORPORATE SOCIAL RESPONSIBILITY:
1. Philip Kotter and Nancy Lee (2005) define Corporate social responsibility as “a commitment
to improve community well-being through discretionary business practices and contributions of corporate
resource” whereas, Mallen Baker refers to Corporate social responsibility as “a way companies
manage the business processes to produce an overall positive impact on society”.
2. According to World Business Council for Sustainable Development “Corporate social
responsibility is the continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as well as of the
local community and society at large”.
3. Archie Carroll describes Corporate social responsibility as a multi layered concept that can
be differentiated into four interrelated aspects – economic, legal, ethical and philanthropic
responsibilities. Carroll presents these different responsibilities as consecutive layers within a pyramid,
as such that “true” social responsibility requires the meeting of all four levels consecutively. The
model probably is the most accepted and established.
Philanthropic
Ethical
Responsibilities
Legal Responsibilities
Economic Responsibilities
SIMPLY SPEAKING…
While the definitions of corporate social responsibility may differ, there is an emerging
consensus on some common principles that underline corporate social responsibility.
1. Corporate social responsibility is a business imperative: Whether pursued as a voluntary
corporate initiative or for legal compliance reasons, corporate social responsibility will
achieve its intended objectives only if businesses truly believe that corporate social
responsibility is beneficial to them.
2. Corporate social responsibility is a link to sustainable development: Businesses feel
that there is a need to integrate social, economic and environmental impact in their
operation.
3. Corporate social responsibility is a way to manage business: Corporate social responsibility

is not an optional add on to business, but it is about the way in which businesses are
managed.
5. THE FOUR PILLARS OF HUMAN DEVELOPMENT RESOURCING: SEGMENT FIVE:
Just as any building is supported by pillars, the idea of human development resourcing is
supported by the concepts of equity, sustainability, productivity and empowerment.
1. Equity: refers to making equal access to opportunities available to everybody. The opportunities
available to people must be equal irrespective of their gender, race, income and caste.
For example, in any country, it is interesting to see which group the most of the school dropouts
belong to. This should then lead to an understanding of the reasons for such behaviour. In India, a
large number of women and persons belonging to socially and economically backward groups drop
out of school. This shows how the choices of these groups get limited by not having access to
knowledge.
2. Sustainability: means continuity in the availability of opportunities. To have sustainable human
development, each generation must have the same opportunities.
All environmental, financial and human resource must be used keeping in mind the future.
Misuse of any of these resource will lead to fewer opportunities for future generations.
A good example is about the importance of sending girls to school. If a community does not
stress the importance of sending its girl children to school, many opportunities will be lost to these
young women when they grow up. Their career choices will be severely curtailed and this would
affect other aspects of their lives. So each generation must ensure the availability of choices and
opportunities to its future generations.
3. Productivity: means human labour productivity or productivity in terms of human work. Such
productivity must be constantly enriched by building capabilities in people. Ultimately, it is people who
are the real wealth of nations. Therefore, efforts to increase their knowledge, or provide better health
facilities ultimately leads to better work efficiency.
4. Empowerment: means the power to make choices. Such power comes from increasing
freedom and capability. Good governance and people-oriented policies are required to empower
people. The empowerment of socially and economically disadvantaged groups is of special importance.
6. SUSTAINBILITY REPORTING: SEGMENT SIX:
Sustainability Reporting (SR) is also gaining prominence and recognition as a value added tool
for displaying a corporate’s commitment towards transparency and accountability towards its
stakeholders.
It helps a company to report on the social, environmental and economic impact of its activities,
along with a report on the internal state of its management and employee welfare system in a manner
as rigorous and transparent as financial reporting.
A well-drafted sustainability report provides a balanced and reasonable representation of the
sustainability performance of a reporting organisation (both positive and negative). It helps the
organizations to define and communicate their overall context and rationale to solve global problems
through its specific business model or elicit whether its business model design is influenced by those
problems. It is also increasingly recognised as a tool for brand and image building.
WHY CORPORATE SOCIAL RESPONSIBILITY (CSR) CANNOT SUBSTITUTE HUMAN

DEVELOPMENT RESOURCING (HDR)?
Whatever may be the model of corporate social responsibility currently doing the rounds of the
Indian or the Fortune 500 companies, we cannot deny certain facts that:
1. Corporate social responsibility is business driven.
2. Since the business houses invest the money, time and the efforts in initiating the development
projects under corporate social responsibility, they expect a definite return on their investments.
3. Businesses decide the modus operandi of the corporate social responsibility initiatives.
4. Stakeholders are not involved from the onset in defining an initiative to make it successful on
the assumption they do not understand the needs of a community.
5. Corporate social responsibility initiatives are, by and large, image building exercises for the
corporates.
6. Corporate social responsibility is interchangable with corporate sponsorship, donation or other
philanthropic activities.
HUMAN DEVELOPMENT RESOURCING: RATIONALE:
1. Human Development Resourcing (HDR) as an Objective:
Viewed as an end in itself rather than a means, human development resourcing is about enriching
human lives. Material enrichment — producing a larger volume of goods and services — may contribute
to this but it is not the same thing. Indeed it is by now widely understood that there is no one-to-one
correspondence between material enrichment (measured, say, by gross national product per head)
and the enrichment of human lives (measured, say, by the human development index). The human
development approach thus, implies the dethronement of national product as the primary indicator of
the level of development.
The objective of development is not to produce more “stuff”, more goods and services, but rather
to increase the capabilities of people to lead full, productive, and satisfying life.
A larger volume of output per head of the population may ofcourse increase the capabilities of
people, and thus, should be warmly welcomed, but increased output should be seen for what it is,
namely, an intermediate product that under appropriate circumstances can enhance human well-
being. Ultimately what is of concern is the ability of people to lead a long life (as measured by life
expectancy at birth), to enjoy good health (as measured by morbidity rates), to have access to the
stock of accumulated knowledge (as approximated by enrolment and literacy rates), to have sufficient
income to buy food, clothing and shelter, to participate in the decisions that directly affect their lives
and their community. In formulating development policies, programmes and plans it is important to put
people first, to specify objectives in terms of the enhancement of human capabilities.
2. Human Development Resourcing (HDR) as a Means:
The economic benefits received by people — whether in the form of money income, material
goods and services received in kind, self-produced items of consumption or production, or capabilities
such as a long life and good health which may be only partially mediated by relations of production
and exchange — can be understood as flows originating from the stock of capital. The stock of
capital, in turn, can be divided into three components: 1. the stock of natural capital, 2. the stock of
man-made physical capital, and 3. the stock of human capital.
The stock of natural capital consists of the natural resource of the globe, including the atmosphere
and oceans, the flora and fauna, the soils and mineral deposits and sources of fresh water.
The stock of physical capital consists of the produced means of production, i.e., the plant and
equipment used in the agricultural, industrial and service sectors, the physical infrastructure (roads,
bridges, ports, pipelines, railways, airports, irrigation canals) and the stock of dwellings.
The stock of human capital consists of the knowledge, skills, experience, energy and inventiveness
of people. It is acquired in a variety of ways: through training and apprenticeship programmes, while
on the job through learning by doing, in the formal education system, through informal contacts by
word of mouth, through newspapers, radio and the information media generally, in institutions devoted
to pure and applied research and through private study and reflection.
A distinctive feature of a human development resourcing is the emphasis placed on human
capital formation. This does not mean that additions to the stocks of natural and physical capital are
ignored — that would be a serious error — but it does mean a major change in priorities in favour
of human capital. The justification for this change in priorities is, first, that the returns on investing in
people are in general as high as if not higher than the returns to other forms of investment, second,
that investment in human capital in some cases economises on the use of physical capital and the
exploitation of natural resource and, third, the benefits of investing in people are in general more
evenly spread than the benefits from other forms of investment. Thus, a greater emphasis on human
capital formation should result in as fast and perhaps even a faster pace of development, more
sustainable development and a more equitable distribution of the benefits of development.
Thus, a human development resourcing has numerous advantages. First, it contributes directly
to the well-being of people. Second, it builds from a foundation of equality of opportunity. Third, it helps
to create a more equal distribution of the benefits of development. Fourth, it enables the linkages
between the various types of investment in people to be fully exploited and, fifth, it takes advantage
of the complementarities between human and physical capital.
3. Human Development Resourcing (HDR) as a means for Sustainable Development:
Sustainable development is a pattern of resource use that aims to meet human needs while
preserving the environment so that, these needs can be met not only in the present, but also for future
generations. The term was used by the Brundtland Commission which coined what has become the
most often-quoted definition of sustainable development as development that “meets the needs of the
present without compromising the ability of future generations to meet their own needs.”
Sustainable development ties together concern for the carrying capacity of natural systems with
the social challenges facing humanity. As early as the 1970s “sustainability” was employed to describe
an economy “in equilibrium with basic ecological support systems.” Ecologists have pointed to the
“limits of growth” and presented the alternative of a “steady state economy” in order to address
environmental concerns.
The field of sustainable development can be conceptually broken into three constituent parts:
environmental sustainability, economic sustainability and socio-political sustainability.
Social
Bearable Equitable
Sustainable
Environment Economic
Viable
4. Human Development Resourcing (HDR) as a means for Participatory Development:

In the final analysis human development resourcing cannot be separated from participatory
development. The goal of human development is to help people realise their own potential, to develop
their intellectual, technical and organizational capabilities. Thus, human development inescapably is
development by the people if it is to be development for the people.
5. Corporate Social Responsibility to move from Image Building Model to Sustainable
Human Development Resourcing Model:
1. A study conducted by KPMG India on “Corporate Social Responsibility: Towards a Sustainable
Future” observed that action in corporate social responsibility in India largely spans a diverse set of
thematic areas – health, education, livelihood, poverty alleviation, environment, water, housing, energy
and microfinance. However, some other areas like women empowerment, child development and
infrastructure also appeared in the case studies.
2. Based on the comparative study of the 24 companies, it was found that while some companies
chose to narrow their focus on a few thematic areas, others took a broader view and undertook a
larger scope of areas to focus on. Out of 24 case studies that were analysed, it was found that there
were as many as 16 corporates focussing on 3-5 thematic areas and remaining eight stuck to six
or more thematic areas. In terms of the area focus, environment garnered the maximum attention from
corporates while women empowerment and poverty alleviation were neglected areas with minimal
corporates focusing on the same.
3. It was observed that for 37 percent corporates, the Corporate social responsibility initiative is
being implemented through a well-structured separated Foundation. Among 58 percent corporates
there is a separate corporate social responsibility department that takes care of the activities to be
implemented.
4. The importance of building strong public-private partnerships as well as working closely with
NGOs as implementation partners is being increasingly realised by corporates. It has been observed
that 58 percent of the corporates within the surveyed sample partnered with the government
departments. The number is higher for the engagement with NGOs, where approximately 67 percent
corporates have formed linkages. Twenty-one percent corporates were working in partnership with
multilateral or bilateral organisations.
5. Stakeholder engagement has become one of the important aspects of corporate social
responsibility practices, though, there are different sets of stakeholders that can be taken into account
while implementing corporate social responsibility.
The World Business Council for Sustainable Human Development has noted that a coherent
corporate social responsibility strategy based on integrity, sound values and a long-term approach
offers clear business benefits to companies and contributes to the well-being of society. As companies
move forward to design a corporate social responsibility strategy that provides the intended leverage
point as intended, key success factors for it to move to a state of sustainable human development
resourcing are:
 Focusing on priorities.
 Allocating finance for treating corporate social responsibility as an investment from which
returns are expected.
 Optimising available and expected resource by ensuring that efforts are not duplicated and
existing services are strengthened and supplemented.
 Monitoring activities and liaising closely with implementation partners such as NGOs to ensure
that initiatives really deliver the desired outcomes through participative development.
 Reporting performance in an open and transparent way so that, all can celebrate progress and
identify areas for further action.
CASE STUDIES IN HUMAN DEVELOPMENT RESOURCING:
1. AMBUJA CEMENTS LIMITED:
Thematic Areas: Poverty Reduction, Reducing Child Mortality, HIV/AIDS, Education and
Environment
Case Study:
Ambuja Cements Ltd. established a foundation, called the Ambuja Cement Foundation in 1993.
With its cement plants being situated in the rural areas, the company realised the need to address
the needs of the rural people. These people formed direct or indirect stakeholders of the Company
and therefore were important for the company’s sustainability. Consequently, the ACF’s focus has
been on integrated rural development programmes. The Foundation works with the mission to “energise,
involve and enable communities to realise their potential”.
It upholds as its guiding light the parent company’s core values and alongside pays due attention
to international trends in social development, expressed through guidelines like the millennium
developmental goals. poverty alleviation, achieving universal primary education, reducing child mortality,
improving maternal health, combating HIV/AIDS and ensuring environmental sustainability is all integral
to the work of the company and its Foundation.
The Foundation in each location begins by working at the micro level in a small way with the
villages impacted by the company’s operations and gradually over time as partnerships develop
expands its area and scope of work. The Foundation at present reaches out to over 1.2 million people
in about 670 villages spread across ten states in India. The large chunk of work of the Foundation
is carried out by a team of well-trained and experienced professionals.
2. APOLLO TYRES LIMITED:

Thematic Areas: Health
Case Study: HIV-AIDS Programme in Apollo Tyres Ltd.
Background:
Apollo started its fight against HIV-AIDS in a project called Healthy Highways. The project was in
partnership with DFID and started in Sanjay Gandhi Transport Nagar in the year 2000.Today Apollo has
a comprehensive programme on HIV-AIDS focussing on its employees, customers and supply chain.
The programme focus is on building awareness and prevention aspect of the epidemic. The
approach is to forge strategic tie-ups with organisations, which bring the technical skills and capacity
building aspects into the partnership.
Apollo Tyres Health Care Centres:
Apollo Tyres Health Care Centres are targeted interventions for truckers. The location for clinics
is identified on the HIV prevalence, density of trucking and mobile population and the current level
of work being done by other organisations in the area. Currently, the company has 7 clinics running
in North, West and South of India. All clinics are strategically located in transport nagars. They are
positioned as general health clinics to avoid stigma attached to HIV-AIDS, however the focus of the
services provided is on HIV-AIDS. The main components of the programme are:
(A) Behaviour Change Communication (BCC):
The communication is directed at increasing awareness regarding the basics of HIV/AIDS. The
communication addresses the modes of transmission, myths regarding HIV, connection between sexually
transmitted diseases and HIV through one-to-one and one-to-group interactions.
(B) Peer Educators:
Building an effective peer educator network is the most important link of the entire programme.
The peer educators become imperative given the geographical spread of the transport nagars and the
mobile nature of the population.
(C) Condom Promotion:
Condom promotion takes place through free distribution as well as social marketing of condoms.
These condoms are available at various outlets and strategic points within the transport nagars. Also
the out reach workers and the peer educators emphsise and educate the target audience on the
correct usage and disposal of condoms.
3. BHARAT PETROLEUM CORPORATION LIMITED:
Thematic Areas: Health, Education, Infrastructure, Income Generation, Vocational Guidance,
Livelihood and Environment and Conservation.
Case Study: Community Development at village ‘Ramthenga’, Jajpur Dist, Orissa.
Objectives of the Project:
 To help the village become socially conscious.
 To improve the general health of the villagers.
 To improve community participation.

 To help them become self-reliant.
This village is dominated by the tribal population – ‘Santhal Tribe’. Their socio-economic status
was highly impoverished. Most of the villagers worked in the neighbouring mines. Due to prolonged
and non-conducive working environment, they had developed severe respiratory/skin infections. The
children did not attend any school and the nutrition status of the children was very poor. There was
also a severe problem of alcohol abuse amongst the men. The women were suppressed and worked
in the farm as well as in the mines. Lack of availability of water was also one of the main concerns
of the villagers. There were bore wells but they were non-functional.
Major interventions were required in the area were:
 Health.
 Education.
 Awareness about health/ sanitation/ hazards of working in the mines.
 Precautions to prevent respiratory illness.
 Making water available.
Having understood the need of the community, BPCL constituted a team to implement the work
in the community.
The main participants in the project were:
 Villagers
 NGO partner – Research Analysis Consultants
 BPCL LPG team based in Bhuvaneshwar and Khurda headed by TM Khurda
 BPCL Human Resource Team at Kolkatta headed by Human Resource Chief and corporate
social responsibility co-ordinator.
 BPCL Corporate Social Responsibility Team headed by GM (Admin).
4. MAHINDRA GROUP OF COMPANIES:
Corporate Social Responsibility in human develpment resourcing has always been an integral
part of the Mahindra Group’s vision and the cornerstone of Core Value of Good Corporate Citizenship.
The Mahindra Group defines corporate social responsibility as making socially responsible
products, engaging in socially responsible employee relations and making a commitment to the
community around it. At the Mahindra Group, corporate social responsibility is not just a duty; it’s a
way of life. In 2005, the Group celebrated its 60th anniversary by renewing its commitment to
Corporate social responsibility. It pledged to dedicate 1% of its profit (after tax), on a continuous basis
towards Corporate Social Responsibility. A unique kind of ESOPs - Employee Social Options were
launched to enable Mahindra employees to involve themselves in socially responsible activities of
their choice. The Group also announced a special gift: to provide free cochlear implants to 60
profoundly hearing-impaired, under-privileged children. In addition to giving impetus to the Nanhi Kali
project for the girl child and the Mahindra All India Talent Scholarship for the economically
disadvantaged, the Mahindra Group is planning to set up two Mahindra Pride Schools. These schools
will offer a variety of courses, with an emphasis on employability, including training for Information
Technology, Retail, and Automotive Engineering etc. They will provide new skills and capabilities to
the weaker sections of society, particularly the scheduled castes and scheduled tribe youth. While
these projects are already underway, plans for more social initiatives are on the anvil.
5. MOSER BAER:
Corporate Social Responsibility Policy:
At Moser Baer, we believe that Corporate Social Responsibility is the way to conduct business that
achieves a balance or integration of economic, environmental and social imperatives while at the same
time addressing stakeholder expectations. Under its corporate social responsibility policy, the company
affirms its commitment of seamless integration of marketplace, workplace, and environment and
community concerns with business operations. Moser Baer uses corporate social responsibility as an
integral business process in order to support sustainable development and constantly endeavors to be
a good corporate citizen and enhance its performance on the triple bottom line.
Corporate Social Responsibility Mission:
Whilst being committed to excellence and total customer satisfaction through team work, ceaseless
innovation and timely delivery of quality products of international standards, we recognize our
responsibilities towards social and environmental dimensions of our business and thus, aim to visibly
play a leading role within our spheres of influence.
We will strive to be a leader while continuing our business in a socially and environmentally
responsible manner. We affirm our commitment to contribute to nation building measures through
improving quality of life of our workforce, their families and the communities of the area we exist and
beyond.
The Structure:
1. Community Development vehicle, Moser Baer Trust is headed by Corporate Social Responsibility
Head of Moser Baer.
2. Trustees are senior leaders from the company.
3. Functional scorecard and KRAs align initiatives with company’s strategic objectives.
4. Regular board level reporting to Corporate Social Responsibility Committee.
5. Programmes evolved after stakeholder dialogue and have independent budget, action plans
and targets.
6. Community programmes designed to meet Millennium Development Goals (MDGs) in MBIL’s
sphere of operations as contribution to nation building.
6. INFOSYS TECHNOLOGIES:
Corporate Social Responsibility:
At Infosys, the distribution of wealth is as important as its legal and ethical creation. A strong
sense of social responsibility is therefore, an integral part of our value system.
Infosys Foundation:
We are committed to contributing to the society and established Infosys Foundation in 1996 as
a not-for-profit trust to support our social initiatives. The Foundation supports programmes and
organizations devoted to the cause of the destitute, the rural poor, the mentally challenged, and the
economically disadvantaged sections of the society.
The Foundation also helps preserve certain cultural forms and dying arts of India. Grants to the
Foundation aggregated Rs. 19 crore during the fiscal year 2007, as compared to Rs. 13 crore in the
previous year.
Community Service:
Through the ‘Computers Classrooms’ initiative launched in January 1999, Infosys donated 2,567
computers to various institutions across India. Additionally, they have applied to the relevant authorities
for permission to donate computers to educational institutions on an ongoing basis in the future.
Microsoft Corporation continues to participate in this initiative by donating relevant software.
Social Commitment in Education:
Infosy’s Education & Research group has the pride of anchoring the Infosys Extension Programme
(IEP), which consists of the Infosys Fellowship Programme, Rural Reach Programme, Catch Them
Young and Train the Trainer.
SIMPLY SPEAKING…
Leading a long and healthy life, being able to gain knowledge and having enough means
to be able to live a decent life are the most important aspects of human development resourcing.
Media
Shareholder
Society Local
Community
Marketplace
Financial
Human
Analysts Development
Resourcing Unions
Workplace
NGOs Environment
Employees
Goverment
Suppliers
The figure shows the beneficiaries in the Participative Model of Human Development Resorucing
Therefore, access to resource, health and education are the key areas in human
development resourcing. Suitable indicators have been developed to measure each of these
aspects. Very often, people do not have the capability and freedom to make even basic choices.
This may be due to their inability to acquire knowledge, their material poverty, social
discrimination, inefficiency of institutions and other reasons. This prevents them from leading
healthy lives, being able to get educated or to have the means to live a decent life.
Just as any building is supported by pillars, the idea of human development resourcing is
supported by the concepts of equity, sustainability, productivity and empowerment. Corporate
Social Responsibility has to move from image building exercise to a more meaningful concept
of Sustainable Human Development Resourcing to maximise the gains of participative
management and implementation of Human Development Resourcing.
EXERCISE FOR PRACTICE

1. Define the concept ‘Turnaround’. What is Human Resource Turnaround? Explain in details with examples.
2. What is the meaning of ‘Holistic Approach’ to Human Resource Management?
3. Why do we need Human Resource Turnaround? What are the various compulsions for seeking Human
Resource Turnaround?
4. Why are Human Resource professionals not business driven? What are their compulsions? Explain in
details citing the excerpts from the case study of ‘Geeta Kapur & Manish Puri’.
5. What went wrong between Geeta Kapur and Manish Puri? Do you think Geeta Kapur did not possess
adequate Human Resource skills and competencies to handle Manish Puri? Who comes across as the
winner in the end? Cite excerpts from the case study in support of your answer.
6. If you are ‘Geeta Kapur’, how would you handle Manish Puri? Re-wtite your conversation with Manish Puri.
7. Why is Human Resource at crossroads? Have the Human Resource People lost their art of diagnosis in
handling and managing people?
8. Why is Human Resource function generally taken for granted? Why do people feel that “there is nothing great
in Human Resource ” and “anyone from top to bottom in the hierarchy can manage Human Resource ”?
9. What is the meaning of Global Human Resource Management? Do, as human resource processionals, we
need “Global Human Resource Competency? Are we ready for this competitive advantage?
10. Why did Simranjeet Singh, Chairman and Managing Director of Perfumes & Petals India Limited involve
VP-Human Resource Ritu Sanyal in merger and acquisition second deal? Why Ritu Sanyal succeeded in
finalising the deal? How the company benefited by involvement of Ritu Sanyal?
11. What approach was adopted by Ritu Sanyal in dealing with second merger and acquisition deal?
12. “Pick good people and set the right priorities”. In what context did Lee Iacocca make this statement?
13. Explain the concept of ‘“Get, Keep, Grow”. Who is the originator of this concept and in what context did
he make this statement?
14. How did Dabur India achieve painless restructuring? What were the benefits of the organizational restructuring?
15. Do you agree that Human Resource needs transformation of image to be business driven, if Human
Resource Strategic planning has to succeed?
16. What are the various paradigm shifts for Human Resource professionals? Explain in details.
17. Write your plan of action the way you would like to transform your Human Resource department to profit
centre or strategic business unit (SBU).
18. What is globalisation? Do you think that Human Resource is really going global because everyone talks
about global Human Resource competencies? Explain it with examples.

BASICS OF HUMAN
2 RESOURCE
PLANNING
HPH
After completion this chapter, the students will learn the following
topics:
 Philosophy of Human Resource Planning
 Definition of Human Resource Planning.
 Importance of Human Resource Planning.
 Need of Human Resource Planning.
 Objectives of Human Resource Planning.
 Scope and Benefits of Human Resource Planning
 Factors Affecting Human Resource Planning
 Tools of Human Resource Planning.
Basics of Human Resource Planning 41
CHAPTER TWO
BASICS OF HUMAN RESOURCE PLANNING:
LEVEL ONE PHILOSOPHY OF HUMAN RESOURCE PLANNING 42 – 45

LEVEL TWO: IMPORTANCE - DEFINITIONS - NEEDS - OBJECTIVES - SCOPE 46 – 52
AND BENEFITS OF HUMAN RESOURCE PLANNING
LEVEL THREE: THE FACTORS AFFECTING HUMAN RESOURCE PLANNING 53 – 54
LEVEL FOUR: HUMAN RESOURCE PLANNING TOOLS 55 – 57
LEVEL ONE
PHILOSOPHY OF HUMAN RESOURCE PLANNING
1. HUMAN RESOURCE PERCEPTIONS ARE IMPORTANT BUT IT IS NECESSARY TO

ALIGN THESE WITH THE CORPORATE GOALS AND STRATEGIC MANAGEMENT:
“Human Resource is like carpentering “, Suresh Oberoi, Senior General Manager-Human
Resource of Alternate Energy Group of Companies told Vinay Malhotra.”You are absolutely correct,
Suresh. We are not using any functional expertise in this recruitment drive; our role here is similar
to that of a …” added Vinay with sarcasm. Vinay is the Vice-President – Human resource with
Navjivan Pharma since 5 years. “I agree with both of you. Human Resource is always treated as a
stepchild by the top management, they don’t take us seriously and the middle and the junior management
staff don’t confide in us” said Amrish Punewalla, a senior Vice-President-Human resource with D K
Constructions Limited.
“You are right to an extent but things are changing. The corporate world has started building
Human Resource as the core function to take care and control human assets without whom the
organization cannot grow and generate revenue” said Nirmoy Dasgupta, Vice-President – Human
resource with Bollywood Software Technologies “I am sure that all of us shall observe a vast change
in the attitude of Corporate India accepting Human resource as a mainstream function rather than a
mere back office department in the next couple of years” he added further.
Four senior Human resource professionals, four interesting perspective and in four different
contexts. Perceptions help in building values for Human Resource Planning Philosophy.
2. MAKING IT HAPPEN:
What is the basic ‘’philosophy’’ that underlines the domain of Human Resources and Human
Resource Planning? Is it a clearly defined and commonly accepted philosophy? If not, can we derive
some sort of ‘emergent philosophy’ from the way the craft of Human Resource is practiced? How has
this philosophy been evolving?
3. ONLY TEN PERCENT MANAGERS ARE COMMITTED: BRUCH AND SUMANTRA

GHOSHAL:
Heike Bruch and Sumantra Ghoshal explains this admirably in a Harvard Business Review
article (February 2002) which places managers in four compartments, depending on the ‘focus’ and
the ‘energy’ they bring to their tasks. The manager with high focus and low energy is described as
‘disengaged’ whose lack of commitment means loss of effectiveness. The manager with low focus
and low energy is a ‘procrastinator’, who puts off until tomorrow what should be done today - and
tomorrow, all too often, never comes.
The high-energy, low-focus type is ‘distracted’. This is the manager who throws himself into
Pareto’s 80% of time-wasters. But Bruch and Ghoshal’s research has a painful message. These three
ineffective types are in an overwhelming majority: they account for 90% of all the managers studied.
That leaves a tiny tenth of the managerial workforce whose high energy and focus make them
‘purposeful’ people, who are committed activists - ‘making it happen’.
4. REVENUE, COST & QUALITY: ONE SONG ONE DESTINATION:

In the final analysis, management comes down to three simple words: REVENUES, COSTS,
QUALITY. The purpose of any manager must surely include raising revenues, reducing costs per unit
of output, and notably improving the quality of internal processes and external perceptions. Get these
three right, and much else will fall neatly into place. The RCQ formula is essentially simple, but it does
involve asking some penetrating questions and getting answers which imply and demand action:
1. Do you have a business plan to raise revenues, reduce costs and improve quality? YES/NO.
If not, do you want one? YES/NO
2. Do you know why your customers choose to buy from you, rather than from anybody else?
YES/NO. If not, would you like to? YES/NO
3. Do you know what percentage of the customers you had a year ago still buy from you today?
YES/NO. If not, would you like to? YES/NO
4. Do you have plans to enter new markets, either in new regions or new product lines? YES/NO.
If not, do you want to? YES/NO.
5. Do you know whether your profit margins are rising, static or falling? YES/NO. If yes, do you
have plans to increase them? YES/NO.
6. Do you know how your costs compare with best practice by competitors and others? YES/NO.
If not, would you like to? YES/NO
7. Do you know which 20% of activities account for 80% of your direct costs? YES/NO. If yes,
do you concentrate on making them lower? YES/NO.
8. Do you know how many of your customers regard your goods and/or services as good or
excellent? YES/NO if not, would you like to? YES/NO.
9. Do you know which of your critical processes could be speeded up and made more cost-
effective? YES/NO. If not, would you like to? YES/NO.
10. Do you plan to introduce new or radically improved goods/services over the next year? YES/
NO. If not, do you want to? YES/NO
With this knowledge, you can plan your activities so that the balance shifts decisively towards
the purposes to which you are now committed. Again, there are four simple questions, adapted from
a well-known Peter Drucker catechism:
1. What is my purpose?
2. What am I doing to achieve that purpose that can only be done by me?
3. What am I doing that can be done by others?
4. What am I doing that need not be done at all?
You obviously delegate (3), scrap (4) and concentrate on (2). That will accomplish less than you
need, however, unless you can also fully identify your delegates and other colleagues with your
purpose.
5. POWER OF CHALLENGE AND CHOICE: THE CASE OF LUFTHANSA AIRLINES

TURNAROUND:
Bruch and Ghoshal emphasise the power of ‘challenge and choice’ in achieving this outcome.
Lufthansa is their case in point. The airline was heading for a financial crash in 1992. The CEO called
in 20 senior managers, admitted that he had no solution, and gave them three days to develop ways
to save Lufthansa. If they determined that it could not be saved, then he would accept bankruptcy.
Once initial shock had been absorbed, the managers quickly formed ambitious purposes, adopted 130
proposals for radical change (of which 70% were enacted), and turned Lufthansa round from loss to
profit.
6. CONGRUENCE OF STATED & ACTUAL VALUES:

We also have to be mindful of the possible conflict between the stated Human Resource Planning
philosophy in an organization and the ‘actual’ Human Resource philosophy practiced in the organization.
What really matters is the Human Resource Planning philosophy (basic assumptions about HRP) that
emerges can be inferred from (or gets reflected in) in the decisions made by the organization.
It will be both tragic and comic situation if an organization says that ‘people are our greatest
assets/people are our main source of competitive advantage’ and at the same time practices ‘downsizing’
and/or ‘cutting employee benefits and training’ as the first response (instinctive response) to any
business downturn. There is no better way to create mistrust and cynicism in the organization. The
same holds good at the level of managers also. Managers represent/symbolize the ‘organization’ to
the employees and the real ‘Human Resource Planning philosophy’ of the organization (as perceived
by the employees) is the one that gets reflected in the behaviours of (or in decisions made by) the
managers. Though, we can’t over emphasize the need for congruence between the ‘articulated Human
Resource Planning philosophy’ and the ‘Human Resource Planning philosophy in practice’ but it
cannot be ignored.
7. EFFECTIVE MANAGEMENT OF PEOPLE:

Human Resource Planning is an expression of this philosophy in the most important area of all,
the effective employment of people. The changes and pressures brought about by economic,
technological and social factors compel organizations of all kinds to study the costs and human
aspects of labour much more seriously and carefully than ever before.
8. EMERGENCE OF KNOWLEDGE WORKER:

Fundamentally the market has changed. The methods and the techniques of doing and managing
business have undergone a paradigm shift. It is world of the knowledge worker. The rise of the
intellect has been imminent. Human Resource Planning no longer can confine itself to the traditional
sources for hiring and retaining. The skills of yesterday are neither available and nor are these being
sought after by the new generation.
9. EMERGING WORLD OF THINKER DOER:

The human resources of today see their roles having changed from that of a doer to that of a
thinker and in most occasions’ thinker doer. Organizations in contrast have continued to nurture and
retain a set of human resource that have become more redundant than ever before.
S IM PL Y S PE A KI NG …
1. Philosophy is the study of general problems concerning matters such as existence,
knowledge, truth, beauty, law, justice, validity, mind, and language. Philosophy is
distinguished from other ways of addressing these questions (such as mysticism or
mythology) by its critical, generally systematic approach and its reliance on reasoned
argument.
2. Philosophy is:
(a) the attempt to acquire knowledge (distinguishes philosophy from creative disciplines
such as literature or music)
(b) by rational means (distinguishes philosophy from mysticism and some varieties of
religion)
(c) about topics that do not seem amenable to empirical investigation (distinguishes
philosophy from the empirical sciences)
3. The ‘philosophy of Human Resource Planning in a specific organization context shapes
the way the employees are managed in that organization.
4. Lack of a clearly articulated and understood ‘Philosophy of Human Resource’ can make
the organization susceptible to ‘taking up the latest fad in people management and
discarding it soon after to take up the next one’. It can also result in highly inconsistent
attitudes/practices in managing the employees. This can cause a lot of avoidable confusion.
5. Logically speaking, philosophy of Human Resource Planning of an organization should
be closely linked to (or even derived from) the core values of the organization.
6. Human Resource perceptions are important but it is necessary all these align with the
achievement of corporate goals and strategic management policies and practices.
7. In the final analysis, management comes down to three simple words: REVENUES,
COSTS, QUALITY. The purposes of a Human Resource Planning Philosophy must
include raising revenues, reducing costs per unit of output, and notably improving the
quality of internal processes and external perceptions
8. We also have to be mindful of the possible conflict between the stated Human Resource
Planning philosophy in an organization and the ‘actual’ Human Resource philosophy
practiced in the organization. What really matters is the Human Resource Planning
philosophy (basic assumptions about HRP) that emerges can be inferred from (or gets
reflected in) in the decisions made by the organization.
9. Human Resource Planning Philosophy must ingrain an all time value: Effective management
of people.
10 Fundamentally, the market has changed. The methods and the techniques of doing and
managing business have undergone a paradigm shift. It is world of the knowledge
worker. The rise of the intellect has been imminent. Human Resource Planning Philosophy
must inculcate it as a value addition in its tenets.
LEVEL TWO
IMPORTANCE - DEFINITIONS - NEEDS - OBJECTIVES SCOPE

AND BENEFITS OF HUMAN RESOURCE PLANNING
A. IMPORTANCE OF HUMAN RESOURCE PLANNING:

1. Human Resource Planning is a Continuous Process....
Human Resource Planning is a continuous processes by which management ensures that it
has the right personnel, who are capable of completing those tasks that help the organization,
reache its objectives.
2. Human Resource Planning Links People to Company’s Mission, Vision, Goals
and Objectives:
Rigorous Human Resource Planning links people management to the organization’s mission,
vision, goals and objectives, as well as its strategic plan and budgetary resources.
3. Human Resource Planning is Forward Looking Process:
Human resource planning is a forward-looking function. It occupies a pivotal place in successful
human resource management programme. It ensures that people are available to extend their
willing hands towards the development endeavours of an organization.
4. Human Resource Planning is Value Addition in Competition and Economic
Downturn:
In the times of great economic turbulence, the importance of human resource planning is more
apparent than ever. A short-sighted lay-off, intended to temporarily reduce overhead, can result
in much heavier long-term costs. We may regret letting people go when we are spending time
and money to hire and train new staff. Plus, we lose profits when we lose experienced,
knowledgeable and talented employees.
Increasing environmental instability, demographic shifts, changes in technology, and heightened
international competition are changing the need for and the nature of human resource planning
in several organizations in India and across the world.
In addition, organizations are realising that in order to adequately address human resource
concerns, they must develop long-term as well as short term solutions. As human resource
planners involve themselves in more programmes to serve the needs of the business, and even
influence the direction of the business, they face new increased responsibilities and challenges.
B. DEFINING HUMAN RESOURCE PLANNING:
1. Dale Beach: In “Developing Human Resource Planning”:
According to Dale S. Beach. “Human resource planning is a process of determining and
assuring that the organization will have an adequate number of qualified persons, available at
proper times, performing jobs which meet the needs of the enterprise and which provide
satisfaction for the individuals involved.”
2. Brian O Neil: In “Strategic Human Resource Planning”:

Human Resource Planning defines project roles, responsibilities, and reporting relationships.
One key result of Human Resource Planning is the staffing management plan which depicts
how and when team members are added to the team, and how the team members are released
from the project, the training needs of the team and several other key components.
3. Maria Stacey Lidstone: In “ Strategic Business Development”:
Human resource planning is the process of analysing and identifying the needs for and
availability of human resources so that the organization can reach its objectives. Both employee
retention and attracting new talent make human resource planning a core competency for
creating an organization’s successful future. By linking human resource planning to company’s
strategic goals, human resource team ensures the organization’s competitive advantage.
4. Bohlander & Snell: In “Managing Human Resources”:
It is a process of anticipating and making provision for the movement (flow) of people into, within,
and out of an organization.
5. Paul Turner: In “Human Resource Forecasting & Planning”:
The output that arises from the process of business or organizational strategy–setting as it
affects the people in an organization. It contains quantitative analysis of human resource data
ranging from headcount and costs to qualitative analysis about culture, learning and knowledge
management. The human resources planning is a dynamic entity that can be changed if
turbulence or unpredicted extraneous factors affect the business strategy. Human Resource
Plan takes the decisions made at the strategic and forecasting level and develops them into a
series of co-coordinated business plans.
The Human Resource Plan
Organization Resourcing Training & Quantified Reward Employee
Design & Plan Development Resource Plan Relation
Plan Plan Plan Development
6. Coleman Peterson: In “ Human Resource Planning”:

Human Resource Planning is the process of determining human resource requirements and the
means for meeting those requirements in order to carry out the integrated plan of the organization.
7. Stainer G & Heinemann: In “Manpower Planning”:
Human Resource Planning is the strategy for acquisition, utilization, improvement and preservation
of an enterprise’s human resources. It relates to establishing the quantitative requirements of
jobs determining the number of personnel required and developing sources of manpower.
8. Edward Bernsky: In “Role of Human Resources Planning in Talent Search”:
Human Resoureces Planning can be defined as the task of assessing and anticipating the skill,
knowledge and labour time requirements of the organization, and initiating action to fulfil or
‘source” those requirements. Thus, if the organization as a whole or one of its subsystem is not
performing to the benchmark, in other words, it is declining, it may need to plan a reduction or
redeploys its existing labour force. On the other hand, if it is growing or diversifying, it might need
to find and tap into a source of suitably skilled labour.
9. Gordon McBeath: In “The Hand of Human Resources Planning” (1992):

Human Resource Planning involves two stages. The first stage is concerned with the detailed
“planning of manpower requirements for all types and levels of employees throughout the period
of the plan”, and the second state is concerned with “planning of manpower supplies to provide
the organization with the right types of people from all sources to meet the planned requirements.”
10. Velter Eric: In “Human Resources Planning” (1994):
“Human Resource Planning or manpower planning is the process by which management
determines how an organization should move from its current manpower position to its desired
manpower position. Through planning, management strives to have the right number and the
right kind of people at the right place, at the right time, to do things which result in, both, the
organization and the individual receiving the maximum long-range benefit.”
11. Perm & Kandola: In “Job Analysis A Manager’s Guide”:
Human Resource Planning is a process by which an organization prepares an inventory of
skills and potential available in the organization. It involves the use of the concept of planning
to visualize how the organization can go through the allocation and control its manpower
resources in better fashion. In other words, it is a tool in the hands of higher management to
equip themselves with the necessary data on human resources available immediately within the
organization and from outside.
12. Robert Mathis & John Jackson: In”Strategic Human Resources Management
& Planning”:
Human Resource Planning is the process of analysing and identifying the need for and
availability of human resources so that the organization can meet its objectives.
13. Jarrell D.W: In “Human Resource Planning”:
Human Resource Planning is defined as the “process of assessing an organization’s human
resources needs in the light of organizational goals and changing condition and making plans
to ensure that a competent, stable workforce is employed. The actual planning process will vary
a great deal from organization to organization”.
Human resource planning is the process by which an organization ensures that it has the
right number and kind of people, at the right places, at the right time, capable of effectively
and efficiently completing those tasks that will help the organization to achieve its overall
objectives.
C. OBJECTIVE, PURPOSE & SCOPE OF HUMAN RESOURCE PLANNING:

1. Forecast Personnel Requrements:
Human Resource Planning is essential to determine the future manpower needs in an organization.
In the absence of such a plan, it would be difficult to have the services of right kind of people
at the right time.
2. Cope with Changes:
Human Resource planning is required to cope with changes in market conditions, technology,
products and government regulations in an effective way. These changes may often require the
services of people with the requisite technical knowledge and training. In the absence of a
Human Resource Plan, we may not be in a position to enlist their services in time.
3. Use Existing Manpower Productively:
By keeping an inventory of existing personnel in an enterprise by skill, level, training, educational
qualifications, work experience; it will be possible to utilize the existing resources more usefully
in relation to the job requirements. This also helps in decreasing wage and salary costs in the
long run.
4. Promote Employees in a Systematic Manner:
Human Resource Planning provides useful information on the basis of which management
decides on the promotion of eligible personnel in the organization. In the absence of a Human
Resource Plan, it may be difficult to ensure regular promotions to competent people on a
justifiable basis.
5. Identifies Forecast Demand:
Human Resource Planning Identifies the Human Resource needs of the organization based on
strategic goals (forecasting workforce demand).
6. Forcast Supply:
Helps us to understand the talent that we already have and become familiar with the talent we
need (forecasting workforce supply).
7. Identifies Supply Market:
Make sure we are up-to-date on labour market, e.g. the talent that is available to us now and
in the future (forecasting workforce supply).
8. Helps Creating, Modifying and Recasting Human Resource Policies, Procedures
and Practices:
Help us to create or modify human resource policies, procedures and practices to align the
demand and supply of human resouce talent in the organization.
9. Provides Right People with Right Capabilities at Right Time and at Right
Place:
Effective
HR Planning
Right Right Right Right

People Capabilities Time Place
D. BENEFITS OF HUMAN RESOURCE PLANNING:

Effective Human Resource Planning provides adequate lead time for the procurement and training
of employees. It is all the more crucial because the lead time for procuring personnel is a time
consuming process and in certain cases, one may not always get the requisite type of personnel
needed for the job.
Non-availability of suitable manpower may result in postponement of delays in executing new
projects and expansion programmes, which ultimately lead to lower efficiency and productivity. To
overcome this, an organization must plan out its manpower requirements well in advance, so that it
can compete effectively with its competitors in the market.
1. Determining the Numbers to be Employed at a new Location:
If organisations overdo the size of their workforce it will carry surplus or underutilised staff.
Alternatively, if the opposite misjudgment is made, staff may be overstretched, making it hard or
impossible to meet production or service deadlines at the quality level expected. So the questions we
ask are:
1. How can output be improved through our understanding the interrelation between productivity,
work organisation and technological development? What does this mean for staff members?
2. What techniques can be used to establish workforce requirements?
3. Have more flexible work arrangements been considered?
4. How are the staff we need to be acquired?
The principles can be applied to any exercise to define workforce requirements, whether it be a
business start-up, a relocation, or the opening of new factory or office.
2. Retaining Highly Skilled Staff:
Issues about retention may not have been to the fore in recent years, but all it needs is for organisations
to lose key staff to realise that an understanding of the pattern of resignation is needed. Thus organisations
should:
1. Monitor the extent of resignation.
2. Discover the reasons for it.
3. Establish what it is costing the organisation.
4. Compare loss rates with other similar organisations.
Without this understanding, management may be unaware of how many good quality staff are
being lost. This will cost the organisation directly through the bill for separation, recruitment and
induction, but also through a loss of long-term capability.
Having understood the nature and extent of resignation steps can be taken to rectify the situation.
These may be relatively cheap and simple solutions once the reasons for the departure of employees
have been identified. But it will depend on whether the problem is peculiar to one organisation, and
whether it is concentrated in particular groups (e.g., by age, gender, grade or skill).
3. Managing an Effective Downsizing Programme :
This is an all too common issue for managers. How is the workforce to be cut painlessly, while
at the same time protecting the long-term interests of the organisation? Human resources planning
helps by considering:
1. The sort of workforce envisaged at the end of the exercise.

2. The pros and cons of the different routes to get there.
3. How the nature and extent of wastage will change during the run-down?
4. The utility of retraining, redeployment and transfers.
5. What the appropriate recruitment levels might be?
6. An analysis can be presented to senior managers so that the cost benefit of various methods
of reduction can be assessed, and the time taken to meet targets established.
If a CEO announces on day one that there will be no compulsory redundancies and voluntary
severance is open to all staff, the danger is that an unbalanced workforce will result, reflecting the
take-up of the severance offer. It is often difficult and expensive to replace lost quality and experience.
4. Where will the Next Generation of Managers Come From?:
Many managers are troubled by this issue. They have seen traditional career paths disappear.
They have had to bring in senior staff from elsewhere. But they recognise that while this may have
dealt with a short-term skills shortage, it has not solved the long term question of managerial supply:
what sort, how many, and where will they come from? To address these questions, we need to
understand:
1. The present career system (including patterns of promotion and movement, of recruitment and
wastage).
2. The characteristics of those who currently occupy senior positions.
3. The organisation’s future supply of talent.
4. This then can be compared with future requirements, in number and type. These will of course
be affected by internal structural changes and external business or political changes. Comparing
your current supply to this revised demand will show surpluses and shortages which will allow
you to take corrective action such as:
a. Recruiting to meet a shortage of those with senior management potential.
b. Allowing faster promotion to fill immediate gaps.
c. Developing cross functional transfers for high fliers.
d. Hiring on fixed-term contracts to meet short-term skills/experience deficits.
e. Reducing staff numbers to remove blockages or forthcoming surpluses.
Thus, appropriate recruitment, deployment and severance policies can be pursued to meet
business needs. Otherwise processes are likely to be haphazard and inconsistent. The wrong
sort of staff are engaged at the wrong time on the wrong contract. It is expensive and
embarrassing to put such matters right. Human Resource Planning is an important tool of
human resources management as it helps in the following ways:
1. Manpower planning results in reduced labour costs as it helps management to anticipate
shortages and/or surpluses of manpower and correct these imbalances before they
become unmanageable and expensive.
2. It is a better basis for planning employee development that is designed to make optimum
use of workers’ skills within organization.
3. It enables indemnification of the gaps of the existing manpower so that corrective
training could be imparted. Thus, the training programme becomes more effective.
4. It leads to improvement in the overall business planning process.
5. It helps in formulating managerial succession plan as a part of the replacement planning
process which is necessitated when job-change plans for managers are formulated.
Besides this exercise would provide enough lead-time for identifying and developing
managers to move up the corporate ladder.
6. It leads to a greater awareness of the importance of sound manpower management
throughout the organization.
7. It serves as a tool to evaluate the effect of alternative manpower actions and policies.
LEVEL THREE
THE FACTORS AFFECTING HUMAN RESOURCE PLANNING

Human Resource Planning is influenced by several considerations. The more important of them
are:
1. Type and strategy of organization.
2. Environmental uncertainties.
3. Time horizons.
4. Type and quality of forecasting information.
5. Sufficient Lead time to recruit.
6. Outsourcing.
7. Manpower Planning methods.
1. Types and Strategy of Organization:
The type of organization is an important consideration because it determines the production
processes involved, number and type of staff needed and the supervisory and managerial
personnel required. Manufacturing organizations are more complex than those that render
services in this respect.
The strategic plan of the organization defines the organization’s human resource needs. For
example, a strategy of internal growth means that additional employees must be hired.
Acquisitions or layoffs, since mergers tend to create duplicate or overlapping positions that can
be handled more efficiently with fewer employees.
2. Environmental Uncentainties:
Human resource managers rarely have the privilege of operating in a stable and predictable
environment. Political, social and economic changes affect all organizations. Personnel and
human resource planners deal with environmental uncertainties by carefully formulating recruitment,
selection, training and development policies and programmes. Balancing mechanisms are built
into the human resource management programme through succession planning, promotion
channels, layoff, flexi time, job sharing, retirement and other personnel related issues.
3. Time Horizons:
Yet another major factor affecting human resource planning is the time horizon. On one hand
there are short-term plans spanning six months to one year. On other hand, there are long-term
plans spread over three to twenty years. The exact time span, however, depends on the degree
of uncertainty prevailing in an organization’s environment. For companies operating in an
unstable environment, plans must be for a short period. For others where environment is fairly
stable, plan may be longer. In general, the greater the uncertainty, the shorter the plan’s time
horizon and vice versa.
4. Type and Quality of Forecasting Information:
The information used to forecast personnel needs originates from a multitude of sources. A
major issue in Human Resource Planning is the type of information, which should be used in
making forecasts.
Closely related to the type of information is the quality of data used. The quality and accuracy
of information depend upon the clarity with which the organizational decision-makers have
defined their strategy, organization structure, budgets, production schedules and so forth. In
addition, the human resource department must maintain well-developed job-analysis information
and human resource information systems that provide accurate and timely data. Generally
speaking, organizations operating in stable environments are in a better position to obtain
higher-quality (comprehensive, timely and accurate) information because of longer planning
horizons, clearer definition of strategy and objectives, and fewer disruptions.
5. Sufficient Lead Time to Recruit:
Human resource planners must consider the nature of jobs being filled in the organization. Job
vacancies arise because of severances, promotions and expansion strategies.
It is easy to employ shop-floor workers but a lot of sourcing is necessary for hiring managerial
personnel. It is, therefore, necessary for the human resource department to anticipate vacancies,
as far in advance as possible, to provide sufficient lead time to ensure that suitable candidates
are recruited.
6. Outsourcing:
Several organizations outsource part of their work to outside parties either in the form of sub-
contracting or ancillarisation. Outsourcing is a regular feature both in the public sector as well
as in the private sector. Most organizations have surplus labour and they do not want to worsen
the problem by hiring more people. Hence, the need for off-loading. Some organizations are
known to carry the concept of outsourcing to ridiculous lengths and in the process, the regular
employees sit idle.
7. Manpower Planning Methods:
The four methods generally used to determine the requirements of personnel are:
1. Annual estimate of vacancies.
2. Long-range estimates of vacancies.
3. Fixed minimum manhour man specification requirements.
4. Specific position estimations.
1. The top management team and the directors must examine their organization structure
and its adequacy for the assigned functions as well as its adaptability for changes
anticipated in the near future. This analysis includes a review of the current vacancies
and probable future changes in the organization’s personnel.
2. For example, adequate forecasts of organizational changes can indicate the number of
executive positions, which will have to be filled as well as the duties and responsibilities
for such positions. From this, it can be ascertained the nature of training and development
required for the existing staff to fit these positions adequately. A crystallization of the job
requirements can help selection of persons who should participate in the management
development programme. In this way, human resource planning is helpful in both the
selection and developmental activities. It ensures that adequate persons are selected
well in advance so that they may be developed for the anticipated position openings to
ensure a smooth growth for the organization.
LEVEL FOUR
HUMAN RESOURCES PLANNING TOOLS

Human Resource Planning is a relatively traditional discipline. However the world of business is
changing rapidly and new tools are necessary if human resource is to meet these new challenges.
1. Corporate Head Count “Fat” Assessment Plan:
Ever wonder why the decision that we need layoffs seems to come up as a surprise? Why not
establish a set of assessment tools that will let us know in advance where head count and
overhead costs are excessive.
2. Redeployment/Agility Plans:
In this changing world it is not uncommon for new markets and products to open and close
rapidly. Companies need to have a strategy to remain agile and to be able to move people, and
resources rapidly from areas of low return to areas of a higher return.
3. “Smoke” Detectors (Predictors):
If human resource is to be proactive it needs to be able to anticipate problems. Developing
human resource systems and metrics known as “smoke detectors” that indicate potential
problems might give us sufficient time to develop plans and strategies to either avoid the
problem or minimize its impact.
4. Bench Strength Plan:
In this time of high turnover, it’s increasingly essential to have a strategy of identifying and
developing individuals that can take over if an employee leaves. A bench strength plan differs
from traditional succession planning in that it only covers replacing key jobs within a single
department. It is not a company-wide succession plan. Individual managers are held responsible
for developing at least one individual to fill every key job.
5. Employee Challenge Plan:
One of the primary reasons employees leave their jobs is due to a lack of challenge. Human
resource can dramatically increase retention rates if it gets managers to develop individual
“Challenge Plans” for each worker. The plan is reviewed each month to ensure that the
individual is constantly growing and feels challenged.
6. Retention Plan:
A retention plan is a corporate strategy to lower turnover. The first step is to identify key
performers and hard to fill positions. Individuals that may be “at risk” are identified. Individuals
or position-wide strategies are then developed to increase their retention rates. Additional efforts
are made to identify why people stay in their jobs and why people leave.
7. Quality of Labor Supply Forecasts:
Identifying the “quality” of the future labour supply is a medium term strategy based on the
assumption that the available labour force will not have the competencies and skills that our
company needs. Accurate forecasting will allow a company to prepare training and development
plans to upgrade the available talent. Adequate preparation will give us a competitive talent
advantage over our rivals.
8. Horizontal Progression Plan:

Because most companies have de-layered or eliminated many management positions there are
fewer opportunities for promotion to stimulate workers. As a result, companies need to develop
horizontal transfer and job rotation plans to ensure the continued development of both technical
and managerial skills among our top employees.
9. Work or Life Balance Supply/Demand Forecasts:
New hires, as well as our current workers are demanding an increasing array of benefits and
work life balance options. human resource needs to develop strategies to accurately assess
what those work life balance demands will be. It must also be able to forecast what percentage
of our work force will choose to participate in work life balance programmes like job sharing and
sabbaticals. This forecast will enable us to be prepared for the decreased amount of hours our
employees will be willing to put in.
10. Learning/Knowledge Plan:
Companies are becoming increasingly aware that a major competitive advantage occurs when
a company can rapidly acquire information/solutions and swiftly share them throughout the
company. Human Resource can help by assisting managers in developing individual and
corporate wide learning plans and strategies to increase our speed of learning and the application
of that knowledge within our company.
11. Skills/Competency Inventories:
In order to rapidly re-deploy resources and fill unexpected vacancies. Human Resource must
develop computerised skill or competency inventories. Such inventories allow us to “throw”
talent at a problem because we are aware of which individuals in our corporation have the
needed skill or experience to solve that problem. These inventories do not require people to
move between positions as they can also be used as sources for advice and benchmarking.
12. Interest Inventories:
To retain employees it is essential that we have a strategy for identifying and meeting the
changing needs of our people. By asking employees as to what projects they might like to work
on? What skills they would like to develop? And what individuals or teams would they like to
work with? Managers can develop strategies for increasing an employee excitement and
productivity levels.
13. Candidate Expectation (Offer-Acceptance Criteria) Forecast:
The increased number of job openings and the “unique” expectations of the current crop of
generation X and college hires makes it increasingly more difficult to get candidates to accept
an offer. By using focus groups and surveys companies can identify and forecast the unique
offer acceptance demands of it’s recruits. Accurate forecasts can give the company sufficient
time to develop the array of programmes and benefits that are increasingly essential to get a
candidate to say yes.
14. Human Resource Competitive Analysis:
As CEOs become increasingly aware of the value of strong human resource programmes
they’re demanding that each and every programme we offer is superior to that of our direct
competitors. This requires a side by side and programme by programme assessment on how
every human resource programme we currently have is superior to our competitors. In addition,
in order to continually improve, human resource must show an improvement each year in our
“this year to last years” comparison.
15. Bad Management Identification Programme:
One of the primary reasons that employees quit their jobs is the bad management practices.
Companies often thrown managers into their jobs with little training or preparation Through the
use of surveys, 360 degree assessments and interviews companies can identify “bad managers”.
The organization can then develop strategies for fixing these managers, transferring them back
to more technical jobs or for releasing them. Because managers are responsible for meeting
many employee needs that are cited as reasons for employee turnover (communicating with the
employees, challenging them, recognising their efforts, etc.) fixing bad managers may be the
single most important factor in increasing productivity and decreasing turnover.
16. Talent Acquisition through Mergers & Acquisition Plan:
There are ways to acquire talent beyond traditional recruiting. Acquiring “intact” teams and large
numbers of talented people (with similar values) rapidly is possible by having human resource
“scout out” target firms and then recommending their acquisition just for their employees.
17. Targeted Succession Plans:
Targeted succession plans are narrowly focused strategies for ensuring that individuals are
available to fill vacant key positions in project teams. Most succession plans have often failed
because they were too broad. Targeted plans allow the focus and forecasting to be more
narrowly applied with the goal of increasing the accuracy of the planning.
18. Turnover/Exit Forecast:
A strong economy coupled with large swings in the health of world economies makes predicting
the supply of labour increasingly difficult. The other side of this issue is identifying, where our
company is likely to lose key talent, through turnover and retirements. This turnover forecast
is designed to predict short term vacancies in the next six months in order to prepare the
appropriate recruitment or internal promotion strategies.

1. Define Human Resource Planning? Why is Human Resource Planning important? What are its objectives?
2. What is the role of Human Resource Planning in Human Resource Management?
3. What are the benefits of Human Resource Planning?
4. “Right People with Right Capabilities at Right Time and at Right Place is Human Resource Planning”.
Examine and analyse the statement with reasons in favour or against it.
5. What are the factors affecting Human Resource Planning?
6. What are the various tools for implementing Human Resource Planning?
7. What do you understand by the term ‘Philosophy’? Write a Passage inculcating the Philosophy of human
resource planning in your organisation?

ter
ap
h
3
RETURN ON
C
INVESTMENT (ROI) IN
HUMAN RESOURCE
PLANNING
After completion of this chapter, the students will learn the following
HPH
topics:
 Concept of Return on Investment (ROI)
 Essential characteristic to determine Return on Investment.
 Why only a handful Human Resource Professional practice
Return on Investment?
 Pitfalls of Return on Investment.
 Importance of Return on Investment in International Human
Resource assignments.
 How Return on Investment support Balance Scorecard?
 Can Return on Investment be calculated in Training and
Development?
 What is good Return on Investment ratio in Training?
 Application of Return on Investment in Indian Industry.
 Measuring Return on Investment in Human Resource: Data &
Applications
 Approaches in measuring the effectiveness of Human Resource
programmes.
PLANNING
Return on Investment (ROI) in Human Resource Planning 59
CHAPTER THREE
RETURN ON INVESTMENT (ROI) IN HUMAN RESOURCE

PLANNING
LEVEL ONE: RETURN ON INVESTMENT IN 60 – 61

HUMAN RESOURCE PLANNING
LEVEL TWO: WORKING PAPER ON RETURN ON INVESTMENT IN 62 – 64
LEVEL THREE: MEASURING RETURN ON INVESTMENT IN
HUMAN RESOURCE DATA & APPLICATIONS 65 – 69
LEVEL FOUR: OTHER APPROACHES IN MEASURING 70 – 75
EFFECTIVENESS OF HUMAN RESOURCE PLANNING
PROGRAMMES
LEVEL ONE
RETURN ON INVESTMENT IN HUMAN RESOURCE PLANNING
CASE OF SWATI MISHRA AND FOCUS TECHNOLOGIES:

Swati Mishra joined “Focus Technologies” as Human Resource Manager at its corporate office
at Bengaluru. She was known to be a very bright and an innovative MBA student from the Indian
Institute of Management, Banglure which she had completed three years ago. She had earlier spent
more than two years with a BPO firm “Atlanta” at Hyderabad as an Assistant Manager – Human
Resource. She left Atlanta as she felt that her creative and innovative capabilities were never appreciated
by her seniors including her boss.
Focus Technologies is a small and flat organization with 65 people on its pay-roll since it started
operations two years ago. It specialises in building user friendly customised software packages in
almost all the specialised areas of Human Resource, Total Quality and Customer Relationship
Management. The Managing Director of the company is a 35 years young tycoon, Ravikant Upal,
from Massachusetts Institute of Technology (MIT), USA, with seven years experience in building
high-end software programmes. Other than his keen interest in promoting his business, he is known
to be very passionate about researching, developing and implementing human resource applications
at Focus Technologies. He is Swati’s immediate boss. One basic reason for Ravikant to select Swati
was that she was equally passionate about developing and applying software applications in Human
Resource. Ravi was very confident that Swati shall do wonders for his organization.
In their first meeting, Ravikant, after briefing her about the company and its overall objectives
and operations and detailed discussion on human resource, asked her to design and write company’s
mission and vision statements. Ravikant told Swati that she has the freedom to initiate Human
Resource activities and processes provided she develops blueprint for every such activity. He was
clear in his advice to Swati that human resource planning and the audit of each initiative in Human
Resource must account for “Return on Investment”
A couple of days later Swati sent the draft of the company’s mission and vision statement to
Ravikant:
“Our Human Resources function aims to maximize the return on investment from the
group’s human capital. Human Resource plays the role of an effective business partner and
understands the firm’s strategy and supports all our businesses by delivering human resource
practices, processes and systems. In five years, Focus Technologies will be one of the top ten
brands in the software development Industry.”
Focus Technologies adopted the mission and vision statement without any change. Ravikant
asked Swati to develop a blueprint and a working paper on ‘return on investment’ and arrange a two
days conference of top and middle level managerial personnel to understand, internalise and capitalise
the concept of “Return on Investment in Human Resource Planning”
Swati researched and prepared a working paper on “Return on Investment in Human Resource
Planning” and circulated it to all the invitees to the conference. The working paper explained the
concepts surrounding return on investment and answered the questions frequently asked by the
executives. Swati initiated the discussion on the working paper during the course of day one of the
conference. (level two)
The next day Swati invited Return on Investment Gurus, Dr. Jack Phillips from ROI Institute and
Dr. Linda Gravett, Chairperson of ‘Professionals of Human Resource’, experts in the “Measurement,
Methodology and Working of Return on Investment”, to address the executives on the application and
methods of calculating return on investment in Human Resources Planning. (levels three & four)
LEVEL TWO
WORKING PAPER ON RETURN ON INVESTMENT IN HUMAN

RESOURCE PLANNING
A. WHAT IS RETURN ON INVESTMENT?

Return on Investment is a measure of the financial benefits obtained by an organisation over a
specified period in return for a given investment in a learning programme. In other words, it is the
extent to which the benefits (outputs) of an activity or programme exceeds the costs (inputs).
B. WHY IS IT ESSENTIAL TO DETERMINE THE RETURN ON INVESTMENT IN HUMAN

RESOURCE?
1. Return on Investment aims to enable companies develop Human Resource as a strategic
business partner by defining and delivering value to the organisation as a whole and to the
different functions in particular. The challenge is to define the “Return on Investment” in Human
Resource, so that, it becomes more effective.
2. Moreover, calculating Return on Investment gives the human resource manager an opportunity
to measure the financial value of any Human Resource Practice or Process. This helps the
Human Resource to improve its credibility in the organisation by aligning itself to the business
of the organization.
3. With the global credit crunch affecting markets across the world, budgets for programmes and
projects are under scrutiny. The era of trial and error is over as managers are under more and
more pressure to demonstrate how the investments are contributing to the bottom line. Since
any programme or project that is implemented within an organization is done so that, it ultimately
makes money, saves money or avoids costs for the organization. Stakeholders want to be
assured that the money that they spend actually works.
C. IF RETURN ON INVESTMENT IS SUCH AN IMPORTANT CONCEPT, WHY ARE SO
FEW HUMAN RESOURCE MANAGERS PRACTICING RETURN ON INVESTMENT IN
INDIA?
1. Absolutely. It is correct to say so because a report shows 82% of Human Resource Managers
do not measure the return on investment of their practices - which is why they struggle to be
seen to provide value to their organisations.
2. Human Resource Managers do realise the importance of Return on Investment, but they do not
know how to measure and calculate it, for example, a training manager is more interested in the
number of courses he runs than in the value these courses add to the organisation because
they need to reflect the figure in the monthly MIS report which is sent to the top management
for decision-taking.
D. WHAT ABOUT RETURN ON INVESTMENT IN INTERNATIONAL HUMAN RESOURCE
ASSISGNMENTS?
1. Although, companies invest heavily in international Human Resource assignments, they are
failing to measure return on investment.
2. Research from Mercer shows just 17% of employers have figures to calculate the cost of their
international assignments and 21% say they cannot provide any figures.
3. Matthew Hunt, Principal in Mercer’s international benefits team, said: “Expatriate assignments
cost between 1.5 and 4 times what a local employee would cost. They represent a major
investment, particularly those that include family. Measurement is vital.”
4. Research from GMAC Global Relocation Services and Lancaster University Management
School reveals that 84% of employers in the financial sector that are expanding their presence
in emerging markets do not measure Return on Investment; for the technology sector the figure
is 85%; and only two out of 17 Human Resource professionals in the pharmaceutical sector
implement any type of Return on Investment measurement.
E. WHAT ARE PITFALLS OF RETURN ON INVESTMENT?
The most important pitfall is to compare apples with potatoes. We have to make sure that we
measure what we are supposed to measure, and that we know all the different cost and benefit items
so that we can calculate an accurate and realistic Return on Investment.
F. WHAT IS THE RELEVANCE OF PERFORMANCE MANAGEMENT FOR RETURN ON

INVESTMENT?
Performance management is of paramount importance for Return on Investment, in fact a well-
developed performance management system that includes clear measures, forms the basis of any
Return on Investment system. By identifying performance gaps and addressing these gaps by means
of training, can provide useful information for Return on Investment measurement.
G. HOW DOES RETURN ON INVESTMENT SUPPORT THE BALANCED SCORECARD?

Return on Investment provides information that can be used at the learning and growth component
of the balanced scorecard. By indicating specific training measures, tangible data is created that can
be used to implement the balanced scorecard.
H. CAN RETURN ON INVESTMENT BE CALCULATED FOR SOFT SKILLS TRAINING?

While it is certainly more difficult to calculate Return on Investment for soft skills training than
for technical or other training, it is indeed possible to calculate Return on Investment for soft skills
training. The challenge is to determine the cost items and benefits of training. The solution does not
lie in the “skills”, but in the outputs achieved in terms of the financial benefits as a result of the
training. For example, when evaluating the Return on Investment of a diversity training programme,
consider all the potential financial benefits that can be measured, eg. more business from diverse
markets, less grievances relating to diversity, higher employee retention, less absenteeism, etc.
I. WHAT IS A GOOD RETURN ON INVESTMENT RATIO IN TRAINING?

There is no rule pertaining to what a good Return on Investment ratio is. Each training course
is different and different Return on Investment ratios are therefore, expected. However, for certain
types of training, such as sales training, Return on Investment ratios of more than 500% have been
reported. In general, Return on Investment ratios between 0% and 5000% have been reported.
J. IF A LOW RETURN ON INVESTMENT, LET US SAY 10% HAS BEEN REPORTED IN

TRAINING, DOES IT MEAN THAT THE TRAINING WAS BAD?
Not necessarily. A low Return on Investment cannot always be attributed to ineffective training. There
can be many factors in the work environment having an impact on Return on Investment, for example,
support provided by supervisors and colleagues, the culture of the organisation, market conditions,
etc.
K. IS IT DIFFICULT TO CALCULATE RETURN ON INVESTMENT?

No. Not at all, in fact, it is quite easy. All we need to do is some form of a pre and post
measurement of performance, as well as determining all the costs and the financial benefits of
training.
L. SHOULD RETURN ON INVESTMENT BE CALCULATED BEFORE OR AFTER

TRAINING?
Return on Investment can be forecast before training in order to determine whether, it is indeed
worth it to continue with the training. Return on Investment should also be calculated after training in
order to determine the real costs and benefits of the training.
M. IF THERE IS AN IMPROVEMENT IN PERFORMANCE AFTER TRAINING, HOW DO WE

KNOW WHETHER IT CAN BE ATTRIBUTED TO TRAINING? SURELY THERE ARE
OTHER FACTORS THAT ALSO PLAY A ROLE.
There are various techniques available to isolate the effect of training. In other words, it is
necessary to differentiate between the training and non-training factors. Some of these techniques are
trend analysis, the use of control groups, and customer inputs.
N. WHAT IS HAPPENING IN APPLICATION OF RETURN ON INVESTMENT IN INDIAN

INDUSTRY?
1. The premise that an Human Resource Management System needs to work towards making the
Human Resource department administratively more efficient no longer holds valid. It needs to
impact the bottom line. Companies have started realising this in the last couple of years, with
the result that Return on Investment calculation on Human Resources Management System is
fast becoming a standard practice in many IT companies.
2. In vMoksha Technologies Return on Investment is very critical for HRMS solutions. For
instance, it has already outlined the cost savings that it expects from the following Human
Resources Management System processes after implementation: eBenefits (80 percent savings);
eDevelopment (73 percent); eProfile (77 percent); eRecruit (33 percent); eCompensation
Manager (59 percent); eProfile Manager (71 percent); eRecruit Manager (70 percent). The cost
savings have been calculated based on the self-service costs vis a vis manual costs.
3. During phase two of its implementation, vMoksha is planning to add features like Track Global
Assignment, Manage Labour Relation, Monitor Health and Safety, Budget Training, Position
Management, Succession Plan, Compensation, Benefits and Resource Management.
4. For Kale Consultants, some of the tools in pipeline are Responsive Workforce Recruitment,
Total Compensation Management, Reporting and Analysis, Competency, Career, and
Succession Management, Integration with other Collaborative Applications, Comprehensive
Reporting and Analysis, Workforce Management, ESOP Administration and Tracking, Generation
of Organisation Chart and All Human Resource Planning and Employee/Managers Self-service.
LEVEL THREE
MEASURING RETURN ON INVESTMENT IN HUMAN RESOURCE

DATA AND APPLICATIONS
TABLE: 3.1
HUMAN RESOURCE ACCOUNTABILITY PROGRESS

1960-2009
1960-1971 1971-1980 1981-1990 1991-2009

Early approaches Value additions Solid value added Human Capital
Approaches Measurement
MBO in Human Human Resource Human Resource Human Resource
Resource and Case Studies Key Indicators Macro Sudies
Personnel Management
Feedback Surveys Human Resource Human Resource Balance Sorecard
Auditing Cost Monitoring
– – Human Resource Human Resource
Satisfaction Surveys as Profit Centre
– – Competitive Human Return on
Resource Investment
Benchmarking Method
Table 3.1: Shows the development and the growth of approaches in Human Resource Planning Management during four
decades from 1960-2009
TABLE: 3.2
WHY USE RETURN ON INVESTMENT
Reactive Purposes Proactive Purposes

Shows contributions of only selected Align learning to business needs
programmes
Justify budgets Earn appreciation of senior and top management
Identify inefficient and ineffective Improve support for Human Resource
programmes that need to be modified or
eliminated forever
— Improve and enhance design and implementation
processes
— Identification of successful programmes that can be
implemented in other areas and locations
Table 3.2 Shows the Reactive and Proactive Purposes of using Return on Investment
TABLE: 3.3
PARADIGM SHIFT IN RETURN ON INVESTMENT
Activity Based Result Based

No business need for the programme Programme linked to specific business
No assessment of performance Assessment of performance effectiveness
No specific measurable objectives Specific objectives for application and business impact
No effort to prepare programme Results expectations are communicated to the participants
participants to achieve results
No effort to prepare the work. Environment prepared to support application
The work environment to support application.
No effort to build partnership with Partnership established with key managers
key managers
No application of Return on Measurement of results and Return on
Investment or its measurement Investment analysis.
Planning and reporting are not output Planning is output focussed
focussed
Table: 3.3: Shows the shift from activity based to result based approach in Return on Investment
TABLE: 3.4
HUMAN RESOURCE PROGRAMME VALUE CHAIN
Levels Inputs Measurement Focus

0 Input Measures input such as volume and efficiencies
1 Reaction and Planned Measures participants reaction to
Reaction the programmes and captures planned actions
2 Learning Measures changes in knowledge, skills and attitudes
3 Application Measures changes in on the job behaviour
4 Business Impact Captures changes in business impact
5 Return On Investment Compares programme benefits to the costs
Table: 3.4: Shows the measurement focus in value chain system of any Human Resource Programme
TABLE: 3.5
AREAS OF APPLICATIONS OF RETURN ON INVESTMENT
 Learning and development  Organization development

 Competency mapping  Orientation programmes
 Career development  Recruitment strategies
 Executive and workforce  Safety/health and wellness
training and coaching management programmes
 Leadership development  Compensation management
 Diversity management  Industrial relations
 Events management  Team building
 Career development  Technology implementation
 Manpower planning  Quality programmes
Table: 3.5: Shows the identified areas wherein Return on Investment can be applied.
TABLE: 3.6
BASIC ELEMENTS OF RETURN ON INVESTMENT
An Evaluation Framework Case Applications and Practice
Implementation
Operating Standards and

A Process Model
Philosophy
Table: 3.6 shows the basic elements of Return on Investment for implementation
TABLE: 3.7
RETURN ON INVESTMENT PROCESS
1. 2. 3. 4. 5. 6. Capture Reporting
cost of
solution
Develop/ Develop Collect data Collect Isolate Convert Calculate Generate
review evaluation during data the eff- data to ROI Impact
objectives plans and solution after ects of monetary study
solution ba seli ne implementation solution solution value
data
Identify
Intangibles
Table: 3.7 shows ROI Process from review of solution/objectives to the last stage of calculation of ROI and reporting of
impact study
TABLE: 3.8
RETURN ON INVESTMENT CALCULATION FORMULA
Net Project Benefit

RETURN ON INVESTMENT =
Project Costs
1. Cost of Project: INR 2,30,000
2. Benefits of project in the first year: INR 4,30,000
INR 4,30,000 – 2,30,000

RETURN ON INVESTMENT =  = 0.87 × 100 = 87%
INR 2,30,000
Table: 3.8 shows the formula/method of calculating Return on Investment
TABLE: 3.9
RETURN ON INVESTMENT EVALUATION FRAMEWORK
EVALUATION FRAMEWORK
1. Reaction and Planned Action Measures participant satisfaction with the project and
captures planned action
2. Learning and Confidence Measures changes in knowledge, skills and attitudes
3. Application and Implementation Measures implementation and changes in behaviour in
the performance setting
4. Business Impact Measures changes in business impact variables
5. Return on Investment Compares benefits to the cost
Table: 3.9 shows five stages of Return on Investment Evaluation Framework
SIMPLY SPEAKING...
GUIDING PRINCIPLES OF RETURN ON INVESTMENT
1. When conducting a higher-level evaluation, collect data at lower levels.
2. When planning a higher level evaluation, the previous level of evaluation is not required
to be comprehensive.
3. When collecting and analyzing data, use only the most credible sources.
4. When analysing data, select the most conservative alternatives for calculations.
5. Use atleast one method to isolate the effects of the programme or project.
6. If no improvement data is available for a population or from a specific source, assume
that little or no improvement has occurred.
7. Adjust estimates of improvements for the potential error of the estimates.
8. Avoid use of extreme data items and unsupported claims when doing Return on Investment
calculations.
9. Use only the first year of annual benefits in the Return on Investment analysis of short-
term solutions.
10. Fully load all costs of the solution, project, or programme when analysing Return on
Investment.
11. Intangible measures are defined as measures that are purposely not converted to
monetary values.
12. Communicate the results of the Return on Investment Methodology to all key stakeholders.
BEST PRACTICES IN RETURN ON INVESTMENT:
1. The Return on Investment methodology is implemented as a process improvement tool
and not a performance evaluation tool.
2. Return on Investment impact studies are conducted very selectively, usually involving
5-10% of programmes.
3. A variety of data collection methods are used in Return on Investment analysis.
4. For a specific Return on Investment evaluation, the effects of the solution are isolated
from other influences.
5. Business impact data is converted to monetary values.

6. Return on Investment evaluation targets are developed, showing the percentage of
programmes evaluated at each level.
7. The Return on Investment methodology generates a micro level scorecard.
8. Return on Investment methodology data is integrated to create a macro scorecard.
9. The Return on Investment methodology is implemented for about 3-5% of the budget.
10. Return on Investment forecasting is implemented routinely.
11. The Return on Investment methodology is used as a tool to strengthen/improve processes.
LEVEL FOUR
OTHER APPROACHES IN MEASURING EFFECTIVENESS OF

HUMAN RESOURCE PLANNING PROGRAMMES
THE CONTINUATION: CASE OF SWATI MISHRA & FOCUS TECHNOLOGIES:

Ravikant was feeling extremely happy and delighted over the tremendous applause and the
overwhelming success of two day conference. At the end of the second day, he requested all the
participants to give a standing ovation to Swati. For the first time in her life, she just couldn’t believe
that it was for real and she was not imagining.
Three days later, Ravikant dropped in Swati’s cabin and spoke to her “I do believe that Return
on Investment is fantastic concept and the credit goes to you for making everyone in the management
talking and swearing by it. But let us not try to force this concept. Yesterday, in the corridor, I
overheard a senior manager telling another one that he is finding it very difficult to apply the concept
in many ways but since the top management has been sold on this, he will have to stay back in the
office and work on it. I feel that let it come from everyone that Return on Investment process is easy
to understand and can work to measure the effectiveness and benefits of any Human Resource
Planning programme. I do understand that we have to motivate people to feel enthusiastic about
everything we do in our organization. What do you say?” he asked Swati.
“Sir, there are many other methods and approaches which can work to measure the effectiveness
of Human Resource Planning programmes. I shall arrange another one day conference to brief our
managers and executives and the leave the choice to them, though I will keep on guiding them till
they themselves opt for Return on Investment” she told Ravikant. “That is smart” Ravikant told her
smilingly.
Swati prepared a brief on other methods available which may be used in realising the effectiveness
of Human Resource Planning programmes and fixed the conference three days later.
OTHER APPROACHES:
1. BENCHMARKING:
“More than 70% of Fortune 500 companies use benchmarking to reinforce their own philosophy
of continuous change and improvement.” Peter Drucker informed a gathering of Human Resource
professionals a year before his death in 2005
Benchmarking is the process of continuously comparing and measuring performance.
Organisations can measure against “best in class,” or against internal benchmarks. Benchmarking
externally is about learning from the best. Benchmarking internally typically implies an undertaking to
work hard for year over year improvement.
Some organisations distinguish between two levels of benchmarking. At one end of the spectrum
we have strategic benchmarking that involves using best practices to develop corporate, programmes,
for product strategies and results. At the other end we have operational benchmarking, which involves
assessing and implementing best practices to improve processes.
Regardless of what you are trying to improve with benchmarking, the following generic steps
usually apply:
 Identify a management practice, work process or result to be improved.
 Analyse your practice, flow-chart process, and identify results indicators.
 Measure your own performance.
 Identify benchmarking partners (if benchmarking externally).
 Determine data collection methods.
 Collect data.
 Determine performance gap.
 Project future performance.
 Develop action plan.
 Implement action plan.
 Monitor results.
 Recalibrate benchmarks.
It is important to remember that benchmarking is not about the wholesale copying of another
organisation’s best practices. If we are benchmarking externally, it entails measuring our performance
and processes against “best-in-class” organisations and integrating those relevant processes and
practices into our organisation and its culture. Internally, it speaks to benchmarking the current state,
setting improvement standards and then taking subsequent measures.
2. KEY PERFORMANCE:
In 1995, the Human Resouce Conference Board established an international working group of
representatives from major global corporations to support its research into performance measures.
In striving to find tools to help companies better manage their business, non-financial measures were
developed by the working group to augment more traditional indicators. These measures evolved and
became known as key performance measures. The Conference Board Report titled New Corporate
Performance Measures offers this typical sample of key measures:
 Quality of output;
 Customer satisfaction/retention;
 Employee turnover;
 Employee training;
 R&D investments;
 R&D productivity;
 New product development;
 Market growth/success;
 Environmental competitiveness; and
 Other measures specific to each company.
While there is no hard and fast rule as to how many measures are appropriate, the tendency,
is usually to start with a significant number and work the list down to a manageable group.
3. HUMAN RESOURCE AUDIT:

A human resources audit can serve as an important measurement-related tool. Consulting
organisations routinely conduct Human Resource audits and can usually rely on the expertise of
senior consultants with extensive experience in the field of human resources management.
A Human Resource audit affords an organisation a snapshot of the strengths, weaknesses and
potential opportunities for the Human Resource function. With audit results, as one source of information,
organisations may find themselves better equipped to set an internal benchmark regarding the efficiency
and effectiveness of the human resources management function. From there, an improvement agenda
can be set. Over the course of a three, or perhaps four-year period, the organisation can use the
audit results in conjunction with other sources of information to set objectives. The organisation may
seek to re-audit after a period of time to realise an independent assessment of how well they have
done.
In a 1997 article from Internal Auditor entitled “Talk to me Please: Supporting the Human Resource
Functions,” Giovanni Grossi, President of the European Confederation of Internal Auditing,
comments that, “Employees must be considered an organisation’s most valuable asset and should
command an auditor’s attention as much, or more so, than any other business asset...... Employees
performing to the best of their ability and with the right tools can have an enormous effect on quality,
productivity, and customer satisfaction. Therefore, we should focus on leadership audits, value audits,
and social audits”. This article provides several questions that Grossi suggests auditors might ask
to make contributions to their Human Resource departments.
 Do we get the most from the potential in our employees? (Average utilization is 60 per cent.)
 Is the money we invest in salaries and compensation earning the proper return? Are we
investing that money or are we simply spending (wasting) it?
 What is the quality of the education programmes our company provides; measured not in days
spent, but in actual knowledge provided and retained?
 What is the temperature of the employees’ morale, and what are the consequences of performance
evaluations, turnover and terminations?
 If, in the post industrial age, people should be led rather than managed, how do we assess the
leadership skills of our top and middle managers?
4. PROGRAMME EVALUATION:
Most organisations, at one time or another, have had occasion to engage in programme evaluation.
Various human resources programmes such as recruiting, career management, new employee
orientation, training, succession planning, employee relocation, to mention only a few, are processes
where programme evaluation methodology is an entirely suitable assessment tool.
Conceptually, programme evaluation findings may be used in a similar fashion to those that might
result from an audit. Programme evaluation results can help answer the questions:
 Are we doing the right things?
 And, if so, are we doing the right things well?
A programme evaluation can provide baseline data that can serve as benchmarks against which
to set improvement/measurement targets for the future.
The Asian Institute of Management, Manila, Philippines (1999-2000) observed:

 Evaluation is important in a result-oriented environment because it provides feedback on the
efficiency, effectiveness and performance of policies and can be critical to policy improvement
and innovation. In essence, it contributes to accountability in management.
The institute was involved in performance management-related work on a variety of fronts,
including programme evaluation. Human resource professionals thinking about embarking on a
programme evaluation as a means of measuring the effectiveness and/or efficiency of a given
programme should consider this as an alternative.
5. COST MONITORING:
Monitoring the cost of Human Resource is not new. In fact, in its simplest form, it preceded the
industrial revolution and is part of the very foundation upon which the measurement movement we
are experiencing today has been built. Although, such costs have been collected and collated by
central repositories since the post-war boom of the ’50s, expanding on their purely statistical application
for competitive comparison purposes is relatively new.
Today, for example, more than 80% companies in India, representing more than ten million
employees do cost monitoring analysis by evaluating the comparative data by company size, industry
and combined revenue growth rate as well as by geographical region.
To enable organisations to compare “apples to apples,” strict definitions are applied to each data
element. Extensive documentation and a help-line service assists in ensuring the rigour needed to
protect the integrity of the data. The following measurement examples are drawn from the various
reports generated and released by corporates specifically in manpower planning:
 Human Resource Investment Factor = Total Expense of the Human Resource Function.
 Voluntary Separation Rate = Total Voluntary Separation/Headcount.
 Involuntary Separation Rate = Total Involuntary Separation/Headcount.
 Cost per Hire = Total Hiring Costs/Total Hires.
 Time to Fill = Calendar Days to Fill Position/Number Filled.
6. EMPLOYEE SURVEYS:
Organisational studies support the argument that there is a correlation between successful/high
performing organisations and a work environment that nurtures positive employee attitudes. Areas to
cover in an employee satisfaction survey might include:
 General employee satisfaction with the company as a place to work.
 Satisfaction with immediate management.
 Satisfaction with company’s efforts at communicating with employees.
 Training and career opportunities.
 Physical working conditions.
 Remuneration.
 Employment security.
 Recognition.
 Morale and Teamwork.

 Industrial Relations.
This list is by no means exhaustive. Each organisation must consider their own context and
determine what topics to probe with their employees to maximize the benefits from such surveys.
In practice, the frequency and detail used in surveying employees seems to support newer
trends in the literature which suggest replacing long and detailed annual surveys with more frequent
and shorter surveys.
7. STRATEGIC HUMAN RESOURCE MANAGEMENT PROFILING:

In the recent publication, Tomorrow’s Human Resource Management, Michael Beer argues
that “for an Human Resource function to develop a strategic role it will have to develop and
institutionalize a core action learning process.” He describes Strategic Human Resource
Management Profiling as such a process. It permits managers to assess the alignment of their
organisations with strategy and values. He explains that this is done in partnership with employees.
The process is facilitated by a “profiler” from human resource or the strategic planning department.
The process begins with the leadership team defining its strategic task and its values. An employee
task force of eight high-potential employees, one or two levels below the top team, is appointed to
interview 100 employees and customers about what barriers to strategy implementation they perceive
and about the extent to which management’s behaviour is aligned with its stated values.
Data collected by the task force is fed back to the top management and processed in a three-
day profiling meeting. The first day of the meeting is devoted to feedback with the task force using
a fishbowl method to facilitate open communication. The second day is devoted to rigorous diagnosis
using a diagnostic model. The third day is devoted to developing a vision as to how the organisation
and its management processes must be redesigned and to the creation of a number of design teams
which will be engaged in the actual redesign activity. To create accountability, it is intended that the
general manager will report task force findings to the next level after reviewing them with the employee
task force.
Issues identified through Strategic Human Resource Management Profiling in several corporations
revealed six key barriers to strategy implementation and reformulation:
1. Poor co-ordination and teamwork;
2. Unclear strategy and priorities;
3. An ineffective top team;
4. Top-down or laissez-faire management;
5. Poor vertical upward communication
6. Inadequate management and management development throughout the organisation.
(“The Transformation of the Human Resource Function: Resolving the Tension between a
Traditional Administrative and New Strategic Role,” Tomorrow’s Human Resource Management, pp.
91-92)
Findings of this nature give a clear picture of where an organisation can set its sights with regard
to benchmarking, seeking out best practices, etc., and then measuring improvement.

1. How would you define the concept of Return on Investment? What is its value in Human Resource
Planning?
2. What is the importance of Return on Investment in International Human Resource assignments and
projects?
3. What are the reasons for minuscule application of Return on Investment in human resource planning in
the Indian Industry as compared to its acceptance internationally?
4. What is the difference between Result based and Activity based Return on Investment?
5. Which are the activities in Human Resource where Return on Investment can be applied and the results
are achieved?
6. Explain in details the implementation of process of Return on Investment?
7. What are the various guiding principles we have to consider when we calculate Return on Investment in
any area of Human Resource Planning?
8. Explain in detail, with examples, various approaches for measuring the effectiveness of Human Resource
Planning Programmes.
9. Critically examine the case study of ‘Swati Mishra and Focus Technologies’ and mention what steps Swati
had taken to implement Return on Investment in Focus Technologies.
10. Critically examine the ‘Mission Statement’ of Focus Technologies and analyse whether the contents of
the statement are good enough to implement Return on Investment at Focus Technologies.

ter
ap
h
4
C
CORPORATE
MISSION & VISION
STATEMENTS
HPH
topics:
 Definitions of Mission and Vision
 Importance of Mission and Vision Statements.
 Framework of Mission and Vision
 Importance of Developing Corporate Mission and Vision Statements
 Understanding Mission and Vision Statements.
 Approaches to Mission and Vision Statements.
 Why companies use Mission and Vision Statements
 Components of Mission and Vision Statements
 Theories of Mission and Vision Statements.
 Developing and Evaluating Mission and Vision Statements.
 Mission and Vision Statements of Indian Corporates
 Mission and Vision Statements of Fortune 500 Companies.
 Writing Mission and Vision Statements
Corporate Mission and Vision Statements 77
CHAPTER FOUR
CORPORATE MISSION AND VISION STATEMENTS
LEVEL ONE: IMPORTANT QUESTIONS ON CORPORATE

MISSION, VISION AND STRATEGIC HUMAN 78 – 87
RESOURCE PLANNING
LEVEL TWO: UNDERSTANDING MISSION 88 – 90
AND VISION STATEMENTS
LEVEL THREE: DEFINING MISSION AND VISION STATEMENTS 91 – 103
LEVEL FOUR: MISSION STATEMENT MODELS 104 – 113
LEVEL FIVE : THEORIES OF MISSION/VISION STATEMENTS 114 – 127
LEVEL SIX: CONCEPTUAL FRAMEWORK: DEVELOPING 128 – 132
MISSION AND VISION STATEMENTS IN STRATEGIC
PLANNING
LEVEL SEVEN: INDIA INC.: MISSION AND VISION STATEMENTS 133 – 139
LEVEL EIGHT: FORTUNE 500 COMPANIES: MISSION AND VISION
STATEMENTS 140 – 155
LEVEL NINE: DEVELOPING VISION STATEMENTS 156 – 161
AND BUSINESS SUCCESS
LEVEL TEN: EVALUATION OF MISSION STATEMENTS 162 – 166
LEVEL ELEVEN: PANTALOON RETAIL (INDIA) LTD: CASE STUDY IN
MISSION AND VISION STATEMENTS 167 – 172
LEVEL TWELVE: MAHINDRA AND MAHINDRA LIMITED: CASE STUDY
ON IMPACT OF MISSION AND VISION STATEMENT 173 – 179
LEVEL THIRTEEN: WRITING MISSION AND VISION STATEMENTS 180 – 184
LEVEL ONE
IMPORTANT QUESTIONS
ON
CORPORATE MISSION, VISION AND STRATEGIC HUMAN
RESOURCE PLANNING
1. WHAT IS VISION, MISSION AND STRATEGY?

An organization’s vision, mission and strategy are essentially the “where, what and how” of an
organization’s Strategic Management Plan. A vision statement presents an inspiring vision of the
future for participants to work toward, or of where the organization would like to be. The mission
statement presents the present work of the plan, or what it is that participants will do. Finally, the
strategy links the mission and vision together, and communicates how the present (what) connects
to the future (where).
Simply speaking, a mission statement informs you of the fundamental purpose of the organization
while the vision statement outlines what the organizations wants to be. The mission statement is
rooted in the present while the vision statement is about the future identity
2. WHY VISION, MISSION AND STRATEGY ARE IMPORTANT?

Any large change initiative that is not grounded by a clear vision, mission and strategy is likely
to lose focus. Because a strategic management plan will need the participation and support of a large
number of people, all of whom might come to the process with different ideas about what it means,
it is important to create a guiding principle that will unify the efforts of everyone involved.
3. WHAT DO VISION, MISSION AND STRATEGY CONSIST OF?

In simplistic terms, a plan’s vision, mission and strategy consist of words and ideas. Without a
framework within which they can be put into action, these words and ideas are easily forgotten or
minimised, and the results (less focus, people working at cross-purposes, lack of direction) are the
same as if they were never crafted.
Therefore, it is crucial that once created, mechanisms are put into place that measure the
working group’s activities against the vision, mission and strategy of the plan at every available
opportunity.
4. WHAT IS THE PHILOSOPHY BEHIND MISSION, VISION AND STRATEGIC HUMAN

RESOURCE PLANNING?
Consistent with the mission, values and operating principles, strategic human resource planning
provides a work environment that values and respects the dignity of people demonstrated through the
continual development of the person – spiritually, physically, emotionally and intellectually. The
organization depends upon employees to participate fully in bringing success to the mission, vision
and direction under the effective leadership of the management to achieve:
 Organization’s business goals.
 Develop relationships that collaborates diversity and diverse ideas, perspectives and cultures.
 Help people to realize their potential by developing competencies and skill sets.
 Raise productivity and work effectiveness.

 Support a balance between family and work life.
 Recognise and reward individual and team achievement.
 Provide appropriate working conditions and resources to enable people to do their work.
 Respect and be sensitive to the needs of individuals when the employment relationship ends.
5. WHY STRATEGIC PLANNING IS A KEY INGREDIENT IN DEFINING THE DIRECTION
OF AN ORGANIZATION?
In a world of no hold’s barred competition, a right series of decisions and actions could mean
the difference between survival and destruction. The current economic meltdown has shown that
there is no immunity from financial tsunamis.
Strategic planning is a key ingredient in defining the direction of an organization and the allocation
of resources. Strategies are of internal origin and pro-active in nature. The outcome is used to define
the roadmap for the present and future. It generally comprises the following questions:
1. “What do we do?”
2. “For whom do we do it?”
3. “How do we beat the competition?”
Therefore, an evaluation of the current situation, defining targets and a roadmap are important
keys. Organizations often outline goals and objectives into a mission statement and a vision statement.
The mission statement and vision statement are very similar yet very different.
6. WHY IS IT SO IMPORTANT ABOUT DEVELOPING MISSION AND VISION STATEMENTS?

Developing a mission statement offers significant benefits. The primary benefit is focus for now
and for future. Only by agreeing which markets to go after, and which products or services to offer,
can an organization concentrate its limited resources viz:
1. A Human Resource manager must know as to what are his inputs whereby, he can align his
objectives with the attainment of organizational goals
2. A marketing manager must know which trade shows to attend, which mailing lists to rent, which
media to consider for advertising.
3. A product manager must understand the needs of the target market to develop specifications
for a new product.
4. An operations manager must understand the customer’s need for reliability, for quick delivery,
for customization and ultimately a quality product. The needs of each of these managers call
for a common understanding and that is a “mission statement”
7. WHY CURRENTLY, THERE SEEMS TO BE AN INCREASING INTEREST IN
DEVELOPING MISSION AND VISION STATEMENTS?
Business managers are currently struggling with the ever-increasing complexity of our economy
– with finding and developing skilled employees; with controlling costs; with managing productivity;
dealing with competitive pressures and the resultant cost squeeze; with an increasingly long list of
government regulations; and with understanding and applying technology.
Managers everywhere are discovering that an important part of the solution to this dilemma is
focus - concentration of resources. To achieve this focus, managers must share a common
understanding of the very foundation of their enterprise – they must develop their company mission
8. SHOULD WE WRITE OUR MISSION AND VISION STATEMENTS IN GENERAL TERMS

OR SHOULD WE BE VERY SPECIFIC?
A well-developed mission statement will be neither very general nor very specific. Rather, it will
be focussed. It will be broad enough to allow for the diversity which management intends such as
new products or services, new markets, revised or new innovative Human Resource practices, etc.
And it will be specific enough to provide the focus necessary to the success of the business.
9. WHO, WITHIN THE ORGANIZATION, SHOULD DEVELOP THE MISSION AND

VISION STATEMENTS?
Most often, the mission and vision statements are developed as an important element in the
company’s strategic plan. As such, these should be developed by the same planning team, which
develops the strategic plan.
10. SOME MISSION AND VISION STATEMENTS ARE IN SINGLE SENTENCES. WHILE
SOME ARE LONGER, WHICH IS BETTER, SHORTER, OR LONGER?
A shorter mission/vision statement, describes the essence of the enterprise. It describes the
internal dimensions of the business: the products and services offered and the functions performed.
And it identifies the market... the customer, and the reason the customer chooses this particular
company’s products or services. In effect, the shorter mission statement builds a bridge between the
company and its customer.
A longer mission/vision statement builds this same bridge to the customer. But it goes on to
describe a number of other relationships as well. It may describe the company’s earning a profit...
its relationship with its owners. Or it may describe its being a good employer... its relationship with
its employees. Or it may describe its substance in human capital investment
Certainly, each of these other relationships is important, but only the relationship with the customer
is at the very essence of the enterprise. Why? Because if the organization doesn’t manage that one
relationship well - if the company doesn’t provide products and services which meet customer needs
- then the company can maintain none of its other relationships. For this reason, it is better to develop
a shorter mission/vision statement... one which is descriptive of the relationship with the customer as
a focus for present and for future.
11. BUT IF THE OTHER RELATIONSHIPS ARE IMPORTANT, SHOULDN’T WE COMMIT

THEM TO WRITING ALSO?
Yes, one may commit them to writing. But one really shouldn’t describe these relationships in
the mission statement... for that would dilute the description of the relationship with the clients/
customers. In company’s strategic plan, we can include a section called, “Company Philosophy.” In
that section, we may write about our company’s relationships with (its philosophy towards) its owners,
its employees, its community, etc.
12. SHOULD THE MISSION STATEMENT DESCRIBE OUR BUSINESS AS IT IS TODAY,

OR SHOULD IT DESCRIBE OUR BUSINESS AS WE WOULD LIKE IT TO BE IN THE
FUTURE?
The development of the mission statement is the step which moves the strategic planning
process from the present to the future.
In effect, the mission statement must “work” not only today but for the intended life of the
strategic plan of which the mission statement is a part. If we are developing a five year strategic plan,
for example, we should develop a mission statement which will “work” for the next five years.
13. DO ORGANIZATIONS NEED TO RE-WORD THEIR MISSION AND VISION

STATEMENTS TO ENERGIZE STRATEGIC PLANNING?
Yes, of course, we should. Even though, we intend that our mission statement “work” for a
number of years, circumstances change. So we should be prepared for some change in our mission
statement. But that change should be a fine tuning. An evolutionary change - rather than a revolutionary
change - over time.
Remember, our mission statement is our description of “what business we’re in,” of our relationship
with our clients. As such, it represents the very foundation of our enterprise. Certainly, we would not
want the foundation of our enterprise changing significantly from year to year.
Mission and visions statements are not static. They are live and kicking. They are dynamic
statements. They are not ornamental statements subscribed on the websites of corporate world.
Organizations are living structures. They continue to grow and achieve the optimum levels.
On the other side there are ones which stop growing due to innumerable reasons. In both the
situations, the companies need to re-look and modify or re-word their visions and mission statements.
Thus, revaluation of vision and mission statements gains highest level of importance and significance.
To prove this assertion, let us take four recent case studies to show that it is pertinent
for the corporate world to continue to evaluate and redefine their mission and vision statements
for implementing the strategic plan to achieve their goals and objectives:
1. STATE BANK OF INDIA:

The Elephant can Dance: Building Mission and Vision Statements:
“I am not a management guru and this is something that even I don’t fully understand. But what
I do understand is that something good has happened,” said State Bank of India Chairman, O P
Bhatt, during a presentation on the transformation of SBI, at the first international conference on
‘Igniting the Genius Within’ at the Indian School of Business, Hyderabad.
It wasn’t easy. “But I could see the need for transformation. I took 25 of the top people into an
offsite at Amby Valley, near Pune. This had never happened in the history of SBI. I first made a
presentation for two hours on the state of the bank in the context of the country and the economy.
I told them that all of us sitting in the room were responsible for what has gone wrong. And we alone
could bring the bank out of this mess. This set the context for the discussion,” said Bhatt.
As expected, it wasn’t easy. “On the first day there was a fair amount of skepticism, but by next
afternoon it started to change. By the third day, there was a lot of energy and commitment within the
group,” said Bhatt.
Whatever, was being discussed was being documented as well. This led to the making of a
document called the ‘State of The Nation’. And this became the basis for transforming SBI. It was
communicated to SBI’s 14,000-odd branch managers across India.
“Initially our fourteen deputy managing directors had volunteered to travel around the country
explaining the document. But when the time came, some of them were reluctant. They said they were
pressed for time. But since I pushed them, they went. And the feedback we got was surprising. The
branch managers asked why we didn’t tell them all this before. They said they weren’t aware that the
bank was in such a shape,” said Bhatt.
The next point on the plan was to get working on the unions. “I had a four-day session with the
30-32 union leaders. The same thing happened in that case as well. They had not realised the state
the bank was in. At the end of it, they made a document, which urged people across the bank to get
to work.
One of the points that the document made was ‘If you have to sit late, to work for a customer,
do that, because all your lives you have been going home early’.” Along the way, Bhatt realised that
something as simple as ‘shaking hands’ and listening to his employees did a lot to their morale.
“I went to a branch. I shook hands with one of the counter clerks and I realised that the guy had
high fever. So I asked him why he had come to office. ‘Sir aap aaye hain’, (sir, you have come) he
replied. I realised that without doing anything I’d given him something.”
An in-house programme called “Parivartan” was launched. “It took 6-7 months for us to develop
it. We launched it across the country and covered all our employees in 120 days. We have around
60 training centres across India. I stopped all other training.
Typically, what happened earlier was that three people in a branch of 30 were sent for training.
They came back wanting to do new things, but their colleagues didn’t allow them to. So this time what
we did was, if a branch had 30 people, we sent all of them together for training. It was carpet
bombing,” said Bhatt.
What happened next was simply magical. “They don’t ask for overtime. They sit in office late.
They may not be able to help customers all the time. But at least they try.”
How the bank went about making a new vision statement, said Bhatt, was very interesting.
“We have always had a vision statement. But even I, as the chairman of the bank, did not know
it. In fact, it used to be a trick question for the candidates we used to interview. And none of them
knew it.
Even the guys who were asking the questions did not know it. So we employed a professional
agency to come up with a new vision statement. But somehow we did not like what they came up
with.
So what we did was send out a questionnaire to our 200,000 employees asking them to
craft a vision, mission and a value statement for the bank. We got 141,000 responses. We
distilled that and came up with a simple vision: My SBI. My Customer First. My SBI First in
Customer Satisfaction. It is a very simple vision statement and something our employees can
identify with.”
2. LEHMAN BROTHERS: INVESTMENT BANK USA:

Let us go through the mission statement of the leading US investment bank “Lehman Brothers”
in the context of its bankruptcy due to its exposure to sub-prime loans that triggered the world
economic slow-down and the recession since early 2008. Later in September 2008, Nomura Holdings
Inc., Japan’s largest brokerage house, made a deal to buy Lehman Brothers Holdings Inc. The deal
includes Lehman’s businesses in Japan and Australia. Nomura called the deal “a once in a generation
opportunity” for the Japanese brokerage house. The deal includes Lehman’s 3,000 employees in
Asia, including the U.S. investment bank’s biggest regional offices in Japan and Hong Kong.
A. Mission Statement of Lehman Brothers:
“Our mission is to build unrivalled partnerships with and value for our clients, through the
knowledge, creativity and dedication of our people leading to superior results for our shareholders”.
B. Mission Statement of Nomura Holding:
1. We are committed to enriching society by delivering superior investment services.
2. We are not afraid to continually challenge conventional wisdom and actively encourage change
in order to pursue growth.
3. We are committed to putting our clients at the heart of our business, developing and maintaining
long-standing relationships based on trust.
4. We are one firm, committed to delivering the full range of our capabilities, knowledge and
resources to meet the needs of our clients.
5. We respect diversity and value differences of opinion.
C. Principles of Conduct for Nomura Executives:
 Be creative and innovative.
 Seek out opportunities, communicate, execute.
 Manage ourselves, our teams, and the Group.
 Take appropriate risks and actively manage those risks.
 Demonstrate leadership, inspire our colleagues.
D. Analysis:
1. The absence of seriousness of the top management and the board of directors of Lehman
Brothers in revaluating the mission statement.
2. The components of the mission statement were never quantifiable and measurable.
3. They had no serious concerns ever for their stakeholders and shareholders.
4. The mission statement failed to communicate and convince the management to appropriately
keep away from the greed of sub-prime business.
5. Had the company done a serious homework on the strategic planning issues involving sub-
prime business, the company would not have succumbed to the exposures of sub-prime
mortgages.
6. Nomura Holdings will have to remove the ornamental effects from the mission statement of
Lehman Brothers and re-word it to make it more realistic, strategic and achievable.
3. SATYAM COMPUTERS, PRICEWATERHOUSECOOPER AND INSTITUTE OF

CHARTERED ACCOUNTANTS OF INDIA:
SATYAM COMPUTERS:
A. THE GROWTH:
The word Satyam means “truth” in Sanskrit. Satyam Computer Services Ltd was found in 1987
by B.Ramalinga Raju. The company offers information technology (IT) services spanning various
sectors, and is listed on the New York Stock Exchange and Euronext.
Satyam’s network covers 67 countries across six continents. The company employs 40,000 IT
professionals across development centers in India, the United States, the United Kingdom, the United
Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. It serves
over 654 global companies, 185 of which are Fortune 500 corporations. Satyam has strategic technology
and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers
in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and
Visakhapatnam.
B. THE FRAUD AND CONFESSION:
On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying board members
and the Securities and Exchange Board of India (SEBI) that Satyam’s accounts had been falsified.
Raju confessed that Satyam’s balance sheet of 30 September 2008 contained:
 Inflated figures for cash and bank balances of INR 5,040 crore (as against INR 5,361 crore
reflected in the books).
 An accrued interest of INR 376 crore which was non-existent.
 An understated liability of INR 1,230 crore on account of funds was arranged by himself.
 An overstated debtors’ position of INR 490 crore (as against INR 2,651 crore in the books).
Raju claimed in the same letter that neither he nor the managing director had benefited financially
from the inflated revenues. He claimed that none of the board members had any knowledge of the
situation in which the company was placed.
He stated that “What started as a marginal gap between actual operating profit and the one
reflected in the books of accounts continued to grow over the years. It has attained unmanageable
proportions as the size of company operations grew significantly (annualised revenue run rate of Rs
11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the
promoters held a small percentage of equity, the concern was that poor performance would result in
a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to
fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without
being eaten.”
C. MISSION STATEMENT OF SATYAM COMPUTERS:
1. Did you know that an Intelligent Business functions similar to the human brain?
“The human brain captures, analyzes and stores every interaction with the external world and
uses the knowledge in the next interactions. Similarly, an Intelligent Business consolidates and
analyses information about the market place, customers and competitors and uses that
information to make critical business decisions and gain a competitive edge.”
2. Customer Relationship Management: Building Profitable Relationships. Why shout to 3 million

people when you can talk to 500 potential customers. Many organizations may have thousands,
maybe millions, of customers across multiple product lines. To build long lasting customer
relationships, many organizations are rolling out customer relationship management systems.
However, for profitable relationships to be built, an integrated view of the customer across
multiple product lines, defining the customer’s needs and wants, his lifetime value to the
organization and behavioral factors is critical.
D. MISSION STATEMENT OF PRICEWATERHOUSECOOPER:
Our middle market and private company services (PCS) professionals are trusted advisors to
tens of thousands of private, medium-sized and smaller organisations around the globe. We have
developed dedicated resources who focus on the audit, tax compliance and planning, and business
advisory needs of middle market businesses, private companies and their owners.
Our philosophy is simple: We work with clients to build relationships and add value to their
organisation. Whether we’re helping an entrepreneur grow his/her business or the management team
of an innovative company enters new markets, we can apply our knowledge of the business, the
industry and the geography to the specific circumstances.”
E. MISSION STATEMENT/PROFESSIONAL ETHICS OF INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA (ICAI):
1. Cardinal Principles:
• Service before self.
• Extends beyond the legal requirements.
2. Some Major Highlights:
• Prohibition on other occupations.
• Prohibition on solicitation.
• Prohibition on advertisement and canvassing.
• Prohibition on financial interest in auditee company.
• Restriction on number of audits.
• Limit on fees for non-audit assignments.
• Prohibition on writing books of accounts of auditee company.
• Demarcation between external and internal auditors.
• Professional fees for audit and other services received by a firm not to exceed 40% of the gross
annual fees of the firm.
ANALYSIS:
1. Satyam initiated strategic management to defraud its clients, customers and employees and
chopped, into innumerable pieces, the mission statement of building profitable relationship with
its customers and clients.
2. Satyam scandal has destroyed confidence in Indian companies despite indictment of western
companies after financial frauds involving most notably Enron (2002) and the $9 billion World
com accounting fraud the same year.
3. Most notably in this respect, Satyam employed an internationally acclaimed western auditor,
PricewaterhouseCooper (PwC), using a mechanism yet to be introduced widely in India, one
that ironically was meant to give investors more transparent and accurate information of the
financial state of the company.
4. The general verdict of accountants is that Satyam’s auditors blew it big time, whatever, fraud
and forgery the management could have produced to hoodwink them in a scandal that is
estimated to have cost Satyam investors $2 billion on January 7, 2009 alone as the stock
plunged by 77% on news of the fraud.
5. The local unit of PwC said in a statement that Satyam’s accounts were supported by “appropriate
audit evidence”.
6. Collusion was a common term used by the “accountant community”. Auditors not knowing
about a fraud of this size does not seem possible, particularly with the confession that Satyam
has been doing it for 7 years.
7. PwC, which calls itself the “world’s largest professional services firm”, could be worse hit than
its client Satyam, with its credibility taking severe damage. The auditing firm, which has offices
in 150 countries, stated that the audit of Satyam was carried out on the basis of the information,
records, books of account and other documents given to them by the company.
8. ICAI, despite its strict norms on professional ethics, found itself helpless to stop its members
from indulging in unethical practices. According to media reports, the sources stated that it is
very difficult to find a firm of auditors who do not sign and certify the balance sheet and the profit
and loss account of an auditee firm on the dotted lines as dictated by the chief executive/board
of directors.
4. MERRILL LYNCH: FINANCIAL SERVICES COMPANY USA:
A. Mission Statement:
At Merrill Lynch, ‘Responsible Citizenship’ is more than a principle. It is a way of life. Through
our global philanthropic efforts, we combine our financial resources and expertise with our greatest
asset-our people to build brighter future in the communities throughout the world in which our employees
and clients live and work. To achieve that goal, our charitable giving targets innovative and effective
programmes for children and youth that provide direct services, have potential for broad impact, and
offer significant volunteer opportunities for Merrill Lynch employees.
B. Short History: The Rise and The Fall:
Merrill Lynch and Co., Inc. is a global financial services firm now owned by Bank of America.
The firm was acquired by Bank of America under distressed circumstances during the 2008 financial
crisis. Merrill Lynch provides capital markets services, investment banking and advisory services,
wealth management, asset management, insurance, banking and related financial services worldwide.
Merrill Lynch is headquartered in New York City.
On September 14, 2008 Bank of America announced its intention to acquire Merrill Lynch for
Bank of America common stock. Under the terms of the agreement Merrill Lynch shareholders
receive 0.8595 shares of Bank of America stock. Shareholders of both companies approved the
acquisition on December 5, 2008 which took effect January 1, 2009.
C. Fraud Charges Against Merrill Lynch:
1. On November 1, 2007, Merrill Lynch CEO Stanley O’Neal left the company, after being
criticised for the way he handled the firm’s risk management and the sub-prime mortgage crisis,
which resulted in about US $2.24 billion in unexpected losses, and for discussing in public the
possible merger with Wachovia Banking Corporation, without being authorized by the board to
do so. He left Merrill Lynch with about US $161 million worth of stock options and retirement
benefits. John Thain, CEO of the New York Stock Exchange, succeeded him as CEO on
December 1, 2007.
2. On January 17, 2008, Merrill Lynch reported a $9.83 billion fourth quarter loss incorporating a
$16.7 billion write-down of assets associated with sub-prime mortgages.
3. On April 17, 2008, Merrill Lynch reported a net loss of $1.97 billion for the first quarter of 2008.
Merrill responded to its losses by raising capital through the sale of preferred shares; however,
experts suggest that such a strategy may pose a risk to the company’s credit rating which
could cause an increase to the company’s borrowing costs.
4. On January 22, 2009 John Thain resigned as CEO of the company after it was disclosed that
he had rushed to pay out $3-4 billion dollars in fourth quarter bonuses to Merrill employees by
the end of 2008, just prior to Bank of America’s acquisition of the company became final. Thain
allegedly did not disclose the bonus payouts to Bank of America negotiators. Thain failed to
warn shareholders of the magnitude of Merrill’s losses prior to the Bank of America acquisition.
5. In November 2007,(In sub-prime mortgage crisis) Merrill Lynch had announced it would write-
down $8.4 billion in losses associated with the national housing crisis and remove E. Stanley
O’Neal as its chief executive. O’Neal had earlier approached Wachovia bank for a merger,
without prior Board approval, but the talks ended after O’Neal’s dismissal. In December 2007,
the firm announced it would sell its commercial finance business to General Electric and sell
off major shares of its stock to Temasek Holdings, a Singapore investment group, in an effort
to raise capital.
6. The deal raised over $6 billion. In July of 2008, the new CEO of Merrill Lynch, John Thain,
announced $4.9 billion fourth quarter losses for the company from defaults and bad investments
in the ongoing mortgage crisis. In one year between July 2007 and July 2008, Merrill Lynch lost
$19.2 billion or $52 million daily. The company’s stock price had also declined significantly
during that time. Two weeks later, the company announced the sale of select hedge funds and
securities in an effort to reduce their exposure to mortgage related investments.
SIMPLY SPEAKING...
1. No mission or vision statement can work for any corporate strategic planning if the
intentions of CEO or the board of directors or their statutory auditors are dishonest or
fraudulent…
2. Designing and writing mission and vision statements is not an easy task because these
require clarity and assessment on the current status of the business and the future
perspectives and its growth. Once the analysis is available, the writing of the statements
can be handed over to a professional who can word and decorate them with a touch of
class. That is all fine. What about the implementation?
3. Implementation takes time. Destroying it takes no time. But who would know about it
other than a chief executive, board of directors or the auditors. Satyam computers
destroyed beautifully worded mission statement within minutes seven years ago. And
others followed in. Therefore, the implementation or the destruction of a mission or
vision statement depends solely on the chief executive…
LEVEL TWO
UNDERSTANDING MISSION AND VISION STATEMENTS
CASE OF BIMAL AND MRUNAL SEN:

Two budding entrepreneurs, Bimal Sen and his father, Mrunal Sen, walked into SME (Small and
Medium Enterprise) get-together and talked about growth challenges they are currently facing in their
businesses. Both focussed quite a bit, among several other issues, on the Human Resource Planning
challenges that come with growth.
Bimal and Mrunal Sen own Horizon Real Estate and Construction Company established in 2004
at Gurgaon in the state of Haryana in North India. They have been seeing significant growth in their
business till they began facing economic slowdown in the beginning of 2008. Real Estate market
crashed by about 30-40 % but they continue to grow at 10-15% margin despite the recession. Bimal
is finding the need to step back from the day-to-day aspects of construction management. That is,
like many entrepreneurs he can no longer spend time “working in his business”, but needs to shift
to “working or his business.” At the same time, his father, Mrunal is beginning to step away from the
business — not retire, but clearly backing off from his role in the day-to-day operations of the
business. So Bimal has to take on more of a strategic leadership role in Horizon, by hiring people
who can manage the operations
“People say real estate is location, location, location. At this point in our business growth, I would
say that the key has become people, people, people,” Bimal shared it with the gathering feeling little
disappointed and finding himself stuck at crossroads. He feels that the key is not just finding the best
people, but finding the right people for the right job.
Both the father-son duo tried keeping their overhead expenses at low levels, a lesson they
learned over the years with lots of ups and down in their industry. And while their current growth
creates the need for more people, they are trying to develop strategies that will keep all of the people
they are adding, engaged and productive, having no idea whether the worse is yet to come or it’s
over.
Bimal has big plans to bring in information technology and other necessary electronic infrastructure
and systems in various processes in Horizon besides enlarging his team. But Horizon is not large
enough to afford such a big investment at this stage of the recession.
During the course of dinner, the duo met Rajbir Bhansali- the Chairman of Akash-Ganga Group
of Real Estate and Construction Companies located at Gurgaon. They sought his advice to get the
solution to their problem. Rajbir shared with them his thoughts and probable solution to their problem:
1. Conduct an Organizational SWOT analysis and match it with the employees SWOT analysis
to get feedback on the current status of goal setting and the corresponding employee involvement
in achieving the business goals of the company. In doing this, they may face obstacles and
resistance from their managers and staff but the persistent efforts and consistency would
definitely yield results.
2. Study the organisational structure, culture and effectiveness of functions of all the departments
and divisions of the company.
3. Study the current competencies and the skill sets of all the employees at various levels and
match it with the employees’ SWOT to understand the future needs of the company and the
employees and the company’s expectations and vice versa.
4. Based on the feed back, write the mission and the vision statements and work on human
resource strategic planning and align them with the revised corporate business goals.
5. Once the Strategic human resource planning gets going, initiate manpower strategic planning
for investment in human capital to look into the need for right people.
6. If the entire process comes through successfully, Bimal would, in about a year’s time, come out
of the daily routine and begin working “at his business” rather than “in business”.
Rajbir Bhansali proved to be right in giving them the solution to the problem. In about nine months
from the time they met Rajbir, Bimal made aggressive inroads into human resource planning process.
He brainstormed his company’s goals and simplified mission and vision statements with his top
management team by applying Management by Objectives (MBO) and Performance Management
tools. Bimal held series of meetings with Anup Chandra, Director - Human Resources to design and
formulate a broad-spectrum human resource planning module based on strategic alliance between
corporate goals, statements of mission and vision and human resource planning processes and
systems. Horizon’s mission and vision statements read:
MISSION
“To be amongst the top real estate companies in India, by consistently delivering superior
and enduring value to all the company’s customers and to the society at large, by making a
qualitative improvement in the lives of people through its projects”.
VISION
“The vision of the company now envisages stepping into the shoes of multi-dimensional
corporate, satisfying wider based customer needs in next three year”
Three months later…….Bimal began working at his business.
THREE PERSPECTIVES OF MISSION:

The literature identifies three basic schools of thought that apply to the concept of mission.
Broadly speaking, one school of thought describes mission in terms of business strategy. The
second school describes it in terms of philosophy, values and ethics. The third school, the military,
looks at mission as the ultimate function of operational effectiveness.
1. Strategic Perspective
The genesis of the strategic approach was an article by Theodore Levit, “Marketing Myopia”,
which appeared in the Harvard Business Review in 1960. This was later expanded upon by
Abel and Hammond in their book “Strategic Market Planning” (1979). According to this approach,
a mission is defined in terms of the product or service, the clients to be served and the technology
used to deliver the product or service to the customer. To do it this way, they argue, avoids the
problem of being too vague or generalised: “being in the transport business” is the oft-quoted example.
When the mission is anchored to products and services, clients or customers, and to delivery
technology, it gives, at the same time, a clear statement of strategic direction. The interface between
strategy and mission is very concrete.
2. Philosophical and Ethical Perspective:

By contrast, the philosophical, social values and ethical view argues that mission is the cultural
“glue” that enables an organization to function as a collective unity. This cultural “glue” consists of
strong norms and values that influence the way people behave how they work together and how they
pursue the goals of the organization. This approach sees mission as encapsulating some of the
emotional aspects of the organization. We see that, in this respect, this approach encompasses
many of the core concepts of vision as we have discussed it above.
3. Military Perspective:
Military historians such as Little Hart, Von Clausewitz and many others, have, after studying
many “wars”, deduced what is commonly referred to as the “ten principles of war”. The first and major
principle is “the selection and maintenance of the aim”. In order to achieve the aim, it is essential that
strategies be formulated. The execution and achievement of these strategies are, in turn, dependent
on the successful completion of one or more missions.
It will be obvious from the above that “aim” is synonymous with Vision, and that the military
consider mission as an operational subset of vision. It is the “do”, or objective, function. The military
view is closely allied to the Abel and Hammond approach discussed above. The Abel and Hammond
approach also incorporates a “do” function, in that it defines products and services, customers and
technology in a three - dimensional, isometric spatial diagram. This spatial diagram can be related
directly to the strategy of the organization.
SIMPLY SPEAKING...
The military and strategic approaches have much in common. In both, the ultimate function
of the mission is the achievement of an objective or goal which contributes directly to
successful strategy implementation. By definition, they are both very much functional in content
and are therefore referred to as functional strategies.
The ethical or philosophical approach, as reviewed above, has three distinct drawbacks.
1. It contains many of the elements of the vision which could be very confusing.
2. It lacks an action orientation.
3. The interface with the strategy of the organization is not clear.
LEVEL THREE
DEFINING MISSION AND VISION STATEMENTS
CASE OF RAHUL AND MEGHNA JOSHI:

“Rahul Kamalnath Joshi, the managing director and the owner of 2500 crores empire “Race
Mobike Corporation” has cornered the automotive market in two-wheeler segment in Maharashtra and
entire north India. Located at a major highway intersection of NH-4 and NH-8 at Pune, it has been
number one buick manufacturer in India for last 5 years.
Following the unexpected and sudden death of Rahul Joshi, his wife, Meghna took over as CEO,
and son Kabir and daughter Aarti became Vice-President. Four days after the death of Rahul Joshi,
Meghna and children addressed all the employees, customers and auto dealers that they would
continue to lead the company from where Rahul Joshi left. Meghna recited a couplet from the diary
of Rahul which he had penned couple of months before his death, while he and his management team
had finished giving final shape to his corporate mission and vision statements.
“Only as high as we reach can we grow,
Only as far as we seek can we go,
Only as deep as we look can we see,
Only as much as we dream can we be.”
The applause was evident. All the employees and other constituents reposed their confidence
in Meghna and her children.
What Rahul Joshi had built was a business with legacy of excellence and prosperity. He had
started as a car mechanic and his accomplishments led him to become the general manager of GM
motors in US. For almost 20 years, he built his business into one of the premier manufacturing giant.
It was not just his acumen that contributed to his company’s excellence and success. Daughter Aarti
said “Papa always fostered the philosophy that we are only as good as our employees”. He treated
his employees well and employee’s satisfaction was very high as a result many of them had been
with the company for years.
Meghna Joshi has big shoes to fill in. She has leadership challenge of following someone who
was loved and respected by his employees. Aarti, remembering his father, said “when any leader
dies, this is the biggest time when people leave ship”
Back from the meeting into her cabin, Meghna began reading the contents of the mission and
the vision statements:
MISSION:
“Our brand is the visual expression of our thoughts and actions. It conveys to everyone our
intention to constantly inspire confidence. Our customers are the primary audience for our brand.
Indeed, our brand identity is shaped as much by their belief in ‘Race’ as it is by our own vision.
Everything we do must always reinforce the distinctiveness of our efforts to make our company
a “world class organization” and the power of our extremely good and cordial relationships and
cooperation with our employees, clients, customers and all our other constituents. We are conscious
of the fact that our human resources are our assets and their overall education, training and growth
is significant for achievement of our corporate goals”.
VISION:
“We have a dream to be a “world class organization” in two wheeler automobile segment with
in next five years. Our vision stems from the fact that we are already in the process of making “Race
Mobike” a learning organization based on our cherished and shared values in collaborating and
cooperating with our employees for generating not only wealth but also for growing together. And to
achieve this goal, we will depend upon our ability for organizational innovation, perfection, speed and
transparency”
On the 10th day after Meghna, Aarti and Kabir addressed the employees, five employees
representing all the workmen personally submitted their Charter of Demands to Meghna stating that
before his death, they had spoken to Rahul Joshi and he had promised them that he would look into
their demands and it was unfortunate that he died suddenly. Meghna assured them that she would
earnestly look into it and revert to them in about 15-20 days.
After the workmen representatives left her cabin, she again glanced through company’s mission
and vision statements and then moved over to read the contents of the Charter of Demands:
1. 30% average rise in the basic wages for all the workmen. The existing average basic wage is
Rs.1500/p.m. The total number of workmen is 140.
2. 40% rise in Dearness Allowance per month. The current dearness allowance scheme is as
follows:
A. On 1st Rs. 100 basic salary= DA is Rs. 1200/-
B. On 2nd Rs. 100 basic salary= DA is Rs. 600/-
C. On 3rd Rs. 100 basic salary= DA is Rs. 300/-
D. On 4th Rs. 100 basic salary= DA is Rs. 150/-
E. On every successive basic of Rs. 100= DA is Rs.150/-
3. Annual earned Leave which is now 12 days to be increased to 22 days.
4. Existing annual Sick leave of 10 days to be increased to 20 days.
5. Existing Casual Leave of 5 days to be increased to 10 days.
6. Company should follow “Sons of Soil” practice while recruiting workmen and sons and daughters
of employees should be given preference for any vacancy among workers and staff with
immediate effect.
Meghna immediately formed a negotiations committee comprising of Vice-Presidents - Human
Resource, Finance, Corporate Relations and Modernization and briefed them:
 The company does not wish to change or modify the company’s mission and vision statements
not because Rahul Joshi, who is no more, masterminded them along with his team but because
the company would strive to become a “world class organization” in next five years and that
cannot happen if our people are not with us to make our dream a reality.
 We like and appreciate the contribution of our workmen in achieving our goals and generating
profits year after year. But yet our productivity is low among the comparable industries in two
wheeler segment. Our dream shall shatter if the productivity is not raised by about an additional
8-9% in stages with in next 12 months.
 Prepare the existing financial burden as against a statement showing increased burden if all the
demands are accepted and implemented.
 Prepare grounds for win-win negotiations with the employees representatives. We don’t want
any confrontation with our workers
 Prepare a report on an “Industry cum region practice” to see what other comparable industries
are giving.
 Prepare in details the counter demands of the company for collective bargaining.
• All the members of company’s negotiating team must workout one to one relationship with the
representatives of workmen and seek their cooperation to settle all the above matters across
the table.
• Vice-President Human Resource should send a letter to the secretary of workmen representatives
to hold the negotiation meetings on day to day basis after all of you have done your homework.
The company would like to sign the settlement with in thirty days from the date of the first
meeting. Prepare the time schedule and it should be on my table within next 24 hours. In case
of any bottleneck or breakup in the discussions with workers, the committee should revert to
me with their counter proposals and suggestions and take fresh mandate from me.
THE RIGHT PERSPECTIVE:
Meghna visualized and assessed the situation right and in absolutely correct perspective from
the construction, the clear thought process in the form of words used and the focus and the goals
to be achieved enumerated in the mission and the vision statements, among others:
1. A clear and focussed goal to bridge the diversity of purpose, culture and the organizational
values and to seek the cooperation and the contribution of all to strengthen the human capital
as the most important organizational asset.
2. A clear and inspiring vision of the future.
3. A clear and accurate assessment of the work contained in strategic management plan.
4. A focussed strategy statement linking mission with vision, and presenting a clear roadmap to
travel from present to future.
5. A specific and measurable strategic management plan to be a “world class organization” within
five years linking vision, mission and strategy.
THE STRATEGIC THINKING:
Meghna had her thought process were very clear. She had realised that to be strategically
oriented she needs to monitor her external environment constantly and be prepared to shift gears
fast, combining planning with entrepreneurship. She had the answers to ‘why we are here ’and’ where
are we today’? Her own analysis of the present was essential, because it provides the true picture
of today from where the company begins the journey towards the future. For her, the vision was a
compelling but not controlling force that keeps her reminding where she wants to be. She remembered
having read KWAN ‘JZU (3rd century B.C) “When planning for a year, sow corn; when planning
for a decade, plant trees; when planning for life, train and educate men”. She decided to
strengthen her human capital assets, educate and train them and grow together.
SIMPLY SPEAKING....
1. Mission: Defines the fundamental purpose of an organization or an enterprise, basically
describing why it exists.
2. Vision: Defines the desired or intended future state of a specific organization or enterprise
in terms of its fundamental objective and/or strategic direction.
3. Mission and Vision Statements are important for success of a business as they provide
the current status of the business and a sense of direction on where does one want his
business to go. Without a vision, one is like a crewless boat; adrift with no destination
in sight.
4. Mission and Vision Statements do not have to be long and complex. Instead, it should
be concise and extremely clear. If it is too complex, it will take too long in developing it.
The best way forward is to brainstorm a few key phrases that would denote where one
wants his business to head.
5. The mission and the vision statements, would keep one focussed on the task at hand
– business success.
6. A vision statement basically will remind one what goals he has set for his business. It
will also show others what is the business all about and how it is different from all other
similar businesses.
7. A vision statement will align one and all people who work in the organization towards
a common purpose. As a decision-maker, one will be able to make timely decision and
less controversial one.
8. Once the mission and vision statements are ready, one would be more focussed towards
attaining the goals. A vision Statement has to be combined with hard work, strategic
thinking, smart planning and prudent decision-making.
9. Mission and Vision Statement are significantly essential for navigating business success.
CONCEPT OF WRITING MISSION AND VISION STATEMENTS BECAME POPULAR WITH

STEPHON COVEY: THE SEVEN HABITS OF HIGHLY EFFECTIVE PEOPLE:
1. Being with End in Mind: Habit 2:
“To begin with end in mind means to start with a clear understanding of your destination” says
Stephon Covey. This is about habit 2 for setting long-term goals based on “true north” principles.
Covey recommends formulating a “personal vision statement” to document one’s perception of one’s
own vision in life. He sees visualization as an important tool to develop this. He also deals with
organizational vision statements, which he claims to be more effective if developed and supported by
all members of an organization rather than prescribed.
2. Every Goal is Created Twice:
How you envision the outcome of your activity is essential to its final success. If you have a
clear vision of exactly what you are working to achieve you can then create the list of action steps
needed to get there. Every goal is created twice, first in your mind, second in reality.
3. Visualisation:
Visualizing the outcome of your project is the vital first step. Without having a firm grip on the
outcome, it is impossible to know when you can stop. “Busy-ness” for the sake of being busy is not
productive, it’s spinning your wheels. When your goal is clear in your mind, and the project has been
determined to be worth doing, i.e., you have outlined the “Why” of the goal; your next step is to set
the conditions that define its successful completion.
4. Questions You ask Yourself:
Here is a short list of questions that can help create the vision of a successful outcome:
 What do I want the future to be?
 What benefit do I want to give to my __________? (family, company, career, etc.)
 What returns do I seek?
 What standards am I aiming at?
 What values do I believe in?
 What are my strengths, and how can I leverage them to success?
 What weaknesses do I have in approaching and overcoming obstacles?
 Are there potential opportunities for changing the plan to meet changing conditions?
 How might this affect the outcome?
 What might prevent me from reaching the best result?
 What will the success of this goal mean in a year? In three years?
 What is the best possible result of my activities?
Once you have completed a realistic analysis of the opportunities for change, the next step is
to decide precisely what the aim of your plan is. Deciding and defining an aim sharpens the focus
of your plan, and helps you to avoid wasting effort on irrelevant side issues.
5. Ready-Fire, Aim-Fire:
The aim is best expressed in a simple single sentence. When the goal of a project is clear and
sharp in your mind, it is that much easier to communicate with the decision-makers and those who
will be implementing your project.
Your description of the outcome is the final mark on the yard-stick that you will be using to
measure your progress through the plan’s stages. When you have properly defined the outcome of
the project you can then create and define specific activities and sub-goals to reach your objective.
6. Mission and Vision are Complimentary:
You can present this aim as a ‘Vision Statement’ or ‘Mission Statement’. Vision Statements
express the benefit that an organization will provide to its customers. Mission Statements give concrete
expression to the Vision statement, explaining how it is to be achieved.
7. Write Your Own Mission Statement:
A personal mission statement is similar to that for a company or organization, in that it defines
the values and principles that will be followed in the everyday activities and long-term planning.
Having a written set of core values can be a very helpful tool in planning and executing your activities.
How different would your life be if you had had a clear understanding of what was truly important
to you five or ten years ago? Some of you reading now may have performed an exercise like this
back then, and have gone on to create wonderful things. Others may never have heard of this
process. We will work through it together and be better for it.
8. Sample Applications:
Stephen Covey has a list of recommended activities for implementing this habit. Four of them
are:
1. Look carefully at your list of values and principles. Does a pattern emerge? Is this really the
person that you are? Or want to be?
2. Identify a project that you have coming up. Apply the principle of visualizing the final outcome.
Write down the results that you desire and the steps that you need to take to achieve those
results.
3. Look at every task you have this week with a new perspective. Visualize the best end result,
and decide if this action will get you there.
4. Use the worksheet to create your own personal mission statement. Keep it handy and be
prepared to revise it if necessary. Watch for opportunities to incorporate this mission statement
into your daily interactions and decisions.
WHY WE USE MISSION AND VISION STATEMENTS?
We use mission and vision statements to turn

our dreams and plans into reality.
1. Common Uses: Mission and Vision Statements are commonly used to:
Internal Uses:
 Guide management’s thinking on strategic issues, especially during times of significant change;
 Help define performance standards;
 Inspire employees to work more productively by providing focus and common goals;
 Guiding management decision-making;
 Help establish a framework for ethical behaviour.
External Uses:
 Enlist external support;
 Create closer linkages and better communication with customers, suppliers and alliance
partners;
 Serve as a public relations tool.
2. Corporate Uses: Corporate uses are:
 Greatly improved business focus.
 Everyone has the same corporate/organizational view of the future - no misunderstandings.
 Enhances the professional perception of business.
 Fosters a team oriented environment.

 Enhances employee morale.
 Helps attract and retain the best people.
 Corporate decision-making.
 Disaster management.
 Image building.
 Business expansion.
 Diversification.
 Strategic planning.
 Talent management and employee retention.
3. What the Leaders of the World Say: Why We use Mission and Vision Statements?
Wal-Mart’s Sam Walton in Wal-Mart Way: In everything we do, we are driven by a common
mission: To improve the quality of life for everyday people around the world.
“The process is always the same. You need to know what you’re looking for and then go look
for it!” Robert Kiyosaki in his book “Rich Dad, Poor Dad”
Rick Warren in “The “Cherish your visions

Purpose Driven Life” and your dreams,
asks us the question Mission and as they are the children
“What on earth am I here Vision of your soul, the
for?”and states “we were Statements blueprints of your
made for a mission.” ultimate achievements.”
Napoleon Hill
People often say that motivation doesn’t last. Well, neither does bathing - that’s why we
recommend it daily.” — Zig Ziglar
Bob Proctor In the movie “The Secret” says we should ask ourselves “What do you really want?
and How do you want your life to be?” Learn to visualize because, as Dr Denis Waitley says
in the movie, “When you visualize, you materialize.”
“Good business leaders create a vision, articulate the vision, passionately own the vision, and
relentlessly drive it to completion.” Jack Welch, Chairman, General Electric
A. PETER DRUCKER:
1. Mission’s Ultimate Test is ‘Right Action’:
The first thing to talk about is what missions work and what missions don’t work, and how to
define the mission. For the ultimate test is not the beauty of the mission statement. The ultimate test
is right action.
2. Corporates Operate on Theory of Business:
“Every organization operates on a theory of Business, that is, a set of assumption as to what
its business is, what its objectives are, how it defines results, who its customers are, what the
customer’s value and pay for.
3. Focus on Goals and Action:

Starting with the mission and its requirements may the first lesson business can learn for
successful non-profits. It focusses the organization on action. It defines the specific strategies needs
to attain the crucial goals. It creates a disciplined organization. It along can prevent the most important
common degenerative disease of organization especially large one: splintering their always limited
resources on things that are “interesting” or look “profitable” rather than concentrating them on a very
small number of productive efforts”
4. Business is defined by Mission:
“My favourite mission definition, however, is not that of a non-profit institution, but of a business.
It’s a definition that changed Sears from a near bankrupt, struggling mail-order house at the beginning
of the century into the world’s leading retailer within less than ten years. Mission and Philosophy is
the key starting point in business. A business is not defined by its name, statues or articles of
incorporation. It is defined by business mission. Only a clear definition of the mission and purpose
of the organization makes possible clear and realistic business objectives
5. Mission Statement Needs to be Operational:
Almost every hospital I know says Peter Drucker, “Our mission is health care.” And that’s the
wrong definition. The hospital does not take care of health; the hospital takes care of illness. You and
I take care of health by not smoking, not drinking too much, going to bed early, watching our weight,
and so on. The hospital comes in when health care breaks down. An even more serious failing of
this mission is that nobody can tell you what action or behaviour follows from saying: “Our mission
is health care.”
“A mission statement has to be operational, otherwise it’s just good intentions. A mission statement
has to focus on what the institution really tries to do and then do it so that, everybody in the
organization can say: This is my contribution to the goal”.
6. Mission is Setting Concrete Action Goals:
“One of our most common mistakes is to make the mission statement into a kind of hero
sandwich of good intentions. It has to be simple and clear. As you add new tasks, you de-emphasize
and get rid of old ones. You can only do so many things. If you have 186 objectives, nothing ever
gets done. I always ask: What’s the one thing you want to do?
7. Leadership is lifting a Person’s Vision:
The first job of the leader is to think through and define the mission of the institution.
“Leadership is lifting a person’s vision to higher sights, the raising of a person’s performance to
a higher standard, the building of a personality beyond its normal limitations.
The most common question I am asked: What are the qualities of a leader? The question seems
to assume that leadership is something you can learn in a charm school. But it also assumes that
leadership by itself is enough, that it’s an end. And that’s misleadership. What matters is not the
leader’s charisma. What matters is the leader’s mission.
8. Vision needs to be Specific and Measurable:
Vision is a picture of what the organization is trying to accomplish in carrying out its purpose.
It describes how the organization intends to focus its role or “business” in the future. It answers the
question, “What are we trying to create or achieve?” The vision statement should describe what will
be accomplished, where and for whom. While purpose tends to be abstract, vision is specific and
measurable or at least assessable.
9. Vision is Unique:
While purpose may not be unique, vision is unique and differentiates the organization from
others. The perceived gap between your organization’s vision and its current reality is the source
of the emotional energy that drives its actions.
10. Vision cannot be Synonymous with Mission:
Purpose and vision are often used synonymously with mission. This approach has some pitfalls.
Using only the purpose as the mission statement does not communicate what the organization does
or what it wants to accomplish.
11. Vision and Mission Statements are Complimentary:
Using only the vision as the mission statement leaves out why the organization is engaged in
this activity and why people should be committed to it.
Combining purpose and vision creates a more meaningful mission statement describing why the
organization exists and what it intends to accomplish.
The mission statements are capable of generating commitment from its sense of purpose and
emotional energy from the vision statements.
B. CHRISTOPHER BART:
Although, biological metaphors have become commonplace in the organization science literature,
Bart (1997), in a Business Horizons article entitled, “Sex, Lies, and Mission Statements,” advances
the analogy to a vividly descriptive level.
He likens mission statements to the “libido” or “sex drive” of a company, inferring that mission
statements not only inspire passion and personal pleasure in the firm, but also compel organizationally
beneficial activity. While the simile may be novel, the theoretical underpinnings of the comparison are
not.
One need not look beyond basic business policy textbooks to find the assertion that mission
statements, as a strategic planning and management tool, provide the basis for organizational
performance and indeed, organizational survival. For example, Miller and Dess (1996) model the
relationship between mission statements and the fate of a firm by specifying the intermediate
linkages as follows:
Mission Operational- Goal Directed Firm Firm
Statement isation of Employee Performance Survival
Objectives Behaviour
A frequently repeated definition of a mission statement is that it is, “a broadly defined but
enduring statement of purpose that distinguishes the organization from others of its type and identifies
the scope of its operations in product (service) and market terms” (Pearce, 1982, 15).
Formulation of such a statement appears to have evolved into a prerequisite of doing business,
as a Bain and Company annual survey has consistently reported “mission statements” are the most
common management tool out of a collection of over 25 tools, and that over 90% of companies have
had a mission statement sometime within the last five years.
Recognised as “the starting point for a corporate identity programme,” mission statements are
described as wielding significant influence over organizational performance (Leuthesser and Kohli,
1997).
As Bart and Tabone (1998) summarize, “in recent years, mission statements have become
recognized in modern management theory as one of the cornerstones of an organization. The conclusion
of most commentaries on mission statements is that they are an essential factor contributing to an
organization’s enduring success”
C. BAIN AND CO:

Boston-based Bain and Company recently reported that of the 400 firms it surveyed, nine out
of ten had used a mission statement some time in the last five years thus, making it the most popular
management tool deployed in recent decades.
The reason for such popularity is that mission statements are usually considered the cornerstone
of every company’s strategy formulation exercise. Most commentaries on mission statements imply
that superior performance results follow shortly after inception.
Little evidence exists, however, that proves their true value. Most studies have tended to focus
almost exclusively - even obsessively - on their content. None has attempted to compare prescription
with practice and only a few have tried to link findings about mission statements to any measures
of performance or satisfaction.
Although, it would be a stretch to claim that the field has established consensus on the essential
skeletal components of an effective mission statement, over a decade ago. Pearce and David’s
(1987) ground-breaking study concluded that higher performing firms have comparatively more
comprehensive mission statements amongst a sample of Fortune 500 companies.
D. DE GEUS:
De Geus’s book “The Living Company: Growth, Learning, and Longevity in Business” has been
widely recognized as one of the most important management books of the decade (Zhu, 1999, p.28).
The essence of de Geus’ argument is as follows:
Research Objective 1: In the exploratory genre of previous mission statement studies, specific
types of purpose, strategy, values, and behavioral standards will be correlated with organizational
longevity to assess the degree to which specific mission statement components are related to the life
expectancy of companies.
Research Objective 2: A regression analysis will be conducted to attempt prediction of lifespan
according to de Geus’ theoretical formulation. Specifically, it is proposed that mission statement
references to certain ideas (community, fiscal conservatism, learning/developing and adapting), as
well as certain corresponding financial measures (leverage/debt utilization and research and
development expenditures) will predict lifespan.
CONCLUSION:
Bart (1999) concluded, however, that sufficient evidence now existed to “challenge those critics
and cynics who liked to pronounce (unjustifiably) that mission statements were not important or that
there was no direct link between a mission statement and performance.“Based on the results of our
study, we would caution that claiming such a victory might be premature”.
Instead, we would concur with Bart’s (2000) most recent admission that “performance-based
empirical evidence [on the relationship between mission statements and organizational outcomes]
is…very thin”
Indeed, this study is not the first to cast doubt on the relationship or impact of mission statements
and outcomes (see David (1989) who examined earnings, ROI, and earning per share; and Klemm
et. al., (1991) who examined profit and turnover).
MANAGEMENT GURUS SPEAK: DEFINING MISSION AND VISION STATEMENTS:
MISSION IS ENDURING STATEMENT OF PURPOSE:

A company’s mission is an enduring statement of purpose that distinguishes its business from
its peer firms, identifies its scope of operations, embodies its business philosophy and reflects the
image it seeks to project The mission statement answers the first question of any business venture:
What business is it in and what is its reason for being?
Establishing this purpose in black and white must come first in order to provide a sense of
direction to the company. Companies that do not have a clear and concise written mission statement
risk wandering aimlessly in the sea of competitors.
A. JACK WELCH
1. Mission Balances Possible and Impossible
Jack Welch, Ex-Chairman and CEO OF General Electric (GE) in his book “Winning” says
“Effective mission statements balance the possible and the impossible” he continues, “they give the
people a clear sense of the direction to profitability and inspiration to feel they are part of something
big and important”.
2. How do we intend to win in business?
An effective mission statement basically answers one question: How do we intend to win in this
business?
It does not answer: What we did used to be good in the good old days? Nor does it answer:
How can we describe our business so that no particular unit or division or senior executive gets
pissed off?
“Instead, the question “How do we intend to win in this business?” is defining. It requires
companies to make choices about people, investments, and other resources, and prevent them from
falling into the common mission trap of asserting they will be all things to all people at all times”.
3. Top Management Responsibility:
Jack Welch, during his forty years tenure with GE, always and emphatically maintained that
“setting the mission is the top management’s responsibility”. During a meeting with his top management
team at GE, he categorically added while making a presentation on “GE and Emerging Markets”, that
“a mission cannot be delegated to anyone except the people ultimately held accountable for it”.
B. IRELAND AND HILL:

Ireland and Hill (1992) in “Mission Statements: Importance, Challenge, and Recommendations
for Development” observe that the “mission statement should include the organizations goals, purpose,
product and market scope and philosophical views”.
C. DAVIES AND GLAISTER:

Davies and Glaister (1997) in “Business School Mission Statements—The Bland Leading the
Bland” believe that a “mission statement should include the organizations statement of purpose and
inspirational view for the future”.
D. BARTKUS, GLASSMAN AND McAFEE:

One of the better practical definitions has been provided by Bartkus, Glassman and McAfee
(2000) in “Mission Statements: Are They Smoke and Mirrors?”, state a “mission statement is a
statement to communicate a description of the firm to its current and prospective stakeholders to
determine if they want to be involved with it”.
E. JUSTICE, THOMAS AND DAVID W. JAMIESON:

Justice, Thomas and David W. Jamieson (1999) in “The Facilitator’s Field Book” state that the
“framework for the development of a mission statement should begin with the organizations primary
purpose, target market, core products or services, critical values and measures of success”.
F. PEARCE, J:
Pearce J in his article “The Company Mission as a Strategic Tool” observed that a “mission
statement can be defined as an enduring document of purpose that distinguishes one business from
other firms of its type. A mission statement is a declaration of an organization’s business or “reason
for being.”
He further elaborated the concept stating that “a clear statement of a company’s mission is
essential to effectively establishing objectives, formulating strategies, setting goals, devising policies,
allocating resources, and motivating employees”.
G. PEARCE J AND RICHARD B. ROBINSON:

In ‘Strategic Management: Formulation, Implementation and Control’, Pearce and Robinson stated
that “a mission statement embodies the “business philosophy of the firm’s strategic decision makers,
implies the image the firm seeks to project, reflects the firm’s self-concept and indicates the firm’s
principal product or service areas and the primary customer needs that the firm will attempt to
satisfy”.
H. ZALEZNIK, A.:
Zaleznik in ‘Power and Politics in Organizational Life’ found that effective organizational “missions”
help to satisfy people’s needs to produce something worthwhile, to gain recognition, help others, to
beat opponents or earn respect.
I. QUINN, J.B.:
Quinn in ‘Strategies for Change: Logical Incrementalism’ observed the “firms must distinguish
themselves from all others in the competitive environment. So far, at least, the mission statement
must transcend the criteria usually attributed to objectives such as measurable, achievable, etc. in
that it should lift the firm above its present state.
J. BART C. K AND BATEZ, M. C.:

Bart and Batez in “The Relationship between Mission Statements and Firm Performance: An
Exploratory Study observed that ‘“A good mission statement captures an organization’s unique and
enduring reason for being and energizes stakeholders to pursue common goals. It also enables a
focused allocation of organizational resources because it compels a firm to address some tough
questions: what is our business? Why do we exist? What are we trying to accomplish?”
K. STONE, R.:
Stone in his article “Mission Statements Revisited” (1996) observed “Corporate mission
statements… are the operational, ethical and the financial guiding lights of companies. They are not
simply slogans and mottos; they articulate the goals, dreams, behaviour, culture and strategies of
companies.
L. ABRAHAMS JEFFREY:
In “Mission Statements Book” (1995) Abrahams defined a mission statement as “an enduring
statement of purpose for an organization that identifies the scope of its operation in product and
market terms and reflects its values and priorities”
M. THOMPSON and STICKLAND:

In the book “Strategic Management: Concepts and Cases (1996), Thompson and Stickland
stated that “a mission defines a company’s business and provides a clear view of what the company
is trying to accomplish for its customers”
N. MILLER:
Miller (1998) states that obligations to stockholders and sources of competitive advantage should
also be the agenda (in addition to the scope of the business and a view of the future).
O. LUCAS:
Lucas (1998) prefers the term “vision statement” for a company declaration phrase that not only
encompasses the core values, core competencies, and future goals, but inspires, guides, and controls
as well.
SIMPLY SPEAKING....
1. A company’s mission is an enduring statement of purpose that distinguishes its business
from its peer firms, identifies its scope of operations, embodies its business philosophy
and reflects the image it seeks to project The mission statement answers the first
question of any business venture: What business is it in and what is its reason for
being?
2. Mission statement embodies the “business philosophy of the firm’s strategic decision-
makers, implies the image the firm seeks to project, reflects the firm’s self- concept and
indicates the firm’s principal product or service areas and the primary customer needs
that the firm will attempt to satisfy”
3. We use mission and vision statements to turn our dreams and plans into reality.
LEVEL FOUR
MISSION STATEMENT MODELS
MANAGEMENT GURUS SPEAK:

The analysis of the definitions of the mission and vision statements attributed by the management
gurus and theorists lead us to conclude as to what should be the contents of the statements when
we sit down to design, write and give shape to our corporate and organizational or even personal
mission statements. A mission statement must be an enduring statement of purpose which must:
 Focus on goal setting and action in establishing objectives, formulating strategies, setting goals,
devising policies, allocating resources and motivating employees.
 Reflect philosophy purpose, core products and services and market scope.
 Reflect core values and core competencies.
 Give people a clear sense of direction to profitability and inspiration that they belong to an
organization.
 Reflect organizational critical values and measures of success.
 Communicate to its current and prospective stakeholders to get involved for the benefit of the
company.
 Articulate goals, dreams, behaviour, culture and strategies of a company.
 Reflect a clear view of what the company is trying to accomplish for its customers.
 Help satisfy people’s needs to produce something worthwhile, to gain recognition, and help
others, to beat opponents or earn respect.
1. PETER DRUCKER: PURPOSE and STRATEGY:
Peter Drucker in “Management: Tasks, Responsibilities, Practices” (1974) observed that the
“mission is carried through commitments to action in the form of objectives and that the objectives
should be operational. Objectives are the fundamental strategy of business. Purpose and strategy are
the two key components of a mission and therefore of the mission statement.
2. CHRISTOPHER BART: TWENTY-FOUR COMPONENTS:
Christopher Bart in “Mission Matters” proposed twenty -four components/ contents that make up
a mission statement:
 Purpose.
 Concern for satisfying customers.
 General corporate goals.
 Values and philosophy.
 Distinctive competence.
 Concern for satisfying employees.
 Business definition.
 Concern for satisfying shareholders.
 Competitive strategy.
 Desired public image.
 Behaviour standards.
 Non-financial objectives.
 Specific products offered.
 Specific markets served.
 Concern for satisfying society.
 Concern for satisfying suppliers.
 Specific financial objectives.
 Technology defined.
 Location of business.
 Desired competitive position.
 Mention of stake holders.
 One big goal.
 Self-concept.
 Vision statement.
3. PEARCE, J. and DAVID, F.: EIGHT COMPONENTS:
Pearce and David in “Corporate Mission Statements: The Bottom Line” (1987) identified eight
key components of mission statements:
 The specification of target customers and markets.
 The identification of principal products and services.
 The specification of geographic domain.
 The identification of core technologies.
 The expression commitment to survival, growth and profitability.
 The identification of key elements in company philosophy.
 The identification of the company self concept.
 The identification of firm’s desired public image.
4. JUAN, D. K.: CONCERNS TO ACTION:
Juan, D.K . in “Components of Mission Statements: Relevance in 21st Century” (1997) mentioned
nine characteristics or mission statement components. Since a mission statement is often the most
visible and public part of the strategic management process, it is important that it include most, if not
all, of these essential components. Components and corresponding questions that a mission statement
should answer are given here:
1. Customers: Who are its enterprise’s customers?
2. Products or services: What are the company’s major products or services?
3. Markets: Where does the firm compete?
4. Technology: What is its basic technology?
5. Concern for survival, growth, and profitability: What is the company’s commitment towards
economic objectives?
6. Philosophy: What are the basic beliefs, core values, aspirations and philosophical priorities of
the company?
7. Self-concept: What are its major strengths and competitive advantages?
8. Concern for public image: What is the company’s public image?
9. Concern for employees: What is the its attitude/orientation towards employees?
5. CAMPBELL, A.: ASHRIDGE MISSION MODEL:
Campbell in “The Power of Mission: Aligning Strategy and Culture” (1992) mentioned four
components/contents for his Ashridge mission model.
The Ashridge Mission Model (Campbell)

PURPOSE
Why the company exists EMPLOYEE VALUES
Employees’
personal values
STRATEGY COMPANY VALUES

The competitive What the company
position and believes in
distinctive competence
STANDARDS AND BEHAVIOURS

The policies and behavioral patterns that underpin the distinctive
competence and the value system
The model is based on research conducted in 53 large companies by the Ashridge Strategic
Management Centre. Its founding director, Andrew Campbell, has spent much of his professional
career studying mission statements. Campbell’s framework of four important mission statement
dimensions has come to be known as the Ashridge Mission Model.
1. What is Ashridge Mission Model?
Managers and employees are occasionally searching for a purpose and a sense of identity.
They want more than just pay, safety and an opportunity to develop their skills. They want a “Sense
of Mission”. In fact there are a number of functions that a Mission can have in any organization.
These can be internal and external and include to:
1. Inspire and motivate managers and employees to higher levels of performance. (Sense of
Mission)
2. Guide resource allocation in a consistent manner.
3. Help balance the competing and often conflicting interests of various organizational stakeholders.
4. Provide a sense of direction.
5. Promote shared values amongst employees.
6. Refocus on organization during crises.
7. Improve corporate performance.
A Mission Statement is an articulation of a company’s mission. An often-used definition of a

mission statement is: “a broadly defined but enduring statement of purpose that distinguishes the
organization from others of its type and identifies the scope of its operations in product (service) and
market terms”
According to Campbell, mission statements frequently do more harm than good because they
imply a sense of direction, clarity of thinking, and unity that rarely exists. Instead of uplifting employees
with elevating ideals, they encourage cynicism. The Ashridge Mission Model from Andrew Campbell
is a method that can be used to create or analyse a mission, sense of mission and mission statement.
The Ashridge model integrates two historic schools to determine a mission:
1. The Strategic School: A Mission is primarily seen as the first step in the strategy process. It
defines the business’s commercial rationale and target market.
2. The Cultural/Philosophy/Ethics School: A Mission is primarily seen as an expression or
statement that should ensure good cooperation between employees. It is cultural glue which
enables an organization to function as a collective unity.
2. Four Elements of Ashridge Model:
The Ashridge Mission Model contains the following four elements which should be linked tightly
together, resonating and reinforcing each other to create a strong mission:
1. Purpose. Three categories:
 For the benefit of the shareholders
 For the benefit of all its stakeholders
 For the benefit of a higher ideal, going beyond merely satisfying the needs of its stakeholders.
2. Strategy. The commercial logic for the company. Strategy links purpose to behaviour in a
commercial, rational, left-brain way.
3. Values. The beliefs and moral principles that lie behind a company’s culture. A sense of mission
occurs when employees find their personal values aligned with the organizational values.
Values give meaning to the norms and behavioural standards in the company. Values are
strong motivators to act in the best interests of the purpose of the company. They can provide
a rational behavior that is just as strong as strategy, but in another, emotional, moral, ethical
and right-brain way. It is for this reason that the Ashridge framework has a diamond shape.
4. Policies and Behavioural Standards. Guidelines to help people to decide what to do on a day-
to-day basis.
3. Usages of the Ashridge Mission Model in Application:
 Helps to think clearly about mission.
 Helps to discuss mission with colleagues.
 Both for developing a new mission and analysing an existing mission.
 A corporate mission must not be confused with a corporate vision. A vision is a mental image
of a possible and desirable future state of the organization.
4. Steps in the Process in Ashridge Mission Model:
There are ten questions by which one can measure the quality of a mission statement are:
1. Purpose:
1. Does the statement describe an inspiring purpose that avoids playing to the selfish interests
of the stakeholders - shareholders, customers, employees, suppliers?
2. Does the statement describe the company’s responsibility to its stakeholders?
2. Strategy:
3. Does the statement define a business domain and explain why it is attractive?
4. Does the statement describe the strategic positioning that the company prefers in a way that
helps to identify the sort of competitive advantage it will look for?
3. Values:
5. Does the statement identify values that link with the organization’s purpose and act as
beliefs that employees can feel proud of?
6. Do the values ‘resonate’ with and reinforce the organization’s strategy?
4. Behavioural Standards:
7. Does the statement describe important behavioural standards that serve as beacons of the
strategy and the values?
8. Are the behavioural standards described in such a way that individual employees can judge
whether they have behaved correctly or not?
5. Character:
9. Does the statement give a portrait of the company and does it capture the culture of the
organization?
10. Is the statement easy to read?
5. Strengths and Advantages of the Ashridge Mission Model:
1. Combines strategic and cultural motivators to guide an organization.
2. The model is particularly useful to ensure that a company has a clear mission and it has
employees with a strong sense of mission.
3. Like the 7-S Framework of McKinsey, the Ashridge Mission Model emphasizes the need for a
fit between strategy and values. Additionally, the Ashridge model recognises the importance of
the link between the organizational shared values and the private values of employees and
managers.
4. Improves decision-making. Raises energy levels. Reduces the need for supervision. Promotes
constructive behaviour. Increases satisfaction and loyalty.
5. Puts corporate purpose as the corner stone and starting point of mission.
6. Limitations of the Ashridge Mission Model:
1. Having inappropriate values or an inappropriate sense of mission is a powerful negative
influence on employee behaviour.
2. Shared values and sense of mission often are extremely difficult to change and can become
an obstacle for change.
3. Strongly shared values or a strong sense of mission can lead to an insularity that becomes
xenophobic.
4. Creating a mission statement is often a time-and resources-consuming process.

5. A mission paper may be a ‘paper tiger’.
7. Assumptions of the Ashridge Model:
 Committed employees and teams perform more efficiently and more effectively than apathetic
employees and teams do.
 People connect themselves more easily to values than to abstract strategic concepts. A
mission must be clearly defined and managed. An intuitive understanding of mission is not
enough.
Table 3.1 How Ashridge Mission Model Works?
Components of Mission Statement Key Mission Statement Terms
1. PURPOSE 1. Why does the company exist?

1. Customers/clients/users 2. What is its reason for being?
2. Investors/shareholders/owners 3. For whose benefit does it exist?
3. Community/society 4. Employers/associates/workers
5. Management
6. Suppliers
2. STRATEGY 1. Fiscal approach

1. How does the company pursue 2. Market share
its strategic objectives? 3. Leverage
2. How does one identify the commercial 4. Sales, Profit, Return
rationale for the business? 5. Competition dominance
6. Long term perspectives
7. Global perspectives
8. Research and Development
3. VALUES 1. Cost consciousness

1. What does the company believe in? 2. Social responsibility
2. Setting priorities and basic beliefs, 3. Accountability
aspirations and philosophical 4. Commitment
priorities and moral rationale for 5. Employee well-being and Quality of life
business. 6. Training and Development and learning
4. STANDARDS OF BEHAVIOUR 1. Ethically, morally, honestly

1. How does it act or behave? 2. Professionally
and fairly. 3. Aggressively
4. Improvement oriented
5. Winning and achieving
6. Adapting and responding
7. Innovating
8. Empowering
MCKINSEY: 7 S FRAMEWORK:
1. What is the 7-S Framework?
Structure
Strategy Systems
Shared
Values
Skills Style
Staff
The 7-S Framework of McKinsey is a management model that describes 7 factors to organize
a company in an holistic and effective way. Together these factors determine the way in which a
corporation operates. Managers should take into account all seven of these factors, to be sure of
successful implementation of a strategy. Large or small. They’re all interdependent, so if we fail to
pay proper attention to one of them, this may affect all others as well. On top of that, the relative
importance of each factor may vary over time.
2. Origin and History of the 7-S Framework:
The 7-S Framework was first mentioned in “The Art Of Japanese Management” by Richard
Pascale and Anthony Athos in 1981. They had been investigating how Japanese industry had been
so successful. At around the same time that Tom Peters and Robert Waterman were exploring what
made a company excellent. The Seven S model was born at a meeting of these four authors in 1978.
It appeared also in “In Search of Excellence” by Peters and Waterman, and was taken up as a basic
tool by the global management consultancy company McKinsey. Since then it is known as their 7-
S model.
3. The Meaning of the 7-S Framework
1. Shared Values:
The interconnecting center of McKinsey’s model is: Shared Values. What does the organization
stands for and what it believes in. Central beliefs and attitudes.
2. Strategy:
Plans for the allocation of a firms scarce resources, over time, to reach identified goals.
Environment, competition, customers.
3. Structure:
The way in which the organization’s units relate to each other: centralised, functional divisions
(top-down); decentralised; a matrix, a network, a holding, etc.
4. Systems:
The procedures, processes and routines that characterize how the work should be done:
financial systems; recruiting, promotion and performance appraisal systems; information systems.
5. Staff:
Numbers and types of personnel within the organization.
6. Style:
Cultural style of the organization and how key managers behave in achieving the organization’s
goals.
7. Skills:
Distinctive capabilities of personnel or of the organization as a whole.
4. Strengths/Benefits of the 7-S Model Benefits:
 Diagnostic tool for understanding organizations that are ineffective.
 Guides organizational change.
 Combines rational and hard elements with emotional and soft elements.
 Managers must act on all Ss in parallel as all Ss are interrelated.
5. How to use the Model?
The model is based on the theory that, for an organization to perform well, these seven elements
need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs
to be realigned to improve performance, or to maintain alignment (and performance) during other
types of change.
Whatever the type of change - restructuring, new processes, organizational merger, new systems,
change of leadership, and so on - the model can be used to understand how the organizational
elements are interrelated, and so ensure that the wider impact of changes made in one area is taken
into consideration.
We can use the 7-S model to help analyze the current situation, a proposed future situation and
to identify gaps and inconsistencies between them. It’s then a question of adjusting and tuning the
elements of the 7-S model to ensure that organization works effectively once we reach the desired
endpoint.
Sounds simple? Well, of course not: Changing your organization probably will not be simple at
all! Whole books and methodologies are dedicated to analysing organizational strategy, improving
performance and managing change. The 7-S model is a good framework to help you ask the right
questions - but it won’t give you all the answers. For that you’ll need to bring together the right
knowledge, skills and experience.
6. 7-S Checklist Questions:
Here are some of the questions that you’ll need to explore to help you understand your situation
in terms of the 7-S framework. Use them to analyse your current situation first, and then repeat the
exercise for your proposed situation.
Strategy:
 What is our strategy?
 How to we intend to achieve our objectives?
 How do we deal with competitive pressure?
 How are changes in customer demands dealt with?

 How is strategy adjusted for environmental issues?
Structure:
 How is the company/team divided?
 What is the hierarchy?
 How do the various departments coordinate activities?
 How do the team members organize and align themselves?
 Is decision-making and controlling centralized or decentralized? Is this as it should be, given
what we’re doing?
 Where are the lines of communication? Explicit and implicit?
Systems:
 What are the main systems that run the organization? Consider financial and human resource
systems as well as communications and document storage.
 Where are the controls and how are they monitored and evaluated?
 What internal rules and processes does the team use to keep on track?
Shared Values:
 What are the core values?
 What is the corporate/team culture?
 How strong are the values?
 What are the fundamental values that the company/team was built on?
Style:
 How participative is the management/leadership style?
 How effective is that leadership?
 Do employees/team members tend to be competitive or cooperative?
 Are there real teams functioning within the organization or are they just nominal groups?
Staff:
 What positions or specializations are represented within the team?
 What positions need to be filled?
 Are there gaps in required competencies?
Skills:
 What are the strongest skills represented within the company/team?
 Are there any skill gaps?
 What is the company/team known for doing well?
 Do the current employees/team members have the ability to do the job?
 How are skills monitored and assessed?
SIMPLY SPEAKING...
Using the information you have gathered, now examine where there are gaps and
inconsistencies between elements. Remember you can use this to look at either your current
or your desired organization.
1. Start with your shared values: Are they consistent with your structure, strategy, and
systems? If not, what needs to change?
2. Then look at the hard elements. How well does each one support the others? Identify
where changes need to be made.
3. Next look at the other soft elements. Do they support the desired hard elements? Do they
support one another? If not, what needs to change?
4. As you adjust and align the elements, you’ll need to use an iterative (and often time
consuming) process of making adjustments, and then re-analysing how that impacts
other elements and their alignment. The end result of better performance will be worth
it.
LEVEL FIVE
THEORIES OF MISSION/VISION STATEMENT
1. PERSONAL MISSION THEORY: KEVIN LIM:

Kevin Lim studies and shares his interest in the wide-ranging aspects of management of growth,
cultural affordances of technology, focusing particularly on the pedagogical aspects of social media.
Through the use of popular culture, he makes it easy to understand various online phenomena via
his blog. Kevin is a social and budding management thinker and an aggressive online businessman
in property, real estate and photography.
Presently in the field of communication, his research work has ranged from the anti-censorship
of China, multi-dimensional regulation of online spam, social capital among non-profit organizations,
and the influence of blogs on purchasing decisions. He also gives social media related workshops
and produces user-centric guides at the Teaching and Learning Center (TLC), located in the University
at Buffalo of the State University of New York.
He believes that until we write our personal mission statement, we may not have the pleasure
of achieving an ultimate corporate mission and the vision statement for future strategic planning. Read
him through and between the lines:
IN SEARCH OF GUIDING FORCE:
“I believe that we often end up being unhappy with what we’re doing not because of where we
are, but because of how we don’t really know where we wanted to go in the first place.
It’s so important to have some form of direction in life, and while it’s hard to figure out our long-
term plans, it’s better to just have something good enough to get by. Making a judgement call, even
if it’s not the best one, is better than not making one at all. As students, we often get people asking
us what we’re doing now and where we plan to go for our future. Stating a clear course of action,
even if difficult or unsure, gives others something to hold onto and remember us by. As with all things
in life, nothing ever works in a straight line, so I accept that change is inevitable and as such, totally
excusable.
Before embarking on my dissertation quest, it became a natural for me build my personal mission
statement so I could see what I wanted in life (e.g., career). Dissertation writing should become more
passionate, which in turn makes the research more effective. This goes well with Alex Halavais’ idea
of how writing a dissertation should be like coming up with a book you’ve always wanted to write.
Thing is I get bored easily, so finding something really unique is going to be my challenge. Over at
43 things, about 60 people pledged to write a personal mission statement. After reading some of their
tips, I got started by using Franklin Covey’s Personal Mission Builder.”
PERSONAL MISSION STATEMENT:
Here’s my “Personal Mission” Statement for providing “vision” to my life:
To find happiness, fulfillment, and value in living I will:
REVERE admirable characteristics in others, such as being ambitious, committed, creative,
enthusiastic, educated, and self-reliant, and attempt to implement similar characteristics in my own
life.
RECOGNIZE my strengths and develop talents as a person who is a creative thinker, decision-
maker, good with words, good at sensing needs, good at making things happen, and working well
with people.
UTILIZE these talents in things I love to do, especially…fixing, writing, reading, blogging, swimming,
running, playing tennis, and listening to music.
ENVISION myself becoming a person who: My Dad thinks is compassionate, creative, and
educated. My Mom thinks is educated, creative, and responsible. Penny thinks is ambitious, caring,
and enthusiastic.
And I Will Remember “What Matters Most to Me” 20 years from now, I hope to be surrounded
by the most important people in my life. This is who they are and what I plan to be doing:
The most important people in my life include my parents, my siblings and my girlfriend. I would
be in a reputable career which engages my passions and makes enough for me to take care of those
I love.
If a six inch steel beam were placed across two skyscrapers, this is what I would be
willing to cross for:
Above all else, I would cross to save a life.
If I could spend one day in a great library studying anything I wanted, this is what I would
study:
I would love to study science fiction (is that possible?)
This is what I feel represents me, and why:
A cat would represent me best since it is smart and agile.
This is a time when I was deeply inspired:
When I saw greatness within the simplest of things.
If I could spend one hour with any person who ever lived, this is who it would be, and
what I would ask:
Steve Jobs, simply because he seems to have found a balance in life, yet remains mysteriously
interesting. I would ask him what he looks for in life.
I’m still not sure if this gives me the clarity I seek, so perhaps you could supplement it by telling
me things I might not realize about me. Getting feedback and improving on this statement is something
I see as a continuous process. Perhaps we can all help each other out. Start by building your own
Personal Mission Statement today!
2. REAL LIFE LEADERSHIP THEORY: KATES BRANDON:

Real life leadership: mission statement defines aim of a business, values statement the philosophy
“I’ve been dealing with Mission, Vision and Values statements for a dozen years. Here is how I’ve
come to understand their usefulness to leaders”
Values
RELATIONSHIPS IDEAS
Vision
Mission
ORGANIZATIONAL
STRUCTURE
A. Mission Statement: A Connecting Link:

A mission statement connects the fundamental ideas of the purpose and design of the business
to the structure of the business. If your mission lacks clarity, you may find your organization floundering
just doing things because you’ve always done them. When an organization loses its sense of mission,
it simply becomes a place where business processes are conducted. This is particularly true in large
complex organizations that find it easy to get “silo-ed” into separate functioning units that have little
relationship to the others.
“A number of years ago I did a project for a hosiery mill. We were dealing with changing their
production process. There were seventeen steps in the process of making a pair of socks. None of
the people at one stage knew what the people at the stage before or after did. It didn’t matter to them.
All that mattered was their specific task. Their relationship to the company lacked a clear sense of
mission. As a result, they just showed up did their job and left. The company implemented a different
approach which linked together the seventeen steps in a meaningful way that reduced cost, inventory
and increased efficiency. In the end though, it was too little too late, and the company closed.
When the mission or purpose of an organization is severed from the work of the business, you
end up with a collection of little fiefdoms, each protecting their little piece of turf. By work I’m talking
about everything that goes into the organizational structure, governance, programme (products and
services), operations and resource development.
So, it is vital that business have a clear sense of mission, and that mission be clearly structured
throughout their business.
B. Vision Statement: Provides Perspective:
A vision statement is different than a mission statement. Where the mission Statement
conceptualizes the organizational structure of the business, a vision statement provides a perspective
on how people work within that structure to create impact. When we focus on impact, or the difference
a person or process makes, we are seeing positive change occur. When the people of an organization
understand the potential that their contribution has, then a picture, a vision, of the ultimate benefit of
the organization can be realized.
C. Vision Statement: An Action Statement:
A vision statement is an action statement. It says, “We see this taking place through the work
of the people of XYZ Company.” It is the difference between a formal portrait of the CEO and a video
of people interacting with one another and with their customers. A mission statement touches more
left brain, logical thought about a business. An ideal vision statement is more right brain
allowing for a more creative picture of the effect of the business upon the people who receive
its products and services and those who produce and provide them.
D. Vision Statement: A Picture of Change:

A Vision statement is a picture of change. It you can’t show the difference that you seek to
create, then you don’t have a vision. The key to understanding a vision is: understanding the
actions of people within the structure of your organization. If you were able to take every little
action that people do in the course of a typical day, and look at it from the standpoint of the impact
that this creates for your market, then you are beginning to understand what a vision truly is.
E. Vision Statement: Clarifies Mission:
A Vision statement should clarify your Mission by making it real, less analytical, less dry. It
should inspire people to take pride in what they do. However, if your Vision is not doing that, then
the problem may be at the Values side of the diagram.
RELATIONSHIP
Shared
Values in Action Values
IMPACT IDEAS
Ethical Standards Value

Statements
ORGANIZATIONAL STRUCTURE
F. Value: Shared Values of a Company:

A values statement is very different from a mission or vision statement. It is not primarily focused
on the externals of the business. Rather, it is focused on those ideas that unite people together with
a common understanding of what the business stands for. If the mission of the organization is not
clear, then quite possibly the leadership lacks a clear sense of what the company stands for. We
normally think of values in ethical terms. In this sense these values provide a social boundary for
what is appropriate behaviour for the company.
The values of a company develop over time and become the standard by which the organization
is judged. If, to the founders, trust was a core value of the company, then decisions and actions
throughout the company will be focused on how they either enhance the expression of trust or
diminish it.
In the above diagram, you can see a bit of how values function in an organizational setting.
First, values that are essential to the health of the business become shared values that have
meaning and application within the relationships associated with the company.
If you have a strong values statement, then you will attract people who want to work for a
company who believes in those values.
If the values are just words on paper, then those people who come to a company expecting
one type of experience and finding another will leave and go somewhere else. It is important,
therefore, that the values are embedded in the policies and practices of the organization.
The company’s values must be integral to the organization’s governance, programme, operations
and resource development policies and practices.
A values statement articulates the shared values of the company. That statement becomes the
foundation of the ethical standards by which the company operates. Those same values become the
character of the work that takes place in the company. If the values are built on trustworthiness, pride
in performance and excellence in all that each person does, then that is what people will see in the
activity of the organization.
G. Values Statement: Not Abstract Principles:
When we talk about values, we are not simply talking about a set of abstract philosophic
principles that make people feel good. We are also setting a standard for personal conduct as a
member of the organization’s community. If we share the value of trust in relationships, then when
that trust is broken, we look to reestablish that trust because it is important in every aspect of what
we do.
“The difference between a values statement and mission and vision statements is more than the
language. It is the difference between someone working hard at what they do and someone who
works with a passion for doing their very best. A values statement addresses the human dimension
that exists in every organization. The mission and vision Statements address the organizational
structural dimension.”
H. Develop an Organizational Value Statement:
If your organization lacks a values statement, let me suggest that you consider creating one.
It may just be the difference between success that is sustainable and success that is just luck being
the in the right place at the right time. The process is similar to the creation of mission and vision
Statements. It needs to be a process that involves people in conversation about what the company
stands for and how that gets applied in aspects of the business.
3. STRATEGIC MANAGEMENT THEORY: SARK H. M.
An organization’s mission statement describes what the organization stands for and why it
exists. It explains the overall purpose of the organization and includes the attributes that distinguish
it from other organizations of its type.
An organization’s internal environment is composed of the elements within the organization,
including current employees, management, and especially corporate culture, which defines employee
behavior. Although some elements affect the organization as a whole, others affect only the manager.
A manager’s philosophical or leadership style directly impacts employees. Traditional managers give
explicit instructions to employees, while progressive managers empower employees to make many
of their own decisions. Changes in philosophy and/or leadership style are under the control of the
manager. The following sections describe some of the elements that make up the internal environment:
A. Organizational Mission Statement:
An organization’s mission statement describes what the organization stands for and why it
exists. It explains the overall purpose of the organization and includes the attributes that distinguish
it from other organizations of its type.
A mission statement should be more than words on a piece of paper; it should reveal a company’s
philosophy, as well as its purpose. This declaration should be a living, breathing document that
provides information and inspiration for the members of the organization. A mission statement should
answer the questions, “What are our values?” and “What do we stand for?” This statement provides
focus for an organization by rallying its members to work together to achieve its common goals.
But not all mission statements are effective in businesses. Effective mission statements lead to
effective efforts. In today’s quality-conscious and highly competitive environments, an effective mission
statement’s purpose is centered on serving the needs of customers. A good mission statement is
precise in identifying the following intents of a company:
 Customers — who will be served?
 Products/services — what will be produced?
 Location — where the products/services will be produced?
 Philosophy — what ideology will be followed?
B. Company Policies:
Company policies are guidelines that govern how certain organizational situations are addressed.
Just as colleges maintain policies about admittance, grade appeals, prerequisites, and waivers,
companies establish policies to provide guidance to managers who must make decisions about
circumstances that occur frequently within their organization. Company policies are an indication of
an organization’s personality and should coincide with its mission statement.
C. Formal Structure:
The formal structure of an organization is the hierarchical arrangement of tasks and people. This
structure determines how information flows within the organization, which departments are responsible
for which activities, and where the decision-making power rests.
Some organizations use a chart to simplify the breakdown of its formal structure. This organizational
chart is a pictorial display of the official lines of authority and communication within an organization.
D. Organizational Culture:
The organizational culture is an organization’s personality. Just as each person has a distinct
personality, so does each organization. The culture of an organization distinguishes it from others and
shapes the actions of its members.
Four Main Components:
Four main components make up an organization’s culture:
1. Values:
Values are the basic beliefs that define employees’ successes in an organization. For example,
many universities place high values on professors being published. If a faculty member is
published in a professional journal, for example, his or her chances of receiving tenure may be
enhanced. The university wants to ensure that a published professor stays with the university
for the duration of his or her academic career — and this professor’s ability to write for
publications is a value.
2. Heroes:
The second component is heroes. A hero is an exemplary person who reflects the image,
attitudes, or values of the organization and serves as a role model to other employees. A hero
is sometimes the founder of the organization (think Sam Walton of Wal-Mart). However, the
hero of a company doesn’t have to be the founder; it can be an everyday worker, such as hard-
working paralegal Erin Brockovich, who had a tremendous impact on the organization.
3. Rites and Rituals:

Rites and rituals, the third component, are routines or ceremonies that the company uses to
recognize high-performing employees. Awards’ banquets, company gatherings, and quarterly
meetings can acknowledge distinguished employees for outstanding service. The honourees
are meant to exemplify and inspire all employees of the company during the rest of the year.
4. Social Network:
The final component, the social network, is the informal means of communication within an
organization. This network, sometimes referred to as the company grapevine, carries the
stories of both heroes and those who have failed. It is through this network that employees
really learn about the organization’s culture and values.
E. Organizational Climates:
A by-product of the company’s culture is the organizational climate. The overall tone of the
workplace and the morale of its workers are elements of daily climate. Worker attitudes dictate the
positive or negative “atmosphere” of the workplace. The daily relationships and interactions of employees
are indicative of an organization’s climate.
F. Resources:
Resources are the people, information, facilities, infrastructure, machinery, equipment, supplies,
and finances at an organization’s disposal. People are the paramount resource of all organizations.
Information, facilities, machinery equipment, materials, supplies, and finances are supporting, non-
human resources that complement workers in their quests to accomplish the organization’s mission
statement. The availability of resources and the way that managers value the human and non-human
resources impact the organization’s environment.
G. Managerial Philosphies:
Philosophy of management is the manager’s set of personal beliefs and values about people and
work and as such, is something that the manager can control. McGregor emphasized that a manager’s
philosophy creates a self-fulfilling prophecy. Theory X managers treat employees almost as children
who need constant direction, while Theory Y managers treat employees as competent adults capable
of participating in work-related decisions. These managerial philosophies then have a subsequent
effect on employee behaviour, leading to the self-fulfilling prophecy. As a result, organizational
philosophies and managerial philosophies need to be in harmony.
H. Managerial Leadership Styles:
The number of co-workers involved within a problem-solving or decision-making process reflects
the manager’s leadership style. Empowerment means delegating to subordinates decision-making
authority, freedom, knowledge, autonomy, and skills. Fortunately, most organizations and managers
are making the move toward the active participation and teamwork that empowerment entails.
When guided properly, an empowered workforce may lead to heightened productivity and quality,
reduced costs, more innovation, improved customer service, and greater commitment from the
employees of the organization. In addition, response time may improve, because information and
decisions need not be passed up and down the hierarchy. Empowering employees makes good
sense because employees closest to the actual problem to be solved or the customer to be served
can make the necessary decisions more easily than a supervisor or manager removed from the
scene.
4. LEADERSHIP THEORY: LEADERS PROVIDE VISION, STRATEGY AND DEFINE

REALITY: MAX DEPREE:
MAX DEPREE:
Max DePree is an American writer, son of D.J. DePree, founder of ‘Herman Miller’ office furniture
company, he and his brother Hugh DePree assumed leadership of the company in the early 1960s.
He succeeded his brother Hugh as CEO in the mid-1980s and served in that capacity to 1990. His
book Leadership is an Art has sold more than 800,000 copies. In 1992, DePree was inducted into
Junior Achievement’s U.S. Business Hall of Fame.
DePree brought the ‘Herman Miller’ to the level of one of the most profitable Fortune 500
companies. Max DePree organizational theories contain pragmatic and solid business sense. In the
growth of “Herman Miller”, Max DePree made very smart hires that look unconventional on the
surface. Their hiring decisions always emphasized his quality and smart marketing.
A. Mission and Vision:
DePree’s leadership theory on mission and vision is based on his CEO experience and all his
experience with employees. One of his most famous quotes is: “The first responsibility of a leader
is to define reality. The last is to say thank you. In between, the leader is a servant.”
The management theory of Max DePree is based on the idea that leadership is an art. His
theory questions some of the basic ideas about leadership, such as whether leadership has a future.
His company thrived on diversity, and a belief that quality work can be done with openness, ideas,
joy, healing and dignity. The three dimensional theory is:
1. Leaders give workers the strategy and the vision of the organization.
2. Leaders need to remove obstacles and get out of the way for workers to perform their jobs.
3. DePree’s management theory is basically humanitarian, focussing on employee needs financially
and emotionally, and giving incentives to employees such as stock options in the company.
B. Leadership is an Art:
1. The first responsibility of a leader is to define reality. The last is to say thank you. In between
the two, the leader must become a servant and a debtor.
2. Leaders should leave behind them assets and a legacy. First, consider assets; certainly
leaders owe assets. Leaders owe their institutions vital financial health, and the relationships
and reputation that enable continuity of that financial health.
3. Leaders must deliver to their organizations the appropriate services, products, tools, and
equipment that people in the organization need in order to be accountable. In many institutions
leaders are responsible for providing land and facilities.
4. Besides owing assets to their institutions, leaders owe the people in those institutions certain
things. Leaders need to be concerned with the institutional value system which, after all, leads
to the principles and standards that guide the practices of the people in the institution. Leaders
owe clear statements of mission, vision the values of the organization. These values should be
broadly understood and agreed to and should shape our corporate and individual behaviour.
What is this value system based on? How is it expressed? How is it audited? These are not
easy questions to deal with.
5. Leaders are also responsible for future leadership. They need to identify, develop, and nurture
future leaders by adopting competencies and skills management system and strategic planning.
6. Leaders are responsible for such things as a sense of quality in the institution, for whether or
not the institution is open to influence and open to change. Effective leaders encourage contrary
opinions, an important source of vitality. Leaders can nurture the roots of an institution, about
a sense of continuity, about institutional culture.
7. Leaders owe a certain maturity. Maturity as expressed in a sense of self-worth, a sense of
belonging, a sense of expectancy, a sense of responsibility, a sense of accountability, and a
sense of equality. All this can happen by bringing in maturity in systems, standards, structure
and styles of management and using all these to achieve corporate goals by strategic management.
8. Leaders owe the corporation rationality. Rationality gives reason and mutual understanding to
programmes and to relationships. It gives visible order. Excellence and commitment and
competence are available to us only under the rubric of rationality. A rational environment
values trust and human dignity and provides the opportunity for personal development and self-
fulfillment in the attainment of the organization’s goals.
9. Leaders are obligated to provide and maintain momentum. Leadership comes with a lot of debts
to the future. There are more immediate obligations as well. Momentum is one. Momentum in
a vital company is palpable. It is not abstract or mysterious. It is the feeling among a group of
people that their lives and work are intertwined and moving toward a recognisable and legitimate
goal. It begins with competent leadership and a management team strongly dedicated to
aggressive managerial development and opportunities. This team’s job is to provide an environment
that allows momentum to gather. Momentum comes from a clear vision of what the corporation
ought to be, from a well-thought-out strategy to achieve that vision, and from carefully conceived
and communicated directions and plans that enable everyone to participate and be publicly
accountable in achieving those plans.
10. Leaders are responsible for effectiveness. Much has been written about effectiveness — some
of the best of it by Peter Drucker. He tells us is that efficiency is doing the thing right, but
effectiveness is doing the right thing.
5. TRANSFORMATION THEORY: JOHN P KOTTER:
Kotter holds that “the methods used in successful transformations are all based on one
fundamental insight: that major change will not happen for a long list of reasons”. Kotter holds that
the key to the success of a change programme is to move through the 8 stages of Kotter.
Additionally, addressing the 3 stages of transition as described by Bridges in a step by step
manner could allow a leader of change to better support the transformation required within people to
support the change effort.
From Kotter, the leading thought leader on change management, here are “Eight Steps to
Transform Your Organization:”
1. Establish a Sense of Urgency:
1. Examine market and competitive realities.
2. Identify and discuss crises, potential crises, or major opportunities.
3. For change to happen, it helps if the whole company really wants it. Develop a sense of urgency
around the need for change. This may help you spark the initial motivation to get things moving.
4. This isn’t simply a matter of showing people poor sales statistics or talking about increased
competition. Open an honest and convincing dialogue about what’s happening in the marketplace
and with your competition. If many people start talking about the change you propose, the
urgency can build and feed on itself.
A. What you can do:
1. Identify potential threats, and develop scenarios showing what could happen in the future.
2. Examine opportunities that should be, or could be, exploited.
3. Start honest discussions, and give dynamic and convincing reasons to get people talking and
thinking.
4. Request support from customers, outside stakeholders and industry people to strengthen your
argument.
5. Kotter suggests that for change to be successful, 75% of a company’s management needs to
“buy into” the change. In other words, you have to really work hard on step one, and spend
significant time and energy building urgency, before moving onto the next steps. Don’t panic
and jump in too fast because you don’t want to risk further short-term losses - if you act without
proper preparation, you could be in for a very bumpy ride.
B. Action Tools:
1. SWOT matrix.
2. Examine the market and competitive realities.
2. Form a Powerful Guiding Coalition:
Assemble a group with enough power to lead the change effort and encourage the group to work
as a team:
1. Convince people that change is necessary. This often takes strong leadership and visible
support from key people within your organization. Managing change isn’t enough - you have to
lead it.
2. You can find effective change leaders throughout your organization - they don’t necessarily
follow the traditional company hierarchy. To lead change, you need to bring together a coalition,
or team, of influential people whose power comes from a variety of sources, including job title,
status, expertise, and political importance.
3. Once formed, your “change coalition” needs to work as a team, continuing to build urgency and
momentum around the need for change.
A. What you can do:
1. Identify the true leaders in your organization.
2. Ask for an emotional commitment from these key people.
3. Work on team building within your change coalition.
4. Check your team for weak areas, and ensure that you have a good mix of people from different
departments and different levels within your company.
B. Action Tools:
1. 5 stages in team development tool.
3. Create a Vision:
Create a vision to help direct the change effort and develop strategies for achieving that vision
1. When you first start thinking about change, there will probably be many great ideas and
solutions floating around. Link these concepts to an overall vision that people can grasp easily
and remember.
2. A clear vision can help everyone understand why you’re asking them to do something. When
people see for themselves what you’re trying to achieve, then the directives they’re given tend
to make more sense.
A. What you can do:
1. Determine the values that are central to the change.
2. Develop a short summary (one or two sentences) that captures what you “see” as the future
of your organization.
3. Create a strategy to execute that vision.
4. Ensure that your change coalition can describe the vision in five minutes or less.
5. Practice your “vision speech” often.
B. Action Tools:
1. Vision building tool.
2. Develop strategies for achieving the vision.
3. Questionnaire to develop shared mission and vision statement.
4. Communicate the Vision:
Use every vehicle possible to communicate the new vision and strategies and teach new
behaviours by the example of the guiding coalition
1. What you do with your vision after you create it will determine your success. Your message
will probably have strong competition from other day-to-day communications within the company,
so you need to communicate it frequently and powerfully, and embed it within everything that
you do.
2. Don’t just call special meetings to communicate your vision. Instead, talk about it, at every
chance you get. Use the vision daily to make decisions and solve problems. When you keep
it fresh on everyone’s minds, they’ll remember it and respond to it.
3. It’s also important to “walk the talk.” What you do is far more important - and believable - than
what you say. Demonstrate the kind of behaviour that you want from others.
A. What you can do:
1. Talk often about your change vision.
2. Openly and honestly address peoples’ concerns and anxieties.
3. Apply your vision to all aspects of operations - from training to performance reviews. Tie
everything back to the vision.
4. Lead by example.
B. Action Tools:
1. Communication plan template.
2. Storytelling tool.
3. Have the vision put up on screen savers, posters, etc.
5. Empower Others to Act on the Vision:
Get rid of obstacles to change Change systems or structures that seriously undermine the vision
Encourage risk taking and non-traditional ideas, activities, and actions:
1. If you follow these steps and reach this point in the change process, you’ve been talking about
your vision and building buy-in from all levels of the organization. Hopefully, your staff wants
to get busy and achieve the benefits that you’ve been promoting.
2. But is anyone resisting the change? And are there processes or structures that are getting in
its way?
3. Put in place the structure for change, and continually check for barriers to it. Removing
obstacles can empower the people you need to execute your vision, and it can help the change
move forward.
A. What you can do:
1. Identify, or hire, change leaders whose main roles are to deliver the change.
2. Look at your organizational structure, job descriptions, and performance and compensation
systems to ensure they’re in line with your vision.
3. Recognize and reward people for making change happen.
4. Identify people who are resisting the change, and help them see what’s needed.
5. Take action to quickly remove barriers (human or otherwise).
B. Action Tools:
Remove obstacles, encourage risk taking and non-traditional ideas, activities, and actions, so
that those who want to make the vision a reality can do so.
6. Plan for and Create Short-Term Wins:
Plan for visible performance improvements. Create those improvements Recognize and reward
employees involved in the improvements:
1. Nothing motivates more than success. Give your company a taste of victory early in the change
process. Within a short time frame (this could be a month or a year, depending on the type of
change), you’ll want to have results that your staff can see. Without this, critics and negative
thinkers might hurt your progress.
2. Create short-term targets - not just one long-term goal. You want each smaller target to be
achievable, with little room for failure. Your change team may have to work very hard to come
up with these targets, but each “win” that you produce can further motivate the entire staff.
A. What you can do:
 Look for sure-fire projects that you can implement without help from any strong critics of the
change.
 Don’t choose early targets that are expensive. You want to be able to justify the investment in
each project.
 Thoroughly analyze the potential pros and cons of your targets. If you don’t succeed with an
early goal, it can hurt your entire change initiative.
 Reward the people who help you meet the targets.
B. Action Tools:
Publicly recognise and reward people who make wins possible through use of the rewards and
recognition guidelines.
7. Consolidate Improvements and Produce still more Change:
Use increased credibility to change systems, structures, and policies that don’t fit the vision.
Hire, promote, and develop employees who can implement the vision. Reinvigorate the process with
new projects, themes, and change agents:
1. Kotter argues that many change projects fail because victory is declared too early. Real change
runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term
change.
2. Launching one new product using a new system is great. But if you can launch 10 products,
that means the new system is working. To reach that 10th success, you need to keep looking
for improvements.
3. Each success provides an opportunity to build on what went right and identify what you can
improve.
A. What you can do:
1. After every win, analyze what went right and what needs improving.
2. Set goals to continue building on the momentum you’ve achieved.
3. Learn about kaizen, the idea of continuous improvement.
4. Keep ideas fresh by bringing in new change agents and leaders for your change coalition.
B. Action Tools:
Hire, promote or develop people who can implement the change vision.
8. Institutionalize New Approaches:
 Articulate the connections between the new behaviours and organizational success
 Develop the means to ensure leadership development and succession
1. Finally, to make any change stick, it should become part of the core of your organization. Your
corporate culture often determines what gets done, so the values behind your vision must show
in day-to-day work.
2. Make continuous efforts to ensure that the change is seen in every aspect of your organization.
This will help give that change a solid place in your organization’s culture.
3. It’s also important that your company’s leaders continue to support the change. This includes
existing staff and new leaders who are brought in. If you lose the support of these people, you
might end up back where you started.
A. What you can do:
 Talk about progress at every chance you get. Tell success stories about the change process,
and repeat other stories that you hear.
 Include the change ideals and values when hiring and training new staff.
 Publicly recognise key members of your original change coalition, and make sure the rest of
the staff - new and old - remembers their contributions.
 Create plans to replace key leaders of change as they move on. This will help ensure that their
legacy is not lost or forgotten.
B. Action Tools:
 Institutionalise the new approaches, articulate the connection between new behaviours, the
organisation’s strategic objectives and organisational success and sustainability.
 Tell vivid stories over and over about the new organization.
 Make sure induction/orientation programmes reflect the new way of working.
 Use the promotions process to place people who act according to the new values, norms and
ways into visible and influential positions.
 Create better performance through customer and productivity oriented behaviour, better leadership
and more effective management.
 Develop the means to ensure leadership development through succession.
LEVEL SIX
CONCEPTUAL FRAMEWORK: DEVELOPING MISSION AND

VISION STATEMENTS IN STRATEGIC PLANNING
1. THE BEGINNING:
Essential to a good strategic plan are clear statements of core values, vision, purpose and
mission. In strategic planning there are differing ways in which the words vision and mission are
used. There is no particular way that is standard or correct. Here are two ways in which the words
“vision” and “mission” are often used:
A. Vision:
 A view of where an organization wants to be or what it wants to look like at some point in the
future; a picture of the ideal state of the organization and/or its impact on society.
 A view of who we are as an organization.
B. Mission:
 A declaration of organizational purpose that states, who it is, who it serves, what needs it
meets, what it does to respond to those needs, and to what end
 A brief and memorable statement of the essential purpose of an organization.
C. Three Statements in Strategic Planning:
 A mission statement of the more comprehensive type.
 A vision statement that gives a view of our ideal future and impact
 A purpose statement that is very short and memorable, like a tag line
2. RATIONALE IN DEVELOPING MISSION AND VISION STATEMENT:
1. JOHN KOTTER: IN “ LEADING CHANGE”:
A professor of leadership at the Harvard Business School, Kotter gives an eight-stage process
for leading change, the third of which is “Developing Vision and Strategy”
A. Vision:
“Vision refers to a picture of the future with some implicit or explicit commentary on why people
should strive to create future.”
B. Good Vision Statement:
Kotter explains that in a change process, good vision serves three important purposes:
 It clarifies the general direction for change.
 It motivates people to take action in the right direction.
 It helps to coordinate the actions of different people.
2. JAMES KOUZES AND BARRY POSNER: IN “THE LEADERSHIP CHALLENGE”
Kouzes is chairman emeritus of the Tom Peters Group and Posner is Dean of the Leavey
School of Business and Administration at Santa Clara University. Drawing from a research database
of more than 60,000 leaders and constituents, the authors discovered recurring patterns of success
and formulated the “Five Fundamental Practices of Exemplary Leadership” presented in this book.
The second of these is “Inspiring a Shared Vision.”
A. Vision: An Ideal and Unique Image of Future:
“We define vision as an ideal and unique image of the future.” “Visions are statements of
destination, of the ends of our labour; they are therefore future-oriented and are made real over
different spans of time.”
B. Vision Statement: Must Appeal to all Who Have Stake in it:
“A vision is a mental picture of what tomorrow will look like. It expresses our highest standards
and values. It sets us apart and makes us feel special. It spans years of time and keeps us focused
on the future. And if it’s to be attractive to more than an insignificant few, it must appeal to all of those
who have a stake in it.”
3. GIL RENDLE AND ALICE MANN: IN HOLY CONVERSATIONS:
Vision Statement: Draw a Picture of Future:
“A vision statement is a word picture of the future of what our congregation would look like if we
were, in fact, able to fulfill our mission statement. It identifies what would be different if we were
faithful. It includes hints of the criteria by which we will measure our ministry by describing what will
be different about us in three to five years. Vision statements are descriptive and therefore usually
not as brief and concise as mission statements. They draw a picture of a future that is sufficiently
rich in detail to offer some direction and guidance for the trip.”
4. JOHN BRYSON: IN STRATEGIC PLANNING FOR PUBLIC AND NON-PROFIT
ORGANIZATION:
John Bryson, a professor of planning and public affairs at the University of Minnesota, was
influential in the strategic planning models advocated by the National Center for Non-profit Boards.
A. Vision:Helps to Achive Full Potential:
A vision statement is a “clear and succinct description of what the organization or community
should look like after it successfully implements its strategies and achieves its full potential.”
B. Mission and Vision: Operate in Tandem:
“A mission outlines the organizational purpose while a vision goes on to describe how the
organization will look when it is working extremely well in relation to its environment and its key
stakeholders.”
5. PETER SENGE: IN “ THE FIFTH DISCIPLINE”: THE ART AND THE PRACTICE OF
LEARNING ORGANIZATION:
Shared Vision: A Must for a Learning Organization to Establish Goals:
“You cannot have a learning organization without shared vision. Without a pull toward some goal
which people truly want to achieve, the forces in support of the status quo can be overwhelming.
Vision establishes an over reaching goal. The loftiness of the target compels new ways of thinking
and acting. A shared vision also provides a rudder to keep the learning process on course when
stresses develop. Learning can be difficult, even painful. With a shared vision, we are more likely to
expose our ways of thinking, give up deeply held views, and recognise personal and organizational
shortcomings. All that trouble seems trivial compared with the importance of what we are trying to
create.”
6. JAMES COLLINS AND JERRY PORRAS: IN ‘BUILT TO LAST’:

Collins is the author of the current bestseller Good to Great. Both authors have been associated
with the Stanford University School of Business where Porras currently teaches and directs the
Executive Programme in Organizational Change.
Vision Consists of Core Ideology and Envisioned Future:
“A well-conceived vision consists of two major components — core ideology and an envisioned
future.”
A. Core Ideology:
Core ideology consists of both core values and core purpose:
Core values are the organization’s essential and enduring tenets — a small set of timeless
guiding principles that have no external justification; they have intrinsic value and importance to those
inside the organization.
Core purpose…is the organization’s fundamental reason for being.
B. Envisioned Future Consists of two Parts:
 A ten-to thirty-year BHAG (Big Hairy Audacious Goal).
 Vivid descriptions of what it will be like when the organization realises the BHAG.
Example One: DARE - A MARTIAL ART COMPANY:
Defence Against Rape and Eveteasers: A Martial Art Organization in Mumbai, India,
A. Our Mission Statement:
1. Teach Avoidance of first Hostile Intrusion (To avoid hostile situations)
2. Teach Verbal and Eye Response to Hostile Intrusion (When he comes uncomfortably close)
3. Teach Reaction to First Physical Contact. (When he grabs your hand)
4. Teach Use of Force to Counter Aggression. (When he starts using force)
5. Teach Defence Tactics to Sexual Assault. (When tries to tear your clothes)
6. Teach Survival and Escape Maneuvers in attempted Rape. (When he tries to penetrate)
7. Teach a Fitness Programme for Surviving Adversity. (The exercises to get fit in a short time)
8. Educate about Legal perspectives in Sexual offence (The law and what is to be done)
B. Our Vision Statement:
Trouble comes when it is least expected. “What happens to others need not happen to me” is
a common rationalisation among women. We have to prepare to protect our women against the
unknown and untimely enemy in this violent and unpredictable world that we live in. “Even
Fortune favours the Prepared”. We would cherish to be the most preferred martial art and kick
boxing teaching organization within next 3-5 years.
1. Non-Consensual Mission Statements : There is much less consensus on mission statements.
This is the type of advocated by Bryson, which answers six questions:
1. Who are we?
2. What needs to we exist to meet?

3. What do we do to meet those needs?
4. Who do we serve?
5. What are our philosophy, values and culture?
6. What makes us distinctive or unique?
Here is an example of this type of mission statement
Example Two: Dignity Foundation Mumbai: A NGO for Cause and Care of Senior
Citizens Since 1995:
1. Mission:
 We will provide opportunities that inspire and motivate seniors to lead active and meaningful
lives post-retirement.
 We will facilitate seniors to derive self esteem i.e., dignity, through involving themselves in
activities that promote “successful” ageing.
 We will provide best-in-class social support systems (Elder Care, Housing, Companionship,
etc.) that deliver care facilities for families where none exist.
 We will provide a wide range of innovative services designed to enrich every aspect of the
lives of seniors.
 Provide information to seniors through publishing, holding seminars and discussions.
 Undertake various services for their support and welfare and enable them to live productive,
meaningful and interesting lives, drawing upon their knowledge, skills and experience.
 Construct a database to determine needs of senior citizens in India and devise ways to
meet them.
 Build awareness by dissemination of such data. Mobilise senior citizens into an identity
group. Undertake advocacy with government and public welfare bodies.
2. Mission: Succinct and Memorable Statement of Purpose: The other type of mission
statement is the succinct and memorable statement of purpose.
Example Three: Microsoft Technologies:
Mission: At Microsoft, we work to help people and businesses throughout the world realise their
full potential.
Vision: “A personal computer in every home running microsoft software”
Example Four: Ford Motors:
Mission: We are a global family with a proud heritage passionately committed to providing
personal mobility for people around the world.
Vision: To become the world’s leading consumer company for automotive products and services.
3. COMPONENTS OF MISSION AND VISION: RENDLE AND MANN:

They make the observation that there are two components to mission and vision statements: the
axiomatic and unique.
A. Axiomatic: Pertains to Accepted Truth:
Axiomatic elements could be true of any other organization. For example, the mission statements
of DARE and Dignity Foundation could be true of other such organizations. But that does not
make those statements less valuable. They are very powerful in the context of their own
perspectives. Internally, those statements provide a clear sense of the organization’s basic
purpose.
B. Unique: Specific or Distinctive:
Unique elements are distinctive to that organization. For example, the mission and vision
statements of Microsoft and Ford Motors are distinctive to these two organizations.
Some people prefer this shorter kind of mission statement or vision statement, others do not.
The choice does not need to be either/or. Both types of statements are valuable. Here, are
some more examples of vision statement in this “One liner tags” category:
1. Siemens: Where technology touches lives.
2. Dupont: Better things for better living through chemistry.
3. Hyundai: Building a better world through innovative technology.
4. Nokia: Connecting people.
5. Xerox: The document company.
6. IBM: Solutions for a small planet.
7. Philips: Let’s make things better.
8. BPL: Believe in the best.
4. FINDING TRUE CORE VALUES:
Core values are the most cherished beliefs and principles that guide an organisation if the list
of core values has too many (preferably three or four but not more than five or six) or if no
process has been used for forced-selectivity to determine the core values, the values on the
hit list are not really “core” values. Again, here are some insights that support this view.
A. JAMES COLLINS AND JERRY PORRAS: IN ‘BUILT TO LAST’
“In identifying the core values of your organization, push with relentless self-honesty for truly
core values. If you articulate more than five or six, there’s a good chance you are not getting
down to the essentials, and probably confusing core values (which do not change) with
operating practices, business strategies, and cultural norms (which should be open for change).
Remember, these values must stand the test of time.”
B. KEN BLANCHARD: IN ‘LEADING AT A HIGHER LEVEL’:
“Most organizations that do have values either have too many values or have not rank-ordered
them. Research shows the people can’t focus on more than three or four values that really
impact behaviour.” They also found that values must be rank-ordered to be effective.
LEVEL SEVEN
INDIA INC.: MISSION AND VISION STATEMENTS
1. RELIANCE COMMUNICATIONS: MISSION AND VISION:

“We will leverage our strengths to execute complex global-scale projects to facilitate leading-
edge information and communication services affordable to all individual consumers and businesses
in India.
We will offer unparalleled value to create customer delight and enhance business productivity.
We will also generate value for our capabilities beyond Indian borders and enable millions of
India’s knowledge workers to deliver their services globally.”
2. TATA COMMUNICATIONS: MISSION AND VISION:

“Deliver a new world of communications to advance the reach and leadership of our customers.
Invest in building long-lasting relationships with customers and partners and lead the industry in
responsiveness and flexibility.
Build leading-edge IP-leveraged solutions advanced by our unmatched global infrastructure and
leadership in emerging markets.”
3. BHARTI AIRTEL:
Mission:
We will meet the mobile communication needs of our customers through:
 Innovative products and service
 Cost efficiency
 Unified Messaging Solutions
Vision
“To provide global telecom services and delight customers.”
4. NTPC LIMITED:
Mission:
“Develop and provide reliable power, related products and services at competitive prices,
integrating multiple energy sources with innovative and eco–friendly technologies and contribute to
society”
Vision:
“A world class integrated power major, powering India’s growth, with increasing global presence”
5. LG ELECTRONICS INDIA: VISION AND MISSION:

“LG Electronics is pursuing the vision of becoming a true global digital leader, attracting customers
worldwide through its innovative products and design. The company’s goal is to rank among the top
3 consumer electronics and telecommunications companies in the world by 2010. To achieve this,
we have embraced the idea of “Great Company, Great People,” recognizing that only great people
can create a great company.
6. ADITYA BIRLA GROUP:

Vision:
To be a premium global conglomerate with a clear focus on each business.
Mission:
To deliver superior value to our customers, shareholders, employees and society at large.
Values:
 Integrity
 Commitment
 Passion
 Seamlessness
 Speed
7. AVIVA LIFE INSURACE:
Vision:
Aviva - where exceeding expectations through innovative solutions is “our” way of life
This is the compelling vision that Aviva India has created through the active contribution of its
employees. These lines not only define the way we live and work but also serve as a reminder.
To deliver the best to our customers, shareholders, colleagues, partners and employees at all
times.
Core Values:
Integrity, Customer centricity, Passion for winning, Innovation and Empowered team that we
have collectively defined and committed to working towards.
8. GODREJ CONSUMER PRODUCTS LTD: VISION AND MISSION:

“We are dedicated to DELIVER SUPERIOR STAKEHOLDER VALUE by providing solutions to
existing and emerging consumer needs in the Household and Personal Care business”. We will
achieve this through ENDURING TRUST and RELENTLESS INNOVATION delivered with PASSION
and ENTREPRENEURIAL SPIRIT.”
9. MAHINDRA AND MAHINDRA LTD:

Vision:
Indians are second to none in the world. The Founders of our nation and of our Company
passionately believed this. We will prove them right by believing in ourselves and by making Mahindra
and Mahindra Limited known world-wide for the quality of its products and services.
Mission:
We don’t have a group-wide mission statement. Our Core Purpose is what makes all of us want
to get up and come to work in the morning.’
10. INFOSYS:
Vision:
We believe a strong, stable and secure home is the answer to many problems we face today.
Our dream is to build homes, not just for a selected few but for everyone. Affordable homes built on
strong foundations, to bring you closer to nature, to happiness, and to yourself.
Mission:
To make a difference to the way people live.
11. ITC LIMITED:

Vision:
“Sustain ITC’s position as one of India’s most valuable corporations through world class
performance, creating growing value for the Indian economy and the company’s stakeholders.”
Mission:
“To enhance the wealth generating capability of the enterprise in a globalizing environment,
delivering superior and sustainable stakeholder value”
12. POLARIS SOFTWARE LAB LTD:

Vision:
 Create the environment to attain personal mastery to push new frontiers
 Unleash the collective knowledge potential
 Achieve global stature by helping customers win in their market place
 Grow the value of Polaris every year
 Anchor the family and its aspirations
 Impact the society at large
 Rooted in Polaris Values – Passion, Humility, Integrity, Respect, FUN - ‘PHIR FUN’
Mission:
“To be a reliable and responsive Techno-Business Solution partner and provide cost-effective,
timely solution, meeting customer expectation through continuous process improvement and Win-Win
relationships in the banking, financial services and insurance space”
13. NIRMA:
Nirma is a customer-focussed company committed to consistently offer better quality products
and services that maximise value to the customer.
This customer-centric philosophy has been well emphasised at Nirma through:
 Continuously exploring and developing new products and processes.
 Laying emphasis on cost effectiveness.
 Maintaining effective Quality Management System.

 Complying with safety, environment and social obligations.
 Imparting training to all involved on a continuous basis.
 Teamwork and active participation all around.
 Demonstrating belongingness and exemplary behaviour towards organisation, its goals and
objectives.
Nirma is a phenomenon and synonymous with Value for Money. The brand transcends the
specific dynamic of any particular product category, which is best captured in its above mission
statement - a statement of sustained innovation, an unceasing effort to deliver better value to consumers,
through better product quality.
14. DABUR INDIA LTD:

Vision:
Dedicating to the Health and well-being of every house-hold.
Mission:
The timing marks the end of our previous four year business plan that was crafted for the year
2002-06 and comes to an end with this fiscal. The new plan envisages an aggressive strategy built
around three pillars. Expansion, Acquisition and Innovation across various markets and product
segments, to drive growth. We expect to double our sales and profits by the end of fiscal 2009-10
with this plan”.
15. TATA CHEMICALS LIMITED:

Vision:
Enrich the quality of life by offering products and services that meet the essential needs of
people.
Mission:
We shall be the most respected company in the businesses and geographies we operate in. Our
growth and success will be achieved by:
 Enhancing the value we deliver to our customers
 Being globally competitive
 Internationalisation of our business
 Improving shareholder value
 Commitment to corporate sustainability
 Strengthening stakeholder relationships
 Providing new and innovative offerings
Employees are our strength, and we will create an environment that fosters achievement, learning
and teamwork.
16. WIPRO:
Vision:
 Having already achieved the pinnacles of process and quality credentials (through ISO 9000,
SEI CMM, PCMM and Six Sigma), Wipro’s Vision is focussed on attaining leadership in the
areas of business, customer and people.
 Business Leadership: Among the top 10 Information Technology Services companies globally
and the No.1 Information Technology company in India.
 Customer Leadership: The No.1 choice of customers through innovative solutions and Six
Sigma processes.
 People Leadership: Among the top 10 most preferred employers globally by creating an
environment of empowerment, intellectual challenge and wealth sharing.
 Brand Leadership: Wipro to be among the 5 most admired brand in India.
17. ICICI BANK:
Vision:
To be the leading provider of financial services in India and a major global bank.
Mission:
We will leverage our people, technology, speed and financial capital to:
 be the banker of first choice for our customers by delivering high quality, world-class products
and services.
 expand the frontiers of our business globally.
 play a pro-active role in the full realisation of India’s potential.
 maintain a healthy financial profile and diversify our earnings across businesses and geographies.
 maintain high standards of governance and ethics.
 contribute positively to the various countries and markets in which we operate.
 create value for our stakeholders.
18. HCL TECHNOLOGIES:
Mission:
“To provide world-class information technology solutions and services to enable our customers
to serve their customers better”

Vision:
“Our Vision is to become a world class organization. The hallmark of this vision has to be total
customer satisfaction. This can be achieved only by offering products of consistent quality at a
competitive price, meeting delivery schedules and commitments.” Infosys’ Vision is to be a globally
respected corporation that provides best-of-breed business solutions, leveraging technology, delivered
by best-in-class people
Mission:
Infosys’ Mission Statement is to achieve their objectives in an environment of fairness, honesty,
and courtesy towards their clients, employees, vendors and society at large
20. HINDUSTAN PETROLEUM CORPORATION LTD:

Vision:
To be a world class energy company known for caring and delighting the customers with high
quality products and innovative services across domestic and international markets with aggressive
growth and delivering superior financial performance. The company will be a model of excellence in
meeting social commitment, environment, health and safety norms and in employee wel - fare and
relations.
Mission:
HPCL, along with its joint ventures, will be a fully integrated company in the hydro-carbons
sector of exploration and production, refining and marketing; focussing on enhancement of productivity,
quality and profitability; caring for customers and employees; caring for environment protection and
cultural heritage.
It will also attain scale dimensions by diversifying into other energy related fields and by taking
up transnational operations.
21. ESSAR GROUP:

Vision:
We will be a respected global entrepreneur, through the power of Positive Action.
Mission:
We are committed to innovative growth, through our personal passion, reinforced by a professional
mindset, creating value for all those we touch.
22. JET AIRWAYS

Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice
carrier for the travelling public and set standards, which other competing airlines will seek to match.
Jet Airways will achieve this pre-eminent position by offering a high quality of service and
reliable, comfortable and efficient operations.
Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability,
achieving healthy, long-term returns for the investors and providing its employees with an environment
for excellence and growth.
23. CADBURY INDIA LTD.:

“At Cadbury PLC, our core purpose is working together to create brands people love.”
The core purpose captures the spirit of what we are trying to achieve as a business.
We collaborate and work as teams to convert products into brands.
24. JINDAL STEEL:

Vision:
To become a global player in Cold Rolled speciality material through strong commitment to
innovation, human resources developement and customer focus.
Mission:
Be the preferred supplier by providing on time the best possible quality Cold Rolled Speciality
material at the lowest possible cost.
25. BIRLA SUN LIFE MUTUAL FUND:

Mission:
To consistently pursue investor’s wealth optimization
Vision:
To be the most trusted name in investment and wealth management, to be the preferred employer
in the industry and to be a catalyst for growth and excellence of the asset management business in
india.
26. RANBAXY
Mission:
There are two key aspects to SRL’s past and future success: our vision of maintaining world
class standard and the values that we live by every day, as a company. To reflect our role as an
industry leader and to focus our efforts on the opportunities ahead, our mission in delivering is as
follows:
Vision:
The Company is driven by its vision to achieve significant business in proprietary prescription
products by 2012 with a strong presence in developed markets. It aspires to be amongst the Top 5
global generic players and aims at achieving global sales of US $5 Bn by 2012.
LEVEL EIGHT
FORTUNE 500 COMPANIES: MISSION AND VISION

STATEMENTS
1. COCA-COLA:
Mission:
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company
and serves as the standard against which we weigh our actions and decisions.
 To refresh the world...
 To inspire moments of optimism and happiness...
 To create value and make a difference.
 Be the Brand - Inspire creativity, passion, optimism and fun
Vision:
Our vision serves as the framework for our roadmap and guides every aspect of our business
by describing what we need to accomplish in order to continue achieving sustainable, quality growth.
 People: Be a great place to work where people are inspired to be the best they can be.
 Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy
people’s desires and needs.
 Partners: Nurture a winning network of customers and suppliers, together we create mutual,
enduring value.
 Planet: Be a responsible citizen that makes a difference by helping build and support sustainable
communities.
 Profit: Maximise long-term return to shareowners while being mindful of our over-all responsibilities.
 Productivity: Be a highly effective, lean and fast-moving organization.
Our Winning Culture:
Our winning culture defines the attitudes and behaviours that will be required of us to make our
2020 Vision a reality.
Live Our Values:
Our values serve as a compass for our actions and describe how we behave in the world.
 Leadership: The courage to shape a better future.
 Collaboration: Leverage collective genius.
 Integrity: Be real.
 Accountability: If it is to be, it’s up to me.
 Passion: Committed in heart and mind.
 Diversity: As inclusive as our brands.
 Quality: What we do, we do well.
Focus On the Market:

 Focus on needs of our consumers, customers and franchise partners.
 Get out into the market and listen, observe and learn.
 Possess a world view.
 Focus on execution in the marketplace every day.
 Be insatiably curious.
Work Smart:
 Act with urgency.
 Remain responsive to change.
 Have the courage to change course when needed.
 Remain constructively discontent.
 Work efficiently.
Act Like Owners:
 Be accountable for our actions and inactions.
 Steward system assets and focus on building value.
 Reward our people for taking risks and finding better ways to solve problems.
 Learn from our outcomes — what worked and what didn’t.
2. DELL:
Mission:
Dell’s mission is to be the most successful Computer Company in the world at delivering the
best customer experience in markets we serve. In doing so, Dell will meet customer expectations of:
 Highest quality.
 Leading technology.
 Competitive pricing.
 Individual and company accountability.
 Best-in-class service and support.
 Flexible customisation capability.
 Superior...
Vision:
It’s the way we do business. It’s the way we interact with the community. It’s the way we
interpret the world around us — our customers’ needs, the future of technology, and the global
business climate. Whatever changes the future may bring our vision — Dell Vision — will be our
guiding force.
So Dell needs full customer satisfaction. In order to become the most successful computer
company, they need the newest technology and loyal customers.
3. PEPSICO:
At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but
the right thing to do for our business.
Our Mission:
Our mission is to be the world’s premier consumer products company focussed on convenient
foods and beverages. We seek to produce financial rewards to investors as we provide opportunities
for growth and enrichment to our employees, our business partners and the communities in which we
operate. And in everything we do, we strive for honesty, fairness and integrity.
Our Vision:
“PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate
– environment, social, economic – creating a better to-morrow than today.”
Our vision is put into action through programmes and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly
sustainable company.
Performance with Purpose:
At PepsiCo, we’re committed to achieving business and financial success while leaving a positive
imprint on society – delivering what we call Performance with Purpose.
Our approach to superior financial performance is straightforward – drive shareholder value. By
addressing social and environmental issues, we also deliver on our purpose agenda, which consists
of human, environmental, and talent sustainability.
4. DELPHI - ISS:
Mission:
To be the global leader in automotive systems and related product lines. We must work together
with employees, suppliers and stakeholders to profitably provide high value solutions to our customers.
Vision:
Be recognised by our customers as their best supplier.
5. DUPONT:
Mission:
Sustainable Growth: Increasing shareholder and societal value while reducing our environmental
footprint.
Vision:
Our vision is to be the world’s most dynamic science company, creating sustainable solutions
essential to a better, safer, healthier life for people everywhere.
We will be a pacesetter in improving every aspect of our operations with a total commitment to
meeting the needs of our customers in Canada and abroad with continuously improving, high-value
offerings.
6. BANK OF CHINA:
Mission:
 Build customer satisfaction and provide quality and professional service.
 Offer rewarding career opportunities and cultivate staff commitment.
 Create values and deliver superior returns to shareholders.
Vision:
 To be customer’s premier bank.
Core Values:
 Social Responsibility — We care for and contribute to our communities
 Performance — We measure results and reward achievement
 Integrity — We uphold trustworthiness and business ethics
 Respect — We cherish every individual
 Innovation — We encourage creativity
 Teamwork — We work together to succeed
7. CITIGROUP:
Mission:
To create world-class operations capabilities that deliver unmatched values to Citigroup through:
Product Expertise - Cultivate in-depth expertise in chosen financial products, serviced on an
end-to-end basis supporting multiple geographies.
Delivery Excellence - Ensuring effective and efficient delivery by leveraging scale and a relentless
focus on continuous improvement, compliance and controls.
Partner Business Excellence - Building a global network, fostering knowledge transfer, creating
“next generation” practices and promoting transparency with clients.
Enhancing Human Capital Competencies - Create an environment that provides people
opportunity to realise their full potential resulting in becoming the employer of choice in the industry.
Industry Leadership - Achieving a premier position in the Indian BPO market and driving
process sophistication for the financial services industry, globally.
VISION:
To be the leader in providing business process management services to help our customers.
8. FORTIS:
Mission:
Fortis provides compelling customer solutions creatively. As one of Europe’s most dynamic and
sustainable financial services brands; we deliver specialized, innovative and pragmatic customer
solutions across a network of channels and by leveraging our operational and entrepreneurial expertise.
Vision:
In an increasingly complex, yet ever more convergent world, innovation, speed and agility will
be as crucial as scale, track record and reach. We will stand out as a professional international
financial services brand, recognised for our ability to deliver superior and sustainable stakeholder
value by constantly anticipating and surpassing the needs of customers, investors, employees,
partners and communities wherever, we do business.
9. HONEYWELL TECHNOLOGY SOLUTIONS:

Mission:
Maximise the value and impact on Honeywell businesses and customers by providing technology,
product and business solutions and services setting standards of world class performance.
Vision:
Be the premier growth company delivering unsurpassed value to Honeywell customers by
providing Innovative total solutions and services enhancing the safety, security, comfort, energy
efficiency and productivity of the environment where they live, work and travel.
10. AXA SUPPORT:

Mission:
Our mission is to build and maintain a specialist advisory services network that is the benchmark
of professionalism, client satisfaction and adviser support in Australia. First and foremost we aim to
deliver excellent service and provide solutions to clients, who rely on us to understand their situation
fully, to give appropriate and expert advice and to follow through over the long term to help them reach
their financial goals. To provide a richly supportive working environment for our employees and
advisers, allowing them to perform at their best capacity and continuously develop themselves personally
and professionally. We aim to operate profitably and deliver increasing value to our shareholders, so
we can continue to grow and service our clients in ever better ways. We strive to enjoy an enviable
reputation, and be sought after as an ideal employer to our staff, and business partner to our aligned
advisers.
Vision:
Our vision is to be Australia’s pre-eminent specialist financial advisory network, providing clients
with services that focus on protection and estate distribution considerations, through a network of
specialist advisers working together. Our network provides advisers with an ideal support system for
their personal, professional and business development.
Values:
 Loyalty to our partners.
 Team spirit that fosters high performance, both individually and collectively.
 Pride in our profession.
 The ambition to be among those who ‘get things done’.
 The imagination to anticipate changes in the world around us.
 The pragmatism to grasp situations as they are and react positively and effectively.
 Commitment to being at the service of those who make the company a success: clients,
advisers, employees and shareholders.
11. METLIFE: MISSION AND VISION:

“To build financial freedom for everyone through leadership in providing financial advice, building
long-term relationships through innovative protection, accumulation and retirement products and robust
under-writing processes, and creating a world-class customer service experience for our customers.”
12. MOTOROLA PHILANTHROPY:

Mission:
Motorola seeks to benefit the communities where it operates around the world. The company
achieves this by making strategic grants, forging strong community partnerships, fostering innovation
and engaging stakeholders.
Vision:
To make a unique contribution to improving the world in which we live.
13. HITACHI GLOBAL STORAGE TECHNOLOGIES:

Mission:
We provide digital storage that delivers pioneering technology and quality that customers can
count on.
Vision:
Inspire our customers by being the storage industry’s most innovative and respected company;
one that makes positive contributions to society through our people and products.
Values:
 Customers: We focus on enabling our customers’ success.
 Global Diversity: We take pride in our people and our ideas.
 Integrity: We are ethical and socially responsible.
 Accountability: We make decisions, take action and own the results.
 Leadership: We build our success on passion, teamwork and agility.
14. TOYOTA-INDUS MOTOR COMPANY LIMITED:
Mission:
Mission of Toyota is to provide safe and sound journey. Toyota is developing various new
technologies from the perspective of energy saving and diversifying energy sources. Environment
has been first and most important issue in priorities of Toyota and working toward creating a prosperous
society and clean world.
Vision:
“IMC’s Vision is to be the most respected and successful enterprise, delighting customers with
a wide range of products and solutions in the automobile industry with the best people and the best
technology”.
 The most respected.
 The most successful.
 Delighting customers.
 Wide range of products.
 The best people.
 The best technology.
15. TOSHIBA BUSINESS COMMUNICATIONS SYSTEM:
Mission:
We proactively deliver time-to-market and cost-to-market strategies to all stakeholders as follows:
Tokyo HQ:
 To provide timely information and strategies to HQ regarding the market coverage.
 Ensuring all targets and strategies are achieved by being a proxy in constant contact with
distributors.
Distributor:
 Provide technical supports like; product training, second level support if needed and also
updates of product roadmap.
 Provide sales and marketing support; sales training, market information update through concerted
efforts with research companies and also AandP activities support.
Government Bodies:
 Ensure all equipment distributed in our market coverage fully conform to the requirements of
individual countries.
Employees:
 Provide opportunities for on-going learning and improvements in the course of work and also
social developments.
Vision:
We strive to be a leader in the Business Communication Systems market for the Asia Pacific
Region.
16. ADIDAS:
 All Day I Dream About Sports.
 Sports All Day I Dream About.
Mission:
“ADIDAS-SALOMON” strives to be the global leader in the sporting goods industry with sports
brands built on a passion for sports and a sporting lifestyle.
We are consumer focussed. That means we continuously improve the quality, look, feel and
image of our products and our organizational structures to match and exceed consumer expectations
and to provide them with the highest value.
We are innovation and design leaders who seek to help athletes of all skill levels achieve peak
performance with every product we bring to the market.
We are a global organization that is socially and environmentally responsible, creative and
financially rewarding for our employees and shareholders.
Vision:
We are committed to continuously strengthening our brands and products to improve our
competitive position and financial performance.
In the medium term, we will extend our leading market position in Europe, expand our share of
the US footwear market and be the fastest growing major sporting goods supplier in Asia and Latin
America. The resulting top-line growth, together with strict cost control and working capital
improvements, will drive over-proportionate earnings growth.
17. MCDONALDS : MISSION AND VISION:

“McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best
means providing outstanding quality, service, cleanliness, and value, so that we make every customer
in every restaurant smile.”
18. MICROSOFT:
Mission:
At Microsoft, we work to help people and businesses throughout the world realise their full
potential. This is our mission. Everything we do reflects this mission and the values that make it
possible.
Vision:
A personal computer in every home running Microsoft software.
Values:
As a company, and as individuals, we value:
Integrity and honesty, Passion for customers, for our partners, and for technology, Openness
and respectfulness, Taking on big challenges and seeing them through, constructive self-criticism,
self-improvement, and personal excellence and accountability to customers, shareholders, partners,
and employees for commitments, results, and quality.
19. TECHNOLOGY EXPORTS SERVICES CORPRATION:

Mission and Vision:
 Be the leader in quality service provided to everyone in the energy, manufacturing and
construction Industry.
 Understand the needs of our client’s and respond with urgency.
 Meet our customer’s demands and exceeds their expectations.
 Maintain highly trained and motivated employees.
 And, continuously improve our skills, service and achieve excellence in all of our endeavors.
20. SAMSUNG:
Mission:
Everything we do at SAMSUNG is guided by our mission: to be the best “digital- a Company”.
Vision:
SAMSUNG is guided by a singular vision: to lead the digital convergence movement.
We believe that through technology innovation today, we will find the solutions we need to
address the challenges of tomorrow. From technology comes opportunity — for businesses to grow,
for citizens in emerging markets to prosper by tapping into the digital economy, and for people to
invent new possibilities.
It’s our aim to develop innovative technologies and efficient processes that create new markets,
enrich people’s lives and continue to make Samsung a trusted market leader.
21. ROYAL BANK OF SCOTLAND (RBS):

Mission and Vision:
RBS Retail’s vision is to be ‘the best retail bank in the world’. To achieve this vision, RBS aims
to be: The best bank to work for, the best bank to bank with, the best bank to invest in.
22. CISCO SYSTEMS:

Mission and Vision:
 “At Cisco, our vision is to change the way people work, live, play and learn”.
 Company’s mission is to enable people to make powerful connections - whether in business,
education, philanthropy, or creativity.
 Cisco Systems also strove to deliver a wide range of new products, expand its offerings
through internal and external efforts, enhance customer support, and increase its presence
around the world.
 Organizations started to recognize the value of their information networks and the Internet as
a source of business advantage; all of this drove company’s mission and vision.
 Ciscos saw the need for multi service network and were trying to find the ways how to integrate
voice, video and data networks together.
23. CATERPILLAR:
Mission:
 Caterpillar will be the leader in providing the best value in machines, engines and support
services for customers dedicated to building the world’s infrastructure and developing and
transporting its resources. We provide the best value to customers.
 Caterpillar people will increase shareholder value by aggressively pursuing growth and profit
opportunities that leverage our engineering, manufacturing, distribution, information management
and financial services expertise. We grow profitably.
 Caterpillar will provide its world-wide workforce with an environment that stimulates diversity,
innovation, team-work, continuous learning and improvement and rewards individual performance.
We develop and reward people.
 Caterpillar is dedicated to improving the quality of life while sustaining the quality of our earth.
We encourage social responsibility.
Vision:
 Be the global leader in customer value.
24. SIEMENS:
Mision and Vision:
As a manufacturer, systems integrator and provider of complete solutions and services, we
enable power utilities and industry customers to transport and distribute electricity reliably and
economically from the power plant to the customer.
To generate additional growth, we are reinforcing and optimizing our portfolio in selected areas.
In addition to switchgear and transformers, our portfolio increasingly comprises products whose
integrated communications and automation technologies offer added advantages to network operators.
Our service offerings include the planning, upkeep and maintenance of entire power grids.
25. FORD MOTORS:

Slogan:
“Built for the road ahead.”
Mission:
“We are a global family with a proud heritage passionately committed to providing personal
mobility for people around the world.”
26. EXXON MOBIL:

Slogan:
“Taking on the world’s toughest energy challenges.”
Mission and Vision:
“Exxon Mobil Corporation is committed to being the world’s premier petroleum and petrochemical
company. To that end, we must continuously achieve superior financial and operating results while
adhering to the highest standards of business conduct. These unwavering expectations provide the
foundation for our commitments to those with whom we interact.”
27. CHEVRON:
Slogan:
“Finding newer, cleaner ways to power the world.”
Mission:
“Our Company’s foundation is built on our values, which distinguish us and guide our actions.
We conduct our business in a socially responsible and ethical manner. We respect the law, support
universal human rights, protect the environment, and benefit the communities where we work.”
Vision:
At the heart of The Chevron Way is our Vision to be the global energy company most admired
for its people, partnership and performance.
28. GENERAL MOTORS:

Mission:
“G.M. is a multinational corporation engaged in socially responsible operations, world-wide. It is
dedicated to provide products and services of such quality that our customers will receive superior
value while our employees and business partners will share in our success and our stock-holders
will receive a sustained superior return on their investment.”
Vision:
“Over the past 100 years, GM has been a leader in the global automotive industry. And the next
100 years will be no different. GM is committed to leading the industry in alternative fuel propulsion.”
“GM’s vision is to be the world leader in transportation products and related services. We will
earn our customers’ enthusiasm through continuous improvement driven by the integrity, teamwork,
and innovation of GM people.”
“Over the past 100 years, GM has been a leader in the global automotive industry. And the next
100 years will be no different. GM is committed to leading the industry in alternative fuel propulsion.”
29. CONOCOPHILLIPS PETROLEUM REFINING:

Slogan:
“Energy for tomorrow.”
Mission:
“Use our pioneering spirit to responsibly deliver energy to the world.”
30. BANK OF AMERICA CORP:

Mission/Philosophy:
“We believe, very simply, that it is the actions of individuals working together that build strong
communities ... and that business has an obligation to support those actions in the communities it
serves.”
31. AT&AT:
Slogan:
“Your world delivered. Connecting you to your world, everywhere you live and work.”
Mission and Vision:
“We aspire to be the most admired and valuable company in the world. Our goal is to enrich our
customers’ personal lives and to make their businesses more successful by bringing to market
exciting and useful communications services, building shareowner value in the process.”
32. WAL-MART STORES:

Slogan:
“Wal-Mart. Always low price. Always.”
Mission:
“Wal-Mart’s mission is to help people save money so they can live better.”
33. MARRIOTT INTERNATIONAL:

Slogan:
“Revive”
Mission/Core Values:
Marriott International have core values rather similar to a Mission Statement.
“The core values established by the Marriott family over 80 years ago have served our company
well and will continue to guide our growth into the future. Foremost of these core values is the
enduring belief that our associates are our greatest assets.
Core Values >> There is a “Marriott Way.” It’s about serving the associates, the customer, and
the community. Marriott’s fundamental beliefs are enduring and the keys to its continued success
Marriott Culture >> It’s the Marriott experience. We do whatever it takes to provide our associates
with the utmost opportunities and our customers with superior service.”
34. AVON PRODUCTS:

Slogan:
“Ding-Dong - Avon Calling.”
Mission:
“We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors
in quality, innovation and value, and elevating our image to become the Beauty company most women
turn to worldwide.”
Vision:
“To be the company that best understands and satisfies the product, service and self-fulfillment
needs of women - globally.”
35. FEDEX:
Slogan:
“Relax, it’s FedEx.”
Mission:
“FedEx is committed to providing outstanding customer experience, to being a great place to
work, a thoughtful steward of the environment and a caring citizen in the communities where we live
and work. At FedEx, we are passionate about sustainable connecting people and places and improving
the quality of life around the world.”
36. WALT DISNEY:

Slogan:
“I’m going to Disney World!”
Mission:
“To make people happy.”
Values:
 No cynicism
 Nurturing and promulgation of “wholesome American values”
 Creativity, dreams and imagination

 Fanatical attention to consistency and detail
 Preservation and control of the Disney “magic”
37. 3M:
Slogan:
“Innovation”
Mission:
“3M is committed to actively contributing to sustainable development through environmental
protection, social responsibility and economic progress.”
38. SONY:
Mission and Slogan:
“To experience the joy of advancing and applying technology for the benefit of the public.”
39. NIKE:
Slogan:
“If you have a body, you are an athlete”
Mission and Vision:
“To bring inspiration and innovation to every athlete in the world”
40. STARBUCKS:
Mission:
“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining
our uncompromising principles as we grow. The following six guiding principles will help us measure
the appropriateness of our decisions:
 Provide a great work environment and treat each other with respect and dignity.
 Embrace diversity as an essential component in the way we do business.
 Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our
coffee.
 Develop enthusiastically satisfied customers all of the time.
 Contribute positively to our communities and our environment.
 Recognise that profitability is essential to our future success.
41. eBay:
Mission:
“eBay’s mission is to provide a global trading platform where practically anyone can trade
practically anything.”
42. GOOGLE:
Mission:
Google’s mission is to organize the world’s information and make it universally accessible and useful.
Philosophy: Ten Things:
 Focus on the user and all else will follow.
 It’s best to do one thing really, really well.
 Fast is better than slow.
 Democracy on the web works.
 You don’t need to be at your desk to need an answer.
 You can make money without doing evil.
 There’s always more information out there.
 The need for information crosses all borders.
 You can be serious without a suit.
 Great just isn’t good enough. Always deliver more than expected.
43. BERGER KING:
Mission:
We will prepare and sell quick service food to fulfill our guest’s needs more accurately, quickly,
courteously, and in a cleaner environment than our competitors. We will conduct all our business
affairs ethically, and with the best employees in the mid-south. We will continue to grow profitably and
responsibly, and provide career advancement opportunities for every willing member of our
organization.”
44. YAHOO:
Mission:
“Yahoo’s mission,” it reads, “is to connect people to their passions, their communities, and the
world’s knowledge”.
45. SAINSBURY:
Mission:
“Our mission is to be the consumer’s first choice for food, delivering products of outstanding
quality and great service at a competitive cost through working faster, simpler, and together.”
46. CVS CAREMARK:

Mission:
We provide expert care and innovative solutions in pharmacy and health care that are effective
and easy for our customers.
Vision:
We strive to improve the quality of human life.
47. CANON:
Mission:
Canon Australia is a market leading supplier of consumer and business imaging solutions. We
are a team committed to our customers’ ongoing satisfaction through the empowerment and development
of our staff.
To be the preferred supplier we will be easy to deal with and provide quality, value for money,
products and services. To ensure success for all stakeholders we will deliver profitability, growth, job
fulfillment and have a positive impact on the community.
Vision:
Simple advanced solutions freeing people to live their dreams and lead enriched lives at home
and at work.
48. THE ESTEE LAUDER COMPANY:

Mission and Vision:
The guiding vision of The Estee Lauder Companies is “Bringing the best to everyone we touch”.
By “The best”, we mean the best products, the best people and the best ideas. These three pillars
have been the hallmarks of our Company since it was founded by Mrs. Estee Lauder in 1946. They
remain the foundation upon which we continue to build our success today.
49. GLOBAL GILETTE:

Mission:
We will provide branded products and services of superior quality and value that improve the
lives of the world’s consumers. As a result, consumers will reward us with leadership sales, profit,
and value creation, allowing our people, our shareholders, and the communities in which we live and
work to prosper
50. LUCENT TECHNOLOGIES:

Mission:
Philanthropy supports the social responsibility cornerstone of Lucent’s mission: To live up to our
responsibilities to serve and enhance the communities in which we work and live and the society on
which we depend.
51. ABBOTT LABORATORIES:

Slogan:
“A Promise for Life”
Mission:
“To improve lives by providing cost-effective health care products and services.”
Vision:
“Abbott’s vision is to be the world’s premier health care company. Simply put, we want to be the
best - the best employer, the best health care supplier, the best business partner, the best investment
and the best neighbour.”
52. BOEING:
Slogan:
“For-ever New Frontiers”
Mission:
 “Run healthy core businesses.
 Leverage strengths into new products and services.
 Open new frontiers.
 People working together as a global enterprise for aero-space leadership.
LEVEL NINE
DEVELOPING VISION STATEMENTS AND BUSINESS SUCCESS
MANAGEMENT GURUS SPEAK:

1. WARREN BENNIS AND BURT NANUS:
Warren Bennis and Burt Nanus, authors of “Leaders: The Strategies for Taking Charge”, identify
vision as a concept central to their theory of leadership.
“To choose a direction, a leader must first develop a mental image of a possible and desirable
future state of the organization.”
This image, which we call vision, may be as vague as a dream or as precise as a goal
statement.
“The critical point is that vision articulates a credible, realistic attractive future for the organization”.
2. ROBERT H. MILES:
Robert H. Miles, in an article entitled “Corporate Transformation”, states
“That all successful transformations are vision led. He defines vision in the following way: It
requires projection into a dimly outlined future. It requires the creation of goals that stretch the
organization beyond its current comprehension and capabilities”.
3. STEPHEN R. COVEY:
Stephen R. Covey stresses the symbiotic relationship between vision and values in an article
called Ethical Vertigo published in Executive Excellence, 1997.
4. MARTIN LUTHER KING:
The Book of Proverbs warns us: “Where there is no Vision, people will perish”, while Martin
Luther King demonstrated the power of vision when he immortalised his vision with the words, “I have
a dream”, and unleashed forces that changed a nation.
5. QUIGLEY:
Quigley (1994) defines corporate values as “the rules or guidelines by which a corporation
exhorts its members to behaviour consistent with its order, security, and growth ... Values and beliefs
are the most fundamental of the three elements of vision”.
It is true to say that most vision statements express an element of ambition. Whether it is to be
“bigger than”, to “go from number two to number one”, or even “to be the best”, an element of
achievement is always present.
It is obvious from the discussion so far that a vision is more than unfettered ambition or being
future oriented. It incorporates cultures, beliefs, value systems and a myriad of force fields. To better
clarify our thoughts on this, we must digress temporarily into the field of neuroscience.
6. ZOHAR:
The following is a direct quote from Zohar (1997)
“Today neuroscience teaches that from the moment of conception we are born with sufficient
neural connections to regulate our breathing, our body temperature and the beating of our heart, but
nearly everything else is pure potentiality. What diet we will be fed, what climatic conditions and
germs we will encounter, what language we will be exposed to - all these and much more are
uncertain at the moment of birth”.
In practical terms, this means that the newly formed business will rapidly create and construct
a language, a culture, and a belief and value system that are a derivative of the environment.
1. as defined by the leader or founder,
2. the social and ethical values of the society (the business environment), and
3. any other force fields that interface or interact with the infant organization.
CASE HISTORIES:
1. SAM WALTON: WAL-MART:
In the 1950’s, Sam Walton worked, inter alia, in the retail trade for the Chicago - based Ben
Franklin Stores. It was during this period that he formulated his vision for a discount store. It was a
deceptively simple idea: a discount store with wholesale margins on every product, a store that
simultaneously offered easy shopping and friendly service. The linchpin, or critical success factor,
was that these stores would be situated in small towns. Sam Walton believed that “there was a lot
more business in those towns than people ever thought”. (Snyder et. al, 1994)
At the heart of Walton’s vision for Wal-Mart were his rock-solid personal values of humility,
honesty, frugality and trust. Despite his $9 billion family fortune, Sam held onto his Ford truck, casual
clothes, modest ranch style house and simple no frills headquarters in out of the way Bentonville.
A. Sam Walton’s Three Key Business Principles:
Walton’s personal values were translated into three key business principles:
1. Provide the customer with value and service in a clean and friendly shopping environment:
2. Create a partnership with associates.
3. Maintain commitment to the community.
The critical and irreplaceable ingredient of Wal-Mart’s success were the strengths and virtues
of Sam Walton himself - his over-riding vision and unwavering values, his courage to take action, and
his uncanny ability to motivate and inspire his “associates”.
Walton was more than a great leader, he was an astute strategist. He searched with painstaking
care for every individual who made up his management team. He sought individuals who believed in
the discount concept and were dedicated to working long hours to see the vision become a reality.
He created an organisation that thrived on innovation and in an atmosphere where people believed
in themselves. He embraced technology as a change agent for innovation and remaining competitive.
B: Paradigm Success of Wal-Mart:
The results speak for themselves. Wal-Mart has succeeded in satisfying not only its customers,
but its employees, suppliers, investors, and host communities. Wal-Mart outshines the rest of the
industry in growth, sales, earnings, margins, and employee and floor productivity.
The paradigm that Sam Walton established has been a winner. The question that remains is, will
this paradigm still hold in our rapidly changing world? Or will there come a time when even Wal-Mart
will need to break out of its paradigm box?
2. HEWLETT PACKARD, MATSUSHITA APPLIANCES AND THE BODY SHOP:

Bill Hewlett, Konosuke Matsushita and Anita Rodick, all tell the same story. “We did what we
thought was right and what came naturally to us. We believe strongly in some key principles
and we have worked hard to stamp these on the company. We believe the principles we have
been following are the most important part of our business”.
Hewlett Packard, Matsushita Appliances and The Body Shop were young organisations with no
entrenched views and no established culture. The neural connections they made depended on the
environment as embodied in the founders, extended stakeholders, and the influence of the political,
demographic, economic, social and technological forces active at birth. The paradigm was being
constructed, but it would take years for it to solidify into the so - called “paradigm box”.
A. Conclusion to Case Studies:
A number of conclusions can be drawn from the above discussion.
1. The most important is that these apparently different concepts are essentially the same, and
the differences between them that do exist are at the periphery and are not significant enough
to warrant being treated differently.
2. Purpose, Vision and Paradigm are so much the same that the many arguments to differentiate
between them become semantic exercises and academic jargon. Strategic Intent would seem
to fall into this category and might be called an exercise in repackaging.
3. It is possible to postulate that the concept of vision goes beyond profits and stakeholders,
although, these are an inherent part of it. vision also addresses the community and in some
instances even the society as a whole (The Body Shop, Wal-Mart).
4. Ambition and the future are essential elements of any vision. Whether this ambition should be
fettered or unlimited is open to debate. Hamel and Prahalad would have it unfettered, whilst
Campbell states that it should be a stretch, but achievable.
5. The case studies reveal that vision encapsulates culture and values and beliefs. Just as the
atom contains enormous energy which, when unleashed, can be beneficial or destructive, so
the paradigm box contains enormous latent power or energy which, if unleashed, can be a
powerful force for achievement or disruption.
6. We know and understand why the development and institution of the vision takes time. There
are no short cuts. More importantly, because it takes so much time to create the paradigm box,
the act of breaking out of it requires tremendous energy and effort. This has serious implications
for change programs.
7. Finally, the law of causality insists that if we are to understand the present paradigm box or
vision, we need to return to the genesis of the company and reconstruct the initial conditions.
Any changes from those initial conditions must be a result of the dynamics of the various force
fields and their interaction.
PREPARING TO DEVELOP VISION STATEMENT:
A. Creating and Institutionalising the Vision:
The importance of the creation of a vision is abundantly clear from the discussion so far. What
we need to discuss at this point is — how? How do we establish a Vision for a company?
There are two important aspects to this problem:

1. Establishing a Vision for a newly formed company: and
2. Changing the Vision of an old, established company.
1. Creating a Vision for a Newly Formed Company:
As indicated, the neural connections that set up the vision/paradigm of the newly created company
takes place in the formative or embryonic and early growth phase of the company. We must ensure
that the force fields which interact with our newly established company are the correct ones.
The leader plays the dominant role in this regard. Witness the way in which Henry Ford’s
paradigm for decades was the paradigm of the Ford Motor Company, ditto for Sam Walton (Wal-
Mart), Watson (IBM), Ray Crock (MacDonald’s), Anita Rodick of The Body Shop, ... etc.
In these early stages, the vision is installed both by design and by adaptation. It is the leader
who installs a vision by design, when the neural pathways or architecture are constructed. The
adaptation occurs when the external fields exert pressure on the organization to adapt and thus
influence the vision/ paradigm, and this will hold as long as the paradigm accommodates the changes
taking place within the force fields that envelop the organization.
2. Changing the Vision of an Established Company:
How does one change the vision/ paradigm of a well established company that has been around
for quite some time? We have noted that the ability to change is very much restricted by the
“paradigm box”.
In the established organization, the founder approach is obviously not possible. Management has
to work within the constraints of the existing paradigm and bring about change in an orderly manner.
Upon inspection, the literature seems to favour two possible approaches.
3. Approaches:
1. Intellectual Process Approach:
The first is the Intellectual Process. This approach brings top management together, who use
techniques such as brainstorming, to formulate a new vision, which they then communicate throughout
the organization.
2. Focussed Approach:
The second method is the Focused Approach. It is a more holistic approach, insofar as due
recognition is given to all the possible relationships that exist and interact with one another.
The Focused Approach recognizes the existence of a whole range of neural networks. This
recognition of the principles that make the founder approach so successful means that leaders who
turn to the Focused Approach can likewise “found” a new vision, even if it involves radical change.
The starting point of the Focused Approach is to establish the initial conditions. Who was the
founder of the organization? What values, beliefs and ethics did that person hold especially important?
What was the environment like? What were the driving forces? Who were the stakeholders? What
was happening in the social, political, economic and technological environment?
The next step is to do the same analysis for the conditions of the present in order to determine
what dynamics have been active and whether the original paradigm has shifted.
With this information as backdrop, we are ready to initiate the necessary change Programme.
Although we show the change program as a process, it must be remembered that the steps shown
are not necessarily sequential and, in all probability, will be iterative.
4. Select an Initial Strategic Focus Point:
Something that is very necessary to change in terms of the survival of the organization.
For example at Indian Airlines, the initial focus will have to be to get the aircraft off on time, to
improve the services delivered by cabin crew and frontline staff, and to ensure that Indian Airlines
remain competitive.
At the finance division of a major private Indian Bank, the focus was to consolidate hundreds
of general ledgers into one, to supply accurate and timely financial information to the operating
divisions and the Reserve Bank, and to supply the divisions with financial intelligence to improve their
decision-making ability.
In both these cases, no formal vision statement was drafted in the initial stages of the realignment
of the corporate direction. When selecting a strategic focus point the following aspects were kept in
mind:
(1) The focus point must be at the core of both the future strategy and the future value system
(2) It should be easy to translate into standards of behaviour.
(3) It should have strong value associations that are attractive to large sections of management
and staff and
(4) It should be non- controversial and be able to elicit a wide base of support.
5. Slogans:
One Liner Approach to Vision
Included in most company vision statements are some forms of slogan, for example, “The quest
for Zero defect”. This slogan, although, it might not appear so at first glance, is crucial to the
establishment of the new vision:
1. Have an action orientation. This approach is, by definition, action orientated. This is in
distinct contrast to the intellectual process, which begins with an intellectual exercise, then the
downward communication of the results until the majority have bought in, followed by the
operationalisation of these ideas in terms of the actions to be taken.
2. Communication must be “Focus” oriented. The reasons for changes to be made at the
operational level must be explained, as opposed to exhorting people to change, or worse, explaining
some intellectual exercise that most find difficult to comprehend. In a sense this continuous focus
oriented communication can be equated to the concept of evangelism and indoctrinisation.
Communicating the tangible changes that are being made in order to achieve certain operational goals
is the transparent end of the change programme. The changes that are taking place in the culture,
values, ethical norms and social architecture are in most cases only apparent to a few at the time
of the change. Repetitiveness and focused communication are some of the underlying pillars of
success.
3. Concentrate on behaviour. An acceptance of vision comes from the link between behaviour,
organization values and personal values. Michael Beer states: “Those who implement successful
transformations focus on behaviour rather than simply talk about it”
4. Expect it to take time. The time it takes to establish the neural connections or paradigm box
and to institutionalise the initial vision stretches well into the early growth phase of the corporate life
cycle. It stands to reason that any change programme will similarly take time. The time it takes will
be dependent upon the amount of change that has to take place. If it is major, as in a crisis situation,
it is conceivable that the duration will be prolonged.
5. Build and sustain Trust. Building trust, says Michael Beer, is a key element in the mobilization
of energy for change. The concept of trust must be seen in its wider context. Transparency, open
communications, and sharing information are all part of the trust building process. However, let us
reiterate an earlier comment. The focal point of everything being implemented in the organization must
be the “focus” programme.
6. Create the Vision Statement. At some stage, the vision statement can be formalised and
hung on the wall, or may be included in the company’s financial statements and reiterated in the
chairman’s report.
SIMPLY SPEAKING...
1. It is true to say that most vision statements express an element of ambition. Whether it
is to be “bigger than”, to “go from number two to number one”, or even “to be the best”,
an element of achievement is always present.
2. It is obvious from the discussion so far that a vision is more than unfettered ambition
or being future oriented.it incorporates cultures, beliefs, value systems and a myriad of
force fields. To better clarify our thoughts on this, we must digress temporarily into the
field of neuroscience.
LEVEL TEN
EVALUATION OF MISSION STATEMENTS
CASE OF ABC BANK LIMITED.

The corporate office of ABC Bank is located at Mumbai. It is in operation since 2002. It has 600
branches all over India. The bank is listed on Bombay and National Stock Exchanges and its share
with face value @ Rs. 1/- is currently being traded at Rs. 25. During last three years, it has not shown
any appreciable movement up or down. The stock does not seem to be favourable with the brokers
and the financial institutions and has also not posted any review or evaluation on CNBC-18. During
the financial year 2007-08, it posted losses amounting Rs. 328 crores. The bank is expecting to incur
further losses during the next financial year.
Alarmed by the declining fortunes of the bank, Chairman and Managing Director, Dipankar Ray,
called an emergency meeting of the board of directors to review the situation and take immediate
corrective actions. The board decided to hire a top and well-known consulting firm to turnaround the
bank. He steered several meetings with all functional heads to discuss the internal modus operandi
and strategy for liaison with the consulting firm. He formed a team of functional heads and appointed
the head of Human Resource, Gurbir Singh as the chairman of the team to internalize the major
issues concerning strategic planning affecting the bank and liaise with the consultants and submit the
interim report within thirty days once the consultants take over the charge.
Gurbir Singh moved fast and held series of discussions with the consultants. The first report of
their observations was submitted to Dipankar Ray within first ten days. Some of these observations,
among others, were:
 The corporate goals of the bank were not clear and sent confusing signals down the line of
hierarchy especially when there is cut-throat and aggressive competition in the banking sector.
 The bank had no mission and vision statements since its operations began in 2002. As a result,
there is no clarity among employees about the current status of the business of the bank and
what lies ahead for them in future.
 The bank did not conceptualise the strategic planning in any function and as a result the
confusion prevailed in almost all the operations of the bank especially in customer services and
human resource management.
 Human resource function, by itself, is not equipped with various concepts and professional
approach in its policies, procedures and practices. The department has no clarity about human
resource strategic planning.
 The customer services are very poor. This is proved beyond doubt from the feedback received
from the customers in all the braches except in Mumbai. During last three years, many
customers have closed their accounts and walk-ins have reduced considerably on account of
rude and insolent behaviour towards customers, delay in handling customer complaints, delay
in providing general customer services, long serpentine queues, over crowding in the branches,
staff moving out of their work stations and not returning for long time, verbal fights and
arguments between staff and customers and lack of provision of infrastructural facilities in the
branches.
Dipankar Ray and Gurbir Singh held meetings with the consultants over the next couple of days.
The following important decisions were taken, among others, for immediate action:
 Gurbir Singh and his team, in consultation with the consultants, shall design and write mission
and vision statements of the bank within next three days for approval of the board of directors
and implementation.
 The short term and long term goals of the bank would be drawn and decided by conceptualizing
the principles enumerated in the philosophy and the practice of Management by Objectives
approach so as to involve everyone in their achievement.
 Gurbir Singh would take charge of initiating Strategic Planning and Strategic Human Resource
planning in collaboration with the consultants and submit a report observations and
recommendations within fifteen days.
Gurbir Singh, his team and the consultants, as planned, submitted the mission and vision
statements to Dipankar Ray. Within next 48 hours, the board of directors approved the statements
with some minor changes:
MISSION AND VISION STATEMENT OF ABC BANK:
“ABC Bank aspires to be one of the most professional, financially sound and profitable banks
in India in three to five years. The bank will grow by meeting the broad financial needs of small and
medium enterprises (SME), businessmen, institutional and select individual customers and clients.”
We shall achieve these mission targets by accomplishing the following:
Our Customers:
 Constantly assess customer needs and match them with our innovative and profitable ways to
meet their financial requirements through general and customised packages.
 Train the existing staff and hire thoroughly qualified people to provide prompt, personal,
professional service to our customers.
 Conduct business in such a prudent manner that demonstrates stability and promotes customers
trust in the bank.
Our Employees:
 Ensure a fair measurement, reward and incentive based system to foster the best possible
service to our customers.
Our Community:
 Serve the role of a facilitator, business leader and responsible corporate citizen, encouraging
employees to participate in activities which enhance the community’s quality of life.
Our Shareholders:
 Provide a continuous long-term source of profitable growth and superior return on investment.
 Become a model in the market for prudent lending and operating practices; by growing carefully
and selectively, and by maintaining stringent conformance with banking regulations and policies.
 Develop and preserve a superior capital position, becoming one of the most financially strong
banks in India.
COMPONENTS EVALUATION OF MISSION AND VISION STATEMENT OF ABC BANK:

1. Step One: Evaluation on the Basis of a Well concelved Mission Statement:
Pearce and David (1987) suggested that the relative strength of a company’s mission statement
may be determined by how well it communicates with the following nine components:
1. Description of target market.
2. Geographic domain.
3. Products/services.
4. Technology used to produce and market its products and services.
5. Intention to grow and increase shareholders profitability.
6. Competitive strengths.
7. Importance of employees.
8. Guiding principles.
9. Desired public image.
2. Step Two: Analysis and Examination of the Mission Statement of ABC Bank:
Let us now examine and analyse the mission and vision statement of ABC Bank while using the
above components of a well conceived mission in the module given by Pearce and David:
1. What Does Mission and Vision Statement of ABC Bank Contain:
a. Description of target market and geographic domain: ABC Bank statement makes it abundantly
clear that its target market is in India only.
b. Intentions to grow and increase shareholders profitability: The bank has decided for profitable
growth and superior returns on investment.
c. Importance of employees: The bank has attached highly considerable value to its employees
stating that they are the permanent assets of the organization.
d. Guiding principles: ABC Bank has laid down four supporting and compliment guiding
principles in its mission and vision statement.
e. Desired public image: The bank has committed to compliances under the Indian legal
system and ethical and corporate social responsibility
2. What the Mission and Vision Statement of ABC Bank ‘Does Not’ Contain:
a. Products and Services: “Broad Financial Needs” is very general term. The financial services
beyond routinely available to the customers are not specifically mentioned.
b. Technology used to produce and market its product and services: The mission statement
does not mention anything about modernisation of operations, transfer of technology and
any other electronic advancement and enhancement required for its operations and general
and specific processes.
c. Competitive strengths: The mission and vision statement does not mention anything about
its unique selling practice (USP) or any other benchmark quality which differentiates it from
its competitors.
MISSION AND VISION STATEMENTS OF ABC BANK: OTHER OBSERVATIONS:

1. Mission and Vision Statement:
Length of the mission statement: While the opening paragraph of the statement is short and
concise but the four guiding principles add to its length. However, the statement provides a very good
understanding about its commitment towards sustaining growth, ethical and corporate social
responsibility and mandatory compliances.
2. Implications of Commitment to Shareholders:
The major implication of a very carefully conceived value statement is that stockholders perceive
‘positive relationship between mission statement and corporate performance’. There are value
statements in each of the guiding principles dedicated to customers, employees, community and
shareholders and each one of these demonstrate bank’s specific commitment.
3. Implications for the Organization:
Glassman and McAfee (2006) observed that “adherence to the fundamental rules of business,
as contained in the mission/vision statement can have a significant positive relationship with financial
performance of an organization.” If ABC Bank follows fundamental rules as contained in its mission
and vision statement, it will boost and enhance its customer confidence and strengthen its market
share – by demonstrating its willingness to align its operations with its strategic planning, reducing
confusion and congestion and by providing working environment to attract quality workforce and
higher caliber professionals, reduce employees turnover and expand its customer base including
walk-ins.
SIMPLY SPEAKING...
 The mission and vision statement of ABC bank is quite wide and well conceptualised
despite its few weaknesses.
 The target audience is specific and is targeted very well.
 The mission and vision statement demonstrates how an institution can develop well
matched assertions that presents a positive image of its vision which shall serve as a
solid foundation for its operating strategy and overall strategic planning across the
nation.
 The mission and vision statement shows bank’s dedicated commitment to corporate
governance and corporate ethical and social responsibility.
 ABC Bank has set new and effective standards in communicating with shareholders,
stock exchanges, employees and general public at large. The mission and vision statement
of the bank shows a commitment to its shareholders for growth in their profitability.
 The bank has attached highly considerable value to its employees stating that they are
the permanent assets of the organization and the organization will train its employees
in acquiring competencies and skills for offering better customer services and achieving
targets in day to day work.
 The vision of the bank for future is specific, stating that it shall emerge as one of the most
professional, financially sound and profitable banks in India in three to five years.
 Since human resources functions and strategies are a means to achieve corporate ends,
they need to be tied to, and driven by the corporate role, mission, vision and strategic
goals, or else they will simply end up as processes that add overhead, but down
increased returns.
 Profit and vision are necessary to effectively motivate a workforce

 It is true to say that most vision statements express an element of ambition. Whether it
is to be “bigger than”, to “go from number two to number one”, or even “to be the best”,
an element of achievement is always present.
 It is obvious from the discussion so far that a vision is more than an unfettered ambition
or being future oriented. It incorporates cultures, beliefs, value systems and a myriad of
force fields.
MISSION AND VISION STATEMENT EVALUATION MATRIX OF ABC BANK IN COMPARISON
WITH ICICI AND HDFC BANKS BEFORE THE RELEASE OF THE STATEMENT
Components
Concern for
Survival,
Products Growth,
Organization Customers Services Markets Profitability Technology
ABC BANK No No Declining No No
ICIC BANK Yes Yes Yes Yes Yes
HDFC BANK No Yes Yes Yes Yes
Components
Concern for Concern for
Organization Philosophy Self-Concept Public Image Employees
ABC BANK No Yes No Patriarchal
ICICI BANK Yes No No Yes
HDFC BANK No Yes Yes Yes
LEVEL ELEVEN
PANTALOON RETAIL (INDIA) LTD: CASE STUDY IN MISSION

AND VISION STATEMENTS
A. THE BEGINNING 1987

Pantaloon Retail (India) Limited is India’s leading retailer that operates multiple retail formats in
both the value and lifestyle segment. Pantaloon has ushered a retail revolution in India and its founder
Kishore Biyani is known as India’s “King of Retail”. Pantaloon’s headquarter is in Mumbai. The
company currently operates over 5 million square feet of retail space and has plans to increase it to
30 million sq. ft by 2011. Pantaloon has plans to open over 3000 new stores by 2010.
Pantaloon’s origin can be traced to 1987 when the company was incorporated as Men’s Wear
Private Limited. The company launched Pantaloons trouser, India’s first formal trouser brand. In 1992,
Pantaloon launched its IPO. In 1994, The Pantaloon Shoppe - exclusive menswear store in franchisee
format was launched across the country. Pantaloon started distribution of branded garments through
multi-brand retail outlets across the nation.
B. MAJOR ACHIEVEMENTS OF PANTALOON RETAIL:

Major Achievements of Pantaloon Retail:
 Chosen as International Retailer for the Year 2007
 Chosen as Emerging Market Retailer of the Year 2007
 Best Employers in India (Rank 14th) in the Hewitt Best Employers 2007 survey.
 Best Managed Company in India (Mid-cap) for the year 2006.
 Won Images Retail Awards 2006 for Best Value Retail Store, Best Retail Destination, and Best
Food and Grocery Store
C. MAJOR BUSINESSES OF FUTURE GROUP:
1. BIG BAZAR: 2001
In 2001, Big Bazaar, India’s first hypermarket chain was launched. In 2002, Food Bazaar, the
supermarket chain was launched. In 2006, Future Capital Holdings, the company’s financial arm
launched real estate funds, “Kshitij” and “Horizon” and private equity fund “In division”. The company
is also planning forays into insurance and consumer credit.
2. FUTURE GROUP:
Pantaloon Retail is the flagship company of Future Group. The lines of business of Future Group
are:
a. E-Commerce:
Pantaloon’s website Futurebazaar.com has revolutionised the e-commerce business in India.
It offers a wide range of products at affordable prices. It has been named as Best Indian
Website 2007 in the Shopping category by PC World.
b. Fashion:
The group offers a variety of options in fashion. Its brands include ALL, Blue Sky, Central,
Fashion Station, Gini and Jony, Navaras, Pantaloons, and Top 10.
c. Leisure and Entertainment:
Options are: Bowling Co. - state-of-the-art premium family entertainment centre, offering multiple,
novel and unique leisure and entertainment options; F 123 - offers a wide range of gaming
options ranging from bowling and pool to redemption and interactive video games to bumper
cars.
d. Wellness and Beauty:
Options are: Health Village - a state-of-the art spa and yoga centre; Star and Sitara: Beauty
salon for men and women; Tulsi - provides access to the best allopathic, ayurvedic and
homeopathic medicinal products; Turmeric - offers beauty products like colour cosmetics,
fragrances, herbal and specialty skin items, hair products and bath accessories.
e. Books and Music:
Future Group’s brand - “Depot” offers Books, CDs, and stationery items.
3. PANTALOON MISSION STATEMENT:
We share the vision and belief that our customers and stakeholders shall be served only by
creating and executing future scenarios in the consumption space leading to economic development.
We will be the trendsetters in evolving delivery formats, creating retail realty, making consumption
affordable for all customer segments – for classes and for masses.
We shall infuse Indian brands with confidence and renewed ambition.
We shall be efficient, cost-conscious and committed to quality in whatever we do.
We shall ensure that our positive attitude, sincerity, humility and united determination shall be the
driving force to make us successful.
4. ANALYSIS OF THE MISSION STATEMENT:

A. Customers:
Under this component the mission statement states about its goal, i.e., evolving delivery
formats, creating retail realty, making consumption affordable for all customer segments – for
classes and for masses.
Thus, mission statement is clear about goals and objectives for customer.
B. Product or Services:
The product and services offered by Pantaloon Retail is “creating and executing future scenarios
in the consumption space” and “creating retail reality”.
C. Market:
The market is “for all customer segments – for classes and for masses”
D. Technology:
Technology used in retail is very important for maintaining low cost, low inventory and building
customer information. This component is missing in mission statement and the revised mission
statement is “using the latest technology and information system.”
E. Survival, Growth and Profitability:

Pantaloon’s mission statement is clear about survival, growth and profitability and can be found
in-“creating and executing future scenarios”, “infuse Indian brands with confidence and renewed
ambition”, and “ cost-conscious and committed to quality in whatever we do”.
F. Philosophy:
The philosophy is clear from “We will be the trendsetters”, “We shall infuse Indian brands” and
“We shall ensure that our positive attitude, sincerity, humility and united determination shall be
the driving force to make us successful”.
G. Self Concept:
From throughout the mission statement Pantaloon has talked about self-concept like “trend
setting”, “confidence and renewed ambitions”etc.
H. Concern for Public Image:
“Creating future scenarios in consumption space leading to economic development”, “trendsetter”
and “committed to quality in whatever we do”. These statements say Pantaloon’s goals and
objectives about concern for public image.
I. Concern for Employee:
Here it says about the stake holders but it does not tell about employees.
5. PANTALOON VISION STATEMENT:
Future Group shall deliver Everything, Everywhere, Every time for Every Indian Consumer in the
most profitable manner.
6. ANALYSIS OF THE VISION STATEMENT:

A. Value addition for indian customer:
The vision statement throws the light on the aspects like delivery of a wide assortment of
products covering a wide geographical area covering “Every Indian Consumer”. The vision
statement also states the fact that the company would deliver products in the most profitable
manner such that it will add value to the customer every time he purchases products from
Pantaloons.
B. Reduction of Delivery Time of Overhead Cost:
It can be said that operations strategies plays an important role in supporting the mission and
the vision statement of the company. The strategies adopted by Pantaloons like inventory
management, supply chain management, better designing of the shopping malls are all part of
the operations and these largely contribute to the betterment of the organization. These
components of the mission and the vision statement reduce the delivery time of products, solve
the queuing problems during paying of the bills, reduce the overheads, reduce the cost price
of the products that are being sold by Pantaloons.
7. MISSION AND VISION: DRIVING FORCE OF PANTALOON RETAIL:
The vision and mission statements work as a driving force. At a time when Indian retailers are
trying desperately to make cash registers ring. Pantaloon’s number for the quarter till December-end
tells the story. It is the only Indian retailer that has managed to grow sales by 25%. Its operating
margin crossed the 10%-mark, up 1.4% year-on year, while manpower and operating costs fell 1.33%
and 1.78%, respectively, despite Pantaloon adding 18 large format stores.
8. STRATEGIC BUSINESS INITIATIVES:

So, the thing which makes Pantaloon to achieve these numbers even in this period of recession
is Biyani’s, native caution and ability to keep an ear to the ground. In January 2008, when much of
India Inc was on a roll, a weekly e-mail communication sent to all employees, Kishore Biyani called
for an initiative, Garv Se Kaho Hum Kanjoos Hain (Say proudly we are stingy).
The message was part of a flurry of initiatives by Pantaloon Retail to make sure it was completely
prepared to face a challenging business environment.
As the numbers show, the initiatives seem to have paid off. “Thank god for what we call Kishore
Biyani’s sixth sense. Early on, he had an inkling of things to come and we kicked in the restructuring
and reorganization process quickly. We have revised production norms and are redeploying existing
people in new stores,” said Sanjay Jog, head of human resources at Pantaloon Retail.
This above mentioned statement by head of human resource clearly brings out that how
the objectives and procedures of Human Resource department are aligned with the super
ordinate goal of the company.
9. THE VISION OF HUMAN RESOURCE FUNCTION:

The objective is to help and maintain the organization as a quality organization, which not only
recognises and nurtures talent, but also helps retain it. Pantaloons do not believe in lay off their
talented employees as they strongly believe in hiring those potential candidates who can absorb the
company’s vision and mission and the work culture.
Pantaloon believes in employee engagement, internal postings and career and succession planning
as it increases the loyalty of work force and reduces the cost to hire and train new people.
Sanjay Jog, human Resource head at Pantaloon Retail India Limited, agrees: “Employee
engagement is not transactional but has to be viewed holistically.”
Pantaloon has many engagement activities, from education to rewards and recognition. “Eighty
per cent of our 18,000 employees are frontline staff and it’s important to have value-add at this level
especially,” he says.
The company has employee discounts available even to their families; non-contractual education
loans and keeps 30 per cent of compensation as variable.
Among other things Pantaloon has an employee insurance scheme that insures them for five
times the amount of their cost-to-company. “The emotional connect with the staff is needed nowadays,”
Jog explains. He concedes that Pantaloon’s low attrition of 23.6 Per Cent proves the effectiveness
of the group’s rewards programme.
10. LINKING HUMAN RESOURCE FUNCTIONS AND POLICIES WITH ORGANIZATIONAL

GOALS AND VISION AND MISSION:
A. The Recruitment Ideology:
It puts a great amount of emphasis on people relations. While recruiting people, the accent is not
just on qualifications, but more on the mindset and attitude of the people. People with functional
experience are given more weightage.
B. The Selection Process:

Ours is a three-pronged selection process encompassing psychometric test, group discussions
and interviews for freshers are inducted into the company within one day. While for senior professionals
2 levels of interviews are held and candidates are finalized within 2-3 days. The interview first is
taken by the manager of that department, it is a technical interview. The second interview is taken
by the head of human resource.
C. The Nature of Training Imparted to Freshers:
For new employees, our company has a two-day induction program. Further training imparted
to fresh recruits is need based, and on-the-job training is provided to recruits who are inducted in
specialized areas. Technical and soft skills training are also imparted from time to time to our
employees. The training modules thus conducted are either in-house or carried out by specialized
agencies.
D. The Appraisal and Evaluation Systems:
The organization has a half- yearly Human Resource appraisal, which includes a 360 degrees
evaluation for senior management. Besides, there are regular appraisals for all employees, including
executives and those of the front line staffs.
E. Motivational Techniques Adopted by Company:
We have a generous incentive programme, which has helped us increase productivity by 30-
40% as well as minimise wastage by 2-3 %. Incentives are offered to all genres of employees, and
we have seen that they have greatly helped in raising morale as well as performance.
F. Pantaloons is Different:
Professionalism in work environment and direct involvement of management in ensuring employee
welfare, are among the key aspects that make us different from our competitors. Besides, the
investments that our organization has made for the future as well as the technology that our employees
work with make our organization distinct from others.
G. Qualitative Techniques Adopted:
More than eight years after it forayed into the retail business, Pantaloon Retail decided to
implement SAP to keep itself competitive in the rapidly growing Indian retail market.
Successful retailers are those who know that the battle for customers is only won at the frontline,
which in the case of a retail chain is at its stores. Pantaloon was regularly opening stores in the
metros and there was an urgent need for a reliable enterprise wide application to help run its business
effectively. “The basic need was to have a robust transaction management system and an enterprise
wide platform to run the operations,” says Rakesh Biyani, Director, and Pantaloon. The company was
looking for a solution that would bring all of its businesses and processes together. After a
comprehensive evaluation of different options and software companies, the management at Pantaloon
decided to go in for SAP.
H. Internal Supply:
a. Human Resources
1. Accounts for over 8% of the employment pool.
2. The company has envisioned big expansion plans over the next few years.
3. An attempt to get qualified, skilled personnel led to the launch of ‘Seekho- A call to learn”, the
company’s educational initiative.
b. Internal Controls and their Adequacy
1. Well defined organizational structure, documented policy guidelines, predefined authority levels
and extensive systems of internal controls to ensure the optimum utilization of the company’s
resources.
2. Regular reviewing of financial and risk management policies, significant audit findings, the
adequacy of internal control systems and compliance with accounting standards.
c. Turn Over Analysis:
Strong Management bandwidth with over 70 senior management and over 350 middle management
empowered entrepreneur observers recruiting more than 500 people every month.
d. Category Management as an Approach
 Pantaloon as a preferred employer of choice in Retail
 Balanced Scorecard as a motivation tool: to name a few have their objectives, which cascade
from the corporate strategy. Further individuals from respective departments will have his/her
scorecard from the departments score card. The employees in the departments will have four
objectives and each objective will have a measure. To achieve the objective the employees will
be given projects. Therefore in the matrix, if the employee achieves all the objectives, then
automatically, the department meets the objective of driving the employees to meet the targets.
LEVEL TWELVE
MAHINDRA & MAHINDRA LIMITED: CASE STUDY ON IMPACT

OF MISSION AND VISION STATEMENT
The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra is
the market leader in multi-utility vehicles in India. It made a milestone entry into the passenger car
segment with the Logan. Mahindra and Mahindra is the only Indian company among the top tractor
brands in the world.
The Group has a leading presence in key sectors of the Indian economy, including the financial
services, trade, retail and logistics, automotive components, after-market, information technology and
infrastructure development. Mahindra has recently made an entry in the two-wheeler segment which
will see the company emerge as a full-range player with a presence in almost every segment of the
automobile industry.
Mahindra’s Farm Equipment Sector is the proud recipient of the Japan Quality Medal, the only
tractor company worldwide to be bestowed this honour. It also holds the distinction of being the only
tractor company world-wide to win the Deming Prize. The US based Reputation Institute recently
ranked Mahindra among the top 10 Indian companies in its Global 200: The World’s Best Corporate
Reputations list.
Mahindra is also one of the few Indian companies to receive an A+ GRI checked rating for its
first Sustainability Report for the year 2007-08.
Fast growing
multi disciplinary
Belongs to engineering
Leading Industrial consultancy
House - organization
The Mahindra Qualified
Group staff with good
competitive
skill sot
Quality
consicious
and time
commitiment
Innovativeness
and quick
ORGANIZATION penetration into
new areas of
operation
Track record
of high
prequalification
rate
Wide
geographic
Large spread
clientele base Handled
and bags Prestigious
repeat orders and unique
assignments
A. WHAT DRIVES THEM?

Vision:
Indians are second to none in the world. The Founders of our nation and of the Company
passionately believed this. The company vision to prove them right by believing in themselves
and by making Mahindra and Mahindra Limited known world-wide for the quality of its products
and services.
2. Mission:
Our Core Purpose is what makes all of us want to get up and come to work in the morning.’
3. Core Values:
The company Core Values are influenced by their past, tempered by their present, and will
shape their future. They are an amalgam of what they have been, what they are and what they
want to be.
4. Good Corporate Citizenship:
As in the past, they will continue to seek long term success, which is in alignment with our
country’s needs. They will do this without compromising ethical business standards.
5. Professionalism:
They have always sought the best people for the job and given them the freedom and the
opportunity to grow. They will continue to do so. They will support innovation and they’ll reason
risk taking, but will demand performance.
6. Customer First:
They exist and prosper only because of the customer. They will respond to the changing needs
and expectations of our customers speedily, courteously and effectively.
7. Quality Focus:
Quality is the key to delivering value for money to our customers. They will make quality a
driving value in our work, in our products and in our interactions with others. They will do it ‘First
Time Right’.
8. Dignity of the Individual:
They will value individual dignity, uphold the right to express disagreement and respect the time
and efforts of others. Through our actions, they will nurture fairness, trust and transparency.
B. MAHINDRA’S HIGH VALUE LEADERSHIP PROGRAMME:
The Mahindra Group offers a number of High Value Leadership Lifecycle Programmes for
leadership development at key transition points for Managers. ‘Bodhi Vriksha’ (a place of enlightenment),
is a world-class, in-house Management Development Centre that has been set up to promote business
values and leadership skills at Nashik.
1. Global Managers Programme:
a. Programme Objective:
1. To provide insights into understanding globalisation and its impact on industry.
2. To appreciate the nuances of International Trade and Finance.
3. To give a perspective on International Marketing, Branding and Strategic Planning.
4. To understand the importance of cross-cultural sensitivity.
b. Key Programme Content:
1. International Marketing and Strategic Selling.
2. Customer Relationship Management.
3. Cross-cultural Sensitivity - Cultural Nuances in China, South Africa, USA, Europe and Middle
East.
4. Four T’s: Training, Transfer, Teams and Travel.
5. Global Marketplace: Implications for domestic/global marketing strategies/projects.
6. Scenario Planning.
7. Nuances of Legal and Contract Issues.
c. Customer-centric Corporation Programme Objective:
1. To help understand consumer preferences, perception and behaviour.
2. To set frameworks for new product development.
3. To help understand brand equity.
4. To create unique value for the targeted customer.
d. Key Programme Content:
1. Understanding customer expectations.
2. Capturing the voice of customers of the Mahindra Group  Benchmarking studies, J.D.Power,
CSI, etc.
3. Setting frameworks for new product development.
4. Positioning for competitive advantage.
5. Creating value for competitive advantage.
6. Co-creating value through experience.
C. ‘BODHI VRIKSHA’ - MAHINDRA MANAGEMENT DEVELOPMENT CENTRE

The potential for learning is limitless. This is the spirit of Bodhi Vriksha, the Mahindra Management
Development Centre. Established in 1999, this residential training facility for the Mahindra Group’s
management staff aims to promote business values and leadership skills. This is in keeping with the
Group’s belief that systems and practices must be upgraded constantly to keep pace with the
dynamic business environment.
Located 7 km away from Nasik, one of the most favoured industrial destinations in Maharashtra,
“The Mahindra Management Development Centre” sprawls across 4 acres of beautifully landscaped
terrain. The architecture is charmingly rustic and the infrastructure is ultra-modern, providing the ideal
setting for employees to ‘Reflect-Network-Develop’. It offers residential management development
programmes with a mix of Classroom and Action learning.
The Mahindra Management Development Centre was commissioned in April 2005, and since
then, over 4500 executives from the Mahindra Group have benefited from its training programmes.
‘Bodhi Vriksha’ is truly a temple of learning for the Group. The campus also houses the world-class
Mahindra Institute of Quality (MIQ) to impart Total Quality Management training to both, the Mahindra
Group and the Indian industry. The Mahindra Institute of Quality has Japanese accreditation and a
top-notch faculty from India and Japan.
INTERNAL SUPPLY:
1. DEFINING MANAGERIAL RATES:
Automaker Mahindra and Mahindra (M&M) is also redefining managerial roles and getting rid of
redundant posts within the organization. Pawan Goenka, president automotive sector, M&M
Ltd, said, “The Company is attempting to simplify its hierarchical structure by doing away with
several posts that were created when the times were good. We have done away with about
10% of our designated positions, but without touching any marketing posts.”
2. SKILLS INVENTORY:
Mahindra Group Believe in Skill inventory and Manpower inventory too rather than hiring skills
from outside. They believe in training and developing the skills from time to time as based on
the current trends and requirements of the organization which are already available in their
buffer, i.e., inventory.
D. MILESTONES
1978:- The Company started negotiation with Balania K. Zacharopoulos Ltd., Athens for jointly
promoting a new company in Greece for the manufacture of Jeep vehicles and trucks.
Initially, it was proposed to assemble these vehicles mainly from CKD packs to be shipped
from India.
1979:- 5722764 Bonus equity share issued in 1:1 to proportion.
1984:- Mahindra Spicer Ltd. (MSL), was amalgamated with Mahindra and Mahindra Ltd. (MML) with
effect from 3rd April. Pursuant to the scheme of amalgamation of MSL with MML, the
shareholders of MSL were allotted 188166 equity shares of MML in the ratio of 1 equity
share of MML for every 6 shares held in MSL.
The Company entered into a collaboration agreement with Foramer S. A., an associate of
Forasol S.A., for purchase of Ile d’Amsterdam an offshore drilling rig at a price U.S.$ 75
million. The Company arranged for a foreign currency loan through Bank of Baroda. In view
of this purchase, the Company obtained a firm order from ONGC for drilling services for 2
years.
1985:- A letter of intent was obtained for the manufacture of 50,000 Lines of EPABX/PAXs in
collaboration with OKL Electric Co. of Japan.
The Company also signed a Memorandum of Understanding with the British Telecom P.L.C.
of London under which the two companies were to jointly explore and develop opportunities
in telecommunication and technical fields in India.
1988:- The Company acquired a off-shore drilling rig Ile d’ Amsterdam from Foramer S. A., France
as on 1st March. A firm letter of intent was received for one land rig for drilling operations
at Jwalamukhi, Himachal Pradesh against a tender from ONGC. The Company already
entered into an agreement with Forasol S.A., for purchase of a land rig and related
equipment
1995:- The Company entered into a joint venture agreement with Ford Motor Company USA (Ford)
for promotion of a new Company for the manufacture and marketing of Ford range of
passenger and other vehicles. The Company has an equity participation of Rs 160 crores
each by Ford and the Company.
1999:- M&M has set up a new company - Mahindra Auto Specialties Ltd
For bullet-proofing passenger vehicles and providing specialised services.
The Company consequent to disciplinary action taken by the Management against certain
workmen and Union representative, the workmen of Kandivli Plant of Tractor Division of the
company initially stopped work and thereafter resorted to illegal strike on 11th January.
2007:- Mahindra and Mahindra acquires a leading German Forging Company Schoneweiss and
Co. GmbH. Mahindra and Mahindra (M&M) has launched the line of sports utility vehicles
(SUV) and pickup trucks that it plans to begin selling in the United States starting from 2009.
E. SUCCESSION PLANNING:
A key HUMAN RESOURCE function at Mahindra group is the career and succession planning.
The objective of this function is to chart out a detailed career path of each individual at the senior
most levels. The career path taps both the strengths and weaknesses and aspiration of each individual
executive.
 The detailed career planning also leads to identification of incumbents as successor to a
specific responsibility.
 “What we try to do, through our succession planning is the early identification of potential
successors and both formally and informally, begin to provide expanded responsibilities so that
there is an on-the-job development of a larger perspective and understanding,” elaborated Mr.
Choudhari.
F. QUANTITATIVE INTERNAL DEMAND:
1. Trend Analysis:
Mahindra Group believes in expanding their business and growing with the strategic planning
including mergers and acquisitions. As we can clearly depict from the current data given below.
1963:- International Tractor co. of India established a joint venture with International Harvester co.
USA
1977:- International Tractor Co of India merged with Mahindra Group to become its tractor division.
1986:- Tech Mahindra established a joint venture with British Telecom.
2004:- Signed MoU to enter into joint venture with Jangling Motor co. group of china to acquire tractor
manufacturing assets from jangling, tractor co, a subsidiary of Jangling Motor co. group.
2005:- Acquire 51% stake in SAR transmission Pvt Ltd, a Co. engaged in manufacturing gear only
transmission shafts.
Mahindra Renault Ltd., established a joint venture with Renault to manufacture 7 market Logan,
a midsized sedan, in India.
Mahindra International Ltd established a joint venture with international Truck 7 Engine Corporation
to manufacture trucks and buses in India.
2008:- Mahindra enters into JV with TMI Pacific in Australia
2009:- Acquired 51% shares of Satyam.
This finally made Mahindra to mark its global presence when in July, it rolled out its 2 millionth
vehicle, achieving a significant sales milestone. Finally Mahindra was honored with Super brand 2008
award. Mahindra tractors top USA dealer satisfaction survey. Mahindra holidays travel portal receives
IATA certification and a lot more to a large group of Mahindra’s credit.
G. INTERNAL SUPPLY:
1. Turnover in Five Years: Mahindra Defence Sales to Cross 2000 Crores
With the launch of a Special Military Vehicle (MSMV) facility here, Mahindra Defence System,
a division of Mahindra Group, yesterday said it targets a 5-fold increase in its turnover at Rs 2,000
crore in the 5 from existing Rs 100 crores,” Mahindra Defense System CEO Brigadier Khutub. He
told reporters. He said the company expects to close this year with the sales of 200 defence
vehicles, while it targets to sell 350 vehicles in the next fiscal.
The company has an order book of 460 Rakshak’s of which it plans to deliver 60 of them in the
first quarter of next fiscal. Meanwhile, he said an initial investment of Rs 25 crore has been made
in the facility and an additional Rs 15 crore will be put in the next phase. “With the technologically
advanced manufacturing facility, MSMV will help Mahindra Defence System to harness the potential
in this State,” Mahindra Group Vice Chairman and MD Anand Mahindra said.
The company currently operates in a single shift which has a production capacity of 500 units.
It can further be expanded up to 750 units if the demand arises. He said the company is planning
to commence second shift operations next year. The company has a 100% of market share as far
as Defense Ministry is concerned for protective vehicles and about 87% market share as far as
Ministry of Home Affairs (police and paramilitary forces), he informed. “Brand presence and knowledge
about the Indian conditions and the needs of the Indian armed forces will help us to be the No. 1
supplier for MSMV’s,” Hai said.
The company hopes to enlarge on this and continue to provide protective vehicles for the use
of police and security forces and the defense, he added. It also has intentions of tying up with the
Defense Research and Development Organization (DRDO) to develop a special kind of armoured
vehicles by 2017-18. “We have already given our presentation to the DRDO and if plans work out
we would move ahead with our future plans,” he said without divulging any further details. The
company had, 3 years ago, supplied 200 Rakshak’s to the Indian Army and about 9 bulletproof
Scorpios last year.
Admitting to the fact that the demand of the special vehicles has increased post 26/11, He said
the company has received an order of 10 Marksman and bulletproof Scorpios and Boleros from the
Maharashtra police. On the export front, he said the company had exported about 30-40 vehicles to
Ghana, Nepal, Guyana and Sri Lanka last year. The company, which is also looking at establishing
another manufacturing facility in Africa to cater to the needs of African nations, will concentrate on
exports next year.
2. Dealing with Turbulent Times: Economic Slow Down
We have reduced our estimates for Mahindra and Mahindra Ltd. (M&M) on account of a sharper-
than-expected slow down in the sales volume growth because of the current global financial crisis.
The Company’s total sales volume has fallen 8.2% in the festive month of October to 30,139 units.
Subsequently, we have downgraded our rating on the Company from Buy to Hold.
We believe the current economic slow down and tight liquidity scenario will continue adversely
impacting the automobile industry for the rest of FY09 and most of FY10. Though interest rates are
expected to decline in the coming months, credit availability will still remain tight as banks are hesitant
to provide loans in the current adverse macroeconomic environment. Thus, we expect the Company’s
sales volume to be in the range of 290–300k units in FY09 and FY10, supported by the launch of the
Xylo in late Q3’09. Further, M&M’s tractor sales are expected to get a boost from the farm loan waiver
and the good monsoons during the year. The slow down in the global economy will also have an
adverse affect on the Company’s subsidiaries. Mahindra Holidays and Resorts India Limited (MHRIL)
will be negatively impacted by the current down turn in the global economy, as travellers would be
forced to cut their travel and holiday expenses. However, we believe MHRIL will be able to restrict
the effect of the current crisis due to its unique business model and a wide network of resorts.
MHRIL’s base of 85,000 member families provides it with a recurring source of revenue, said V.
Handol, Sr. Manager-HR Mahindra group.
LEVEL THIRTEEN
WRITING MISSION AND VISION STATEMENTS
A. BUSINESS OF BUSINESS IS MISSION: FOUR CASE STUDIES:

1. MUKESH NAGPAL: CEO OF SUPERSONIC MOTOR CAR SERVICES, NEW DELHI:
Mukesh Nagpal, the proprietor of his ten years old “Supersonic Motor Car Services” located at
Delhi said he attended a two days programme on “Strategic Management” organized by Delhi
Management Association. The seminar encouraged him writing mission and vision statements. At the
end of the seminar, he decided to take it seriously and followed it up aggressively.”
Today, he uses mission and vision statements as a guide to serving his customers, promoting his
warranty and keeping his employees focussed on respecting customers’ cars. His company is all about
fulfilling his customers’ needs. Mukesh adds an important point about how to always use the mission
statement: “Bring your staff together and review the mission statement,” he said. “Reinforce why we are
here and how we should be here everyday, by reading and discussing it and planning for future.”
2. GAUTAM BUNDALIA: MD AND CEO OF OCEAN LIFE STYLE, MUMBAI:

Gautam Bundalia, Managing Director and Chief Executive Officer of a gents, ladies and kids
ready made garments retail outlet ‘Ocean Life Style”, at Mumbai since 1999, said “It doesn’t matter
if you are a one-person business or a large shop with multiple locations. It is still essential to know
how you want your business to look and where you want to focus your energy”. He has used his
organizational mission and vision statements to his fullest advantage.
He recently worked out a business deal with “Esprit” to sell its products in his Ocean Life Style.
The “Esprit” brand is sold in five continents and more than 40 countries, 640 freestanding stores and
over 12,000 wholesale customers. More than 20,000 products are designed each year for 12 product
lines for women, men and kids - and in addition a wide variety of licence products for every part of
life! He said “I owe the success of this deal to my mission and vision statements. I never stop defining
and redefining my vision to look for higher levels of promoting my business. I always ask myself
“Does every activity I do in my business serves what I started out to do?”
3. MANGAL SINGH: CHAIRMAN AND CO-OWNER OF ROYAL STEEL, JAMSHEDPUR:

Mangal Singh, the Chairman and the co-owner of “Royal Steel” located at Jamshedpur since
1982, echoed similar sentiments, “Every time you have a business decision to make, you have to
have a touchstone, a guide to help you. I believe everyone needs to sit down and figure out exactly
why you did this. Write down how you felt when you decided to start your business”
He added “It is so tempting to become a chameleon and try to do everything. If you do that, you
end up somewhere else, being something else ... not what you wanted to be. The time, effort and
work you put into creating your mission statement is one solid thing you can do for your business.
Once you do it, everyone can see who you are.”
4. BANARSI LAL GUPTA: OWNER-CAFE COFFEE DAY FRANCHISE, LUCKNOW

“Banarsi Babu” as he is popularly known among the young college students in Lucknow, has
been successfully running his franchise, at crowded college road, “Café Coffee Day” since 2003
from a premises admeasuring seven hundred square feet. “I have been taking home on an average
a net earning of Rs. 3000/- per day on week days and approximately Rs. 6500/- per day on weekends
and holidays” he confided “Thanks to your advice you gave me six years ago, I had built and rebuilt
mission and vision statements for my franchise which helped me to determine my focus in my
business for the present and the future but the worst time came in August 2008, when I started losing
my income due to economic meltdown and recession.
At that time, I looked again at the mission and vision statements which I had revised in 2007 and
had talked about diversification in my business.
Opportunities do arise, and it is always a question of how an opportunity may complement your
business or serve your customers in a new way. Changing or adding to a business is a hard
decision. But I did it. I rented another premises, five hundred yards away, on the college road and
started “Taste of India” a fast food and snacks centre which became very popular among the young
school and college students. The mission and the vision statement have opened up new opportunity
for me”.
B. DO WE REALLY NEED MISSION AND VISION STATEMENTS? ANSWER IS ‘YES’:

We have hundreds of such story tellers who will vouch for the inherent value and the worth of
having mission and vision statements. The question is: Do we really need mission and vision
statements for our business and their continuous value-revaluation for determining our focus for
present and for the future perfect?
Scores of business planning and strategic experts will state a mission statement is mandatory
for your company direction and fund raising. Other advisors suggest writing a mission statement
becomes a meaningless few sentences collecting dust somewhere in your office. Is a personal and
corporate mission statement necessary for success in today’s hostile business climate?
C. THE ANSWER DEPENDS ON WHETHER OR NOT THE MISSION STATEMENT YOU

COMPOSE HAS SIGNIFICANT MEANING TO YOU, OR IS IT JUST ANOTHER
CORPORATE EXERCISE IN FUTILITY.
A mission statement can guide your company in good times and bad. A meaningful mission can
act as a moral and corporate compass. It can help you make decisions aligning with your values and
goals.
Speaker and author, Laurie Beth Jones of “The Path: Creating Your Mission Statement for Work
and for Life” states, “It is the key to finding your path in life and identifying the mission you choose
to follow. Having a clearly articulated mission statement gives one a template of purpose that can be
used to initiate, evaluate, and refine all of one’s activities.”
D. WHEN THE ANSWER IS YES: WHAT DO WE DO TO WRITE BUSINESS AND VISION

STATEMENTS?
“I think that is a practical way to get started on this process. There is no right or wrong way to
begin. Just begin. Buy some pizza and sit down with your staff. If you can’t imagine whom to ask
for help, bring it to your next door neighbour. The benefit of other’s insights will help you see your
own priorities more clearly. Don’t rush the process because it’s not about the words, but about
what you truly believe in and want everyone connected to your business to believe in” says
Deb Van Batenburg. She is a leadership trainer for the Job Corp. at California.
Step One: Collect Information and Feed back:

1. List the organization’s core competencies; its unique strengths and weaknesses.
2. List the organization’s primary customers, internal or external, by type, not by name.
3. Review how each customer relates to each of the organization’s strengths.
4. Write a one-sentence description of each customer/strength pairing.
5. Combine any that are essentially the same.
6. List the sentences in order of importance to the organization’s vision, if one exists.
7. Combine the top three to five sentences into a paragraph.
8. Do a pilot study tests with employees, customers, clients, suppliers and the other constituents.
9. Incorporate the feedback from customers, employees and suppliers and repeat the process.
Step Two: Answer Your Own Questions:
David Tucker, a Business and Strategic Planning Consultant with Armstrong Consultants, Brazil
observes that answering the following questions will help you to create a verbal picture of your
business’s mission:
1. Why are you in Business?
What do you want for yourself, your family and your customers? Think about the spark that
ignited your decision to start a business. What will keep it burning?
2. Who are your Customers?
What can you do for them that will enrich their lives and contribute to their success — now and
in the future?
3. What Image of your Business do you want to Convey?
Customers, suppliers, employees and the public will all have perceptions of your company.
How will you create the desired picture?
4. What is the Nature of your Products and Services?
What factors determine pricing and quality? Consider how these relate to the reasons for your
business’s existence. How will all this change over time?
5. What Level of Service do you Provide?
Most companies believe they offer “the best service available,” but do your customers agree?
Don’t be vague; define what makes your service so extraordinary.
6. What Roles do you and your Employees Play?
Wise captains develop a leadership style that organizes challenges and recognizes employees.
7. What Kind of Relationships will you Maintain with Suppliers?
Every business is in partnership with its suppliers. When you succeed, so do they.
8. How do you Differ from your Competitors?
What do you do better, cheaper or faster than other competitors? How can you use competitors’
weaknesses to your advantage?
9. How will you Use Technology, Capital, Processes, Products and Services to reach your
Goals?
A description of your strategy will keep your energies focussed on your goals.
10. What Underlying Philosophies or Values guided your Responses to the Previous
Questions?
Some businesses choose to list these separately. Writing them down clarifies the “why” behind
your mission.
Step Three: Apply Intelligence and Mind Together:
1. Bring in many Perspectives
Get lots of input from the target audience you plan to serve, as well as from your board, staff,
and volunteers. This will help you to develop a broad base of support. You can get this input
through meetings, surveys or phone calls. Ask people what they think or need in regard to the
area of services you plan to offer.
2. Allow Enough Time
Time spent now will pay off later. So, don’t rush the process. Provide time to reflect on the
information you gather, to write an initial draft, to allow key participants to read it, and to make
changes.
3. Be Open To New Ideas: Brainstorm
This is especially important for the founders of the organization. You may have had tunnel vision
while getting your organization set up, but now it is time to get some fresh perspective. Be open
to different interpretations of what you should be doing and new ideas about how to accomplish
your goals. Use brainstorming techniques to ensure that all ideas come forward freely.
4. Write Short and only what you need
The best mission statements are short and state the obvious. Your statement’s length and
complexity depends on what your organization wants to do, but keep it as brief as possible. You
should be able to use the statement frequently, so make it brief and succinct.
As Tony Ponderis of the Fund-Raising Forum says, the mission statement should be “...short
enough to remember and easily communicate. Strong enough to inspire.”
5. Final Approval: Get the Nod of CEO:
Finally, get the seal of approval from the Chief Executive Officer of the company
6. Review Mission and Vision Statements Frequently
“The American Heart Association”, for instance, reviews its mission statement every third year,
but it is changed only every few decades.
Cass Wheeler, long-time CEO of the American Heart Association, says in his book, “You’ve
Gotta Have Heart: Achieving Purpose Beyond Profit in the Social Sector,”The environment
changes and the organization changes, so a periodic review is important to ensure that there is
alignment of purpose and reality.”
SIMPLY SPEAKING....
1. Like anything with lasting value, crafting a mission or a vision statement requires time,
thought and planning.
2. Business Mission and vision statements must inspire and motivate.
3. Mission and vision statement must serve as a compass to keep things going in the right
direction. It helps you measure your progress, set goals, establish priorities, and know
when to use one of the most important words in your vocabulary: “No”
4. Mission and vision statements must provide focus to your purpose. As Henry David
Thoreau said, “In the long run men only hit what they aim for.”
5. Mission and vision statements must be unconventional
6. Shake things up. Offer new perspectives. Only when you see or hear things in a different
way can you see greater opportunities.
7. Keep them simple. If people can more easily understand something, then it’s more likely
to get things done.

1. What is the meaning of Mission and Vision? How these two concepts relevant for strategic management
in an organization?
2. What is the philosophy behind mission, vision and the organizational strategic Human Resource planning?
3. Why, in these days of global competition, every organization is trying to develop its Mission, Vision and
Values statements? What has undergone a change in the corporate sector?
4. What are the various perspectives of Mission and Visions Statements?
5. What is the philosophy of Peter Drucker on Mission and Vision Statements? What are the various features
of Mission statements according to him?
6. Critically examine Christopher Bart’s philosophy on the use of mission statements and compare and
contrast it with that of Bain and Co and De Geus.
7. Explain in detail the Campbell’s Ashridge Mission Model.
8. “To begin with the end in mind means to start with a clear understanding of your destination” Stephon
Covey. Explain this with examples.
9. What is 7-S framework model? Explain it with examples.
10. Explain in detail the major features of all the theories of Mission and Vision and Statments.
11. What are the various framework styles of developing Mission and Vision Statements? What factors are
relevant for developing Vision Statements?
12. Critically examine the case study of Rahul and Meghna Joshi and write what were the factors responsible
for Meghna’s success after the death of Rahul Joshi?
13. Pick up any ten mission statements of Indian companies and compare and contrast them with ten mission
statements of Fortune 500 companies and write major differences in content formation and business goals
and objectives.
14. What are the components of mission and vision statements? Compare and contrast the case studies of
Wal-Mart, Hewlett Packard, Matsushita Appliances and Body Shop.
15. Examine the case study of ABC Bank and write your evaluation of its mission and vision statements.
16. “Business of Business is Mission”. Explain this statement citing examples.

Strategic Human Resource Planning 185
t er
ap
h
STRATEGIC HUMAN
5
C
RESOURCE
PLANNING
HPH
topics:
 Paradigm shift from Human Resource Planning to Strategic Human
Resource Planning.
 Need of Strategic Human Resource Planning.
 Models of Strategic Human Resource Planning.
 Strategic Human Resource Planning in Action.
CHAPTER FIVE
STRATEGIC HUMAN RESOURCE PLANNING
LEVEL ONE: FROM HUMAN RESOURCE PLANNING TO STRATEGIC 187 – 192

LEVEL TWO: A STRATEGIC HUMAN RESOURCE PLANNING MODEL 193 – 202
LEVEL THREE: OTHER MODELS OF STRATEGIC HUMAN RESOURCE 203 – 215
PLANNING
LEVEL ONE
FROM HUMAN RESOURCE PLANNING TO STRATEGIC HUMAN

RESOURCE PLANNING
1. HISTORY AND GROWTH OF HUMAN RESOURCE PLANNING:

1. PETER DRUCKER:
Why Human Resource Professionals fail to Prove that they Contribute...?
Throughout the history of the Human Resource (HR) profession there has been a debate that
Human Resource professionals have suffered from problems associated with achieving credibility
and recognition in their organizations.
For example, Peter Drucker noted, as far back as 1954, a constant worry of all personnel
administrators to prove that they are making a contribution to their enterprise. He believed that these
problems mainly have been due to the Human Resource functional role as an administrative support
function, dealing with employment contracts, salaries etc.
2. BERGLUND, 2002; LEGGE, 1995:
A. Human Resource is People and not Business Oriented:
The Human Resource function has been considered as representing mainly the interests of the
employees and thereby been split off from the rest of the organization. According to Berglund this has
created a continuous struggle for many Human Resource professionals to re-establish their status
and legitimacy in their companies, and reduce the gap by becoming more business oriented.
B. Personnel, Human Resource and Strategic Human Resource Management are same
Concepts in a new Bottle:
Berglund observed further that this has also sometimes created a willingness to adopt different
roles and rhetorics to enhance their legitimacy and strengthen their identity. Throughout the history
of the personnel management profession, the world has also witnessed several concepts that have
evolved in the profession, starting with Personnel Management and followed by Human Resource
Management (HRM), and later Strategic Human Resource Management. Many critics have argued
that the different concepts describes the same thing and do not differ extensively from each other
(Legge, 1995). Legge noted that Human Resource Management had the same intentions and described
the same things as Personnel Management.
3. MABEY, SALAMAN AND STOREY (1998):
Mabey, Salaman and Storey (1998) claimed that Strategic Human Resource Management referred
to the same intentions that Human Resource Management had from its birth, and argued that the
choice to add the strategic component was a rhetoric way of again, emphasising that people could
make difference in distinguishing successful organizations from the rest.
4. WREN (1994): FROM WELFARE PLANNING TO HUMAN RESOURCE PLANNING:
Human Resource Planning has been discussed in different Human Resource Management
contexts for many years. The first documented attempt to establish a plan for the employee development
was made in the end of 1800 and was generally referred to as welfare planning.
These plans were based on the idea to carefully select, train, and retain employees. In addition
they were taking care of grievance and transfers of dissatisfied workers as well as education and
management of performance and development records. The ideas sustained and developed but
gradually changed name to manpower planning, and later also to Human Resource Planning (HRP).
(Wren, 1994)
5. McBEATH (1978): KNOWLEDGE, COMPETENCIES AND SKILL:
In 1978, McBeath addressed his view of human resource planning by highlighting a set of issues
that he regarded as being important with respect to the human resource planning. These were;
1. An estimation of how many people the organization needed for the future.
2. A determination of what knowledge, skills and abilities that are needed to ensure that the
organization can survive and grow.
 An evaluation of the knowledge, skills and abilities of existing employees.
 A determination of how the company could fill the identified competence gaps.
6. GALLAGHER (2000): FROM JOB ANALYSIS TO SWOT ANALYSIS:
A. Human Resource Planning was a Part of Job Analysis and Used as Swot Analysis:
According to Gallagher (2000), human resource planning was initially an important aspect of job
analysis and was often used as bases for determining strengths and weaknesses among the
employees and to develop the skills and competences they needed. As individual career plans
started to gain more popularity, companies gradually started to pay more attention to the certain skills
and competences among individual employees as a way of dealing with the companies’ succession
planning. Annual appraisals were made between managers and employees in order to evaluate the
current competence and the aspirations and objectives for the future, and a distinction was often
made between, what Gallagher refers to as, functional and numerical groups of employees.
B. Functional Theoretical Framework is more Critical to Organizational Success:
The functional theoretical framework group was considered as able to perform complex
professional and managerial duties, while on the contrast, the numerical groups of employees were
regarded as low skilled. Thus, the functional group was being regarded as critical to the success of
the organization and as the core group in the succession planning.
7. STOREY (1995):
A. Human Resource Planning is Competencies Forecast:
Storey (1995) argues that human resource planning today is a very important task of every
organization’s human resource department. He refers to it as the company’s ability to forecast future
needs of competence. In this way the company actively scans its current competences and makes
forecast for future needs using various techniques.
B. Succession Planning is an Essestial Part of Human Resource Planning:
According to him, Human Resource planning mainly involves the identification of skills and
competence within the organization, the filling of identified competence gaps, and the facilitation of
movements of employees within the organisation. An essential part of the human resource planning
is, according to him, the succession planning which aims to ensure the supply of individuals and filling
of gaps on senior key positions when they become vacant, and to transfer competences to areas
where they are most valued.
2. WHY WE NEED STRATEGIC HUMAN RESOURCE PLANNING?

A. Important Component of Strategic Human Resource Management:
Strategic human resource planning is an important component of strategic human resource
Management. It links human resource management directly to the strategic plan of an organization.
Most mid to large sized organizations have a strategic plan that guides the organization in successfully
meeting its mission.
Organizations routinely complete financial plans to ensure they achieve organizational goals and
while workforce plans are not as common, they are just as important.
Even a small organization with as few as ten staff can develop a strategic plan to guide decisions
about the future. Based on the strategic plan, an organization can develop a strategic human resource
plan that will allow human resource management to make decisions to support the future direction of
the organization.
B. Important Tool for Human Resource Management Budgeting:
Strategic human resource planning is also important from a budgetary point of view so that we
can factor the costs of recruitment, training, etc., into our organizational budget.
C. Human Resource Function Understands and Supports the Direction in Which an
Organisation is Moving:
A comprehensive human resource strategy plays a vital role in the achievement of an organisation’s
overall strategic objectives and visibly illustrates that the human resource function fully understands
and supports the direction in which the organisation is moving. A comprehensive human resource
strategy will also support other specific strategic objectives undertaken by the marketing, financial,
operational and technology departments.
D. Adds Strategic Value to Organisation:
Strategic human resource planning will add value to the organisation if it:
1. Articulates more clearly some of the common themes which lie behind the achievement of
other plans and strategies, which have not been fully identified before. The first of these areas will
entail a careful consideration of existing or developing plans and strategies to identify and draw
attention to common themes and implications, which have not been made explicit previously
2. Identifies fundamental underlying issues which must be addressed by any organisation or
business if its people are to be motivated, committed and operate effectively. The second area should
be about identifying which of these plans and strategies are so fundamental that there must be clear
plans to address them before the organisation can achieve on any of its goals. These are likely to
include:
(i) Workforce planning issues.
(ii) Succession planning.
(iii) Workforce skill plans.
(iv) Employment equity plans.
(v) Pay levels designed to recruit, retain and motivate people.
(vi) Equal pay for equal work.

(vii) A grading and remuneration system which is seen as fair and giving proper reward for
contributions made.
(viii) Wider employment issues which impact on staff recruitment, retention, motivation, etc.
(ix) A consistent performance management framework which is designed to meet the needs of all
sectors of the organisation including its people.
(x) Career development frameworks which look at development within the organisation at equipping
employees with “employability” so that they can cope with increasingly frequent changes in
employer and employment patterns.
(xi) Policies and frameworks to ensure that people development issues are addressed systematically
such as competence frameworks, self-managed learning, etc.
3. WHAT IS STRATEGIC HUMAN RESOURCE PLANNING?
Strategic Human Resource Planning is a process which integrates human resource management
strategies and systems to achieve the overall mission, strategies, and success of the organisation
while meeting the needs of employees and other stakeholders.
4. WHAT ARE THE OBJECTIVES OF STRATEGIC HUMAN RESOURCE PLANNING?

A. Ensure adequate human resources to meet the strategic goals and operational plans of an
organization - the right people with the right skills at the right time.
B. Keep up with social, economic, legislative and technological trends that impact on human
resources in an organisation.
C. Remain flexible so that an organization can manage change if the future is different than
anticipated.
D. Strategic human resource planning predicts the future human resource management needs
of an organization after analysing the organization’s current human resources, the external
labour market and the future human resource environment that the organization will be operating
in.
E. The analysis of human resource management issues external to the organization and developing
scenarios about the future are what distinguishes strategic planning from operational planning.
F. Three basic questions are significant to start thinking about initiating the strategic human
resource planning Process.
1. Where are we going?
2. How will we develop human resource strategies to successfully get there, given the
circumstances?
3. What skill sets do we need?
In addition, the human resource strategy can add value by ensuring that, in all its other plans,
the organisation takes account of and plans for changes in the wider environment, which are likely
to have a major impact on the organisation, such as:
 changes in the overall employment market - demographic or remuneration levels.
 cultural changes which will impact on future employment patterns.
 changes in the employee relations climate.

 changes in the legal framework surrounding employment.
 Human Resource and employment practice being developed in other organisations, such as
new flexible work practices.
Finding the right opportunity to present a case for developing a human resource strategy is
critical to ensuring that there will be support for the initiative, and that its initial value will be recognised
by the organisation.
Giving a strong practical slant to the proposed strategy may help gain acceptance for the idea,
such as focussing on good management practice. It is also important to build “early or quick wins”
into any new strategy.
Other opportunities may present the ideal moment to encourage the development of a Human
Resource Strategy:-
 a major new internal initiative could present the right opportunity to push for an accompanying
human resource strategy, such as a restructuring exercise, a corporate acquisition, joint
venture or merger exercise.
 a new externally generated initiative could similarly generate the right climate for a new Human
Resource strategy.
 In some instances, even negative news may provide the “right moment”, for example, employee
dissatisfaction expressed through a climate survey.
5. MAKING THE HUMAN RESOURCE STRATEGY INTEGRAL TO THE ORGANISATION:
The human resources practitioner should ensure that the human resource strategy is integrated
with broader organisational objectives. Above all, it should ensure that the rest of the organisation
accepts the Strategy. To achieve this objective, practitioners should:-
 consult all stakeholders on the nature of the strategy;
 cultivate and develop allies and supporters of the strategy through the consultation process;
 focus on the benefits which are being derived from the strategy through talking to and persuading
others, and by marketing the benefits of the strategy with concrete examples of how it has
helped;
 check that there is real commitment to the strategy at all levels of the organisation;
 give regular feedback on the implementation of the plan through employee newsletters, exhibitions,
etc.
 where possible, build into the strategy quantifiable outcomes which can be easily monitored and
evaluated, so that it is possible to show the effect; and
 make the strategy part of the induction process - especially for senior managers.
6. A STRATEGIC HUMAN RESOURCE PLANNING MODEL:
There is no single approach to developing a human resources strategy. The specific approach
will vary from one organisation to another. The model below identifies six specific steps in developing
a human resource strategy:-
1. Setting the strategic direction.

2. Designing the human resource management system.
3. Planning the total workforce.
4. Generating the required human resources.
5. Investing in human resource development and performance.
6. Assessing and sustaining organisational competence and performance.
SIMPLY SPEAKING…
While human resource strategies must be developed to support the achievement of the
organisation’s objectives, it is a two-way process. Human Resource strategies can themselves
be critical inputs in determining the strategic initiatives for the organisation. A fatal error,
however, is to develop and implement Human Resource strategies without having regard for
the goals and objectives which the organisation has explicitly or implicitly identified. A common
mistake is the development of work place skill plans which are not linked to any strategic
goals or objectives or which have no affirmative action components.
Similarly, the isolated identification of affirmative action numerical targets without first
conducting a workforce and succession planning exercise is in most instances, simply
meaningless.
LEVEL TWO
STRATEGIC HUMAN RESOURCE PLANNING IN ACTION AT

MANNAT SECURITIES AND ASSETS MANAGEMENT: CASE OF
CHAMPAK LAL BHUMIA AND DR. MUNGHERI LAL
Mannat Securities and Assets Management, a non-banking finance company (NBFC), was
established in 1999 at Mumbai with branches in Delhi, Chennai and Ahmedabad. The company was
in business of trading shares in Capital (equity) Markets and offering advisory services to their clients
in managing their investment portfolio in equities and Mutual Funds under Portfolio Management
Services (PMS). The company had the membership of Bombay, Delhi and Ahmedabad stock
exchanges. Mannat Securities started its operations with the staff strength of 25 persons which
gradually rose to 105 over a period of 5 years.
Champak Lal Bhumia, Managing Director, had spent 25 years in equity trading under well-known
stock brokers in Ahmedabad and Mumbai. He came from a very traditional and semi-literate Gujrati
family. His father did not let him complete his education beyond 8th standard and got him employed
under a seasoned stock broker in Ahmedabad.
Ten years later he shifted his base to Mumbai to join as a partner with Mumbai’s top stock broker
Narotambhai Shah of Royal Securities. He left Narotambhai in 1999 and launched Mannat Securities.
Champak Lal was extra-ordinarily gifted with his art of making money even from the smallest transaction
at Dalal Street
In mid-2000, he hired Dr. Mungheri Lal as the Vice-President and Head of Human Resource
Management. Champak Lal was convinced that human resource could transform his company’s
image from a broking firm to a professionally managed non-banking finance company.
Dr. Mungheri Lal had 15 years experience in human resources in manufacturing set up. After
initial period of settling down and understanding the company’s business and the operations of stock
markets, he got into action to identify what can make Champak Lal’s dream come true.
He started from scratch. He drafted mission and vision statements, wrote values and the code
of conduct, got into corporate goal setting and planning, performance management, setting recruitment
standards, employees training and welfare. Ten months later, both Dr. Mungheri Lal and Champak
Lal were confident that human resource initiatives had started showing some results at Mannat. By
mid-2001, Dr. Mungheri Lal had established human resource impact in almost every function of the
company. He felt secured and satisfied and was happy that Champak Lal’s dream was almost
coming true and was a matter of time. He realised that sooner or later he will have to embark upon
translating plain vanilla Human Resource into ‘Strategic Human Resource Planning’ with carefully
articulated and customised systems and processes. He took next 3 months to prepare a blueprint
and decided to share his views with the managing director and win his approval to go ahead. A week
later, he sought a meeting with Champak Lal.
During their meeting, Dr. Mungheri Lal shared his plans and got his boss’s views. Champak Lal
got into a detailed discussion with him and asked for several modifications and additions in the blue-
print and gave his final approval. Dr. Lal, sensing the trend of their meeting and the grinning mood
of his boss, collected his courage to ask him something which he had in his mind but had not
cherished at all over a last couple of months “Sir, this concept of ‘Strategic Human Resource Planning’
which you have approved, cannot succeed unless the human resource function is in tune with the
business of the company and the goals of the human resource are aligned with the business goals
of the company. This is not possible if you do not invite or ask me to participate in the day to day
business meetings and the transactions of the company like marketing, finance or any other function
does. If human resource continues to be a back office support function and does not transform itself
into business and revenue generation department, it is very difficult to see that the strategic human
resource management would be successfully implemented “Dr. Mungheri Lal looked up to see the
reaction of his boss.
“Come on Dr. Lal, I am pretty serious about what you have just said. You are here with us for
last 18 months. I am very you happy with your performance. A fairly big part of my dream is about
to be realised. You have full credit for this. But tell me frankly, how much do you know about the
business of the company? According to my assessment, I have never seen you enthusiastic about
it. Three months are good enough to know the business of the company on one’s finger tips. I
personally feel that human resource has given our company a professional credibility. Like any other
chief executive, I also feel that human resource provides a support system to other departments and
functions and therefore, it has nothing new in its kitty to prove that it can ever become revenue
generation part of the business of the company. However, I am quite open on this issue. Show me
your enthusiasm, information, knowledge and above all, your seriousness about it; I will support you
in putting human resource at par with marketing, sales and finance” Champak Lal sounded serious
but relaxed.
Five minutes later, Dr. Mungheri Lal was out of the conference room. He was not feeling
comfortable. He believed that any such initiative has to come from the top and his boss would have
done it if he desired to do so. He was not happy with the way Champak Lal blamed him. He had
an excellent, practical and down to earth strategic management model for the company. He decided
to implement it, bid his time and then leave the organisation.
Should Dr. Mungheri Lal have taken the initiative to be a part of company’s business to
add value to his Human Resource philosophy and strategic management or should Champak
Lal have invited or involved him in the day to day business affairs of the company? It’s a
million dollar question.
DR. MUNGHERI LAL’S STRATEGIC HUMAN RESOURCE PLANNING MODEL:

1. The Preparation:
The human resource function of the company shall take the following strategic actions to ensure
that the Human Resource Strategic Planning is integrated with broader organisational objectives and
it is accepted by the employees at all levels:
1. Consult all stakeholders and the top management team on the nature of the strategy and how
it would be implemented.
2. Cultivate and develop allies and supporters of the strategy though the consultation process.
3. Focus on the benefits which are being derived from the strategy through talking to and
persuading others, and by marketing the benefits of the strategy with concrete examples of how
it has helped or will help in future.
4. Take people into confidence through discussions that there is real commitment to the strategy
at all levels of the organisation.
5. Tell people that there would regular feed back on the implementation of the plan through
employee newsletters, meetings, conferences, etc.
6. Build into the strategy quantifiable outcomes which can be easily monitored and evaluated, so
that it is possible not only to realize the results but also to show the effect of the planning.
7. Make the strategy part of the induction process at all the levels.
8. Keep it simple for the people to understand and internalise.
2. Human Resource Planning Model:
The strategy is based on the objectives of the company and the empirical data analysis collected
through discussion with employees at various levels. The model identifies six specific steps in
developing human resource strategy:-
2. Designing the Human Resource Management System.
3. Planning the total workforce.
A Strategic Human Resource Management System
Strategic Direction HRM System Planning the Total Workforce
The strategic direction Shaping HRM for Deciding the numbers and
and outcomes that the organisation competence of personnel
organisation seeks to Success the organisation requires
achieve.
Assessing and Sustaining Generating Required Human Resources

Organisational Competence and
Performance Attracting, accessing and initially assigning the
people needed in the organisation’s total workforce
Measuring the organisation’s
progress towards its desired
outcomes and adjusting the
system accordingly
Investing in Human Resource Development and Performance

Developing and reinforcing competence and performance in individual groups and teams in the
organisation’s total workforce
The six broad interconnected components of this system consist of three planning steps and
three execution steps.
Three Planning Steps:
2. Designing the human resource management system.
3. Planning the total work force.
Three Execution Steps:
The top three components represent the need for planning. We must determine their
strategic direction and the outcomes they seek. This is usually accomplished with a specific
form of strategic planning. Classic strategic planning is a formal, top-down, staff-driven
process. When done well, it is workable at a time when external change occurs at a more
measured pace.
However, as the pace and magnitude of change increases, the approach to strategic planning
changes substantially:
1. Forming: First, the planning process is more agile; changes in plans are much more frequent
and are often driven by events rather than made on a predetermined time schedule.
2. Storming: Second, the planning process is more proactive. Successful organizations no
longer simply respond to changes in their environment, they proactively shape their environment
to maximize their own effectiveness.
3. Norming: Third, the planning process is no longer exclusively top-down; input into the process
comes from many different organizational levels and segments. This creates more employee
ownership of the plan and capitalises on the fact that often the most valuable business
intelligence can come from employees who are at the bottom of the organizational hierarchy.
4. Performing: Lastly, the strategic planning process less reactive and more driven by line
leadership.
Once strategic planning is underway, we must undertake process to design and align its human
resources management policies and practices to provide for organizational success. The other
step in planning is to determine the quality and quantity of human resources the organization
needs for its total force.
ROLE OF EXECUTION STEPS:
The rest of the human resource strategic system exists for and is guided by these plans,
policies, and practices. These execution components contain mechanisms that generate the correct
skill sets, invest in staff development and performance, and productively employ them in the
organisation. The last component provides a means to assess and sustain the competence and
performance of the organization and the people in it with regard to outcomes that the organization
seeks.
Analysis
Using the process model mentioned above, the specific components of the Human Resource
Strategic Plan are discussed in greater detail below:
STAGE 1:
Setting the Strategic Direction:
Strategic Direction
The strategic direction and outcomes that the organisation seeks to
achieve
External environment
Strategy outcomes, goals
and objectives
Vision,mission,values and
goals
A. Aligning Human Resource Policies to Support Corporate Mission, Vision and Goals:
This process focuses on aligning human resource policies to support the accomplishment of
the Company’s mission, vision, goals and strategies. The business’ goals sit at the heart of any
human resource strategy and in order to align business and Human Resource, we need to
answer one key question, Can our organisation’s internal capability deliver the organisation’s
business goals?
B. Retaining People Through Innovative Human Resource Policies and Developing
Competencies: Many organisations cite their people as their primary source of competitive
advantage. Successful companies continuously identify and adopt innovative human resource
management policies and practices to sustain that advantage. More importantly, they structure
work and design training, performance management, pay, and reward policies to help members
of the organization succeed in achieving desired organizational outcomes.
C. Reinforcement of Employees Behaviour: In other words, they integrate and align human
resources management policies and practices to reinforce employee behaviours that can best
realise the leaders’ strategic intent. In the most successful companies, the set of policies and
practices that collectively make up a company’s human resources management system is the
critical management tool for communicating and reinforcing the leaders’ strategic intent.
Actions to be Taken:
1. Conduct an external environmental scan and evaluate its impact on the organisation.
2. Identify the organisation’s vision, mission and guiding principles.
3. Identify the mission’s outcomes and strategic goals.
4. Consult all relevant stakeholders.
5. Evaluate the impact of legislation on the organisation.
STAGE 2:
Designing and Shaping Human Resource Management System:
HRM System
Shaping HRM for organisation success
HRM plans, policies, procedures and best

practices
A. Selection, Design and Alignment of Human Resource Plans, Policies and Practices: This
stage focuses on the selection, design and alignment of human resource plans, policies and
practices. Various options may be open to the organisation such as drawing on industry best
practices.
B. Emerging Human Resource Policies and Practices: Emerging human resource policies and
practices range from outsourcing certain non-core functions, adopting flexi-time work practices
and the increased use of information technology.
C. Cost Benefit Analysis of Implementing New Human Resource Policies and Practices: It
is essential that a cost-benefit analysis of implementing new human resource policies and
practices be undertaken. For example, the costs (monetary and in allocation of resources) of
implementing a new job grading system may outweigh the benefit of such an undertaking. There
may be more cost-effective alternatives available to the organisation at this point in time.
D. Selection of Human Resource Policies and Practices which Support Company’s Strategic
Intent: A practical way of selecting the appropriate human resources policies, procedures and
practices is to identify the appropriate human resources practices which support the organisation’s
strategic intent as it relates to recruitment, training, career planning and reward management.
1. Identify appropriate human resource plans, policies and practices needed to support organisational
objectives.
2. Identify relevant human resource best practices.
3. Conduct an employment systems review.
STAGE 3:
Planning the Total Workforce:
Planning the Total Workforce

Deciding the numbers and competence of personnel the organisation requires
Organisation design
Workforce (manpower) plan-
quantitative and qualitative
workforce requirements
Job design
A. Identifies Workforce Competencies: Workforce planning is a systematic process of identifying

the workforce competencies required to meet the company’s strategic goals and for developing
the strategies to meet these requirements.
B. Provides Framework for Human Resource Decisions: It is a methodical process that
provides managers with a framework for making human resource decisions based on the
organization’s mission, strategic plan, budgetary resources, and a set of desired workforce
competencies.
C. Identifies Human Capital Required: Workforce planning is a systematic process that is
integrated, methodical, and ongoing. It identifies the human capital required to meet organisational
goals, which consists of determining the number and skills of the workers required and where
and when they will be needed.
D. Helps in Developing Strategies to Meet Human Capital Requirements: Finally workforce
planning entails developing the strategies to meet these requirements, which involves identifying
actions that must be taken to attract (and retain) the number and types of workers the
organisation needs.
E. Helps in Determining the Right Number of People At Right Time and at Right Place:
Determining future business requirements, especially those relating to manpower requirements,
represents one of the most challenging job of human resource function
F. Workforce Plan May be Simple or Complex: A workforce plan can be as simple or as
complex as an organisation needs. Workforce planning can be conducted for a department,
division or for the organisation as a whole.
G. Workforce Planning is Critical Process: Whatever, may be the level or approach being
adopted, it must be dispassionately integrated with broad-based management strategies. The
development of a workforce plan is a critical component of our human resource strategic
planning.
1. Determine the appropriate organisational structure to support the strategic objectives.
2. Structure jobs (competencies, tasks and activities) around key activities.
3. Develop a work force plan designed to support the organisations strategic objectives.
4. Compile work force profiles, identifying designated groups, an inventory of current workforce
competencies, competencies required in the future and identified gaps in competencies.
STAGE 4:
Generating the Required Human Resources:

A. Focus on Recruiting, Hiring, Assigning and Classifying Training Needs of Employees:
This process focusses on recruiting, hiring, classifying, training and assigning employees
based on the strategic imperatives of the organisation’s workforce plan.
B. Focus on Learning Competencies and Application of New and Innovative Channels of
Recruitment and Selection: A comprehensive workplace skills plan will identify appropriate
training priorities based on the organisations workforce needs now and in the future. New
recruitment practices may need to be adopted to increase the representation of designated
groups, or securing essential skills in the organisation. A comprehensive “learnership strategy”
may assist in developing future workforce needs, identified either in terms of the organisations
workforce plan or required in terms of industry black economic empowerment charters.
Generating Required Human Resources

Attracting, appointing and initially assiging the people needed in the organisation’s total
workforce
Recruitment and selection
Training -
training needs
analysis,
Job classification - occupational levels and categories learnerships,
skillsplans
Appointment and placement
1. Evaluate recruitment and selection practices in light of the organisation’s strategic objectives.
2. Develop and implement a comprehensive workplace skills plan (with a thorough training needs
analysis).
3. Implement a learning strategy.
4. Adopt or clarify occupational levels and category classifications.
STAGE 5:
Investing in Human Resource Development and Performance:
Investing in Human Resource Development and Performance

Developing and reinforcing competence and performance in individual groups and teams in
the organisation’s total workforce
Promotion Rewards Performance

management
Compensation Career
planning
Separation Development
(termination)
A. Traditional Approaches in Human Resource Policies must be Reviewed from Time to

Time: Traditional approaches to career planning, performance appraisals, reward management
and employee development must be re-appraised in light of the vision, characteristics and
mission outcomes as reflected in the Human Resources plans, policies, and practices.
Development aims to increase business skills, the application of business skills, competencies
and the behavioural elements - all of which contribute to an organisation’s effective performance.
In many ways, the newer concepts such as lifelong learning and recognising prior learning
should form an integral component of the process of investing in employees.
B. Employee Retention is a Critical Part of Workforce Planning: Clearly, where a workforce
planning exercise reveals that there is little projected growth in the work force or that promotional
or career development opportunities are limited, strategies aimed at employee retention will be
very different from organisations which are experiencing considerable growth and expansion.
C. Investment in People Helps in Achieving High Level of Organizational Performance:
Investment initiatives for the individual, team and organisation are all geared to achieve high
levels of organisational performance. It is important that at an individual level, particularly for
senior staff, that they feel their development needs are agreed and that they are provided with
the skills to do their jobs.
At team level, it defines the individuals’ ability to work flexibly with others and align individual
and team skills and activities to business goals — all of which ensures that the organisation is
equipped to achieve its goals.
D. Rewards and Motivational Strategies Play a Fast Tune of Investing in Human Capital:
Reward strategies aim to align the performance of the organisation with the way it rewards its
people, providing the necessary incentives and motivation to staff. Its components can be a
combination of base pay, bonuses, profit sharing, share options, and a range of appropriate
benefits, usually based on market or competitor norms and the organisation’s ability to pay.
Identify appropriate policies, procedures and practices in respect of:
1. Career progression.
2. Performance appraisals.
3. Employee development and learning.
4. Reward management (compensation and benefits).
5. Promotions and job assignments.
6. Separation and exit interviews.
STAGE 6:
Assessing and Sustaining Organizational Competence and Performance:
Assessing and Sustaining Organizational Competence and Performance
Measuring the organisation’s progress towards its desired outcomes and adjusting the
system accordingly
Organisational Assessing organisational

culture performance and evaluating
effectiveness of HR Strategy
Balanced scorecard
Succession
planning
A. Measurement of Input to Output Ratios: Organization has to effectively measure how well
their different inputs affect performance. In particular, no measures may be in place for
quantifying the contribution people make to organizational outcomes or, more important, for
estimating how changes in policies and practices, systems, or processes will affect that
contribution.
B. Use of Balanced Scorecard in Measuring and Implementing Quantifiable Milestones:
Implementing clear quantifiable measures, identifying milestones in the achievement of specific
organisational goals, and using concepts such as a “balanced scorecard” will articulate the
results of the human resource strategic plan in measurable terms. Periodically, regular evaluation
of the plan will truly assist in fine-tuning the Human Resource Strategic Plan itself.
Actions to be Taken
1. Evaluate organisation culture and climate.
2. Implement succession planning.
3. Evaluate human resource strategy using quantifiable measures, e.g., balanced scorecard.
4. Revise and adapt human resource strategy.
SIMPLY SPEAKING…
1. As we close this part of the chapter, we would like both Champak Lal Bhumia and Dr.
Mungheri Lal to understand that unless the goals of human resource are aligned with the
business goals of the company, it would be difficult to implement and realise the benefits
of strategic human resources management and planning in Mannat Securities. Dr.
Mungheri Lal would need a transformation from his 360 degrees Human Resource
person ‘to a’ business savvy Human Resource executive – a right hand and a blue eyed
boy of Champak Lal. At the same time, Champak Lal, if he really wants to transform
Mannat Securities into a world class non-banking finance company, he should not
bother about short term gains from the good work done by Dr. Mungheri Lal but
concentrate on bigger profits by transforming a nondescript Human Resource department
to small business unit (SBU) accountable for generating business within business.
2. While, human resources strategies must be developed to support the achievement of the
organisation’s objectives, it is a two-way process. Human resource strategies can
themselves be critical inputs in determining the strategic initiatives for the organisation.
3. A fatal error, however, is to develop and implement human resource strategies without
having regard for the goals and objectives which the organisation has explicitly or
implicitly identified.
4. A common mistake is the development of workplace skill plans which are not linked to
any strategic goals or objectives or which have no affirmative action components.
5. Similarly, the isolated identification of affirmative action numerical targets without first
conducting a workforce and succession planning exercise is in most instances, simply
meaningless.
LEVEL THREE
OTHER MODELS OF STRATEGIC HUMAN RESOURCE

PLANNING
MODEL ONE: FIVE STAGES HUMAN RESOURCE PLANNING MODEL: SAMI SANDOPAN:
The basic model for planning provides a representation of how the human resources planning
process is integrated with an organization’s strategic plan. As with all models, this is an example to
provide guidance in thinking about and implementing workforce planning.
Both the demand and supply processes are conducted simultaneously. The demand and supply
processes are linked by five major stages of human resource planning.
1. Collection of Data and Information:

A. Strategic Planning - Demand:
1. Review department mission.
2. Identify strategic direction.
3. Assess challenges and devise solutions.
4. Forecast what the department will look like over the next 5 years.
5. Set goals and objectives.
B. Strategic Planning - Supply:
1. Trends in staffing (recruitment, selection, compensation).
2. Current Human Resource programmes related to staffing.
C. Internal Scanning (Operational Planning Level) - Demand:
1. Identify key positions.
2. Current structure and culture of the organization.
3. Identify expected organizational changes or business process changes.
D. Create a Future “Model” Organization:
1. Expected technology changes.
2. Current Human Resource issues - compensation, employee satisfaction, etc.
E. Future Trends:
1. Downsizing.
2. Changes in Business Processes.
3. Restructuring.
4. Decentralization or centralization.
5. Legislation.
6. Budget.
F. Internal and External Scanning (Operational Planning Level - Supply):

1. Conduct workforce analysis.
2. Diversity analysis (age, gender, ethnicity, etc.).
3. Current skills and jobs available.
4. Current and future labour markets.
 Sources for labour competition.
 Current human resources policies and programmes.
2. Forecasting - What will Be Required (Demand):
1. Skills, competencies necessary for future workers.
2. Types of positions and classifications expected to be used into the future.
3. Number and Location of staff over the next 1-5 years.
3. Forecasting - What will be Available (Supply):
1. Skills, competencies available of future job applicants.
2. Will current classifications meet tomorrow’s needs?
3. Number and location - will workers be available in sufficient numbers and where needed?
4. Resources (e.g. budget).
4. Reconciliation (Gap Analysis):
1. Analyse gaps between forecasted requirements and forecasted availability.
2. Prioritize importance.
5. Action Plans:
1. Develop plans to address identified gaps.
2. Set strategies to carry out plans.
3. Assign responsibility for implementation of plans.
4. Set timelines and targets.
5. Communicate plans to the department staff.
6. Feedback/Evaluation:
1. Accuracy of forecasts
2. Evaluation of action plans and strategies
3. Employee surveys
SIMPLY SPEAKING…
A. In this model, both the Demand and Supply processes are conducted simultaneously.
The Demand and Supply processes are linked by five major stages of Human Resource
Planning:
1. Collection of data and information: This includes strategic planning of demand and
supply, internal scanning of demand, external and internal scanning of supply, creating
a future model organization and future trends.
2. Demand and Supply Forecasting.

3. Reconciliation of Gap Analysis.
4. Action Plans.
5. Feedback and Evaluation.
MODEL TWO:HUMAN RESOURCE PLANNING MODEL FOR OUTSOURCING: SHILPA
KHANNA AND RANDOLPH: GOLIATH BUSINESS NEWS:
1. Two Ways to Look at this Model
There are two ways to look at the interplay between Human Resource Planning and Outsourcing.
Human Resource E models (Burack and Mathys, 1980; Mathys and Burack, 1993) and planners will
tell you that outsourcing is just one approach among many to fill an organization’s demand for human
resources. In this view, the role of outsourcing is primarily to serve as a source of human resources.
2. Human Resource Planning for Outsourcing - A By-Product of Overall Organisational Human
Resource Planning:
This implies that the determination of the Human Resource plan for the outsourced relationship
is a by-product of the overall Human Resource plan for the organization. After all, only after the whole
organization (or a specific business unit or functional area) plan has been prepared (i.e., what number
of people of what skill level in which roles and where) can one determine what gaps exist. In this
view, outsourcing is one among the many ways to fill those gaps. As a result of this thinking,
“strategic” Human Resource planners often do not delve into the outsourcing process, instead treating
it as a mere “tactic.”
3. Outsourcing Decisions Taken By Business Heads Independently of Human Resource:
The outsourcing decision is often taken by business executives independently of the Human
Resource planner. The decision is mostly driven by business objectives such as cost reduction,
increasing flexibility, gaining access to particular set of technologies, or simply to concentrate
management bandwidth on core activities (Outsourcing Institute, 1998; Perkins, 2004)
4. Human Resource Must Increase its Involvement and Leadership in the Outsourcing Process:
Whichever view one holds, Human Resource planners can and should increase their involvement
and leadership in the outsourcing process. For this to happen, business leaders should involve
Human Resource planners early in the outsourcing process and then charge them with active
management of workforce planning issues throughout.
5. Key Points to be Addressed By Human Resource Planner: Human Resource

Model During Outsourcing:
The Human Resource planning professional should address a number of key points as his or
her company goes through the process of considering, evaluating, contracting, initiating, transitioning,
and then maintaining an outsourced relationship. These apply equally for the outsourcing of any
function—Human Resource, IT, call centres, etc. — and are applicable to varying degrees in all types
of outsourcing arrangements: on shore, near-shore, offshore, and multi-shore (Tornbohm and Rold,
2005).
6. RETAIN APPROPRIATE HUMAN RESOURCE TALENT:

A. Human Resource planning should not be outsourced during the outsourcing process.
Companies rushing into outsourcing sometimes depend so much on consultants and potential vendors
for advice that the critical job of determining the new organization is left to these third parties.
Because consultants’ success may initially be measured on getting activities out of the door and on
money saved per head, they can potentially undercut the internal staff, leaving the company vulnerable
in the longer run. By being sloppy on this front, the company can lose critical skills or lose control
over the supplier (Quinn and Hilmer, 1994; Yogi, 1997).
B. It is also a fallacy to assume that all the human resource aspects of the outsourced workforce
are not required, and that the human resource personnel servicing the outsourced function are not
needed (Institute of Management and Administration, 2003). Instead, decide on the number of Human
Resource personnel required to control and monitor the quality and quantity of workforce at the
vendor.
C. The work of the Human Resource organization may actually become more complex because
of the “knock-on” effect of having to manage an external, dispersed workforce in addition to an
internal organization (Eden, 1996). A recent example is the fiasco at Heathrow airport where 70,000
passengers were stranded because of a wildcat strike by baggage handlers. The strike was a direct
result of a labour relations problem at British Airways’ catering supplier, Gate Gourmet (Donkin,
2005).
D. All talk of outsourcing non-core and retaining core functions can come to naught if business
is impacted because of people issues, whether internal or external (Quinn and Hilmer, 1994). A strike
by contract loaders and un-loaders, working for Air India, at Mumbai Airport some years ago, threw
airlines flying schedules out of gear for 5 days.
E. Human resource may need to look inward and adjust its own organizational structure and job
profiles (Schievelbein, 2004). Also, Human Resource’s role before, during, and after the outsourcing
transition increases significantly (Wray, 1996).
7. CONSIDER TRADITIONAL ALTERNATIVES TO PURE OUTSOURCING:

There may be alternatives to outsourcing that will achieve intended objectives and be more
palatable to the organization. For example, key objectives of outsourcing, such as reducing costs and
gaining flexibility, can also be met by traditional contingent labour arrangements (Human Resource
Magazine, 1997; McLean, et.al., 1998). These traditional arrangements include:
A. Float Workers:
These are full-time employees who are cross-trained so that they can be deployed against the
specific job based on business needs.
B. Part Time Workers:
This basic arrangement has long been used to provide a cost-efficient way of managing seasonal
spikes in workload. For example, McDonalds calls in part-time workers to handle extensive daily
variations, yet is able to select future permanent and managerial personnel from these people.
C. Temporary Workers:
This is another cost-effective way to maintain flexibility in operations that are volatile. It is
possible to have fairly long-term stable relationships with organizations providing “temporary” labour.
Many such employees are as well-trained as the full-time employees of the company.
D. Casual Workers:
The practice of employing casual labour is very much prevalent in India as the labour laws allow
such a system. Casual labour is employed to complete a job of casual nature such as digging raods,
moving things and articles from one place to another etc. such assignments last only for a couple
of days.
E. Independent Contractors:
Self-employed individuals whose services are engaged on a contract basis are hired to perform
specialised tasks generally requiring a high level of independence, judgment, skill, and discretion.
They can simultaneously be employed at other firms.
F. Consultants:
Large consulting firms not only provide advice and specific expertise, but can also lend “warm
bodies” to bolster their client’s organization temporarily.
8. CONSIDER NEW/EMERGING TRENDS:

A. Internal (Or Captive) Shared Service Centres:
Some of the world’s best companies — GE, Citibank, HP, and Microsoft — have off-shored their
processes without outsourcing. Given sufficient scale internally, this approach can be used without
giving up control and access to proprietary knowledge. Of course, this approach does not mitigate
the loss of jobs on shore to move processes to foreign lands.
B. Joint - Ventures and Equity Partnerships:
These arrangements are used to build a long-term stake for both parties in the relationship. It
has also been used as a vehicle to transition employees to a lower wage structure.
C. External Co-Sourcing:
In this arrangement a group of companies agrees to pool their operations. This is attractive if no
scale player exists, although, it is extremely difficult to implement given the governance, IT platform
integration, control, and myriad other issues involved. Recently, Vijay Mallya’s Kingfisher Airlines and
Naresh Goyal’s Jet Airways agreed to external co-sourcing to cut costs and losses.
D. Vendor Co-Sourcing:
In this approach, the company retains control over the processes while letting go of the detailed
operations through a joint investment arrangement that leverages the best of both partners and
spreads the risk and reward. For example, in the co-sourcing arrangement between Thomas Cook
and Accenture, the former controlled strategy, policy setting, and procurement investment decisions,
and the latter handled operations and processes (Clemens, 2003). The team remained in-house and
provided Thomas Cook with flexible access to optimal expertise at an attractive cost without sapping
the strength of internal controls.
E. Re-Badging or Resourcing:
This tactic involves transferring company employees to the vendor along with the processes. It
is often used when work does not necessarily need to move physically. There is little loss to
business continuity and employees are hurtless, although, they may lose pay or be replaced in the
longer term (Mosher, 2000).
F. Employee Swapping:
This is an extremely innovative approach exemplified by SEMCO and Rhino Foods (Inc., 1993;
Semler, 1994). In SEMCO’s case, employees that had to be let go as a result of economic downturn
were encouraged to set up satellite ventures that could then supply to Semco (using Semco equipment).
From 500 workers in 1990, Semco had 200 internal and another 200 unsupervised, “in-house,”
satellite workers by 1993. Rhino foods contracted out idle employees to other local businesses to tide
over their own business downturn.
G. Business Transformation Outsourcing:
In this arrangement, the vendor engages at a strategic level with the client to influence, direct,
and control business outcome. The vendor takes ownership and operational responsibility of a
company’s processes as well as the organization, with the express purpose of improving business
performance metrics. In some cases, it will invest its own capital to affect the outcomes, taking on
risk. For example, ATandT turned over its customer relationship operations to Accenture with the goal
of significantly improved functionality delivered at a lower cost, while Avaya turned over the design,
optimisation, and management of internal training to Accenture (Couture and Young, 2002).
9. EVALUATE VENDOR ORGANIZATION:

1. Human Resource planners should exert the required influence on selection of the vendor
based on an evaluation of the suitability and capability of the vendor organization. Considering the fit
between the two organizations is critical for success (Noble, 2004). Generally one should choose a
partner who can provide a significant on site presence or capability if the work intended to be
outsourced is relational in nature (Marchington, 2004):
(i) Highly customer-facing and requiring substantial interaction with them.
(ii) Requiring intimate knowledge of customers, business practices, or specialised skills endemic
to the domestic industry.
(iii) Relating to process control or other “real-time” or mission-critical applications.
2. This approach can be taken to the next level of sophistication. For example, when ABN
AMRO Bank India decided that no single vendor organization was the right match for its needs, it
developed a comprehensive multi-vendor outsourcing arrangement that included both onshore and
offshore providers.
3. It is also important that some elements of the vendor’s organization design be guided to a
reasonable degree by the outsourcing company. These might include key role definitions, delivery
team structure, worker job specifications, and training and development at the vendor. Leading
outsourcing vendors from India, such as Daksh and Progeon, espouse a customer-centric organization
that aims to be guided by the requirements of each individual client.
10. DESIGN THE INTERNAL ORGANIZATION THAT WILL MANAGE THE VENDOR:
One of the most important tasks for the human resource planner is to design the future internal
organization for monitoring, controlling, and managing the vendor. Two broad issues for the Human
Resource planner to consider are the organization structure, and the skills and competencies required
for this internal “extended operations monitoring unit.” Two choices are available:
A. Dedicated Vendor Management Unit:
This is a specific (and often centralized) group responsible for overseeing outsourcing relationships.
This is usually part of the functional or business unit that has outsourced the processes and would
report to the head of that unit. For example, in the case of IT, the group would report to the CIO. In
large organizations that use outsourcing extensively this may even be centralised at the corporate
level. For example, the number of outsourcing contracts at Development Bank of Singapore (DBS)
increased from 100 to 600 from 1999 to 2002. Managing each of these relationships independently
by individual units became inefficient. So DBS created a centralized partner performance monitoring
unit reporting to the head of operations.
B. Cross-Functional Team:
Most often, outsourcing oversight is entrusted to a cross-functional team with members who
reside in different parts of the organization. For example, the business development or purchasing
group negotiates the contract with the vendor, the project management area sets up the relationship
and manages ongoing changes, and the relevant business units or functional area manages the day-
to-day interaction. If there are any internal operations left, the same team manages the internal
operations and provides oversight for the extended operations.
11. EMPLOY A PHASED APPROACH FOR TRANSITION:

One of the biggest lessons learned by several companies in the forefront of the outsourcing
boom is that the “big-bang” or “clean break” approach to moving work to a third party does not work
except for processes that are completely off-line, non-business critical, relatively small, and non-time
critical. A phased transition is necessary when there is a need for business continuity and skill. An
example of the phased approach is the big IT outsourcing deal (valued at $680 million over 10 years)
that Development Bank of Singapore (DBS) entered into with IBM in 2002.
12. BUILD A TRANSITION TEAM:

Human resource planners need to be involved in and plan carefully for the transition team and
its governance structure. The transition of business processes from one entity to another while
ensuring business continuity is akin to heart transplant surgery: The organ needs to be replaced
without stopping blood flow to the body. The transition team is like the medical surgery team in this
case. Naturally, the company undergoing this “operation” should pick this team carefully. The team
should include members from the operations of both the company and the vendor, as well as subject
matter experts from the internal operations being outsourced (Huntley, et.al., 2005).
13. BUILD IN CONTINUOUS IMPROVEMENT AND FLEXIBILITY:

The Human Resource Planner should plan for continuous improvement (e.g., new technology or
productivity improvement) at the vendor just as he or she would for the internal organization. These
changes should lead to a regular review of the size of the vendor workforce and its skills and
competencies.
SIMPLY SPEAKING…
1. In today’s turbulent business environment, dynamic human resource planning systems
incorporating flexible workforce arrangements are used extensively. Simultaneously,
business imperatives such as cost competition and focussing management bandwidth
on core processes have led to a big boom in outsourcing.
2. In most cases, the business leads the outsourcing engagement and focuses on vendor
selection, deal structuring, and negotiation while paying lip-service to human issues.
The irony is that planning the workforce for outsourcing is also relegated to the background,
even though outsourcing is in many ways an human resource planning tool.
3. This needs remedial action. Business and human resource leaders and human resource
planners must understand the outsourcing process and adopt best practices for workforce
planning before, during and after the contract is executed.
4. Therefore, it is essential to have a basic process model for human resource planning
during outsourcing. The best practices supporting the model should help create a
checklist to ensure a systematic and planned change in the organization as it proceeds
through outsourcing.
5. The model recognises the important stages of an outsourcing engagement and describes
the role that human resource planners need to play during each stage of this organizational
change: evaluation, contract negotiation, transition and stabilization.
6. By being part of the change, human resource planners can influence the process so that
resource decisions are made with due thought and the organization does not hurt itself
by either undercutting its talent pool or retaining excess flab.
7. Human resource planners should take this mission seriously if they want to have any
control over the changing face of the organization of the future. Conversely, in the
absence of these practices, many “deals” have failed and others will undoubtedly…
MODEL THREE: EIGHT STAGES OF HUMAN RESOURCE PLANNING MODEL:

1. What is Human Resource Planning?
 Right number of people with right skills, at right place, at right time to implement organizational
strategies in order to achieve organizational objectives
 In light of the organisation’s objectives, corporate and business level strategies, Human
Resource Planning is the process of analysing an organization’s human resource needs and
developing plans, policies, and systems to satisfy those needs
 Setting human resource objectives and deciding how to meet them
 Ensuring Human Resource resource supply meets human resource demands
2. What is Human Resource Planning Process?
 Interfacing with strategic planning and scanning the environment
 Taking an inventory of the company’s current human resources.
 Forecasting demand for human resources.
 Forecasting the supply of Human Resource from within the organization and in the external
labor market.
 Comparing forecasts of demand and supply.
 Planning the actions needed to deal with anticipated shortages or overages.
 Feeding back such information into the strategic planning process.
Example of the Basic Human Resource Planning Model:
1 2 3
Organizational Human Resource Human Resource Feasibility

Objectives Requirements Programmes Analysis
4
5
3. Basic Human Resource Planning Model

A. Strategic Human Resource Planning
– Links 1 and 5: · objectives are linked to organizational objectives and planning.
B. Designed to insure consistency between organization’s strategic planning
process and Human Resource Planning.
– So objectives of strategic plan are feasible and
– Human Resource Planning programs are designed around what organizational objectives and
strategies require in terms of human resource goals
C. Operational Human Resource Planning
– Steps 2,3, and 4
D. Ensure Human Resource Planning programmes are coordinated and allow
the organization to meet its human resource requirements.
Example of the Basic Human Resource Planning Model:
Open new Develop staffing for Recruit skilled Recruiting and

product line new installation 2 workers 3 training
Open new 1 Develop technical programmes
factory and  production training feasible
distribution worker programmes Transfer
system Transfer unfeasible
 Supervisors managers because of lack
 Technical staff from other of manager
facilities with right skills
 Other managers
Develop new
objectives
and plans 5 Recruit managers Too costly to hire
4
from outside from outside
E. Links
Link 1: Determine Demand (labour requirements)
 How many people need to be working and in what jobs to implement organizational strategies
and attain organizational objectives.
 Involves forecasting Human Resource needs based on organizational objectives
 Involves consideration of alternative ways of organizing jobs (job design, organizational design
or staffing jobs)
 Example - Peak production could be handled by temporary workers or assigning overtime.
Machine breakdowns assigned to maintenance department or handled by machine operators
Link 2: Determine Human Resource Supply (availability)
 Choose Human Resources Management programmes (supply)
 Involves forecasting or predicting effect of various Human Resource programs on employee
flowing into, through and out various job classifications.
 First determine how well existing programmes are doing then forecast what additional programs
or combination of programs will do.
 Need to know capabilities of various programmes and program combinations.
 Determine Feasibility.
Links 3 and 4
 Capable of being done
– Requires knowledge of programs, how programmes fit together and external environmental
constraints (e.g., labour force, labour unions, technology created skill shortages) and
internal environmental constraints (skill shortages within the organization, financial resources,
managerial attitudes, culture)
 Do the benefits outweigh the costs.
 Difficulty in quantifying costs and benefits.
 Revise Organizational Objectives and Strategies.
Link 5
 If no feasible Human Resources programme can be devised, the organization must revise
strategic plans.
SHORTCOMINGS OF THE MODEL:
1. Over simplification of Planning Process.
 Planning does not normally proceed till find first acceptable plan.
 More than one set of Human Resource goals to satisfy Link 1 and more that one acceptable
plan to satisfy Link 2 so:
 Typically choose the best Human Resource goal for the strategic plan and the best programme
to satisfy that HR goal.
 Oversimplification of the benefit of planning is the specific plans that result.
 Planning process has value in and of itself.
 Human Resource Planning in practice is usually less rational and may omit one or more of the
steps.
 May lack knowledge required for forecasting.
 Incorrect assumptions about effectiveness of Human Resource programmes.
 Does not engage in strategic planning.
 Resistance to change present Human Resource systems.
2. Internal Supply Forecasting Information:
Forecasting as a part of Human Resource Planning
DEMAND SUPPLY
Choose human
FORECASTING FORECASTING
resource programs
Determine
organizational
objectives
Internal External programmes
programmes
 Recruiting
 Promotion
 External selection
 Transfer
Demand forecast for  Execution
 Career Planning exchange
each objective
 Training
 Turnover control
Internal supply forecast External supply forecast
Aggregate
demand Does aggregate
forecast supply meet Aggregate supply
aggregate No forecast
demand?
Yes
Go to feasibility analysis steps
 Organizational features (e.g., staffing capabilities).

 Productivity - rates of productivity, productivity changes.
 Rates of promotion, demotion, transfer and turnover.
 External Supply Forecasting Information.
 External labour market factors (retirements, mobility, education, unemployment).
 Controllable company factors on external factors (entry-level openings, recruiting, compensation).
3. Demand Forecasting Information:

 Organizational and unit strategic plans.
 Size of organization.
 Staff and Managerial Support.
 Organizational design.
4. Considerations in Establishing a Forecasting System:
 How sophisticated.
 Appropriate time frame.
 Subjective versus objective forecasting methods.
5. System Sophistication:
 Organizational size:
– large organizations require more complex forecasting systems and likely to have the
required skilled staff.
 Organizational complexity:
– complex career paths and diverse skill requirements lead to more complex forecasting
systems.
 Organizational objectives:
– the greater the gap between current Human Resource situation and desired Human Resource
situation the more sophisticated the system.
 Organizational plans and strategies:
– the complex the plans are the more complex the forecasting system.
6. Forecasting Time Frame:
1. Depends on degree of environmental uncertainty.
2. Factors creating uncertainty (shortening time frame).
– many new competitors, changes in technology, changes in social, political and economic
climate, unstable product demand.
3. Factors promoting stability (longer time frame).
– strong competitive position, slowly developing technology, stable product demand.
7. Subjective vs. Objective Forecasting:
1. Objective is inappropriate when:
– Lack expertise to use objective methods.
– Lack the historical data or Human Resource data base is inadequate.
– Forecasting horizon is too long for the available objective method.
8. Demand Forecasting Methods:
 Delphi Method.
 Staffing Table Approach.
 Regression Analysis.
 Time Series Analysis.

 Linear Programming.
9. Supply Forecasting Methods:
 Skills Inventory.
 Replacement Charts.
 Succession Planning.
 Flow Modelling/Markov Analysis.
 Computer Simulations.
SIMPLY SPEAKING…
1. This model, like five stages model, is over simplified.
2. It does not mention strategic human resource planning in any of the processes or stages
of actions.
3. It takes into consideration demand and supply forecasting methods but does not show
how the various demand and supply forecasting methods work towards building strategic
human resource planning.

1. “Why Human Resource Professionals fail to prove that they contribute” Examine this statement with your
reasons in favour or against it.
2. Why do we move from Human Resource Planning to Strategic Human Resource Planning?
3. Why we need Strategic Human Resource Planning?
4. What is Strategic Human Resource Planning and what are its objectives?
5. What are the lessons we learn from the case study of Dr. Mungheri Lal?
6. What is the Strategic Human Resource Planning Model propounded by Dr. Mungheri Lal?
7. What are the stages for developing a Strategic Human Resource Planning Model?

t er
ap
h
STRATEGIC
6
C
MANPOWER
PLANNING
HPH
topics:
 Basic Concepts of Manpower Planning.
 Definition, Importance, Need, Objectives and Scope of Manpower
Planning
 Basic Principles of Strategic Manpower Planning.
 Models of Manpower Planning.
 Manpower Forecasting.
 Tools and Methods for Developing and Implementing Manpower
Strategies.
Strategic Manpower Planning 217
CHAPTER SIX
STRATEGIC MANPOWER PLANNING
LEVEL ONE: BASICS OF STRATEGIC MANPOWER 218 – 221

PLANNING
LEVEL TWO: STRATEGIC MANPOWER PLANNING FACES FOUR 222 – 225
BASIC ISSUES IN REALITY CHECK
LEVEL THREE: MODELS OF MANPOWER PLANNING 226 – 234
LEVEL FOUR: MANPOWER FORECASTING 235 – 243
LEVEL FIVE: APPROACHES AND METHODS FOR 244 – 246
DEVELOPING MANPOWER FORECASTING
LEVEL SIX: CASE STUDIES IN MANPOWER 247 – 250
PLANNING
LEVEL ONE
BASICS OF STRATEGIC MANPOWER PLANNING
A. THE NEED FOR STRATEGIC MANPOWER PLANNING:

1. Predicting Manpower Needs is Crucial:
The ability to predict manpower needs is crucial for an industry. On the demand side, companies
formulate manpower planning strategies based on these forecasts, while, on the supply side, they
provide job seekers with a basis to assess the attractiveness of a given sector.
2. Economics of Manpower Planning is even more Crucial:
Manpower forecasts are also important for assisting the government in the policy-making process
by serving as pointers to help avoid redundant investments and achieve efficient and balanced
growth for an industry. Meanwhile, forecasts based on an inaccurate market analysis can cause
imbalances such as undersupply or over supply of manpower.
3. Economics of Demand and Supply of Manpower Forecasting can be Highly
Challenging:
Forecasting errors most often stem from a superficial and partial analysis of a market, which
overlook its structural characteristics, or one that is narrowly focused on the present, or a given
industry, without taking into consideration dynamic changes that may occur over time or delayed
feedback effects, or linkages the market may have with other related industries.
4. We may have Money in our Pocket to Hire but we still may not get the Right
People:
Static and unilateral analysis, in sum, is the most common culprit for erroneous predictions of
supply and demand for manpower. These approaches can yield particularly severely flawed forecasts
with cutting-edge industries and emerging industries which, while entertaining complex relationships
of interdependence with other industries and experiencing rapidly-growing manpower demand, are
characterised by a longer period required developing needed human resources.
B. DEFINING MANPOWER PLANNING
1. Manpower Planning is the development of strategies to match the supply of manpower to the
availability of jobs at organizational, regional or national level. Manpower planning involves
reviewing current manpower resources, forecasting future requirements and availability, and
taking steps to ensure that the supply of people and skills meets demand.
2. Manpower Planning is estimating or projecting the number of personnel with different skills
required over time or for a project, and detailing how and when they will be acquired.
3. Manpower planning in terms of human resource development is the skills, knowledge and
capacities of all human beings actually or potentially available for economic and social development
in the country.
4. Manpower planning refers to optimal use of human resources. It is a procedure used in
organizations to balance future requirements for all levels of employee with the availability of
such employees.
5. Manpower planning is the rightsizing and achieving the balance of demand and supply of
workforce. The penalties for not being correctly staffed are costly.
A. Understaffing loses the business economies of scale and specialization, orders, customers
and profits.
B. Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because
of modern legislation in respect of redundancy payments, consultation, minimum periods of
notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business.
6. Manpower Planning is the process of systematically forecasting the future demand and supply
for employees and the deployment of their skills within the strategic objectives of the organization.
It is the process by which Management determines how the management should move from its
current manpower to its desired manpower utilization.
7. Robert William Pollock, CEO, Drake International observed “From this angle (critical path)
comes the proposition that, to be effective, manpower planning most irrevocably is tied to
corporate strategy, and the reasons for this are laid out and analyzed. There is also a hard-
hitting assessment of management priorities, which might sound like heresy to some personnel
managers. As we know deployment of capital is a critical, CEO’s decision is equally critical, if
not more so, is the procurement and deployment of people resources.”
8. Human Resource or Personnel Management is the productive exploitation of manpower resources.
This is also termed as ‘Manpower Management’. Manpower Management is choosing the
proper type of people as and when required. It also takes into account the upgrading of existing
people. Manpower Management starts with manpower planning.
C. ADVANTAGES OF MANPOWER PLANNING: TONY MILLER IN “MANPOWER PLANNING
PROCESS”
Tony Miller lists the following advantages of manpower planning:
1. Manpower planning ensures optimum use of available human resources.
2. It is useful both for organization and nation.
3. It generates facilities to educate people in the organization.
4. It brings about fast economic developments.
5. It boosts the geographical mobility of labour.
6. It provides smooth working even after expansion of the organization.
7. It opens possibility for workers for future promotions, thus, providing incentive.
8. It creates healthy atmosphere of encouragement and motivation in the organization.
9. Training becomes effective.
10. It provides help for career development of the employees.
D. IMPORTANCE AND SCOPE OF MANPOWER PLANNING: LEO LINGHAM IN “MANAGING
A BUSINESS”:
1. Quantify job for producing product/service.
2. Quantify people and positions required.
3. Determine future staff-mix.
4. Assess staffing levels to avoid unnecessary costs.

5. Reduce delays in procuring staff.
6. Prevent shortage/excess of staff.
7. Comply with legal requirements.
E. SCOPE OF MANPOWER PLANNING:
The manpower plans help to bring supply and demand into equilibrium, as a continual workforce
planning exercise, the inputs to which will need constant varying to reflect the actual as against
predicted experience on the supply side and changes in production actually achieved as against
forecast on the demand side. The plans interact with manpower planning issues at every given stage
in all these areas of human resources. They are recruitment and selection, induction and orientation,
training and development, compensation and benefits, performance appraisal and management,
industrial relations, promotions, transfers, terminations, staff amenities and welfare, retirement, attrition,
redundancy, voluntary retirement and career and succession planning.
F. OBJECTIVES OF MANPOWER PLANNING:

1. Demonstrate understanding of competency based approach in human resource.
2. Utilise tools in identifying current staff competencies and gaps, vis-à-vis, the organization’s goal
and targets.
3. Demonstrate skills in conducting training needs analysis.
4. Formulate strategies for addressing identified training needs, prepare and design training
modules and develop curriculum for training course and cost estimates.
5. Demonstrate the abilities to have the human resources development plan approved by the
appropriate decision making body.
6. Design different training programmes to meet specific needs of particular group.
7. Formulate detailed implementation schedule.
8. Design evaluation tool.
9. Implement training and development activities, programmes and plans.
10. Write a professional report.
11. Demonstrate knowledge on using relevant analytical tools for planning.
12. Explain the relationship between the organization strategic plan and the strategic human
resources development planning process.
13. Conduct a comparative study on the current human resources development planning process.
G. PRE-REQUISITES OF MANPOWER PLANNING:
STEP 1
Job Analysis: Management must define what work to be performed, how tasks are to be carried
out and allocated into manageable work units (jobs).
STEP 2
Job Description and Job Specification: It refers to incumbent where a job specification with
regard to qualification and experience needed to perform a job.
STEP 3
Forecasting Procedures: Corporate planner has to forecast the number of people needed for
a particular job. It can be done by forecasting the internal supply and external supply of the people
who can perform the job
STEP 4
Internal Supply of Manpower: Identify the manpower supply internally
H. STRATEGIC MANPOWER PLANNING:

1. Its Importance:
The strategic manpower planning system recognizes that people display varying degrees of
talent and leadership potential and that, for every organization, there is an optimal mix of leaders and
followers that best served its business objectives. For some organizations, the division of talents
could be even more refined; for instance, a further distinction could be made between a leader of
leaders and a leader of followers. Regardless of the number of talent categories, the important point
is that the careers of people from different talent pools would progress at different pace and terminating
at different levels of competency.
2. It Captures Different Talents Pools:
In short, the strategic manpower planning system explicitly captures the different talent pools
that exist in an organization and determines the most appropriate sets of personnel policies to groom
and retain the right mix of people to achieve the business goals.
3. It Captures Career Plans and Grooms Right Number of Individuals:
While strategic manpower planning system helps the human resource managers to devise
organizational wide personnel policies, the tactical planning system addresses the peculiarities and
specific career needs of professions within the organization. As such, the key output of tactical model
is a career plan that systematically grooms the right number of individuals to hold the various jobs.
The career plan will spell out the sequence of jobs to assume and the trainings to attend so that the
individuals going through the pace will gain the necessary exposure and experience to discharge the
duties professionally.
4. It Assists Human Resource Managers to Strategise Development Plans:
Finally, the operational planning system assists the human resource managers to formulate
optimal personnel posting/deployment plan for the employees. With the exceptions of very small
companies, where job changes (promotion or lateral move) are generally opportunistic in nature, most
companies (especially the more structured institutions like the Armed Forces) can orchestrate job
changes to ensure that both the individuals. aspirations and the organization’s objectives are well
aligned.
In a nutshell, the gamut of strategic manpower planning systems produces results that are
mutually consistent so that, the employees would receive clear and unambiguous career
recommendations.
LEVEL TWO
STRATEGIC MANPOWER PLANNING FACES FOUR BASIC

ISSUES IN REALITY CHECK
1. MANPOWER PLANNING IS FAR MORE THAN A NUMBER GAME:

Manpower planning is far more than a numbers game; it involves understanding people and
matching their skills and aspirations to those of the organization for increased productivity. Thus,
operational objectives should not be defined solely in financial terms. Manpower planning must involve
prediction of future skill requirements and some knowledge of the skills already learned by employees.
2. WORKFORCE PLANNING COMBINED WITH CORPORATE STRATEGIES SETS THE

BALL ROLLING:
Effective manpower management involves combining work force planning with overall corporate
strategies for growth. Planning for a fully staffed and productive work force is vitally important for
maximum productivity and has been badly neglected in the past. Such planning involves the statement
of current corporate objectives, the evaluation of current work force capacity and an accurate
assessment of future work force needs.
3. CORPORATE STRATEGIES ARE BASED ON SEVERAL CONSTRAINTS:

1. Budget constraints pressure human resource to get the best resources for the least expense.
2. Increase in sales and production in a business put pressure on human resource to recruit more.
3. Sales/production decreases in business put pressure on human resource to rationalize
recruitment.
4. New ventures mean demand for new type of skills and knowledge.
5. Acquisitions and mergers mean rationalization of human resources.
6. Organization development means human resource implementing new structure, new culture
and new systems, etc.
7. Operational redesign means human resource implementing new methods, new process, new
systems etc.
8. Globalization means managing human resource diversity, new culture change and new training
etc.
9. The Manpower Planning is interlinked with organization planning and it cannot be planned
without the support of the other. Whether it is:
 an organization with no expansion plan or
 an organization with major expansion plan or
 an organization start up, the conceptual approach is the same.
 investment dimension.
 time frame.
 product plan and range of products and services.
 nature of operations.
 geographical coverage, distribution set up or channel plans.
4. CORPORATE STRATEGIES ARE ALSO BASED ON ORGANIZATIONAL STRUCTURE,
CULTURE AND PEOPLE COMPETENCIES:
The above constraints plus the corporate planning strategies and the consequences of the
imbalances from the analysis and investigations would dictate the creation of manpower and Human
Resource planning strategies and tactics.
This process in turn creates further imbalances when the million dollar question arises:
how to get right people in right numbers at right time and in right jobs? We are rightfully and
stratigically concerned with never ending process because this is what strategic manpower
planning is.
5. WHY THIS HAPPENS IS BASED ON THE THREE BASIC PRINCIPLES. THEY ARE:
1. PETER PRINCIPLE: IN A HIERARCHICALLY STRUCTURED ADMINISTRATION, PEOPLE
TEND TO BE PROMOTED UP TO THEIR “LEVEL OF INCOMPETENCE” (IN A HIERARCHY
EVERY EMPLOYEE TENDS TO RISE TO HIS LEVEL OF INCOMPETENCE)
The Peter Principle was first introduced by L. Peter in a humouristic book (of the same title)
describing the pitfalls of bureaucratic organization.
A. The principle is based on the observation that in such an organization new employees typically
start in the lower ranks, but when they prove to be competent in the task to which they are
assigned, they get promoted to a higher rank.
B. This process of climbing up the hierarchical ladder can go on indefinitely, until the employee
reaches a position where he or she is no longer competent.
C. At that moment the process typically stops, since the established rules of bureaucracies make
that it is very difficult to “demote” someone to a lower rank, even if that person would be much
better fitted and more happy in that lower position.
D. The net result is that most of the higher levels of a bureaucracy will be filled by incompetent
people, who got there because they were quite good at doing a different (and usually, but not
always, easier) task than the one they are expected to do.
E. The better (more fit, smarter, more competent, more adaptive) a system is, the more quickly
it will solve all the easy problems, but the more difficult the problem will be, it finally gets stuck
in. Getting stuck here does not mean “being unfit”, it just means having reached the limit of one’s
competence, and thus, having great difficulty advancing further.
F. This explains why even the most complex and adaptive species (such as ourselves, humans)
are always still “struggling for survival” in their niches as energetically as are the most primitive
organisms such as bacteria.
G. If ever a species would get control over all its evolutionary problems, then the “Red Queen
Principle” would make sure that new, more complex problems would arise, so that, the species
would continue to balance on the border of its domain of incompetence.
H. Peter’s Corollary states that “in time, every post tends to be occupied by an employee who
is incompetent to carry out his duties” and adds that “work is accomplished by those employees
who have not yet reached their level of incompetence”.
2. DILBERT PRINCIPLE: COMPANIES TENDS TO SYSTEMATICALLY PROMOTE THEIR

LEAST-COMPETENT EMPLOYEES TO MANAGEMENT (GENERALLY MIDDLE MANAGEMENT),
IN ORDER TO LIMIT THE AMOUNT OF DAMAGE THEY’RE CAPABLE OF DOING.
A. Companies tend to systematically promote their least-competent employees to management
(generally middle management), in order to limit the amount of damage they’re capable of doing.
“leadership is nature’s way of removing morons from the productive flow.”
B. The Dilbert Principle is a variation of the Peter Principle. The Peter Principle addresses the
practice of hierarchical organizations (such as corporations and government agencies) to use
promotions as a way to obtain greater advantage from employees who demonstrate competence
in their current position. It goes on to state that, due to this practice, a competent employee will
eventually be promoted to, and remain at, a position at which he or she is incompetent.
C. The Dilbert Principle, on the other hand, claims that incompetent employees are intentionally
promoted to prevent them from doing harm (such as reducing product quality, offending
customers, offending employees, etc.) The Dilbert Principle draws upon the idea that in certain
situations, the upper echelons of an organization can have little relevance to the actual
production and the majority of real, productive work in a company is done by people lower in
the power ladder. It is possible for both principles to be simultaneously active in a single
organization.
3. PARKINSON’S PRINCIPLE: WORK EXPANDS TO FILL THE TIME AVAILABLE FOR
IT’S COMPLETION.
It basically means that if you are supposed to write a 10 pages report and you set the deadline
to be 2 days. it will most probably be finished in 2 days. According to Parkinson, the work will expand
itself to adjust to the deadline you have set. You will start feeling the need for a more thorough
research about the topic; maybe an interview or a good time spent doing nothing. The simple 10
pages work has now expanded itself to fill up the vacancy in the 2 days period.
Now that is an example of a really motivated and productive guy. Imagine what will happen to
a person whose nickname is The Laziest Person on the Planet. He will start surfing the internet,
watching television in the name of research, take few long nap to refresh his mind from God knows
what. In the end, the 10 pages report will still only be finished after the 2 days deadline (even though
based on the attitude, it will be very unlikely)
Exactly after 2 days, both of them (productive guy and lazy guy) will claim that the work done
is very hard and it requires the full 2 days just finishing it.
Now this is where it becomes interesting. Try assigning the same work to another guy and set
the deadline to be only 1 day. You will observe that the work will still be finished by the deadline with
almost no difference in quality (Of course we are comparing between two productive persons)
From the manpower planning point of view, the principle suggests that we keep on hiring people
because we feel we need more people. These people keep on fitting into the expanded pool till one
day we get a wake up call from some wise person in the organization asking as to why we have so
many people and what are they doing. In such a scheme of things, there is no strategic planning or
even a simple arithmetic calculation as to why we need so many people.
SIMPLY SPEAKING…
1. Manpower planning is far more than a numbers game; it involves understanding people
and matching their skills and aspirations to those of the organization for increased
productivity.
2. Effective manpower management involves combining work force planning with overall
corporate strategies for growth.
3. The million dollars question is how to get right people in right numbers at right time and
in right jobs? We are rightfully and strategically concerned with never ending process
because this is what strategic manpower planning is.
4. Strategic manpower planning is dependant upon three basic principles:
 Peter Principle: in a hierarchically structured administration, people tend to be
promoted up to their “level of incompetence”. (in a hierarchy every employee tends
to rise to his level of incompetence)
 The Dilbert Principle: companies tend to systematically promote their least-competent
employees to management (generally middle management), in order to limit the
amount of damage they’re capable of doing.
 Parkinson’s Principle: work expands to fill the time available for its completion.
LEVEL THREE
MODELS OF MANPOWER PLANNING
1. MARKOV CHAIN MODEL: APPLICABLE TO LIMITING STRUCTURE OF EXPANDING

MANPOWER SYSTEM:
A. Markov chain model was proposed by Young and Vassiliou in 1974. It is applicable to limiting
structure of an expanding manpower system. The limiting structure and the relative limiting structure
exist under certain conditions which are easily met in practical situations. The model used for manpower
planning in the Slovenian armed forces and the administration of the Ministry of Defence is based on
Markov chains.
B. Markov chains are used to model random processes evolving over time. A crucial assumption
used is the Markov property which is best described by saying that the process is “memory less”,
which means that its future states only depend on the present state rather than its history. Another
assumption which is usually posed is that transition probabilities are time-homogeneous, which means
that they are independent of time. Of course, these requirements are often not entirely fulfilled;
however, omitting them would result in more general non-homogeneous models (see Vassliou 1981,
1998), Gerontidis (1994)) that require additional data to estimate the parameters.
C. A sequence of random variables X1, X2, ..., Xn , ... is a Markov chain if every variable can
assume any value from a set S = {s1, s2, ..., sm}, whose elements are called states. A particular
realisation of the process is then a sequence of values from S. Mathematically we can describe the
Markov property by requiring that P(Xn+1 = sj | Xn = si,…, X1 = sk) = P(Xn+1 = sj | Xn = si) = p(n)ij.,
where n denotes the time points. This means that the probability that the process will be in state sj
at time n+1, given that it is in state si at time n, is p(n) ij. If in addition p(n) ij= pij, for every n, the
chain is homogeneous because the transition probabilities do not depend on time.
D. Markov Analysis is a powerful analysis technique which, used in manpower planning, can
help it successfully achieve its goal. Markov chains make it possible to predict the size of manpower
per category as well as transitions occurring within a given time period in the future (resignation,
dismissal, retirement, death, etc.). More importantly yet, with a Markov chain, one can obtain long-
term average probabilities or equilibrium probabilities.
E. However, to predict manpower supply and demand with accuracy using a macroeconomic
model, one needs a vast array of data for each of the many variables used. To collect these data,
one must first get hold of sufficiently broad-ranging time series data for each industry. For this reason,
a method of this type proves to be inadaptable for emerging sectors undergoing fast-paced growth
with only small amounts of statistical data on the industry as a whole and manpower available.
F. Markov chain model itself could not provide an answer as to how to achieve the desired
manpower structure. This problem was successfully addressed here by simulations which is the
manipulation of a model in such a way that it operates on time or space to compress it, thus enabling
one to perceive the interactions that would not otherwise be apparent because of their separation in
time or space.
2. GRINOLD’S STOCHASTIC PROGRAMMING MODEL: POTENTIAL GAIN OF INCREASED

REVENUE IS OFFSET BY ADDED COST OF EXCESS CAPACITY
A. Bartholomew (1982) provide a general review of the application of stochastic modelling to
social systems, while Bartholomew and Forbes (1979) developed a more specific application of these
principles to the manpower planning problem.
B. A basic model defines a number of discrete manpower grades, with employees advancing or
leaving with fixed transition probabilities. The state of the system is defined as the number of employees
in each grade and the system is analyzed as a Markov chain.
C. Grinold develops a stochastic model motivated by the demand for naval aviators (Grinold
1976). Anderson (2001) developed a model where demand is driven by a continuous non stationary
seasonal process meant to approximate a business cycle. Gaimon and Thompson (1984) developed
a model that looks at an organization in terms of cohorts, i.e., employees with the same length of
service, using an objective function that measures the “effectiveness” of the organization.
D. The stochastic models are generally high level abstractions useful for identifying system
phenomenon or developing general policies, but are not designed to be implemented as management
control systems. The stochastic solution is difficult to find but provides a more realistic picture of the
hiring policy; as recruiting becomes more expensive the firm decreases the hiring level and relies
more on subcontractors to satisfy peak demand.
E. The stochastic solution allows for a fine grained analysis of the optimal service level; the
degree to which the firm must be positioned to satisfy the extreme values of demand. The model finds
that in most cases the potential gain of increased revenue is offset by the added cost of excess
capacity. The model selects the combinations of high demand and high attrition that are not profitable
to staff. Only in the case of high margins and high spare capacity is it optimal to staff so as to satisfy
all demand scenarios.
F. The process for staffing services via stochastic model is divided into three decision levels.
The three planning “levels” are used as decomposition stages in developing a general staffing model.
(a) Policy decisions, including the operating procedures for service centres and for the staff-control
process it self.
(b) Staff planning, including hiring, discharge, training, and reallocation of decisions.
(c) Short-term scheduling of available staff within the constraints determined by the two previous levels.
G. The levels formulates the planning and scheduling stages as a stochastic programming
problem, suggests an iterative solution procedure using random loss functions, and develops a non
iterative solution procedure for a chance-constrained formulation that considers alternative operating
procedures and service criteria, and permits including statistically dependent demands.
H. Stochastic model is very complex to handle and because parameters used are more it
sometimes become very complex. Stochastic solutions are very reliable but due to its complex nature
companies sometimes use optimisation model as a substitute to stochastic model.
3. JOHN BANE’S THE SIMULATION MODEL: MATHEMATICAL WAY TO GET REAL

ESSENCE OF WORKING IN THE SYSTEM:
A. A simulation is the manipulation of a model in such a way that it operates on time or space
to compress it, thus enabling one to perceive the interactions that would not otherwise be apparent
because of their separation in time or space.
B. Simulation Model is a mathematical model, developed to get the real essence of the working
in the system. It uses input variables and gives output which is in accordance with the input variables
keeping the other parameters constant. It is developed to reality. Simulation modelling is the process
of starting with an initial value in each variable and running the set of equations for multiple time
increments. At each time increment, all equations are processed to generate new variable values
from the current values. The resulting data for variables at each time increment represents one run
of the simulation.
C. Simulation model is driven by input data and produces output data. Data can come from initial
values in the model, user entry or a data file. Output data can be stored in the model or in output data
files and used to drive configured charts, graphs and tables. An integrated Data File editor makes it
easy to create, view, import data from or export data to other applications.
EXAMPLES OF SIMULATION MODELS ARE:

A. Simulation model for pilots for attacking enemy’s territory.
B. Simulation model for driving schools.
C. Models to learn different functions of human resource.
D. Model to mark out the demand graph for a product.
4. STRATEGIC MANPOWER PLANNING MODEL: STATE OF TEXAS USA:
The model was develop as an example for the various state agencies to follow. It was derived
from other models used in a variety of organizations.
Phase IV
Monitor, Evaluate, and
Revise
´ Communicate workforce plan.
´ Implement strategies to reduce gaps

and surpluses
PHASE I - SET AGENCY STRATEGIC DIRECTION:

A. Manpower planning naturally complements and is a follow-up to strategic planning. Just as
strategic planning helps agencies map where they are, where they are going, and how they plan to
get there, a workforce plan lays out the specific tasks and actions needed to ensure an agency has
the resources to accomplish its mission.
B. One of the main purposes of workforce planning is to ensure that an agency has the necessary
workers to support its mission and strategic plan. In Phase I, those responsible for workforce planning
should identify the agency’s mission and the key goals and objectives of its strategic plan.
C. A strategic plan charts the future with broad mission-related targets and milestones. An
agency’s vision, mission, and measurable goals and objectives drive the identification of what type
of work needs to be accomplished. A workforce plan translates strategic thinking into concrete action
in the area of workforce staffing and training needs. It attempts to answer the following questions:
1. How many and what types of jobs are needed in order to meet the performance objectives of
the organization?
2. How will the agency develop worker skills?
3. What strategies should the agency use to retain these skills?
4. How have retirements, reductions in force, and/or hiring freezes affected your agency’s ability
to get the work done?
PHASE II - CONDUCT WORKFORCE ANALYSIS:
A. Analysis of workforce data is the key element in the workforce planning process. Workforce
analysis frequently considers information such as occupations, skills and experience, retirement
eligibility, diversity, turnover rates, and trend data. Questions to be considered include:.
B. Are there certain occupational groups with increasing worker turnover? Can factors influencing
turnover be identified? Has turnover reduced the skill set of a certain occupational group?
There are four key steps to the workforce analysis phase of the planning model. These steps
are illustrated below.
Step 1 - Supply Analysis Step 2 - Demand Analysis

Consider. Identify
• Staffing Level • Workforce will meet projected need
• Workforce Skills • Starting patterns
• Workforce demographics • Anticipated program and workload
• Employment trends Changes
Step 1 : Supply Analysis

Supply analysis focusses on the specifics of an organisation’s existing workforce and projects
future workforce supply. This step involves (1) creating a current workforce profile, (2) reviewing
trend data, and (3) projecting future workforce supply.
A profile of its existing workforce helps an agency understand where it is in terms of the right
number of people with the right skills. Analysis of the current workforce can include:
1. Number of employees and contracted workers.
2. Skill assessment of employees.
3. Salary and contract workforce expenditure data.
4. Workforce diversity (age, gender, and race).
5. Retirement statistics.
6. Location.
Of the items above, all but the skill assessment should be readily available to organisations
through employee payroll records, employee files, and various human resources databases.
Organisation should look at trend data, which provides a picture of what occurred in the past.
It can also help an agency predict the supply of skills that may be available in the future. Examples
of trend data include:
1. Hiring patterns (time required to fill vacancies, average number of vacancies in a year, etc.).
2. Retirement patterns.
3. Employee turnover statistics.
It may be helpful to break down the trend analysis by organisational divisions or by occupational
groups. Looking at trend data will help an organisation project future workforce supply. It will also help
an organisation apply assumptions about how the variables listed will influence the future work force.
Trend information combined with the current workforce profile is an essential building block for
forecasting workforce supply.
Step 2: Demand Analysis:
A. Demand analysis identifies the workforce needed to carry out the mission of an organization.
The focus of this step should be on the functions that an organization must perform and not just
on the people. One reason this step is separated from the supply projections is to ensure that
changes in functions are considered. These changes might have a significant impact on the
size and kind of workforce that will be needed in the future. This step may provide one of the
greatest benefits in workforce planning because it offers the chance for an agency to re-
examine long-standing assumptions about the purpose and direction of its programmes in light
of changes that are taking place in the external environment. Results include a forecast of the
numbers of employees needed in the future and the skills workers will need.
B. Two ways to determine future functional requirements are through environmental scanning and
organizational analysis. Environmental scanning is the process of examining external trends to
obtain a better understanding of what is happening in the environment in which the agency
operates. There are several approaches to environmental scanning. The scan should include
trends and issues in the economic, social, technological, legal, and political areas. It is important
to track the legislative and appropriations processes to identify factors that may change the
organisation’s mission or programme priorities. It is also important to track the changing
composition of the workforce and shifting work patterns including demographics, diversity,
outsourcing, and growing and vanishing occupations. An organizational analysis should include
internal factors such as strategic objectives, business functions, and technology.
C. Once the “what” and “how” of future work are determined, the next step is to identify the skills
employees need to carry out that work. The future workforce profile shows the number of
workers and the set of worker skills needed for the agency’s future workforce.
Step 3: Gap Analysis:
Gap analysis is the process of comparing the workforce supply projection to the workforce
demand forecast. An analysis should consider the composition of the workforce, including demographic
characteristics, geographic location, size, and employee skill level. The organisation will eventually
establish work force strategies based on the results of this analysis. Analysis results will show one
of the following:
A. A gap (when projected supply is less than forecasted demand), which indicates a future
shortage of needed workers or skills.
B. Surplus (when projected supply is greater than forecasted demand), which indicates a future
excess in some categories of workers and may require action. The surplus data may represent
occupations or skills that will not be needed in the future or at least not needed to the same
extent.
Step 4: Strategy Development:
A. The final step in the workforce analysis phase involves the development of strategies to
address future gaps and surpluses. Strategies include the programmes, policies, and practices
that assist organisations in recruiting, developing, and retaining the critical staff needed to
achieve programme goals. A wide range of strategies exists for attracting and/or developing
staff with needed skills and dealing with workers or skills no longer needed in an organization.
B. Once an organisation identifies a workforce gap, it needs to develop and implement effective
strategies to fill the gap. Such strategies include outreach recruitment, contract worker attainment,
staff training, and succession planning. Critical gaps should be analysed with care to ensure
that timely action is taken before these gaps become a problem for the organization.
C. Several factors influence which strategy or, more likely, which combination of strategies should
be used. Some of these factors include, but are not limited to, the following:
1. Time: Is there enough time to develop staff internally for anticipated vacancies or new skill
needs, or is special, fast-paced recruitment the best approach?
2. Resoureces: What resources (for example, technology, Web sites, structured templates,
and sample plans) are currently available to provide assistance, or should resources be
developed?
3. Internal Depth: Does existing staff demonstrate the potential or interest to develop new
skills and assume new or modified positions, or is external recruitment needed?
4. In-Demand Skills: What competition exists for future skills that are needed? Will the
organisation need to recruit for these skills or develop them internally?
5. Job Classification: Do presently used job classifications and position descriptions reflect
future functional requirements and skills?
6. Reorganization: Will some divisions need to be reorganized to meet business needs and
strategic objectives?
PHASE III - IMPLEMENT WORKFORCE PLAN:
1. Implementation brings workforce plan to life. We may need a separate action plan to address
the implementation of each strategy in the workforce plan. Before implementing the plan,
agencies should consider:
A. Ensuring that there is executive support for the plan.
B. Allocating necessary resources to carry out workforce strategies.
C. Clarifying roles and responsibilities in implementing strategies. This includes identifying who
is involved in implementing what and identifying the need for coordination among different
parts of the organisation or with different organisation.
D. Establishing time lines.
E. Defining performance measures/milestones and expected deliverables.
F. Communicating the plan.
2. The workforce plan should be implemented in connection with the requirements of the organization’s
strategic plan. If the strategic plan changes due to unanticipated customer, leadership, or
legislative changes, adjustments to workforce plan strategies may be necessary.
3. The figure below the relationship between strategic planning, performance measurement, and
human capital investment made by organisation. Workforce planning supports all three of these
areas.
The People Editor
Workforce
Strategic Planning Planning Human Capital
mission data reskilling
Organization’s profiles redeploying
resources projections recruiting
retaining
PHASE IV - MONITOR, EVALUATE, AND REVISE:

1. Ongoing evaluation and adjustments are imperative in workforce planning and are keys to
continuous improvement. Although a workforce plan should cover five years, it should be
reviewed annually. If an organisation does not regularly review its workforce planning efforts,
it runs the risk of failing to respond to unanticipated changes.
2. Consequently, organizations should establish a process that allows for a regular review of
workforce planning efforts in order to:
A. Review performance measurement information.
B. Assess what’s working and what’s not working.
C. Adjust the plan and strategies as necessary.
D. Address new workforce and organizational issues that occur.
Organisation should ask themselves the following questions to determine whether or not the plan
needs revisions:
1. Have strategies undergone a change?
2. Are the assumptions used in demand and supply models still valid?
3. Are the changes such which would cause strategies needing changes?
4. Are we using tools such as customer satisfaction inventories, programme progress reviews
and standardized questionnaires to determine whether workforce plan is achieving results?
How To Do it?
 Develop a method to validate the workforce plan’s milestones. This step will help an agency identify
accomplishments and determine which goals have not been met
 Prepare annual reports of the workforce plan to share with management.
 Reprofile strategies annually to address new priorities and readjust strategies to maximize results.
 Use data collection tools, such as customer satisfaction inventories and programme progress
revlews to measure how workforce planning contributes to organizational results.
SIMPLY SPEAKING...
This model serves as a useful starting point for understanding the elements involved in
workforce planning. The following information includes a graphic representation of this model
and brief descriptions of each of its steps.
Step 5: Monitor, Evaluate
and Revise Step 1: Set Strategic
5 Direction
WORKFORCE
4 PLANNING Step 2: Analyze Workforce,
Identify Skill Gaps,
Step 4: Implement
2 and Conduct Workforce
Action Plan Analysis
3
Step 3: Develop Action Plan
Step 1: This step involves linking the workforce planning process with the
Set Strategic Direction agency’s strategic plan, annual performance/business plan, and
work activities required to carry out the goals and objectives of
the strategic plan (long term) and performance plan (short-term).
Step 2: This step involves:
Analyze Workforce, Identify  Determining what the current workforce resource are they will
Skill Gaps, and Conduct Workforce evolve over time through turnover, etc.
Analysis  Developing specifications for the kinds, numbers, and workforce
location of workers and managers needed to accomplish the
agency’s strategic requirements
 Determining what gaps exist between the current and projected
workforce needs.
Step 3: This step involves the identification of strategies to close gaps,
Develop Action Plan plans to implement the strategies, and measures for assessing
strategic progress. These strategies could include such things as
recruiting, training/retraining, restructuring organizations, contracting
out, succession planning, technological enhancements, etc.
Step 4: This step involves ensuring human and fiscal resources place;
roles are understood; and the necessary communication, marketing,
Implement Action Plan
and coordination are occurring to execute the plan and achieve
the strategic objectives.
Step 5: This step involves monitoring progress against milestones,

Monitor,Evaluate, and Revise. assessing for continuous improvement purposes, and adjusting
the Plan to make course corrections and to address new workforce
issues.
LEVEL FOUR
MANPOWER FORECASTING
A. DEFINING MANPOWER FORECASTING:

Manpower forecasting is a process that identifies current and future human resources needs for
an organization to achieve its goals. It means forecasting an organization’s future demand and supply
for employees, based on its business needs; and subsequently developing and employing the strategies
required to meet these needs.
1. Forecasting Involves Gap Analysis Between Current Human Resource Supply
and Future Demand:
It involves a gap analysis between current human resource supply and future demand. Strategies
are then developed to address the gap and may involve recruitment, internal staffing, development,
training, contracting and partnering, and activities relating to downsizing.
2. Forecasting Future Human Resource Needs Implies Understanding Future
Business Directions:
“Forecasting future needs” implies understanding the future business directions of the organization
so that the human resource needs can be appropriately identified. Manpower forecasting can be
conducted at the organization level or at any component level but a key to success is always
understanding and linking to business direction.
Manpower Planning always starts with understanding the business needs of the organization.
There may also be a need to further develop and refine plans for the strategies that are going to be
employed and this may result in separate or integrated, staffing plans, training plans, etc.
3. Manpower Forecasting is More Than Numbers Game:
As stated earlier, manpower forecasting is more than just a numbers game, it also involves
identifying the organization’s Human Resource management goals and expected results, identifying
strategies and activities to achieve those goals, and measuring organizational progress towards their
achievement. Organizations that engage in this level of planning do so because they are aware of
and want to profit from the direct, positive link between certain “good” human resources management
practices and overall organizational business performance.
B. FRAMEWORK FOR MANPOWER FORECASTING:

1. Models of Manpower Planning Lack Human Face: People are seen only as
Numbers:
The models of manpower planning deal on a high level of abstraction with employee movements
from function to function through the organization. As a consequence functions and employees are
seen as numbers with no characteristics.
2. Manpower Requirements of Functions in an Organization Develop over Time:
Within the organization the requirements of functions develop over time. As a result employees
are needed with different competencies. To decrease the level of abstraction we must avoid the pitfall
of implementing too much behavior of employees. It is not possible to model the many interactions
and career patterns of employees and the occupation of function in a very detailed manner. The
modelling of “soft” factors such as preference, or dislike of specific functions by employees is

therefore, saved for later research. Our approach is to first cover the “hard” factors of employee
characteristics and function requirements, for example education, age, and experience based on
earlier fulfilled functions. To model, verify, and explain these interactions patterns which will occur
over time is the first aim.
3. Forecasting: Provides an insight into (mis)match Between Employees Existing
Competencies and Future Demand:
The objective of manpower forecasting is to give insight into the (mis)match between the
competencies of the employees and the demand for competencies of the organization. The starting
point has to be the demand of the organization, in terms of needed competencies, and based on the
organizational goals. Therefore, the following information is needed of the organization with respect
to competencies:
1. First, a characterization of the organizational infrastructure, which functions are available within
the organization that is necessary to carry out the activities of the organization.
2. Secondly, the organization must provide a characterisation of required competencies for
carrying out a function. Together with the number of employees needed in the functions it
defines the demand for competencies in the organization.
3. To model the flow of employees through the organisation, conditions for promotion such as a
minimum time served in a function have to be determined.
4. Education is important to develop the skills of the employees within an internal labour market.
5. The supply side for manpower forecasting consists of the set of competencies of the employees.
Their competencies can change (and usually increase) continuously. The increase can have
different causes.
4. Change in Competencies is governed by Peter Principle:
A. The competencies of the employees, which are useful for the organization, can also decrease
by several causes. In the first place, after reorganization a shift in the competency demand of
the organization arises. The number of employees stays the same, but the amount of competencies
of the employees, which are still valid for the organization can decrease.
B. As these competencies are no longer necessary for the organization, they are not taken into
account anymore. Secondly, the employee’s competencies get out of date after some time.
Fighting obsolescence is a joint responsibility of the employee and the organization. Solutions
can be to take courses or to change position in the organization to gain new experience.
C. The factors mentioned here do not change the quantity of the employees, but just the set of
available competencies. Besides the mentioned processes, three other factors have an influence
on the available competencies in an organization: inflow, outflow, and absence. The inflow of
employees creates a growth in competencies available for the organization.
D. The other two factors decrease the competencies. Insight into the trends of absence (through
illness, vacation, and other causes), inflow and outflow can be gained by analysing historical
data and by looking at the developments on the labour market. These three factors change the
obtainable competencies in the organization by changing the quantity of employees within the
organization. Of course there is a difference between inflow in the ‘lowest’ functions in the
organization and horizontal inflow in higher functions.
E. In the latter case, one can expect the new employees to have a larger set of suitable
competencies for the organization. In organizations with an internal labour market, employees
usually only enter the organization at the bottom in a fixed set of functions. The inflow can be
controlled by the organization, but it of course depends on the status of the labour market for
the needed competencies. Outflow and absence can only be influenced indirectly.
F. However, at macro level, the competencies, whether in regard to existing or new employees,
are governed by Peter Principle which articulates: “In time, every post tends to be occupied by
an employee who is incompetent to carry out his duties” and adds that “work is accomplished
by those employees who have not yet reached their level of incompetence”.
WORKFORCE PLANNING:
1. Definition:
In its simplest terms workforce planning is getting “the right number of people with the right skills,
experiences, and competencies in the right jobs at the right time.” This shorthand definition covers
a comprehensive process that provides managers with a framework for making staffing decisions
based on an organization’s mission, strategic plan, budgetary resources, and a set of desired workforce
competencies.
The model consists of four planning steps: supply analysis, demand analysis, gap analysis, and
solution analysis, plus an ongoing evaluation step which are explained further
2. Game of Demand, Supply and Gap Between Two:
Many organizations, both public and private, have developed models for workforce planning.
Putting aside variations in terminology, the processes are all very much alike. All rely on an analysis
of present workforce competencies; an identification of competencies needed in the future; a
comparison of the present workforce to future needs to identify competency gaps and surpluses; the
preparation of plans for building the workforce needed in the future; and an evaluation process to
assure that the workforce competency model remains valid and that objectives are being met. This
process is simple in outline but depends on rigorous and comprehensive analysis of the organization’s
work, workforce, and strategic direction.
3. Strategic Planning, Budget, Human Resource and Competencies: Key Players in
Workforce Planning:
Workforce planning requires strong management leadership; clearly articulated vision, mission,
and strategic objectives; and cooperative supportive efforts of staff in several functional areas. Strategic
planning, budget, and human resources are key players in workforce planning. Plans set organizational
direction and articulate measurable program goals and objectives. The budget process plans for the
funding to achieve objectives. Human resources provides tools for identifying competencies needed
in the workforce and for recruiting, developing, training, retraining, or placing employees to build the
workforce of the future.
4. Demand Analysis:
Demand analysis deals with measures of future activities and workloads, and describing the
competency set needed by the workforce of the future. Demand analysis must take into account not
only work force changes driven by changing work but also work force changes driven by changing
workload and changing work processes. Technology will continue to have an impact on how work
is performed and must be considered in the demand analysis process. Demand analysis, among
others, looks at:
A. Critical occupations and competencies required to meet projected needs.

B. Anticipated changes of programmes and services (volume, delivery channel, location and
duration).
C. Separation/turnover rates.
D. Vacancy rates.
5. Supply Analysis
Supply analysis focusses on identifying organisational competencies, analysing staff
demographics, and identifying employment trends. Competency analysis provides baseline data on
the existing organisation and present staff. Trend analysis provides both descriptive and forecasting
models describing how turnover will affect the workforce in the absence of management action. Trend
analysis is essential to the solution analysis phase.
A. Internal supply
1. Current workforce demographics
2. Workforce trends – eligibility for retirement, separation rate, etc.
B. External supply
6. Gap Analysis:
A. Gap Analysis process involves determining, documenting and approving the variance between
business requirements and current capabilities. It is the comparison study of general expectation of
performance in the industry and the level of performance at which the company currently functions.
Gap analysis provides a foundation for ensuring investment of time, money and human resources
required to achieve a particular outcome (e.g. to turn the salary payment process from paper based
to paperless with the use of a system). Such analysis can be performed at the strategic or operational
level of an organization. ‘Gap analysis’ is a formal study of what a business is doing currently and
where it wants to go in the future. It can be conducted, in different perspectives, as follows:
 Organization (e.g., human resources).
 Business direction.
 Business processes.
 Information technology.
B. Gap analysis identifies situations in which the number of personnel or competencies in the
current work force will not meet future needs (demand exceeds supply) and situations in which
current workforce personnel or competencies exceed the needs of the future (supply exceeds demand).
In short a Gap analysis is -
1. Identifying the differences between the work force an organization has currently and the
workforce it will need in the future, based on it’s operational goals.
2. It will reveal gaps in competencies and staffing levels to carry out future functional requirements
7. Workforce Analysis:
A. The Workforce Analysis is a unique survey designed to measure employees’ engagement
levels and their total workplace experiences. It also indicates job satisfaction and the work
environment of staff members within an organization. The information collected in this survey
provides leaders with a vital perspective on the current reality in their organizations’ workplace
and areas of concern affecting the total workplace experience.
B. The Workforce Analysis provides insight into employees’ opinions about human resource
issues, the role work plays in their lives, what their needs and preferences are on-the-job and
what motivates them at work. A major nationwide study has shown that over 50% of the working
population is not engaged in their work.
The model consists of four planning steps: supply analysis, demand analysis, gap analysis,
which we have studied earlier and solution analysis, plus an ongoing evaluation step which are
explained further.
8. Solution Anlaysis:
Solution analysis is the process of developing strategies for closing gaps in competencies and
reducing surplus competencies. A variety of strategies are available in solution analysis including
planned recruiting, training, retraining, and placing employees. Solution analysis must take into account
employment trends which may work either in the favour of or counter to the direction of planned
workforce change.
The three key elements in identifying competencies are workforce skills analysis, job analysis
and job profile.
A. Workforce Skills Analysis:
Workforce skills analysis is a process which describes the skills required to carry out a function.
Conducting workforce skills analysis requires the leaders of an organisation to anticipate how the
nature of the organization’s work will change, and then to identify future human resource requirements.
(This process spans the supply analysis and demand analysis aspects of workforce planning.)
B. Job Analysis:
Job analysis collects information describing successful job performance. Job analysis focuses
on tasks, responsibilities, knowledge and skill requirements as well as other criteria that contribute
to successful job performance. Information obtained from employees in this process is used to
identify competencies.
C. Role Profile:
Role profile collects the information describing the exact and actual of job a person is performing
in his function. It is different from job description which is the ideal description of job which a person
is expected to perform but never performs in reality.
9. Evaluation/Feedback/Adjustments:
We noted that evaluation and adjustments are implicit in workforce planning or any planning
process. Managers and project leaders need to build an assessment process in to any workforce
transition plan they develop. Managers need not only to consider whether planned workforce changes
are taking place, but also to review the assumptions on which the transition plan is based. Strategic
direction is influenced both by internal programme management and outside factors.
10. Budgeting and Controlling Manpower Costs:
Budgeting and budget control of The human resource function will give us the skills we need to
fully understand the costs involved with Human Resource – and allow us to present a realistic case
to management in language that they understand. This highly interactive method will feature case
studies, business simulation and practical group exercises to show you how to prepare, monitor and
control the Human Resource budget, and most importantly, tell us you how to understand the link
between organizational finance and Human Resource budgets.
Methods of Controlling Costs
1. Learn how to build, monitor and control a human resource budget and understand how it links
to organizational finance.
2. Identify the key components and cost factors in a human resource budget so that you can build
an effective budget.
3. Investigate advanced professional budgeting techniques which will help you manage and
forecast effectively.
4. Understand how linking budget control of human resource and effective manpower planning will
lead to organizational success.
5. Recognise how to create a successful link between your business strategy and an effective
manpower plan, ensuring you have the right skills available when you need them.
6. Investigate how manpower planning can be strategically integrated into organization and
business objectives.
7. Discover a rigorous methodology for preparing and maintaining a manpower plan which will
allow you to forecast your manpower requirements accurately.
8. Explore the effects of local legislation on your organization’s manpower planning.
11. Principles to Understand the Dynamics of Cost Cutting:
1. Understand the relationship between capital and recurrent costs
2. Understand the relationship between staff and non-staff recurrent costs.
3. Clearly identify those resources critical for success and seek consensus to ensure that they
will be made available.
1. Capital and Recurrent Costs:
Capital expenditure breeds future recurrent costs. When capital development is proceeding
apace, planners and policy makers tend to forget that heavy recurrent costs will be incurred several
years down the line. As Chambers (1974) notes, “In planning activities, recurrent resources...have
been relatively neglected, and there is a strong case for subjecting recurrent allocations and their use
to more stringent appraisal, evaluation and management”.
2. Staff and Non-Staff Recurrent Costs:
The same principles which apply to the ratio between capital and recurrent costs also apply to
the ratio between staff and non-staff costs within the recurrent cost category. Staff costs breed non-
staff costs and the planner must know what the ratio between them is if resources are not to be
wasted. Rising staff costs, coupled with a relative (and real) decline in funds available to meet other
recurrent costs, has been a major cause of failure.
3. Critical Resources:
Resources those are critical to success need to be established at the outset of the planning
process. They may consist either of staff or of physical inputs (or of both). Hence, there is the need
to monitor changing staff ratios and to relate these to future manpower and training needs. The
following steps are normally followed:
1. Project/programme objectives are determined and critical manpower needs are established by
category.
2. These needs are then related to the output of existing category and for each period; transfers
of staff from other sources are considered and negotiated.
3. Allowances are made for wastage, caused by factors such as retirement, resignation, emigration,
dismissal or death. (Wastage rates are frequently neglected in manpower planning, leading to
the inefficient use of resources arising from unexpected manpower shortages.).
This procedure yields information on expected staff surpluses or deficits by category. A plan can
then be devised to compensate for any anticipated shortages, giving careful consideration to the
capacity of existing institutions to meet demands, the funds available for expanding them where
necessary and the time that will elapse before additional manpower will come on to the market.
Techniques such as critical path analysis and bar chart planning have been used to establish
resource-to-resource and resource-to-activity relationships more precisely and to improve the scheduling
of operations. The former relies on a precision of control; the latter can be of use in:
 Identifying and establishing resource linkages
 Examining the assumptions regarding the availability of critical components
 Examining potential conflicts in the scheduling of project activities
 Monitoring capital and recurrent expenditures.
Step 1 - Set Strategic Direction:
An agency’s vision, mission, and measurable goals and objectives drive the identification of
future functional requirements. In turn, those requirements drive the analysis and elements of the
workforce plan.
When identifying future funtional requirements, focus on function, not on the people needed to
do the job. The overreaching question is: “What key function need to be performed in order to
accomplish the goals and objectves set out in the strategic plan?” This may include many of the
organization’s current functions, in addition to forecasting important future and activities.
Step 2 - Conduct Workforce Analysis
The key element in the workforce planning process is an analysis of workforce data. It considers
information such as job classification, skills, experience, retirement eligibility, diversity, turnover rates,
education, and trend data. This step reviews the work that will be required for an agency to achieve
its goals and objectives, the knowledge and skill sets, and the staffing levels necessary to perform
that work.
There are two phases in conducting the workforce analysis:
The Workforce Demand Forecast identifies the future workforce needed by an organisation. The
focus of this step should be on the work the organisation must perform and on the staff needed to
perform that work. In this step, identify the current work functions being performed and on the staff
needed to perform that work. In this step, identify the current work functions being performed, future
or new function that will need to be performed, and how the work will be performed in order to achieve
the goals of strategic plan. We may also identify current function which will not be necessary in the
future due to changes in technology or responisibility in providing specific services.
The Workforce Supply analysis focusses on an organisation existing and future workforce supply.
It answers the question, “What is the existing profile of the current workforce, and what does it need
to be in the future to accomplish the organisation goals and objectives?” Once the work functions that
must be performed have been focus on defining the staffing, or workforce, needed to perform those
functions. possess to successfully perform the work, Determine the number of staff with these
competencies that the organisation will need to accomplish its functions.
Step 3 - Conduct Gap Analysis
Gap analysis is the process of comparing the workforce supply projection to the workforce
demand forecast, An analysis should consider the composition of the workforce, including demographic
characteristics, geographic location, size, and employee competencies level. The agency will establish
workforce strategies based on the results of this analysis.
Analysis results may show one of the following:
 A gap ( when projected supply is less than forecasted demand), which indicates a future
shortages of needed workers or skills, It is important to know what critical jobs will have gaps
so the necessary training or recruiting can be anticipated.
 A surplus (When projected supply is greater than forecasted), which indicates a future excess
in some categories of workers and may require action. The surplus data may represent job
classifications or skills that will not be needed in the future or at least may be needed to some
extent.
Step 4 – Develop Strategies:
Once an organisation identifies a workforce gap, it need to develop and implement effective
strategies to fill the gap. Critical gaps should be analyzed with care to ensure that timely action is
taken before these gaps become a problem for the organization.
A wide range of strategies to address future gaps and surpluses exists, Strategies include the
programmes, policies, and practices that assist organisations in recruiting developing and retaining
the critical staff needed to achieve programme goals.
Strategies can fall into broad categories of :
 Position classification actions, redefining title series, adding new job classification, reallocating
job classes, and rewriting position descriptions to better reflect future functional requirements.
 Staff development strategies to find and hire qualified candidates from various sources to
include other organisations or the occupations.
 Recruitment/selection strategies to find and hire qualified candidates from various sources to
include other organisations or the private sector.
 Retention strategies to encourage employees to stay in the agency.
 Organizational interventions such as redeployment of staff or reorganization.
 Succession planning strategies to prepare to ensure that there are highly qualified candidates
capable of filling critical positions.
 Knowledge transfer strategies to capture the knowledge of experienced employees before they
leave the organisation.
Strategies should be kept to a manageable number. They should be prioritised to allow an
organisation to focus its resources on the most important strategies first.
Step 5 - Implement Strategies
Implementation brings the organisations workforce plan to life. An agency may need a separate
action plan to address the implementation of each strategy in the workforce plan. Before implementing
the plan, organisations should:
 Ensure that there is executive support for the workforce strategies.

 Allocate necessary resources to identify workforce strategies.
 Clarify roles and responsibility in implementing strategies. This includes identifying who is
involved in implementing what, and where coordination among different parts of the organization
or with different agencies is needed.
 Establish timelines.
 Determine perfomance measures and milestones and expected deliverables.
 Communicate the plan. The basis of the plan, as well as its elements, should be communicated
to all employees. as to why and how it was developed, how it will be applied, and how it will
affect staff.
Step 6 - Monitor, Evaluate and Revise:
Ongoing evaluations and adjustments are important in workforce planning and are key to
continuous improvement. If an organisation does not regularly review its workforce planning efforts,
it risks failing to identiify and respond to unanticipated changes Organisations should establish a
process that allows for a regular review of their workforce planning efforts to:
 Review performance measurement information.
 Assess what is working and what is not working.
 Adjust the plan and strategies as necessary.
 Address new workforce and organizational issues that occur:
SIMPLY SPEAKING...
Strategic manpower planning model advanced by State of Texas, USA and Kentucky’s
workforce planning model are identical.
Dr. John Sullivan in ‘Developing a Workforce Plan to Plan Explosive, Out of the Box
Growth’ has observed that ‘it is a wise move to develop a workforce plan that enables us to
take appropriate action before the turnaround occurs’.
He advocates the following actions in creating workforce plan:
 Forecast the type of talent needed.
 Identify the position with projected retirements or turnover.
 Identify growth regions.
 Identify rapid growth business units.
 Identify time to market requirements.
 Identify skill requirements.
 Identify the needed innovative methods rates.
LEVEL FIVE
APPROACHES AND METHODS FOR DEVELOPING MANPOWER

FORECASTING
1. PLANNING FOR THE STATUS QUO:

Planning involves steps to replace any employees who are either promoted or who leave the
firm. An example is management succession planning which seeks to ensure that there is at least
one qualified manager to replace any higher level manager in the organization.
2. THUMB RULE:
This is on the basis of firm’s beliefs with regard to forecasting human resource needs. For
example one firm believes that a ratio of one production supervisor for every 12 workmen in optimal.
This firm maintains this 1:12 ratio because it has proved successful in the past. Another thumb rule
is based on past experience that one person can produce 2000 units of output per day and accordingly
5 employees needed for 10,000 units as a matter of forecast.
3. MARKOV ANALYSIS (MA):

Markov chains is a powerful analysis technique which, used in manpower planning, can help it
successfully achieve its goal. Markov chains make it possible to predict the size of manpower per
category as well as transitions occurring within a given time period in the future (resignation, dismissal,
retirement, death, etc.). More importantly yet, with a Markov chain, one can obtain long-term average
probabilities or equilibrium probabilities.
However, to predict manpower supply and demand with accuracy using a macroeconomic
model, one needs a vast array of data for each of the many variables used. To collect these data,
one must first get hold of sufficiently broad-ranging time series data for each industry. For this reason,
a method of this type proves to be inadaptable for emerging sectors undergoing fast-paced growth
with only small amounts of statistical data on the industry as a whole and manpower available.
4. UNIT FORECASTING:
This refers to the estimate of supervisors and managers with regard to forecasting Human
resource needs for the next year unit wise – this approach is called “Bottom up approach” for
forecasting as the selections are made by lower level management and added together at a higher
level of the organization.
5. RATIO TREND ANALYSIS:

The basic principle here is to say if it takes six people, for example, to perform an existing amount
of work, it will take twelve people to do twice as much. Organizations measure activity levels in a
variety of different ways. The ratio between ‘direct’ and ‘indirect’ in manufacturing is a classic one.
Individual departments in an organization will also have their own rule-of thumb measures. A
sales department, for instance, may have an idea of the number of customer calls a salesperson
should make in a week, and, indeed, use this as one criterion for monitoring sales efficiency. If the
business plan projects an increase in the number of new customers, this can be translated into a
proportionate increase in the sales force.
6. DELPHI METHOD:
This method relies on expert opinion in making long range forecasts – this involves obtaining
independent judgments from a panel of experts usually through a questionnaire or interview schedule
on certain issue affecting the nature and magnitude of demand for an organization’s products and
services
7. COMPUTER SIMULATION:
This is one of the most sophisticated methods of forecasting human resource needs – A computer
is a mathematical representation of major organizational processes, policies and human resource
movement through organization – computer simulations are useful in forecasting for human resources
by pinpointing any combination of organizational and environmental variables.
8. TIME AND MOTION STUDY:

Here the Industrial Engineer observes records and movement of workman and productivity vis-
a-vis time required to conduct specific activities.
9. MOST: MAYNARD OPERATION SEQUENCE TECHNIQUE:

This method is well accepted in automobile industries where lots of manual activities are involved.
It is based on the walking and moving of the workmen to conduct the specific activity.
MOST in a acronym for Maynard Operation Sequence Technique. It was developed at H.B.
Maynard and Co. Inc., USA in 1970’s. It is a revolutionary PMTS System. MOST is an activity based
work measurement system that enables us to calculate the length of time required to perform a task
i.e. a system to measure work. This technique is based on fundamental statistical principles and
basic work measurement data complied over many years. MOST concentrates on movement of
objects. It was noticed that the movement of objects follow certain consistently repeating patterns,
such as reach. grasp, move and position of object. These patterns were identified and arranged as
a sequence events followed in moving an object. This concept provides the basis for the MOST
Sequence models.
Benefits:
l Universal approach.
l Fast to apply.
l Adequate accuracy.
l Easy to understand and learn.
l Minimum of paperwork.
l Multilevel system.
l Consistent results.
l Encourages method developement and improvement.
l Derive activity timings in advance.
l No rating system as required in time study.
Methodeolgy:
In order to carry out MOST work measurement exercise and to arrive at a standard time for all
the activities in a plant. Following procedure is recommended.
1. Awareness and Training Programme.
2. Awareness and Training Programme in a group (around 20 to 25) consisting of Management,
Supervisors and Operators. This training program will be of 4 days.
3. Identification of a group of employees (min. 3 to 4) department wise for carrying out work
measurement by MOST.
4. Allocate responsibilities to the selected group of employees.
5. MOST work measurement for all the activities in shop floor.
6. Approval of work measurement done by the team.
7. Arrive at a Standard time for each activity.
8. Application of the Standard time and data for work allocation for operator.
9. Implementation of the above work distribution in shop floor and other production areas.
LEVEL SIX
CASE STUDIES IN MANPOWER PLANNING
McDONALD’S:
1. Like all businesses, McDonald’s require the assistance of staff to carry out the daily activities
related to the nature of the organization. The people are all important to McDonald’s and fulfill
a key role in its operations. McDonald’s would not be successful without sophisticated technology;
human beings are responsible for setting up correctly, pressing the right buttons and repairing
it if it malfunctions.
2. Once inside, McDonald’s staff performs various duties in connection with their roles and
McDonald’s expects their work to be of a satisfactory standard, completed within a timescale
and to be cost effective. Training is provided to help employees improve their levels of efficiency
and this is rewarded with promotion or a bonus in recognition of their efforts.
3. None of this would occur if the managers had not selected potential workers in a careful way.
The skills required can be identified and matched against the abilities of people looking for work.
If McDonalds takes in staffs who are not suitable, it can cause a series of problems, e.g.,
A. Poor productivity levels.
B. Bad feeling among staff.
C. Job dissatisfaction.
D. High level of absenteeism.
E. Customer complaints.
F. Dismissal or resignation.
G. The search for a replacement.
4. Human resources planning is concerned with getting the right people, using them well and
developing them in order to meet McDonald’s goals. In order to meet McDonald’s aim successfully,
it is necessary to identify the means of using people in the most effective way and to identify
any problems that are likely to occur (for example recruiting the best people) and then working
out the solutions.
DEMAND FOR LABOUR:

McDonald’s demand for human resources is estimated by analysing its future plans and by
estimating the levels of activity within McDonald’s.
METHODS OF FORECASTING DEMAND:

1. Management Estimates:
Managers are asked to forecast their staff requirements. They do it on the basis of past, present
and likely future requirements.
2. Work Study Techniques:

Work-study specialist work out how long various jobs take, using available machinery and
equipment provided they know what sales are likely to be, they calculate the numbers of employees
required and the hours they will need to work.
3. Supply of Labour:
For McDonald’s to work out the supply of labour available it examines the numbers of people
available to work, how long they can work for, their ability to do the required job, their productivity
(output per head) and other factors. The supply of labour is made up of two sources:
A. Internal Supply:
Statistics and information is collected on employees already within McDonald’s. This covers the
following main areas:
A. The number of employees in a particular job: - This figure will give a broad overview of the
number in McDonald’s who already possess certain broad categories of skills.
B. The skills available:- It may be helpful to identify the current skills held by the labour force and
to see how many of these are transferable.
4. Skills Analysis:
McDonald’s needs to be sure that it has the right number of people available at the right time
but also with the right skills. McDonald’s, therefore, need to assess its present supply of skills across
its workforces and to identify the sorts of skills it will require in the future.
A skills inventory of current employees indicates those who have received recent training and
those who will require training. It may be possible to meet the human resource requirements of
McDonald’s by training and developing current staff rather than recruiting externally.
5. Performance Results:
McDonald’s gather various information about the level of performance of various categories of
current employees. Promotional potential: An internal promotion changes the availability of existing
resources. McDonald’s finds it useful to know how many employees have the skills and the aptitude
for promotion to more demanding roles. In addition, McDonald’s finds useful to know how many
employees have the potential, with suitable training for promotion.
ALKYL AMINES CHEMICALS:

ALKYL AMINES is a global supplier of amines and amine-based chemicals to the pharmaceutical,
agrochemical, rubber chemical and water treatment industries, among others.
Alkyl’s commitment to customer satisfaction by delivering quality products and services has
helped it to become one of the world’s leading amine manufacturers.
MANPOWER PLANNING:
The company has two types of manpower planning
ALKYLAMINES CHEMICALS LTD
Aliphatic C1-C6 Speciality Amine

Amines Amines Amines, Derivatives
Amides,
Chlorides.
Speciality Marketing Total service provider Contract

Chemicals Representative from R&D to Manufacturing
for Degussa and commercial
Rohm & Haas. production for
phamaceutical and
agrochemical
intermediates
Ethytene Controlling interest in Contract Research Bioprocess

Amines Diamise & Chemicals and Development of Technology
Ltd., the only Ethylene novel bioprocess
Amines Business in products and
India pathways
1. Skeleton Manpower:
This is the bare minimum manpower required to run a plant. This manpower planning is done
through six parameters:
A. Safety: To look after safety of the person working in the plant, there is requirement of some
people.
B. Monitoring parameter: To supervise the workers, there is requirement of some persons, they
monitor the performance of workers.
C. Geographic dispersion: Planning is done depending on proximity of the functional departments
within the plants.
D. Contingency help: In case of breakdowns and any emergency there is backup of manpower
to handle the situation.
E. Reserve: There are two types of reserves one is Leave reserves and another is Attrition
reserves. In leave reserves, if any employee goes on leave then, someone should be there to
do his work.
F. Attrition reserves: there are some people already recruited as reserves. When people leave
the company they take up the vacant position.
2. Net Manpower:
Net manpower is equal to skeleton and reserve manpower. After products have been made in
factory, they have to sell these products, so different departments are needed like marketing department,
R&D department. To forecast manpower for R&D department there are 4 parameters.
1. Product life:
2. Market growth rate
3. Diversification:
4. Technological factor of change
3. Annual Operating Plans (AOP)
1. According to annual operating plan, the company plan their manpower on annual basis, means
for a particular year how many people are required?
2. SOP: It is 5 year operating plan, in this plan, they plan their manpower according to need for
next 5 years in their plant. Based on this planning, they recruit people. Before going for actual
recruitment, they take into consideration that how many products are required, take help from
R&D department to find out about the products.
3. Technology Development team: They plan how many people are required in technology
development team, according to machinery required in the plant, they plan manpower, who will
handle which machinery, like that.
4. Project team: In project team there are different levels on which they decide their manpower,
like managerial level, designing engineers, etc. Based on the volume of products, they decide
how many people should be there in project team.

1. What is the economics of manpower planning? What factors are important to calculate the economics of
strategic manpower planning?
2. How would you define manpower planning? What are the advantages of strategic manpower planning?
3. What is the importance, scope and the objectives of manpower planning?
4. What are the steps in manpower planning process implementation?
5. What is the difference between manpower planning and strategic manpower planning? What is the
importance of strategic manpower planning?
6. What are the three basic Principles of Strategic Manpower Planning? Write in detail.
7. Write in detail the major features of various manpower planning models.
8. Write short notes on:
1. Manpower Forecasting
2. Workforce Planning
3. Demand and Supply Gap Analysis
4. Budgeting and Cost Cutting
5. Workforce Planning Models
9. What are the approaches for developing manpower planning strategies?

Strategic Planning 251
t er
ap
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7
C
STRATEGIC
PLANNING
HPH
topics:
 Definition of Strategic Planning.
 Strategic Planning as a Continuous Process.
 Strategic Planning Goals.
 SWOT Analysis.
 Pest Analysis.
 Risk Analysis.
 Models of Strategic Planning.
 Implementing Strategic Planning.
 Strategic Planning in action.
CHAPTER SEVEN
STRATEGIC PLANNING
LEVEL ONE: DEFINITION, CONCEPTS AND 253 – 258

COMPONENTS IN STRATEGIC PLANNING
LEVEL TWO: MODELS OF STRATEGIC PLANNING 259 – 267
LEVEL THREE: IMPLEMENTING STRATEGIC 268 – 272
PLANNING
LEVEL FOUR: STRATEGIC PLANNING IN ACTION: 273 – 276
DABBAWALS
LEVEL ONE
DEFINITION, CONCEPTS AND COMPONENTS OF STRATEGIC

PLANNING
1. DEFINING STRATEGIC PLANNING:

1. Strategic planning is the process of determining a company’s long-term goals and then identifying
the best approach for achieving those goals.
2. Strategic planning is an organization’s process of defining its strategy or direction and making
decisions on allocating its resources to pursue this strategy, including its capital and people.
3. Strategic planning is a process to determine or re-assess the vision, mission and goals of an
organization and then map out objective (measurable) ways to accomplish the identified goals.
4. Strategic planning is systematic, formally documented process for deciding what are the
handfull of key decisions that an organisation, viewed as a corporate whole must get right in
order to thrive over the next few years.
5. Strategic Planning is a continuous and systematic process where people make decisions about
intended future outcomes, how outcomes are to be accomplished, and how success is
measured and evaluated.
6. Strategic planning is the method by which a community continuously creates artifactual systems
to serve extraordinary purpose.
7. Strategic planning is systematic process of determining goals to be achieved in the foreseeable
future. It consists of: (1) Management’s fundamental assumptions about the future economic,
technological, and competitive environments. (2) Setting of goals to be achieved within a
specified timeframe. (3) Performance of SWOT analysis. (4) Selecting main and alternative
strategies to achieve the goals. (5) Formulating, implementing, and monitoring the operational
or tactical plans to achieve interim objectives.
8. Strategic planning is a coordinated and systematic process for developing a plan for the overall
course or direction of the endeavor in order to optimizing the future potential.
9. Strategic planning is a business process that many companies employ to identify critical
success factors that set the course for future growth and profits.
10. Lewis Carroll in “Alice in Wonderland” makes a good case for it: “Would you tell me, please,
which way I ought to go from here?” said Alice. “That depends a good deal on where you want
to get to,” said the Cat. ”I don’t much care where...,” said Alice. “Then it doesn’t matter which
way you go,” said the Cat.
Strategic Planning is a continuous and systematic process where people make decisions
about intended future outcomes, how outcomes are to be accomplished, and how success is
measured and evaluated:
1. “...continuous...” Strategic planning is ongoing; it does not end with the publication of
a plan; its success depends on it purposefully becoming an uninterrupted and never-
ending cycle.
2. “...systematic...” Any effective strategic planning process has a deliberate and specific
methodology and a sequence of events; it is never haphazard.
3. “...process...” The value of strategic planning lies more in the journey than the destination.
While strategic planning must indeed produce a product, a Strategic Plan document, the
primary value comes from the team work, vision, commitment to and ownership of
organizational success the planners gain through the process of making the decisions
the document contains.
4. “...people...” A strategic planning process must involve all the right people and those
people must be ready and willing to contribute to the process.
5. “...decisions...” Strategic planning is a decision making process. Organizations that are
ready to plan strategically have leaders who are ready to make decisions.
6. “...outcomes...” Strategic level planning addresses external results, or the organization’s
effects on the outside world, particularly how it affects its customers. An old adage
states: “If you don’t know where you’re going, any road will take you there.” Strategic
planning is primarily about defining where “there” is, a type of roadmap outlining the
outcomes and results designed to be achieved throughout the journey.
7. “...how outcomes are to be accomplished...” Strategic planners don’t quit just because
they defined the future target; they go ahead and select the roads that will get them
there.
8. “...how success is measured and evaluated.” Strategic planning is all about succeeding.
A well-written strategic plan will describe clearly how anyone can tell whether the
organization is successful. The plan may measure intended future outcomes either
quantitatively or qualitatively, but it always defines threshold criteria for achieving
success.
2. DEFINING MISSION STATEMENT:
The mission statement is a short, concise statement that describes what the organization will
strive to bring about — the reason why the company exists in terms of its impact on the rest of the
world.
3. DEFINING VISION STATEMENT:

One of the functions of strategic planning is to inspire people in the organization to work towards
the creation of a new state of affairs. The vision is a means of describing this desired future, but it
works best to inspire and motivate if it’s vivid — in other words, a vision should be a “picture” of the
future. The visioning process is usually the very first step in the strategic planning process.
4. DEFINING ROLE STATEMENT:

The mission statement would focus on results and outcomes, while the role statement gets more
into the “how’s”.
A good way to think about this is to first state your mission, add a byline to it, and then add a
role.
For example, if the Mission of a start up organisation is to “go where no man has gone before”
there might be a set of role statements (usually there will be more than one). For example: To go
where no man has gone before by building new technologies and starships that can...
5. ENVIRONMENTAL SCAN:
In terms of organizations and strategic planning, an environmental scan involves considering the
factors that will influence the direction and goals of an organization. And, it includes consideration of
both present and future factors that might affect the organization, since, we’re planning for the future,
not just the present.
For example, an environmental scan might project that in the next ten years, the number of
people (potential customers) between the ages of 18-24 will increase from 30% to 40%. That’s
important information if we want to decide what kind of new products we might consider introducing
into the marketplace. Should we work on developing products targeted at a dwindling seniors population?
Or should we develop products to take advantage of the shift to a youth dominated market. The
environmental scan forces us to look at these factors.
6. COMPETITIVE ANALYSIS:
A competitive analysis involves looking at those that compete in the market place, and using
information about the competitors to identify where organisational strengths are relative to those
competitors. One of the principles for becoming competitive is to leverage one’s strengths with
respect to competitors, and minimise the weaknesses.
7. STRATEGIC PLANNING GOALS:

Once we established a vision, mission and role, and done internal and external scans, we should
have enough information to set goals for the period that our strategic plan covers. Goals in strategic
planning can be either result oriented, or process oriented, although, it’s probably better to have
results oriented goals. For example: increase share price by 5% , increase return on capital investments
by 10%, reduce employee turnover by 10%, bring three new products to market, register 3 new
patents. Bad and non–strategic goals are, for example, become the most regarded company in our
field (too vague, hard to measure, improve customer service (vague), hire and retain more talented
staff (vague)
8. SWOT ANALYSIS:
SWOT analysis is a tool for assessing the business and its environment that helps focus on key
issues. It can help us focus limited resources and capabilities to the competitive environment. SWOT
stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal
factors. Opportunities and threats are external factors. The point of the SWOT analysis is to ensure
that we have a marketing plan that is consistent with the resources and capabilities of our company.
A. Strengths could be:
 A specialist marketing expertise.
 A new, innovative product or service.
 Quality processes and procedures.
 Any other aspect of business that adds value to product or service.
B. Weaknesses could be:
 Lack of marketing expertise.
 Undifferentiated products or services (i.e., in relation to competitors).
 Poor quality goods or services.
 Damaged credibility.
C.Opportunities could be:
 A developing market or an emerging market.
 Mergers, joint ventures or strategic alliances.
 Moving into new market segments that offer improved profits.
 A new international market.
 A takeover
D. Threats could be:
 A new competitor in home market.
 Price wars with competitors.
 A competitor has a new, innovative product or service.
 Competitors have superior access to channels of distribution.
 Taxation/ Octroi/Service tax is introduced on product or service
EXAMPLES OF SWOT ANLAYSIS:
A. WAL-MART
1. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money,
convenience and a wide range of products all in one store.
2. Weaknesses - Wal-Mart is the World’s largest grocery retailer and control of its empire, despite
its IT advantages, could leave it weak in some areas due to the huge span of control.
3. Opportunities - To take over, merge with, or form strategic alliances with other global retailers,
focusing on specific markets such as Europe or the Greater China Region.
4. Threats - Being number one means that you are the target of competition, locally and globally.
B. STARBUCKS:
1. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600
million in 2004.
2. Weaknesses - Starbucks has a reputation for new product development and creativity.
3. Opportunities - New products and services that can be retailed in their cafés, such as Fair
Trade products.
4. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.
C. NIKÉ:
1. Strengths - Niké is a very competitive organisation. Phil Knight (Founder and CEO) is often
quoted as saying that ‘Business is war without bullets.’
2. Weaknesses - The organisation does have a diversified range of sports products.
3. Opportunities - Product development offers Niké many opportunities.
4. Threats - Niké is exposed to the international nature of trade.
D. INDIAN PREMIER LEAGUE:

Where will you find the Mumbai Indians, the Royal Challengers, the Deccan Chargers, the
Chennai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata Knight Riders and the
Rajasthan Royals? In the Indian Premier League (IPL) - the most exciting sports franchise that the
World has seen in recent years, with seemingly endless marketing opportunities. (Only strengths and
opportunities)
9. SCENARIO PLANNING:
In essence scenario planning is about being prepared.
Scenario planning is a fancy term for a very logical and sensible process — the “what if”
process. It involves looking into the future, anticipating possible events, scenarios or changes, and
analysing what will happen to the company as a result of those things happening, and, planning to
minimise any damage, and maximise opportunities.
Scenario planning is often used in IT environments but applies to any business. For example,
the IT department might anticipate what would happen if a major hurricane hit and destroyed their
central computers. As a result they would minimize their risk by using offsite data storage geographically
separate from the main installation, or move their central computers to a more resistant building.
Scenario planning can look at any set of possible circumstances. For example, an oil company
might plan around the possibility that a new, non-petroleum based vehicle becomes available. As an
outcome of this kind of scenario planning, they might look at the possibility of offering hydrogen fuel
at their retail outlets (or charging stations). It doesn’t mean they would implement those now, but they
would be more prepared if such changes happened. In small business, one might consider, and plan
for a scenario where one’s rent might double, or one might lose the prime retail space.
10. PEST ANALYSIS:

The PEST analysis or model is another tool, quite similar to the SWOT model, but is more
specialized and focussed on the external environment and important factors “out there” that can affect
present and future business. The PEST acronym stands for:
 Political
 Economic
 Social
 Technological
Once political, economic, social and technological factors are identified (which is the first step),
the next step is to create a business strategies that will take advantage of these trends and changes,
while minimizing risk to the company from those trends and changes.
11. RISK ANALYSIS:

Risk analysis involves identifying where a company might be vulnerable to various outside
(usually) factors. Risk analysis may be conducted either within the structure of strategic planning, or,
on its own. These days companies need to buffer the effects of a number of things “out there” so they
ensure that they don’t become the victims of foreseeable events. We can never be sure that we have
covered off all risks — we can only identify, and plan for risks we can foresee.
12. STP (SITUATION-TARGET-PATH):

STP or Situation–Target–Path is a very simple overview of the strategic planning method. It
divides the planning process into three parts, starting with defining the situation - evaluating and
analyzing the current situation and how it came about.
The second component - Target - involves defining goals and objectives for the future. Sometimes
this is referred to as defining the ideal or desired future state.
The third component - Path - involved defining a map or path to achieve the goals or future state.
The STP method is simple, but accurately describes, at least in a general way, what strategic
planning involves?
13. GOALS GRID METHOD:

A goals grid is a relatively simple technique to help us think more clearly about organizational
and company goals, particularly when we are doing strategic planning.
Fred Nickols, explains that the goals grid is intended to help you answer the following questions:
1. What are we really up to here?
2. Do we have all the bases covered?
3. What are we overlooking?
4. Have we adequately thought about it?
5. How do our various goals and objectives relate to one another?
6. What do the patterns tell us about our willingness to risk, to change?
7. Are we in conflict with others?
The goals grid itself is a box with four quadrants in it - a goals matrix. We classify goals
according to two dimensions using a Yes/No system. Each goal falls within one of the boxes depending
on the answers to the following questions:
1. What do you want that you don’t have? (Achieve)
2. What do you want that you already have? (Preserve)
3. What don’t you have that you don’t want? (Avoid)
4. What do you have now that you don’t want? (Eliminate)
It is imperative that before we attempt to work on an organizational strategic planning
exercise, we must have these basic concepts on our finger tips.
It is also important to remember that any business strategic plan is not merely a tool or
model, it is a way of life.
LEVEL TWO
MODELS OF STRATEGIC PLANNING
1. BASIC STRATEGIC PLANNING FOR SMALL AND MEDIUM ENTERPRISES(SME) MODEL
This very basic process is typically followed by organizations that are small and medium
enterprises that have not done much strategic planning before.
The process might be implemented in year one to get a sense how planning is conducted, and
then embellished in later years with more planning phases and activities to ensure well-rounded
direction for the organisation. Planning is usually carried out by top-level management. The basic
strategic planning process includes:
A. Identify Purpose (Mission Statement):
This is the statement that describes why an organization exists, i.e., its basic purpose. The
statement should describe what client needs are intended to be met and with what services. The top-
level management needs to develop and agree on the mission statement. The statements may
change somewhat over the years.
B. Select Goals Aligned with Mission:
Goals are general statements about what we need to accomplish to meet purpose, or mission,
and address major issues facing the organization.
C. Identify and Implement Specific Strategies to Achieve Goals:
The strategies are often what change the most as the organization eventually conducts more
robust strategic planning, particularly by more closely examining the external and internal environments
D. Identify Specific Action Plans to Implement each Strategy:
These are the specific activities that each major function must undertake to ensure it’s effectively
implementing each strategy. Objectives should be clearly worded to the extent that people can
assess if the objectives have been met or not. Ideally, the top management develops specific committees
that each have a work plan, or set of objectives.
E. Monitor and Update the Plan:
Planners regularly reflect on the extent to which the goals are being met and whether action
plans are being implemented. Perhaps the most important indicator of success of the organization is
positive feedback from the organization’s customers.
2. ISSUE AND GOAL BASED STRATEGIC PLANNING MODEL:

Organizations that begin with the “basic” planning approach described above, often evolve to
using this more comprehensive and more effective type of planning. The following table depicts a
rather straightforward view of this type of planning process.
A. Internal and External SWOT:
External/internal assessment to identify “SWOT” (Strengths and Weaknesses and Opportunities
and Threats).
B. Prioritisation of Goals:
Strategic analysis is necessary to identify and prioritise major issues/goals.
C. Design Major Strategies:
Design major strategies (or programmes) to address issues/goals.
D. Update/Design Mission, Vision & Values:
Design/update vision, mission and values statements.
E. Establish Action Plans:
Establish action plans (objectives, resource needs, roles and responsibilities for implementation).
F. Prepare Strategy Plan Document:
Record issues, goals, strategies/programmes, updated mission and vision, and action plans in
a strategic plan document, and SWOT analysis.
G. Develop Annual Operating Plan Document:
Develop the yearly operating plan document (from year one of the multi-year strategic plan)
H. Allocate Budget for First Year:
Develop and authorise budget for year one (allocation of funds needed to fund year one).
I. Conduct First Year Operations:
Conduct the first year operations.
J. Get Feedback on Evaluation:
Monitor, review, evaluate and update the strategic plan document for feedback purposes
3. ALIGNMENT MODEL:
The overall purpose of the model is to ensure strong alignment among the organization’s mission
and its resources to effectively operate the organization. This model is useful for organizations that
need to fine-tune strategies or find out why they are not working. An organization might also choose
this model if it is experiencing a large number of issues around internal efficiencies. Overall steps
include:
Step One:
The planning group outlines the organization’s mission, programmes, resources and needed
support.
Step Two:
Identify what’s working well and what needs adjustment.
Step Three:
Identify how these adjustments should be made.
Step Four:
Include the adjustments as strategies in the strategic plan.
4. SCENARIO PLANNING MODEL:

This approach might be used in conjunction with other models to ensure planners truly undertake
strategic thinking. The model may be useful, particularly in identifying strategic issues and goals.
A. External Forces Impact Changes:
Select several external forces and imagine related changes which might influence the organization,
e.g., change in regulations, demographic changes, etc. Scanning the newspaper for key headlines
often suggests potential changes that might effect the organization.
B. Discuss Three Future Scenarios for each Change in a Force:
For each change in a force, discuss three different future organizational scenarios (including
best case, worst case, and OK/reasonable case) which might arise with the organization as a result
of each change. Reviewing the worst-case scenario often provokes strong motivation to change the
organization.
C. Suggest Potential Strategies in each Three Scenarios:
Suggest what the organization might do, or potential strategies, in each of the three scenarios
to respond to each change.
D. Frame Common Strategies to respond to External Changes:
Planners soon detect common considerations or strategies that must be addressed to respond
to possible external changes.
E. Select most likely External Changes to effect Organization for a Specific Time
Frame:
Select the most likely external changes to effect the organization, e.g., over the next three to five
years, and identify the most reasonable strategies the organization can undertake to respond to the
change.
5. ORGANIC OR SELF-ORGANISING STRATEGIC PLANNING MODEL:

A. Traditional Planning Processes are Mechanistic:
Traditional strategic planning processes are sometimes considered “mechanistic” or “linear,” i.e.,
they’re rather general-to-specific or cause-and-effect in nature. For example, the processes often
begin by conducting a broad assessment of the external and internal environments of the organization,
conducting a strategic analysis (“SWOT” analysis), narrowing down to identifying and prioritising
issues, and then developing specific strategies to address the specific issues.
B. More Coherent and Realistic Planning is Organic Process:
Another view of planning is similar to the development of an organism, i.e., an “organic,” self-
organizing process. Self-organizing requires continual reference to common values, dialoguing around
these values, and continued shared reflection around the systems current processes.
Step One: Articulate Cultural Values of Orgnisation:
Clarify and articulate the organization’s cultural values. Use dialogue and story-building techniques.
Step Two: Articulate Group’s Vision:
Articulate the group’s vision for the organization. Use dialogue and story-boarding techniques.
Step Three: Continue to Update Processes to Align them with Vision:

On an ongoing basis, e.g., once every quarter, dialogue about what processes are needed to
arrive at the vision and what the group is going to do now about those processes.
Step Four: It is a Continous Process: Keep this at the Back of Mind:
Continually remind yourself and others that this type of naturalistic planning is never really “over
with,” and that, rather, the group needs to learn to conduct its own values clarification, dialogue/
reflection, and process updates.
Step Five: Be Patient with Processes:
Be very, very patient.
Step Six: Focus on Learning:
Focus on learning and less on method.
Step Seven: Think of Stakeholders:
Ask the group to reflect on how the organization will portray its strategic plans to stakeholders,
etc., who often expect the “mechanistic, linear” plan formats.
6. STRATEGIC THINKING AND PLANNING MODEL (STP):

A. STP is a Learned Practice:
The management of strategy development is typically described in terms of strategic planning
and analytical systems. Strategic thinking, however, is equally important. Getting to grips with a
strategic thinking and planning process is central to creating business advantage and mastering the
strategy challenge.
B. It is more Analytical Formal Process:
Strategic Thinking means getting a meeting of minds where collective creativity reveals novel,
innovative strategies to create sustainable business advantage; and to create possibilities for success
significantly different from those of the present. It is a divergent, creative, synergistic team effort.
Strategic Planning puts into operation the potential and possibilities developed through strategic
thinking. It is a much more analytical, conventional and formal process.
C. STP is Seven Stages Process:
The Strategic Thinking and Planning (STP) Model is a seven stages system to enable us to
create sustainable business advantage and accomplish our purpose and business objectives:
Stage 1: Current Situation Analysis.
Stage 2: Organizational History.
Stage 3: Clarifying and Ordering your Values.
Stage 4: The Power of Purpose … Crystallising Mission.
Stage 5: Commitment to a Clear Vision.
Stage 6: Writing Clear Strategic Goals.
Stage 7: Implementation … Tactical Planning.
D. Thinking Part of STP:

The thinking part of The STP model is less tangible (less visible) in early stages. It is emotional
strategy in action. Its purpose is to discover innovative, imaginative strategies to create business
advantage and successful futures for everyone.
E. Planning Part of STP is more Operational:
The planning part of the model is the more operational and practically oriented later stages. Its
purpose is to ‘tangible’ thinking process. It is more formal, conventional and analytical.
F. Strength of STP is in its Flexibility:
The strength of the STP Model is in its flexibility and the latitude it gives us to change it, update
it, and keep it dynamic and alive.
7. PEST ANALYSIS MODEL:

PEST analysis is concerned with the environmental influences on a business. The acronym
stands for the Political, Economic, Social and Technological issues that could affect the strategic
development of a business.
Identifying PEST influences is a useful way of summarising the external environment in which
a business operates. However, it must be followed up by consideration of how a business should
respond to these influences.
The table below shows some possible factors that could indicate important environmental influences
for a business under the PEST headings:
TABLE 7.1
Political Economic Social Technological

Environmental Economic growth (overall; Income distribution (change in Government spending on
regulation and by industry sector) distribution of disposable research
protection income;
Taxation Monetary policy (interest Demographics (age structure Government and industry
(corporate; rates) of the population; gender; focus on technological effort
consumer) family size and composition;
changing nature of
occupations)
International Government spending Labour/social mobility New discoveries and
trade regulation (overall level; specific development
spending priorities)
Employment Policy towards Lifestyle changes (e.g., Home
law unemployment (minimum working, single households) Speed of technology transfer
wage, unemployment
benefits, grants)
Government Taxation (impact on Attitudes to work and leisure Rates of technological

organisation / consumer disposable obsolescence
attitude income, incentives to invest
in capital equipment,
corporation tax rates)
Competition Exchange rates (effects on Education Energy use and costs
regulation demand by overseas
customers; effect on cost of
imported components)
Inflation (effect on costs and Fashions and fads Changes in material sciences
selling prices)
Stage of the business cycle Health and welfare Impact of changes in
(effect on short-term Information technology
business performance)
Economic “mood” - Living conditions (housing, Internet!
consumer confidence amenities, pollution)
1. Pest Analysis on a Human Resource Department:

While the PEST analysis is primarily aimed at looking at the external environment of an
organization, many human resource courses ask students to use the PEST analysis model to look
at their own function. In this context we need to imagine that the department (human resource) is an
organization in its own right and look outside. Factors to include in our analysis may include the
following:
 Political:
– What is the culture of the organization.
– How is the human resource function viewed by other functions?
– Who are the political champions of human resource (or its adversaries)?
– Shareholder views.
 Economic:
– What is the budgetary position of the department.
– Is more money available?
– Are our customers likely to spend more or less money on the services we offer?
– What is happening to the financial status of the organization.
– Interest rates.
– Inflation.
– Salary trends in the sector.
 Sociological:
– Other departmental attitudes to human resource.
– Population shifts (age profile).
– Education.
– Fads.
– Diversity.
– Immigration/emigration.
– Health.
– Living standards.
– Housing trends.
– Fashion and role models.
– Age profile.
– Attitudes to career.
 Technological:
– What changes may be coming our way?
– What new technology/systems.
– How do we record attendance, performance? how might this change?
– Use of and encourage home working?
– Communications technologies.
– Changes of technology that will increase/reduce the need for recruitment.
– Changes to Human Resource software.
 Legal
– What is happening in our sector that will impact what we do?
– Minimum wage,
– Working time,
– Labour laws,
– Child labour,
– Occupational/industrial Training, etc.
– What changes will impact the services of the organization
 Environmental
– Staff morale.
– Staff engagement.
– Need to reduce storage needs.
– Management attitudes (inside dept/function).
2. The Pest Analysis Tool:
A. PEST analysis is a useful tool for understanding the “big picture” of the environment, in which
you are operating, and the opportunities and threats that lie within it. By understanding the
environment in which you operate (external to your company or department), you can take
advantage of the opportunities and minimise the threats.
B. PEST analysis is a useful tool for understanding risks associated with market growth or
decline, and as such the position, potential and direction for a business or organization.
C. PEST analysis is often used as a generic ‘orientation’ tool, finding out where an organization
or product is in the context of what is happening outside that will at some point effect what is
happening inside an organization.
D. PEST analysis is a business measurement tool, looking at factors external to the organization.
It is often used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and
Threats analysis).
E. PEST analysis headings are a framework for reviewing a situation, and can also be used to
review a strategy or position, direction of a company, a marketing proposition or idea.
F. Completing a PEST analysis can be a simple or complex process. It all depends how thorough
you need to be. It is a good subject for workshop sessions, as undertaking this activity with
only one perspective (i.e., only one person’s views) can be time consuming and miss critical
factors.
G. Use PEST analysis for business and strategic planning, marketing planning, business and
product development and research reports.
H. The PEST template below includes sample questions or prompts, whose answers are can be
inserted into the relevant section of the table.
I. The questions are examples of discussion points, and should be altered depending on the
subject of the analysis, and how you want to use it.
J. Make up PEST questions and prompts to suit the issue being analysed and the situation (i.e.,
the people doing the work and the expectations of them).
K. It is important to clearly identify the subject of a PEST analysis (that is a clear goal or output
requirement), because an analysis of this type is multi faceted in relation to a particular
business unit or proposition - if you dilute the focus you will produce an unclear picture - so be
clear about the situation and perspective that you use PEST to analyze.
L. A market is defined by what is addressing it, be it a product, company, organization, brand,
business unit, proposition, idea, etc., so be clear about how we define the market being
analysed, particularly if we use PEST analysis in workshops, team exercises or as a delegated
task. The PEST subject should be a clear definition of the market being addressed, which might
be from any of the following standpoints:
 A company looking at its market.
 A product looking at its market.
 A brand in relation to its market.
 A local business unit or function in a business.
 A strategic option, such as entering a new market or launching a new product.
 A potential acquisition.
 A potential partnership.
 An investment opportunity.
Strategic planning determines where an organization is going over the next year or
more, how it’s going to get there and how it’ll know if it got there or not. The focus of
a strategic plan is usually on the entire organization, while the focus of a business plan
is usually on a particular product, service or programme.
There are a variety of perspectives, models and approaches used in strategic planning.
The way that a strategic plan is developed depends on the nature of the organization’s
leadership, culture of the organization, complexity of the organization’s environment,
size of the organization, expertise of planners, etc.
Goals-based planning is probably the most common and starts with focus on the
organization’s mission (and vision and/or values), goals to work toward the mission,
strategies to achieve the goals, and action planning (who will do what and by when).
Issues-based strategic planning often starts by examining issues facing the organization,
strategies to address those issues, and action plans.
Organic strategic planning might start by articulating the organization’s vision and
values and then action plans to achieve the vision while adhering to those values. Some
planners prefer a particular approach to planning, e.g., appreciative inquiry.
Some plans are scoped to one year, many to three years, and some to five to ten years
into the future. Some plans include only top-level information and no action plans. Some
plans are five to eight pages long, while others can be considerably longer.
STP is more realistic and flexible model which is based on strategic thinking and
analysis.
LEVEL THREE
IMPLEMENTING STRATEGIC PLANNING
1. KAJORI FASHIONS & GARMENTS LTD: CASE STUDY:

Kajori Fashions & Garments Ltd was established at Kolkata in 2002 with manufacturing facilities
at Midnapur and 24 Parganas. The company specializes in making ladies and gents fashion and
business outfits and is very popular in customizing ladies products such as Business suits, Ensembles,
Jackets, Blazers, Dresses, Skirts, Trousers, knitted or crocheted shirts. It also customizes men’s
business suits. Seventy percent of its products in both the segments are exported and the remaining
is sold domestically. As on date, it has outsourced employee strength of six hundred for both the
factories. It has need based permanent total staff strength of 150 distributed among head office,
factories and sales and marketing offices in West Bengal. Its sales turnover for the current financial
year is INR 1800 crores.
Partha Kumar Mukherjee, Chairman and Managing Director of Kajori Fashions recently appointed
Abhijit Guha as the President – Human Resource and Strategic Planning. Mukherjee’s brief to Abhijit
was focussed and clear “ Every employee of Kajori Fashions must know that he has to contribute
to the growth of the company in terms of per capita output and return on its investment in human
capital. Each one of them must not only clearly understand the objectives behind strategic planning
but also align his objectives with company’s overall goals to create wealth and not only generate
profits” he told Abhijit “ make it simple for them to understand and then internalise”.
Abhijit followed a simple principle while working on the agenda given by Partha. “Avoid using
jargons. Use simple and easy words. Translate the blueprint in the language which employees
understand. Help them to internalise the basics of the issues in strategic planning and ensure that
they go through the least pain in changing and adapting to a new cultural, social and environmental
changes in their organizational life” he told himself. He mentally prepared his department and organised
briefing sessions for them during next fifteen days. He asked each one of his officers to pick and
choose and master the subject and give presentation so as to help each employee to internalise the
issues.
Eight senior officers of Abhijit offered themselves to pick up subjects in strategic planning
process implementation and internalisation for the next six months:
1. SWOT ANALYSIS: BIJOY CHAKRAVARTY
Strengths Weaknesses
1. 70% Exports 1. Over dependent on borrowings
2. Basis for strong management team Insufficient cash resources
3. Customers: China, USA, Brazil, 2. Board of Directors is narrow
Singapore,Hongkong & Bangkok 3. Lack of awareness amongst
4. Wide range of products prospective customers
5. Located near major centres of 4. Need modernise Midnapore
excellence factory
6. Very focussed management/staff 5. Absence of strong sales/
7. Well-rounded and managed marketing head and expertise
business 6. Overdependence on few key staff
7. Emerging new technologies may
move market in new directions
Threats Opportunities
1. Major player may enter targeted 1. Market segment is poised for
market segment rapid growth
2. New technology may make 2. Export markets offer great
products obsolescent potential
3. Distribution channels seeking new markets 3. Economic slowdown could reduce
4. Euro/Yen may move against $ products demand
5. Market may become price sensitive 4. Scope to diversify into related
6. Market segment’s growth could market segments
attract major competition
2. MISSION AND VISION STATEMENTS: BANKIM DUTTA:

A. Mission:
The mission of the Kajori group is to represent the most refined qualities of Indian and Western
“Art of Living” around the world. Kajori must continue to be synonymous with both elegance and
creativity. Our products, and the cultural values they embody, blend tradition and innovation, and
kindle dream and fantasy.
B. Vision:
Kajori’s vision is to provide all its customers with products and services that offer the best
overall value in terms of price, performance and delivery. To become world class organisation in 3-
4 years, Kajori shall:
1. Listen to its customers to understand their service and product needs.
2. Continually improve its range of services and products.
3. Ensure that its product specifications remain fully competitive in any market in which it operates.
4. Ensure that all goods sold fully meet its customers’ expectations.
5. Comply with all statutory requirements and requirements of our quality management system.
6. Review the objectives continually and change wherever and whenever required.
3. CORPORATE VALUES: BIPASHA SEN:
In view of the mission, five priorities reflect the fundamental values shared by all group
stakeholders:
1. Be creative and innovate.
2. Aim for product excellence.
3. Bolster the image of our brands with passionate determination.
4. Act as entrepreneurs.
5. Strive to be the best in all we do.
4. LONG-TERM BUSINESS OBJECTIVES: SUDIPTO DAS:

1. To expand the business aggressively and offer above-average returns to shareholders.
2. To become the leading, innovative systems company within the market segments.
5. KEY STRATEGIES: SUDENSHU BHATTACHARYA:

A. Critical Key Strategies
1. Accelerate product launches by strengthening R&D team.
2. Extend links with key technology centres.
3. Raise additional venture capital.
4. Expand senior management team in sales/marketing.
5. Recruit non-executive directors.
6. Strengthen human resources function and introduce share options for staff.
7. Appoint advisers for intellectual property and finance.
8. Seek new market segments/applications for products.
B. Non-Critical Key Strategies:
1. Locate new premises adjacent to xxx.
2. Commission assessments of key markets.
3. Start participating in trade shows and missions.
4. Develop overseas market entry plans.
5. Pursue strategic alliances with complementary players.
6. Strengthen web presence and promote.
7. Seek new market segments/applications for products.
6. MAJOR GOALS: 2-3 YEARS: HIMANSHU GUPTA:

1. Achieve sales of INR 2500 crores by 200X.
2. Report annualised profits of INR 600 crores in 200X.
3. Secure 35% of the 80 % market segment by 200X.
4. Become largest supplier by 200X.
5. Undertake an IPO by 200X.
6. Employ 500 people including 53% technically qualified by 200X.
7. Have sales offices and agents in 12 key markets before 200X.
7. STRATEGIC ACTION PROGRAMMES: GEETA ROY:
The following strategic action programmes will be implemented:
1. CEO: Prepare comprehensive business plan and develop contacts to raise Venture Capital
within 6-9 months.
2. President Human Resource: Recruit Marketing Director and other key staff for marketing/
sales & Director-Modernization within 3-4 months.
3. Technical Director: Review R&D resources and scope for technical alliances - expand with
arrival of Venture Capital.
4. Board: Expand Board of Directors to include further independent financial, technical and
industrial expertise prior to seeking Venture Capital.
5. CEO & CFO: Locate emerging markets in Asia, Europe and South Arica
6. President Human Resource: Transform Human Resource into business and revenue generation
function.
8. MONITORING, FEEDBACK & HELPLINE: PRASHANT NANDI:

1. Helping People Understand the Plan:
A. Part of keeping the plan alive and relevant involves executives helping employees understand
what the plan actually means in real life.
B. By both asking employees, and sharing the CEO’s ideas, about the meaning of the plan as
applied to real every day decisions, employees clarify their own understanding, and also realize
that the CEO is serious about implementation.
2. Encourage Employees to Evaluate:
A. The strategic plan can, and should be used by those in the organization to evaluate the degree
to which the organization is sticking to the plan, and/or achieving the goals and objectives
contained in it.
B. Encourage employees to evaluate whether any specific action of interest is consistent with the
values of the organization, or the strategic goals in the plan.
C. Not only is this very crucial and practical evaluative process designed to help keep things on
track, but, once again, it tells employees that the CEO is serious about the plan.
3. Cascade Down:
A. Make sure that all the divisions and sub-units, and employees are making use of the strategic
plan to formulate their own goals and objectives in the shorter term.
B. Get the strategic plan’s goals and objectives to cascade downward, and make sure everyone
understands that what they are to accomplish is defined by the strategic plan.
9. BEST PRACTICES IN STRATEGIC PLANNING: ABHIJIT GUHA:

1. Pick up strategic planning team.
2. Schedule an off-site strategic planning meeting.
3. Get commitment from strategic planning team.
4. Set goals that lead.
5. Don’t put the strategic plan in a binder on a shelf
6. The strategic planning team writes the plan.
7. Commit to the plan.
8. Review the plan regularly.
10. OVERALL ACCOUNTABILITY: PARTHA KUMAR MUKHERJEE, CHAIRMAN AND
MANAGING DIRECTOR:
The organization must be held accountable to the intended results of the plan. To that end, the
following questions must be asked and answered regularly, and include appropriate accountability
based on the answers:
A. Are people’s actions consistent with the documented mission?

B. Has there been measurable progress toward the established goals?
C. Are the priority projects being executed as documented in the plan?
D. Have we stopped or appropriately adjusted the non-”Must Do” projects?
E. Are the priorities established in the plan still valid?
F. Can every one in the organization talk about key elements of the plan?
G. Can individuals express the mission, describe a strategic goal, or identify a core project?
Strategic planning implementation is a team work. Human Resource has to be a strategic
business partner in implementing Strategic planning.
LEVEL FOUR
STRATEGIC PLANNING IN ACTION
DABBAWALAS: CASE STUDY:
1. History of Origin:
Dabbawala is a person in Mumbai (Bombay), India, whose job is carrying and delivering freshly
made food from home in lunch boxes to office workers. The word “Dabbawala” is literally translated
as “one who carries a box”; “Dabba” means a box (usually a cylindrical aluminum container), while
“wala” is a term of reference to the preceding word (literally translated, the closest meaning would
be “tiffin-man”). Though the profession seems to be simple, it is actually a highly specialised trade
that is over a century old and has become integral to Mumbai’s culture.
The Dabbawalas originated when India was under British rule: many British people who came
to the colony didn’t like the local food, so a service was set up to bring lunch to these people in their
workplace straight from their home. Nowadays, Indian business men are the main customers for the
Dabbawalas, and the services provided are cooking as well as delivery.
“We started this profession in 1890 and since then, we have been continuously supplying
dabbas in nearly all regions of Mumbai regardless of any situation,” says Mr. Raghunath Medge,
President of the Nutan Mumbai Tiffin Box Supply Charity Trust. He is the third generation of the family
involved in this work since then. The trust consists of over 5000 people, working in nearly 800 teams,
striving hard to carry out flawless journey of each ‘dabba’ from home to the particular person daily.
2. Dabba System: Mumbai’s Cultural Heritage:

Mumbai is a densely populated city with a huge flow of traffic. Because of this, lengthy commutes
to work places are common, with many workers travelling by train. Instead of going home for lunch
or paying for a meal in a café, many office workers have a cooked meal sent from home, through
a carrier who delivers it to them in lunch boxes and then having the lunch boxes collected and re-
sent the next day. This is usually done for a monthly fee.
3. Collecting Dabbas: Managing by Wandering Around:

The Dabbawalas have a complex association and hierarchy across the city. A collecting
dabbawala, usually on foot or a bicycle collects dabbas from homes or, more often, from the dabba
makers (who cook the food). When asked about using some or the other vehicle for collection and
delivery of the dabbas, Medge said that using some vehicle will add to the carrying cost of each
dabba mainly. Adding further he said that they were doing their part of protecting the environment by
not using any of the fuel driven vehicle apart from the train. “We do not like using any of the vehicles.
First of all it is a small practice to protect Mother Earth and secondly, it is cumbersome to use any
of them in Mumbai’s heavy traffic, and once on cycle or foot, you don’t have any traffic rules to
abide!”, he continued jokingly.
4. A Day in the Life of Dabbawalas: Complex Delivery System:

7.00 a.m: The Dabbawalas collect the dabba to transport across Mumbai. This Dabba contains
a typical Indian lunch - curry, vegetables, and a type of bread called Roti.
8.00 a.m: The Dabbawalas often carry the Dabbas on their heads, walk to the dabbawallahs’
meeting point, i.e., the local train station for the start of the Dabba’s journey.
10.00 a.m: The dabbawalahs lift a crate of Dabbas onto a train. The crates are very heavy and
one can only imagine that how a dabbawalah carries it on his head!
11.00 a.m: After a really cramped train journey, the Dabbawalahs shift their loads on to a cart.
Each cart holds around 200 Dabbas. These carts are then pushed across the city ready for Dabba
delivery.
1.00 p.m: After a lot of pushing and pulling, a loaded cart through the hot streets of Mumbai, the
dabba reaches its destination and is handed over to the recipient.
2.00 p.m: The food is gobbled up by the Dabba’s recipient, while dabbawalah sometimes grab
a quick tea-break outside in blistering heat. Once the food is finished, the Dabba is handed back to
the waiting dabbawalah.
2.45 p.m: The dabbawalah must now return the Dabba to where he picked it up in the morning.
He must repeat the process in reverse; there are no shortcuts for a Dabbawala.
5. Dedication and Hard Work: Hallmark of System:

Why such hard work and dedication to this extremely tiring job and that too for a meager pay?
Such question is answered in a very interesting and inspiring manner by Reghunath Medge. “We do
not think of anything that is related to money. We trust in God and believe that ‘Service to mankind
is service to God Himself’. Also, even passing the ‘ann’ (food), is a great privilege for us since it will
be consumed by a hard working person, working every day and night to keep up to the expectations
of his family.”
6. Is Education Must For Strategic Planning & Six Sigma? Ask Dabbawalas:
Majority of the dabbawalas are illiterate. So how did they manage to obtain and maintain the six
sigma status? “We have a very typical coding system. Since, a majority of us are not literate, we use
colours and the codes which our people can understand and decode. By the time, they are recruited
as full time dabbawalah, they have learnt everything so well, that seldom a mistake takes place,” puts
in Raghunath Medge. When asked about the selection and recruitment procedure, he continues by
saying, “We do not take any person as a future dabbawalah! Our only motive is to give the customer
full satisfaction, and hence, we cannot afford to take people who would not be dedicated to this
beautiful profession. We work throughout, even in the worst of situations and weather, with only the
public holidays and Sundays, so the person has to be carefully chosen. Often, the people are
recommended ones. They then undergo training for six months at a stretch. Also, he has to deposit
Rs. 70,000 so that, we have faith in him that he won’t run away as generally other people do in other
offices.”
Wasn’t there any situation or time when they could not deliver the dabbas or had lost majority
of them? To this he tries recalling and says, “I remember once that in 1973 or 1974, the local trains
did not work for around 22 days. That was the time when we experienced extreme difficulties. We
supplied the dabbas which were in nearby regions, but going to the far off regions was out of
questions. Also, we used to have a lot of customers in the mills situated in Lower Parel. But due to
some political reasons, they were closed, resulting into a major loss for us. But as I said earlier, we
have a firm belief in God. Not only did He open other paths for also, but using His powers, he just
changed the spelling. MILLS became MALLS! And due to that we again have a lot of customers
there,” Medge was smiling when he finished.
7. Strategic Planning Without Management Education and Human Resource Planning:
Is it Reality?
The six sigma rating which the Dabbawallas received by Forbes magazine precipitated a rush
of interest from management supply companies and business schools searching for the secrets of
its success. The rating means that the Dabbawalas have a 99.9 percent efficiency rate. To this Mr.
Medge gushes into saying, “We do not know much about it. But we are happy that they have taken
notice of all the work which we carry out. People in my organization do not understand much about
it. The day they start understanding it, this organization won’t work this smoothly. I know knowledge
is good, but I pray to God that please do not give us a huge amount of it, that it rottens the whole
business”.
8. Meeting With Prince Charles: A Matter of Pride

“We also like people visiting us from various institutes and company and we like it as well. But
the only limiting factor is time. We are mostly so busy that it is really very hard for us to take out
time and talk about everything.
Time reminds us of their episode with Prince Charles. Prince Charles had to adjust his schedule
accordingly, in order to meet the dabbawalah! Raghunath Medge has a vivid memory of it. “It was
a nice feeling, meeting him. The Prince had come to meet us all. And when he asked us to join his
wedding there, we were honoured and very glad,” he puts in, smiling.
Expansion of the network of Dabbawalas is limited; however, the extra revenue from associations
with the likes of Airtel, lectures and media operations goes to the Dabbawala Foundation, a social
security fund for the Dabbawalas and their families, as well as a means to buy new carts or bicycles.
9. Are Human Resource and Corporate Strategic Planners Listening?

Ending with one interesting story - one large shipping company from Europe came to study their
process, and travelled in the local train from Virar to Churchgate station to experience the action.
Finally, they asked, how is it that with all our technology, we manage to lose large shipments, but
here, with so simple process and technology, you achieve six-sigma.

1. Define Strategic Planning. What are the components of Strategic Planning?
2. Write short notes on the following:
(a) SWOT Analysis with examples.
(b) PEST Analysis.
(c) Risk Analysis.
(d) Scenario Planning.
(e) Goal and Grid Method.
3. What are the various models of Strategic Planning? Explain their major characteristics and working formula
in implementing Strategic Planning.
4. Critically examine the case study of ‘Kajori Fashions & Garments’. On the basis of this case study, frame
another case study in steel industry environment and work out a strategy to implement strategic planning.
5. Read the case study of Dabbawalas in level four of this chapter and answer the following questions:
(a) They are illiterate to semi-literate people doing an excellent business with a lot of business sense.
How have they managed to implement strategic planning?
(b) Nutan Mumbai Tiffin Box Supply Charity Trust- the association of Dabbawalas do not have Human
Resource department. They have no idea what is the meaning of Human Resource and what are its
function. This means to implement strategic planning, one does not require Human Resource people
and their support. Do you agree? Give reasons to support your answer.

Strategic Planning in Core Areas of Human Resource 277
t er
ap
h
STRATEGIC PLANNING
8
C
IN CORE AREAS OF
HUMAN RESOURCE
After completion of this chapter, the students will learn Strategic
HPH
planning in:
 Manpower Planning.
 Recruitment and Selection.
 Training and Development.
 Performance Management.
 Leadership Development.
 Team Building
 Industrial Relations.
 Compensation and Benefits
 Sexual Harassment at Workplace
CHAPTER EIGHT
STRATEGIC PLANNING IN CORE AREAS OF HUMAN

RESOURCES
LEVEL ONE: ESSENCE OF STRATEGIC PLANNING IN HUMAN

RESOURCE 279 – 281
LEVEL TWO: BASICS KNOWLEDGE OF STRATEGIC 282 – 285
PLANNING IN RECRUITMENT AND
SELECTION
LEVEL THREE: STEPS IN PLANNING STRATEGIC RECRUITMENT 286 – 295
AND SLECTION PROCESS
LEVEL FOUR: STRATEGIC PLANNING IN TRAINING 296 – 304
AND DEVELOPMENT
LEVEL FIVE: STRATEGIC PLANNING IN 305 – 314
PERFORMANCE MANAGEMENT
LEVEL SIX: STRATEGIC PLANNING IN 315 – 328
LEADERSHIP DEVELOPMENT
LEVEL SEVEN: STRATEGIC PLANNING IN TEAM BUILDING 329 – 336
LEVEL EIGHT: STRATEGIC PLANNING IN PREPARING STANDARD 337 – 381
OPERATING PROCEDURE (SOP) IN COMPENSATION
AND BENEFITS
360-DEGREE PERFORMANCE APPRAISAL SYSTEM
AND ITS LINKAGE TO COMPENSATION IN A PUBLIC
SECTOR UNDERTAKING (PSU)
LEVEL NINE: STRATEGIC PLANNING IN 382 – 394
INDUSTRIAL RELATIONS
LEVEL NINE A STRATEGIC PLANNING IN ACTION IN INDUSTRIAL
RELATIONS: STORY OF PUSHPA AND ANAND 395 – 401
LEVEL TEN STRATEGIC PLANNING IN MANAGEMENT 402 – 427
SEXUAL HARASSMENT AT WORKPLACE
LEVEL ONE
ESSENCE OF STRATEGIC PLANNING IN HUMAN RESOURCE
1. ESSENCE OF PLANNING: EXPECTATIONS MUST BE REALISTIC:

Planning in organizations is both the organizational process of creating and maintaining a plan;
and the psychological process of thinking about the activities required to create a desired goal on
some scale. As such, it is a fundamental property of intelligent behaviour. This thought process is
essential to the creation and refinement of a plan, or integration of it with other plans, that is, it
combines forecasting of developments with the preparation of scenarios of how to react to them.
A plan should be a realistic view of the expectations. Depending upon the activities, a plan can
be long range, intermediate range or short range. It is the framework within which it must operate.
For management seeking external support, the plan is the most important document and key to
growth. Preparation of a comprehensive plan will not guarantee success, but lack of a sound plan
will almost certainly ensure failure.
2. ESSENCE OF STRATEGIC PLANNING : IT MUST STRATEGISE CORPORATE

STRATEGIES:
Strategic planning is an organization’s process of defining its strategy, or direction, and making-
decisions on allocating its resources to pursue this strategy, including its capital and people. Various
business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths,
Weaknesses, Opportunities, and Threats) and PEST analysis (Political, Economic, Social, and
Technological analysis) or STEER analysis involving Socio-cultural, Technological, Economic,
Ecological, and Regulatory factors and EPISTEL (Environment, Political, Informatic, Social,
Technological, Economic and Legal)
Strategic planning is the formal consideration of an organization’s future course. All strategic
planning deals with at least one of three key questions:
3. “How do we excel?”
In many organizations, this is viewed as a process for determining where an organization is
going over the next year or more - typically 3 to 5 years, although some extend their vision to 20
years. In order to determine where it is going, the organization needs to know exactly where it stands,
then determine where it wants to go and how it will get there. The resulting document is called the
“strategic plan”. It is also true that strategic planning may be a tool for effectively plotting the direction
of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and
what issues will surface in the coming days in order to plan an organizational strategy. Therefore,
strategic innovation and tinkering with the ‘strategic plan’ have to be a cornerstone strategy for an
organization to survive the turbulent business climate.
3. ESSENCE OF STRATEGIC HUMAN RESOURCE PLANNING : IT MUST PREPARE

HUMAN RESOURCE FUNCTION TO ALLIGN ITS OBJECTIVES WITH CORPORATE
BUSINESS GOALS:
Strategic Human Resource Planning is a pattern of planned human resources deployments and
activities intended to enable an organization to achieve its goals. According to experts, there is no
single approach to developing a human resources strategy. This will vary from organization to
organization. However, here are the steps most commonly used in developing a human resource
strategy:
 Setting the strategic direction.
 Designing the human resource management system.
 Planning the total workforce.
 Generating the required human resources.
 Investing in human resource development and performance.
 Assessing and sustaining organizational competence and performance.
4. ESSENCE OF DEVELOPING MANPOWER PLANNING STRATEGIES: IT MUST ENSURE
ACHIEVABLE DEADLINES AND QUALITY OF DELIVERABLES:
The availability of adequately qualified manpower is one of the essential conditions of success
for any project or programme. Without qualified manpower no organization can be planned, built or
operated properly, and there can be no assurance of safety and reliability of power production. The
amount and qualification of manpower required for a successful programme are usually underestimated
and the resulting shortage of manpower is a limiting factor in the development and transfer of technology
in developing countries.
Strategic workforce planning is not limited to hiring and retaining talent, but anticipating future
manpower needs of an organization. In a dynamic business scenario, manpower planning is critical
to organizational growth and stability. It is integral to recruiting, retaining, retraining and redeployment
of talent. Linked to business needs of the organization, the process is much more complicated than
it seems, primarily because it also involves developing skills and competencies of existing employees
to meet market demands which can change with time. Having a contingent plan in place in case of
any eventuality (talent shortage) is also critical to the process. Future manpower planning is directly
linked to the strategic business plans of an organisation. The estimation on manpower and budgets
are governed by customers’ demands.
Ashwin Thacker, Managing Director, Flamingo Pharmaceuticals, states, “Business needs
are achieved from effective management of materials, machines, money and manpower. Manpower
needs, if planned properly, in terms of profile required, numbers, time and place, will give the company
mileage over competitors in terms of consistency in output. Effective human resources planning give
optimal productivity in terms of timeliness and quality of deliverables.”
It will not only improve people competency, but will also ensure that people grow with the
company. This helps arrest the attrition rate. An organisation set on the growth path needs competent
people to achieve its objectives. And finding the right human resources is not an easy task. “You
need educated, skilled manpower for sales, product management, research and development,
production, etc.
SIMPLY SPEAKING…
Planning in organizations is both the organizational process of creating and maintaining
a plan; and the psychological process of thinking about the activities required to create a
desired goal on some scale.
Strategic planning is the formal consideration of an organization’s future course. All
strategic planning deals with at least one of three key questions:
3. “How do we excel?”
LEVEL TWO
BASICS KNOWLEDGE OF STRATEGIC PLANNING IN

RECRUITMENT AND SELECTION
A. DEFINING RECRUITMENT AND SELECTION AS A PROCESS:

1. Recruitment is the process of attracting, assessing, selecting and employing people to carry
out the work activities required by a company or an organisation.
2. Edwin B. Flippo defines “Recruitment as the process of searching the candidates for
employment and stimulating them to apply for jobs in the organization. “Recruitment refers to the
attempts of getting interested applicants and creating a pool of prospective employees so that, the
management can select the right person for the right job from this pool. Thus, recruitment is a positive
process.
3. Selection, better known as a process of rejection, selection involves a series of steps by
which the recruited candidates are screened for choosing the most suitable persons for the vacant
posts. It leads to employment of persons who possesses the ability and qualifications to perform the
job. Selection is a process of “picking the sheep from goat”. Selection is a negative process because
it aims at rejecting the unsuitable applicants.
B. BASIC OBJECTIVES OF PLANNING IN RECRUITMENT AND SELECTION:

1. Assisting to ensure the best person is recruited for the position;
2. Considering the needs of the local area and the organization;
3. Efficient use of the time of selection panel members;
4. Increasing the success of attracting suitable applicants.
C. RECRUITMENT PLANNING HELPS A HUMAN RESOURCE MANAGER TO CONSIDER
PROCESS AND STRATEGY TO:
1. Market the benefits of becoming an employee of the preferred organization.
2. Identify and communicate the organization’s uniqueness to potential applicants.
3. Create a ‘high’ performing’ employee profiles.
4. Utilise innovative “talent” sourcing methods
5. Recruit internationally.
6. Maintain consistency and fair treatment of all applicants.
7. Highlight the work area strengths.
8. Use appropriate applicant assessment methods.
9. Evaluate the selection practices in an effort to ensure continuous improvement of the recruitment
and selection practices.
10. Investigate advanced techniques of professional budgeting in line with managing and forecasting.
11. Understand how linking budget control of human resource and effective manpower planning will
lead to organizational success.
12. Understand the link between organizational finance and human resource budgets.
13. Identify the key components and cost factors in a human resource budget.
14. Learn how to build, monitor and control a human resource budget.
15. Understand the link between a successful business strategy and an effective manpower plan.
16. Investigate how manpower planning can be strategically integrated into organization and
business objectives.
17. Learn a rigorous methodology for preparing and maintaining a manpower plan.
18. Develop effective manpower plans linked to organizational objectives.
19. Accurately forecast manpower requirements.
20. Explore the effects of localisation labour legislation on an organization’s manpower planning.
D. CONTRIBUTION OF STRATEGIC PLANNING IN RECRUITMENT PROCESS:
1. Recruitment is Expensive:
Recruitment can be expensive, but so too is the appointment of an employee who is inadequately
qualified, fails to perform well or leaves the organisation before he or she has been able to make
a significant contribution.
2. Effective Recruitment is vital to meet Organizational Goals:
Effective recruitment processes are vital in ensuring that an organisation has the people it
needs to implement its strategy and meet its objectives.
3. Careful Investment in Recruitment helpful to get Right Person:
The time and effort invested in planning the process of recruitment carefully can help to get the
right person for the job, reduce labour turnover and enhance competitive advantage.
4. Proessionally and carefully worked out Recruitment Process builds Organization’s
Image to attract People:
Recruitment and selection processes affect the organization’s image as an employer and, in
turn, its ability to attract qualified people. It can also enhance the presentation of the organization
as the “preferred employer”, so it is important to ensure that all candidates experience the
process as professional, well planned and efficient.
5. A Well-Planned Recruitment Process minimise possible and potential delays:
A recruitment plan ensures a proactive, strategic approach that reflects the principles identified
in the policy and ensures a transparent and objective process. A well, planned process
increases the quality of the recruitment process and can minimise the risk of potential delays.
E. WHY STRATEGIC PLANNING PROCESS IS ESSENTIAL?
1. Most of the successful tactics for diversified recruitment are identified and implemented during
the planning stage. Conversely, failure to cover key issues in planning can rarely be fixed later
in the recruitment process.
2. In the early recruitment planning stages, we need to consider:
A. Strategic versus operational considerations.
B. Search issues and understanding of target groups.
C. Effective composition of the selection committee.
D. Casting the dissemination net widely.

E. Recruitment budget.
F. The recruitment timetable.
F. STRATEGIC VS. OPERATIONAL CONSIDERATIONS:
Up to this point, attention has focussed solely on the vacancy to be filled, defining the role and
selection criteria. However, the first step in planning the recruitment is to consider broader, longer-
term strategic issues for the organization. For example:
1. Is this a work area that should be built up over a period, remain static in staffing or be reduced?
2. Should the opportunity be restricted to recruiting that position or extended to include other skill
areas that will become higher priority in the years ahead?
3. Is it necessary to recruit externally or does it make more sense to transfer/redeploy an existing
staff member (e.g. to provide career development or to provide greater job security)?
4. Is there a promising developing country national who would benefit from transferring to the new
role?
SIMPLY SPEAKING…
1. Recruitment is the process of attracting, assessing, selecting and employing people to
carry out the work activities required by a company or an organisation.
2. Selection involves a series of steps by which the recruited candidates are screened for
choosing the most suitable persons for the vacant posts. It leads to employment of
persons who possesses the ability and qualifications to perform the job. Selection is a
process of “picking the sheep from goat”. Selection is a negative process because it
aims at rejecting the unsuitable applicants.
3. A recruitment plan ensures a proactive, strategic approach that reflects the principles
identified in the policy and ensures a transparent and objective process. A well-planned
process increases the quality of the recruitment process and can minimise the risk of
potential delays.
CASE OF MEENAKSHI DESHMUKH: CASE STUDY FOR

PRACTICE
Meenakshi Deshmukh, an MBA in Marketing, from a renowned Mumbai management institute,
received an interview call from a private sector bank for the post of Relationship Manager for
appointment in its Phone Banking division located at Nashik. The job profile attracted her which
consisted of selling the bank’s investment products and the select customers were those who had
made huge investments in the bank and its products. She was also expected to attract new and
potential customers.
Meenakshi was excited. She thoroughly studied bank’s balance sheet for the previous three
years. She requested her friend Sujata to help her in practicing mock interview. She rehearsed and
re-rehearsed all possible questions which the interviewers may ask. She ensured that she does not
fumble during the interview. She was all set for attending the interview the next day at 10.00 a.m.
The interview started two hours behind schedule. Meenakshi had to wait for more than three
hours to take her turn. She was getting nervous. The receptionist refused to share the reasons of
the delay when Meenakshi approached her. Finally, she was called in.
The interview hall was huge. The seven interview panel members were seated in a corner. She
was asked to be seated. She greeted all of them before she took her seat. The chair gave her jerks
when she tried to settle down. The panel members seemed to be friendly and approachable. She
waited for the volley of questions.
A long silence followed. Meenakshi tried to get into conversation with them by showing her
certificate. Nobody seemed to be interested. “These have no value, these are not the proof of your
capabilities and abilities to handle the stress of the job in case you get selected”, one of them broke
the silence. Meenakshi tried to smile in response but she felt like hitting him with a paper weight lying
on the table.
They asked her a barrage of questions most of which were not relevant to the job and were
sarcastic and cynical. She was asked to solve a situational case. One of them asked when she is
likely to get married. The other panel member asked her whether she has any boy friend and whether
she was going steady with him. Another panel member asked her if she would like to be a budding
Bollywood actor, he could help her. She was then put through imaginative situations and take hardcore
decisions. The panel memebrs asked her if she had any question for them. Meenakshi had prepared
the questions but she was completely exhausted and wanted to leave the room. She tried to smile
and said that she had no questions for them.
The panel members assured Meenakshi that they would get back to her soon. She thanked them
and left the room in disgust.
QUESTIONS FOR PRACTICE:

1. What steps would you have taken to make the interview meaningful and effective?
2. What strategic planning is required to conduct an interview?
3. Interviewing is an art. How does one learn this art?
4. What kind of interview do you think Meenakshi had to face?
5. Why was the attitude of the panel members negative? If you are panel member, how would you
conduct the interview with Meenakshi?
6. Discuss the various other kinds of interviews which the panel members could have used while
interviewing Meenakshi?
LEVEL THREE
STEPS IN PLANNING STRATEGIC RECRUITMENT AND

SELECTION PROCESS
1. POSITION IS WELL DEFINED:

A. The decision to undertake a recruitment process should begin with an analysis of the position.
That is called position design which is a vital part of the recruitment planning process.
B. It ensures that the position is well defined, that the duties and key performance indicators are
clear and that the position is contributing to the strategic direction of the organization.
2. POSITION DESIGN FOLLOWS WORKFORCE PLANNING AND INCLUDES:
A. Developing a workforce plan.
B. Seeking approval to recruit.
C. Job Analysis.
D. Writing a position description/profile.
E. Position title.
F. Job evaluation and classification.
3. WORKFORCE PLANNING IS READY FOR REFERENCE:
Workforce planning information is beneficial in the process of developing a workforce plan. It
involves achieving our desired profile through:
A. Forecasting future needs for employees in different roles.
B. Predicting the availability of such employees.
C. Developing strategies to match supply with demand.
4. POSITION/VACANCY IS IDENTIFIED AS SHOWN IN THE ORGANISATION CHART OF
CONCERNED DEPARTMENT:
Health of the department is required to submit the organization chart of his department and
identify each vacancy or position vacant therein.
5. APPROVAL TO RECRUIT IS SOUGHT:

1. A clear understanding of the need for the position.
2. The key role of the position.
3. How the position fits into the existing structure.
4. The alternatives considered by the manager.
5. Agreed workforce planning priorities/needs are identified.
6. Budget implications – the studied and analyzed
6. JOB ANALYSIS IS DONE:
1. Job analysis involves systematic investigation of a job while using variety of methods to
determine essential duties, tasks and responsibilities of a position.
2. Job analysis is crucial to the identification of relevant skills and competencies. It involves
obtaining objective and verifiable information about the actual requirements of a job, and the
skills and competencies required to meet the organizational needs.
3. Job analysis facilitates accurate recruitment and selection practices, sets standards for
performance appraisals, appropriate classification reclassification of positions.
4. Comparing the skills possessed by employees with the results of job analysis can greatly
assist in workforce planning strategies and restructuring or redesigning jobs to reflect the
requirements of the organization.
7. ROLE PROFILE IS WRITTEN:
A. The role profile is a key document in the process as it provides a clear picture of the position
to the members of the selection panel and to the potential candidates. It has to accurately reflect
the nature of the role and the required skills, knowledge and attributes necessary for successful
performance in the role.
B. It should also identify core relationships such as client groups that the appointee may need to
establish and maintain.
8. POSITIONS ARE EVALUATED:
A. Job evaluation is the process used to measure the relative job worth of a position within an
organisation. It focuses on actual requirements of the position, not on a person or his performance
and measures the content/work value and not the volume of work.
B. The work value of the position is dependent on a range of factors including the experience, skills
and training required to perform the duties and responsibilities of the position.
9. APPROVAL FOR REMUNERATION IS SOUGHT:
A. The applicable remuneration outlines the salary levels for the blue and white collared employees.
B. Gaining approval to negotiate the classification level (increment step) or any other special
remuneration arrangements prior to commencing negotiations will ensure that the appointment
process is completed swiftly and effectively.
10. EQUAL OPPORTUNITY AND EQUAL PAY FOR EQUAL WORK IS ENSURED:
A. Recruitment and selection processes will be conducted on the basis of fair and equitable
treatment of all applicants and equal pay for equal work.
B. An organisation’s “Equal Opportunity Policy” and all other equity policies and principles apply
to the selection processes.
11. ADVERTISEMENT/DATABASE/CONSULTANTS ARE TAKEN CARE OF:
A. Selecting the most appropriate means of advertising and creating a suitable advertisement to
attract the widest range of applicants is covered in the organisation’s selection strategy.
Alternatively, human resource can utilise the services of recruitment consultants and use their
database for recruiting or online database by service providers.
B. The content and wording of the advertisement plays an important role in attracting suitable
applicants. Human Resource liaises with the organization’s preferred advertising agency.
C. There are specific close off times for each press publication that the organization does not have
any control over. At times the advertisement may miss the current week’s paper and will need
to be advertised in the following week’s paper.
D. Human resource is aware of deadlines for advertising and can provide organisation with
appropriate advertising close off dates.
12. APPLICATIONS AND ENQUIRIES ARE RECEIVED:
A. All efforts should be made to promptly and professionally respond to enquiries from potential
applicants throughout the selection process.
B. Every effort should be made to inform candidates of timelines during process and to provide
notification of details as soon as practical (e.g. - meeting dates/ times, travel and accommodation
arrangements, participation in assessment processes, etc).
C. It is particularly important to inform the applicant promptly if a delay occurs in the process.
D. All applications lodged should be acknowledged through email, letter or phone within a reasonable
time frame.
E. Prompt acknowledgement provides a quality service, portrays a professional image and can
minimise the number of enquiries received.
13. PROCESSING OF APPLICATIONS IS COMPLETED:
A. Ensuring that the selection and recruitment process is administered effectively and efficiently
is essential to the success of the process.
B. The administrator should discuss any special arrangements with the selection panel, such as
whether they prefer electronic or hard copies of the applications to be forwarded to the panel
14. DUE DILIGENCE IN SHORTLISTING THE APPLICANTS IS IN PLACE:
Shortlisiting is the process to determine which applicants prima facie meet the selection criteria
and will proceed to the next section of the selection strategy (typically assessment or interview).
Panel members involved in shortlisiting will be provided with all the relevant information about the
selection process:
A. Recruitment and selection policy and equal opportunity information.
B. Recruitment plan including search plan and selection strategy.
1. Position description and advertisement.
2. Selection grid, if required.
3. Copy of all applications or access to all available applicant information.
C. Applicants who prima facie meet all of the essential criteria should be short listed. The panel
will decide upon strategies to shortlist a reasonable number of applicants to interview based on
the degree to which the applicants meet the criteria and the weighing of each criteria if a large
pool of applicants is obtained.
D. There may be a necessity to undertake a second shortlisiting prior to going to interview if an
assessment centre has been utilised as a selection strategy. The panel may use the information
gained from the assessments to further shortlist.
E. It is particularly useful to undertake a further shortlist in situations where there are a large
number of applicants who prima facie meet the selection criteria and there are large number of
applicants to be interviewed.
15. PLANNING OF INTERVIEW PROCESS IS COMPLETED:

A. There are a number of different ways of conducting an interview and the technique chosen
enables the panel to gain the most valuable information about the applicant in the most efficient
way.
B. An organization uses a selection panel to conduct interviews with members selected on their
relevant expertise as it relates to the position advertised.
C. Scheduling the interviews in terms of the dates, time and the venue should be planned way
ahead to give sufficient time to the shortlisted candidates to make it convenient for themselves
to attend the interviews.
16. PLANNING THE METHODS OF INTERVIEW IS DECIDED:
There are a number of different ways of conducting an interview and the technique chosen
enables the panel to gain the most valuable information about the applicant in the most efficient way.
1. Question and answer or ‘patterned’ – Quite a basic interview and useful if time resources are
limited.
2. Conversational or ‘non-directive’ – Provides the applicant with most of the speaking time while
the panel listens to the answers with minimal interruption and therefore, does not influence the
applicant’s answers.
3. Structured – The panel, prior to interviews, determine the agenda for the session, the interview
questions, and determine each panel member’s responsibility.
4. Behavioural – A type of structured interview that has questions specifically targeted at gaining
information about the applicants experience and skills by them providing real examples of past
experiences.
5. Walk-in Interviews: to save time and to get wider response.
17. PLANNING THE REFERENCE CHECK IS IN THE LOOP:
A. References are very informative in the recruitment process and it is important to undertake a
thorough checking of all potential applicants to gain a better insight into their capabilities.
B. Applicants can nominate referees who can account for their current skills and attributes
relevant to the position. Referees could include members of the selection panel in which case
they should declare this at the beginning of the recruitment process. If all of a particular
applicant’s referees are on the selection panel, a request for a non-panel additional referee from
the applicant is necessary.
C. Applicants must be informed that the panel is seeking information from their referees, either
verbally or through phone or at interview) and/or through written correspondence.
18. CONSENSUS DECISION TO SELECT AND APPOINT PEOPLE IS IN PLACE:
A. Each person independently decides an order of merit on the basis of all selected information.
B. Each panel member then explains his or her decision using evidence or back up opinions.
C. Panel members should not just agree automatically with the most vocal or forceful panel
member.
D. Differences of opinion should be used for a more thorough consideration of all information.
E. Members should avoid arguing as what is ‘right’ is the collective judgement of the group.
F. Panel members should not change their minds just to avoid conflict and to reach agreement,
but should thoroughly discuss the reasons for the disagreement. If an impasse occurs, the
panel should look for the most acceptable alternative for both parties.
19. SYSTEM OF INFORMING APPLICANTS THE FINAL OUTCOME OF INTERVIEW
IS READY:
A. All applicants should be communicated of the outcome of the recruitment process as soon as
possible therefore, immediate phone contact with interviewed applicants followed by written
notification to all applicants is recommended.
B. Chairman of the panel is responsible for providing feedback to applicants who request it. This
feedback should address the specific criteria the applicant did not adequately satisfy and be
aimed at providing constructive assistance and not imply an unsatisfactory standard of work
or behaviour.
20. PLAN TO OFFER THE EMPLOYMENT IS READY:
A. Who will make the offer?
B. Negoitate the offer?
C. Formalise the offer?
D. Direct candidate for reporting?
CASE STUDIES IN RECRUITMENT AND SELECTION:
1. RELIANCE ENERGY LIMITED:
A. Tracking People for Multi-Skilling:

Woven into strategic planning, recruitment in Reliance Energy Ltd. no longer involves short-term
vacancy or the annual ritual of Campus Recruitment. Translating corporate strategies into a manpower
plan and developing a long term programme accordingly, Reliance Energy Ltd. (now Reliance
Infrastructure Limited) is tracking down people with the combination of knowledge, experience, skills
and behaviour best suited to achieve the company’s objectives.
B. The Focus of Recruitment:

1. Attract people with multi dimensional experiences and skills.
2. Induct talent with a new perspective to lead the company.
3. Develop a culture that attracts people to the company.
4. Locate people whose personalities fit the company’s values.
5. Devise methodologies for assessing psychological traits.
6. Seek out unconventional development ground for talent.
7. Design entry pay that competes on quality as well as quantum.
8. Anticipate and find people for positions proactively.
A. ‘Campus Connect’ to Enhance Human Resource Quality:

Concerned over shortage of skilled manpower for IT as well as other industries, software major
Infosys will spend around USD 4 million for its educational initiative ‘campus Connect’, aimed at
enhancing quality of engineering students in the country.
The company is also looking at expanding its ongoing training programme, under which it trains
students belonging to backward classes, enabling them access to advanced technical know-how.
“Under this initiative, we select students under specific educational eligibility criteria, and provide
them with technical as well as personality development training,” says Infosys Director, Human
Resource, T. V. Mohandas Pai.
On completion of the training, the company hires the students, based on performance. “Last
year, we carried out such training initiative for our BPO Programme, which was attended by 65
students and around 35 of them are working with us now,” Pai said. The company is carrying out this
initiative in parts of North and South Karnataka. “We have observed that most of these students
basically lack confidence. We give them opportunity to strengthen their skills and it is earning good
returns,”. The company has also earmarked USD 100 million this year for training its personnel. “We
are developing a large training facility at Mysore, which will permit us to train around 9,000 personnel
at one place. The facility will consist of 250 fully developed rooms along with all entertainment and
recreational arrangements,” Pai smilingly added.
B. Checklist: For Strategic Planning in Recruitment and Selection:

1. Determine the need for a new or replacement position.
2. Think creatively about how to accomplish the work without adding staff (improves processes,
eliminate work we don’t need to do, divide work differently, etc.).
3. Hold a recruiting planning meeting with the recruiter, the human resource leader, the hiring
manager, and, potentially, a co-worker or internal customer.
4. Develop and prioritize the key requirements needed from the position and the special qualifications,
traits, characteristics, and experience we seek in a candidate.
5. Develop the role or job profile for the position.
6. Determine the salary range for the position.
7. Decide whether the department can afford hiring employees to fill the position.
8. Post the position internally on the “Job Opportunities” on the notice board for one week. If we
anticipate difficulty finding a qualified internal candidate for the position, we may state in the
posting that we are advertising the position externally at the same time.
9. Send an all-company email to notify staff that a position has been posted and that the company
is hiring employees.
10. Company encourages talented, qualified, diverse internal candidates to apply for the position.
11. Interested internal candidates fill out the ‘Internal Position Application’.
12. Schedule an interview, for internal candidates, with the hiring supervisor, the manager of the
hiring supervisor or a customer of the position and human resource. (In all cases, we may tell
the candidates the time we anticipate the interview process will take.)
13. Hold the interviews with each interviewer clear about their role in the interview process.
14. Interviewers fill out the Candidate Assesment Form.
15. If no internal candidates are selected for the position, make certain that we clearly communicate
with the applicants that they were not selected. Whenever possible, provide feedback that will
help the employee continue to develop their skill and qualifications. Use this feedback as an
opportunity to help the employee continue to grow in their career.
16. If an internal candidate is selected for the position, make a written job offer that includes the new
job description and salary.
17. Agree on a transition timeline with the internal candidate’s current supervisor.
18. If no qualified internal candidates apply, extend the search to external candidates, if the position
is not advertised simultaneously. Develop your candidate pool of diverse applicants.
19. Spread word-of-mouth information about the position availability in industry and to each employee’s
network of friends and associates.
20. Place a classified advertisement in newspapers with a delivery reach that will create a diverse
candidate pool.
21. Recruit online. Post the classified advertisement on jobs and newspaper-related websites
including the company website.
22. Talk to colleges/educational institutes for campus placement.
23. Brainstorm other potential ways to locate a well-qualified pool of candidates for each position.
24. Through your recruiting efforts, you’ve developed a pool of candidates. People are applying for
your open job. Whether you have developed a candidate pool in advance of the job opening or
you are searching from scratch, the development of a qualified pool of candidates is crucial.
Develop data base.
25. Communicate to each applicant to acknowledge receipt of the resume.
26. In case we have developed a number of applicants for the position, screen resumes and/or
applications against the prioritised qualifications and criteria established.
27. Phone screen the candidates whose credentials look like a good fit with the position. Determine
candidate salary requirements, if not stated with the application, as requested.
28. Schedule qualified candidates, whose salary needs you can afford, for a first interview with the
hiring supervisor and an human resource representative, either in-person or on the phone. In
all cases, tell the candidates the timeline you anticipate the interview process will take.
29. Ask each candidate to fill out your official job application form, upon their arrival for the interview.
30. Hold screening interviews during which the candidate is assessed and has the opportunity to
learn about your organization and your needs.
31. Fill out the ‘Candidate Assessment Form’ for each candidate interviewed.
32. Decide which candidates to invite back for a second interview.
33. Hold the second round of interviews
34. Candidates participate in any Psychological testing you may require for the position.
35. Human Resource checks the finalists’ (people to whom you are considering offering the
position) credentials, references and other qualifying documents and statements.
36. Anyone who has stated qualifications dishonestly or who fails to pass the checks is eliminated
as a candidate.
37. Through the entire interviewing process, human resource, where desired, stay in touch with the
most qualified candidates via phone and email.
38. Human resource and the hiring manager agree on the offer to make to the candidate,
39. Talk informally with the candidate about whether he or she is interested in the job at the offered
salary and stated conditions.
40. The offer letter and the role or job profile are provided to the candidate.
41. The candidate signs the offer letter to accept the job or refuses the position. If yes, schedule
the new employee’s start date. If no, start again to review the candidates pool and redevelop
a pool if necessary.
SIMPLY SPEAKING...
Interviewing for retaining people is a very positive stance while recruiting by rejecting
people reflects a very negative attitude in building a people-centric organisation. Keep the
following issues/factors at the back of your mind for strategising the selection strategies:
A. Purpose
1. Design the questions.
2. Plan strategy for interviewing.
3. Select the right person for the Job.
B. Strategy:
1. Topics of discussion.
2. Order of Discussion.
3. Length of Interview.
C. Questions:
1. Closed Questions.
2. Open Questions.
3. Reflective Questions.
4. Probing and Challenging Questions.
D. Resumé:
1. Resumé present the candidate in the best light.
2. It is difficult to gauge the candidates suitability for the job from a resumé.
3. A resumé is not an objective document.
4. Does it give a clear picture of the applicants work experience?
5. Does it list the educational background and does it match the requirement?
6. Are there any skills you require that are not mentioned in the resumé?
7. Is there any contradictory information in the resumé?
E. Information:
1. Interviewer – information: Qualification of the candidate, Experience and Skill,
Candidates expectation’ Attitude
2. Candidate – information: Why the job fell vacant, Salary expected, Conditions of
work, Career Prospects
3. Venue and Seating: Details like convenient, comfortable, Privacy, and Free from
disruptions, free from distractions should be taken care off.
4. Interview: Important factors during an interview for example job profile and time
allotted for the interview, different types of questions must be determined during
planning stage.
5. Selection: criteria for selection must be clearly defined and arrangements shall be
made to give information to all candidates about the results.
CASE OF MARIGO SOLUTIONS: CASE STUDY FOR PRACTICE

Marigo Solutions, a growing organisation in telecom sector, was established in 2002 in Mumbai.
Its phenomenal growth, since then, saw its number of mobile subscribers going up from fifty thousand
in 2003 to seventy lakhs in 2008 keeping in view the severe cut throat competition in the telecom
industry. The company faced a tough and a challenging task of recruiting human resource talent from
a market which already had twenty odd players competing with each other.
Yash Pal Sharma, CEO of Marigo Solutions, called for an urgent meeting of all the functional
heads to brainstorm the ways and means to meet the manpower requirements of the company. He
invited innovative suggestions for recruiting and retaining the talent from the industry.
Sushma Bhagat, Head of the HR said “We require experienced people as most of the positions
are in the middle and the top levels of our hierarchy and it is difficult to connect with such people
within the industry as it would amount to real hard-core and massive head-hunting directly or through
the consultants. Therefore, we may have to turn our attention to passive job seekers market”
lndraneel Pandey, Head of the Projects raised a doubt and said “In a highly competitive market,
it is doubtful that we would succeed in attracting the skilled employees”. Yash Pal Sharma and
Sushma Bhagat seemed to agree with Pandey.
After a day long meeting, it was decided to conduct a study to “identify the ways for capturing
the candidates in the passive job seekers market’ as suggested by Sushma Bhagat. It was decided
that a team of three members from human resource function headed by a senor manager, Tarun
Bhandari, will study the ways by which passive job seekers could be attracted.
The following week, Tarun Bhandari presented the report with his findings. The report found that
a person already possessing a job would approach another organisation if invited by a friend or a peer
working in the same organisation. Tarun also disclosed that generally people do not seek a job
elsewhere as they are not sure of organisation’s image and long time spent in the hiring cycle. The
report also mentioned that people are also scared for settling down all over again and the feeling that
a known devil is better than an unknown person.
Yash Pal Sharma asked Sushma Bhagat and Tarun Bhandari to prepare an action plan based
on Tarun’s findings. Three days later Marigo Solutions announced an innovative scheme called ‘Invite
a Friend.” The scheme was introduced to encourage the employees to bring in potential candidates
from amongst their friends circle and other known people to fill up the jobs at various levels. In case
the candidate got selected, the employee who referred the selected candidate would be rewarded.
Marigo Solutions hired, in the next six months, about fifty five percent people through this scheme.
Yash Pal Sharma held another meeting with his functional heads and thanked all of them for the
huge success of the recruitment scheme. Sushma Bhagat suggested to the CEO that Tarun Bhandari
should take over as an in-house head hunter to reduce the cycle time in hiring process and to be
assisted by a team of three persons drawn from human resource, projects and systems departments.
The approval was granted and the committee began functioning a week later.
A month later, Marigo Solutions opened a dedicated website with a network linkage with other
sites through Google as an add-on to seek response from the passive job seekers. This helped
Marigo Solutions to attract another ten percent of the top level talent from the industry. It gained a
compettitve edge over its rivals in the industry through attracting and retaining its talent.

1. Evaluate the success of Marigo Solutions in its innovative recruitment process.
2. Draw an innovative recruitment scheme for a company engaged in the business of manufacturing
two wheelers.
3. What strategic planning is required for drafting a recruitment drive for a non banking finance
company (NBFC) in the business of selling mortgages and investment products?
LEVEL FOUR
STRATEGIC PLANNING IN TRAINING AND DEVELOPMENT
1. FACING THE FACTS:
A. Organisations that Train Staff Perform Better:

Research on high performing organisations is building a steadily growing base of evidence to
show that organisations that train their staff perform better.
B. Training Spend is Not Good Predictor of Training Impact:

But training spend is not a good predictor of training impact. What seems to matter is whether
training and development activity is linked with the knowledge, skills or behaviours most aligned with
the business goals of the organisation.
C. Training Plans and Budgets reflect the way Training Needs are Identified:
Many organisations do not have a single, visible plan for training; objectives and priorities may
be more visible than ‘plans’. Where plans do exist they may be multiple, covering parts of the
organisation (e.g. divisions or sites), particular workforce groups (e.g. managers) or specific types
of training and development activity (e.g. centrally run courses). Training budgets are also often
multiple, located centrally and locally, and in the training function and in the line. These complex sets
of training plans and budgets reflect the way training needs are identified in multiple locations and on
different timescales.
D. Planning for Training is influenced by the way Training Function Operates:

Planning for training is also strongly influenced by the organisation of the training and development
function and the activities it provides.
Some choices here are:
1. Whether the training and development function and the human resource function are tightly
integrated or more loosely linked, both at the centre and in local units.
2. Whether the training function operates as a single centralised service reaching out to the
business or as a devolved function, embedded in the business.
3. How strongly key business function control, the content and delivery of development activities
for their people across internal business boundaries.
4. The degree of ownership which line managers take over plans for the training of their staff and
training spend.
5. How far and how fast the organisation is shifting from the provision of courses to other learning
methods of a more tailored and experiential kind (such as projects, secondments, coaching and
mentoring, team development).
E. Training is all about Enhancing Skills and Competencies of People:

Human resource Development constitutes the logical outcome of the argument than an
organization’s employees are its most valuable resource. The essence of human resource management
is that employees are valued assets and that their value should be increased by a systematic and
coherent approach by investing in their training and development. Resourcing is about providing the
skills base needed by the organization. Human resource development is about enhancing and widening
these skills by training, by helping people to grow within the organization, and by enabling them to
make better use of their skills and abilities.
F. Major Considerations for Strategically Planned Training:

1. Company’s vision and mission: Training plan for the year must be aligned with the company’s
vision and mission.
2. Culture and values: Every company has its own culture and values. Training plan must be in
line with the culture of company.
3. Inputs from employees: Training efforts are successful only when inputs are taken from
individual employee as for his interests.
4. Linking it with career development: For successful training and development in organization
it is very important that training activity is linked to career development opportunity of employees.
G. Training and Development System is Built on following Blocks:
Strategy Overview
Measurement Structure of
Function
Training and
Delivery Development
System Determination of
Content
Participation
H. Six Mechanisms for Influencing Training Plans:

1. Formal business planning at both top level and more locally leading to training priorities.
2. Links from human resource strategy or processes to training implications: Rather disappointingly
Human Resource strategies do not often give clear indications of areas of training need.
Competency models derived in human resource are often carried over for use in training and
development, but may not link with real skill gaps.
3. Plans for key workforce groups: These are most evident in the frequent separation of management
development from other types of training. Some functions, notably finance, also often have their
own training and development plans.
4. Major business issues or changes often lead directly to major training interventions, usually
with extra funds from the corporate centre. Similarly just-in-time (JIT)needs can be identified at
local level and supported by local business budgets.
5. Team reviews or individual training plans usually stemming from appraisal can in theory
influence training plans, but this data is not often analysed to see if there are clear patterns of
need.
6. Take-up of training provision is a strong influence on future plans, and evaluation has a
significant effect on future training content and methods.
I. Processes and Practices which help in Aligning Training with Business Goals:
1. One-to-one dialogues between the training function and unit managers at a variety of levels on
business concerns, skill issues and training plans.
2. Collective and more formal management discussions to agree with training priorities at top level
3. Involvement of functional leaders as heads of profession, skill owners, etc., is important as
these roles take responsibility across the business for the capability of particular professional,
functional or occupational groups.
4. Corporate response to major business issues which require one-off learning interventions, with
central cash to fund them. It also helps to assign people from training and development to the
teams developing and implementing major business changes including training and learning
priorities in the individual objectives of all employees. For managers these should focus on the
development of their staff. For learning and development people they should focus on the
learning outcomes they achieve, not just activity inputs.
5. The training and development function needs to offer a quick and professional response to
managers needing some kind of development intervention for their team or advice on how to
meet the training needs of individual employees.
J. Training Needs Assessment Planning:

1. Training Needs Assessment is the term we give to the small percentage of our training budget
we devote to the decision of what to train, when to train, and to whom.
2. Priority Needs Assessment means an assessment of training needs that ranks the skills in
importance, instead of simply finding out people’s preferences for training. If we focus on the
priority of skills, asking the right questions of the right group of people, we will make better
decisions about training.
3. The scaled comparison is the tool to give us the data we need for training decisions. All this is
not new in training management. But traditional approaches to training needs assessment have
not prevented the following three mistakes. These are not questions about the content or
process of training, but how training decisions are made. We have more to lose or gain by the
way we make training decisions than by the way we deliver our content.
1. Ever run the right programme...for the wrong people? If we conduct the perfect
programme...for the wrong people, we may be good trainers, but bad decision-makers.
2. Ever run the right programme for the right people...only for them to go back into a
workplace that won’t let them use their new skills? If we run the perfect programme for the
right people, but our organization does not support, or even worse, punishes people for
trying to use their new skills, we are not bad trainers, just bad decision-makers.
3. Ever get the feeling that people want different training than they need? We would be
surprised to learn that the ‘training’ most people in most organizations want is the ‘training’
that will take them out of their current situation into a better one, not the training that will help
them perform better in their current job? Are we really making the best decision by offering
our training “cafeteria style?”
4. A training needs assessment that gives us a consensus of what skills are Important
to Job performance not just from the perspective of the job incumbents, but their managers
as well. It will tell us what skills are important at different levels and functional groups in the
organization.
5. A training needs assessment that gives us a consensus of which of those critical skills
are in ‘Need’ of Training.
6. A needs assessment that gives us a consensus of what skills are actually aligned
with strategy in the way the organization rewards. Without alignment of rewards and
incentives our training may succeed, but the skills will not be supported by the work-place
when the training is over. The answers to this question help you determine when to train,
and when to wait until organizational reward and support systems are in place for the new
skills.
7. An assessment that tells us whether people are answering honestly or “fudging”. The
scaled comparison cannot be unobtrusively manipulated, so decision-makers are alerted to
results that look plausible but can’t be trusted. The scaled comparison can distinguish
between manipulation and simple confusion about what the questions or skills mean.
K. Four Stage Process in Training and Development:

1. Identification of Training Needs:
Training needs will be identified for each employee, level and business unit based on the:
1. Competencies and skills identify gaps identified through performance management process.
2. Future business and departmental requirements.
3. Individual development needs for top talent within the company.
4. Critical career transition training needs.
2. Preparation and approval of Training Calendar and Budget:
The organisation training calendar will have the mandatory training programmes to be conducted
across company. The overall training budget will be prepared by Human Resource and approved by
CEO.
3. Design and Delivery:
Based on the approved training calendar, Human Resource function would coordinate (internal
and external) training design and delivery with vendors/instructors to ensure appropriate customisation
of the training material.
4. Assessment of Training Effectiveness:
Feedback on the effectiveness of the training programme will be collected at various levels and
time durations. It is proposed for company to measure training effectiveness.
CASE STUDIES IN TRAINING AND DEVELOPMENT:

1. TRAINING AND DEVELOPMENT AT RELIANCE INFRASTRUCTURE LTD.
With the changing business environment becoming more and more dynamic, a need on a continual
basis for improved domain expertise is the need of the hour.The core function of our training department
is to bridge the gap between the changing requirements of the job and the abilities that individuals
need to perform these tasks such as self-directed leadership, self-motivated teams and self generated
creativity to excel in their respective areas of performance.
Objectives of Training and Development:
1. Make learning one of the fundamental values of the company.
2. Commit major resources and adequate time to training.
3. Use training to bridge the gap with the external work.
4. Integrate training into initiatives for change management.
5. Use training as a developmental tool for individuals.
6. Link organizational, operational and individual training needs.
7. Install training systems that substitute work experience.
8. Ensure that training allows the staff skills to bloom.
9. Use retraining to continuously upgrade employees skills.
10. Create a system to evaluate the effectiveness of training.
Induction:
1. A formal induction programme is organized for all the new employees.
2. A structured Induction programme is carried out for:
A. Lateral Joinees:
1. This provides a general overview of the organization to the new recruits and familiarises
employees with various business processes, culture, business practices of the company
2. It also covers soft skills modules like team building, change management and communication
etc.
B. Graduate Engineer Trainees:
1. All the graduate engineer trainees undergo a one-year induction training programme.
2. The induction programme contains the following:
a. Technical training
b. On the Job training
c. Class room training
d. Functional Training
e. Managerial Skill Development
2. TRAINING AND DEVELOPMENT AT AIRTEL:
A. Quality Training:
A. Apart from the certification based QES, which is conducted in association with the Institute
of Quality Ltd, Bharti Cellular also conducts need-based training for its employees. The training needs
are identified according to the company’s thrust areas arising out of business needs, technological
or process driven training needs, skill gap analysis and individual employee needs following the
annual appraisal. Airtel’s specific training features are as follows-

B. State of Art Learning Centre: The employees can get logged on to customized training
programmes developed by British Telecom (BT). Unlike most other organizations, AIRTEL lets the
employees decide their training needs.
C. Mentoring: A philosophy of constant mentoring has been established at Airtel. Here, an
employee (mentee) is assigned a senior mentor who helps the mentee to be at ease in the organization
and treats him as a friend, philosopher and guide.
D. Human resource Interface: The success of Bharti Cellular’s training programmers also
involves dealers, franchisees, collection agencies and corporate sales agents. While Airtel dealers
and franchisees are involved in corporate breakthrough and empowerment training programmers
along with the Airtel employees, collection agencies and corporate sales agents are trained in telephone
handling, communication skills and other customer care areas under the human resource Interface
and Airtel-in-Touch programmers.
3. TRAINING AND DEVELOPMENT AT INFOSYS TECHNOLOGIES:

1. Method of Training:
Training at Infosys is an ongoing process. When new recruits from colleges join Infosys, they
are trained through fresher training courses. They are trained on new processes and technologies.
As they reach the higher levels, they are trained on project management and later were sent for
management development programmes, followed by leadership development programs.
2. Training New Recruits:
Infosys conducts a 14.5 week technical training programme for all new entrants. The company
spends around Rs. 200,000 per year on training each new entrant. The new recruits are trained at
the Global Education Center (GEC) in Mysore, which has world class training facilities and the
capacity to train more than 4500 employees at a time. GEC, which was inaugurated in February 2005
is spread over 270 acres and is the largest corporate training centre in the world with 58 training
rooms and 183 faculty rooms.
TRAINING AND DEVELOPMENT AT GODREJ GROUP: CASE

STUDY FOR PRACTICE
1. GODREJ GROUP OF COMPANIES:

A. Godrej and Boyce Manufacturing Limited: GBML was incorporated in 1897 to manufacture
consumer durables and industrial products, security equipment and solutions. The major
products include strong room doors, safes, safe deposit vaults, cash boxes and coffers, data
safes, fire resisting safes, record and filing cabinets, cupboards, electronic coffers, cash
counting machines, security doors and burglar alarm systems, CCTV systems, access control
systems, locks and keys and furniture.
B. Godrej Properties and Investments Limited: GPIL was incorporated in 1990. It provides
planned townships.
C. Godrej Agrovet Limited: GAL was incorporated in 1991. It is in the business of producing
animal feed, horticulture and tissue culture products.
D. Geometric Software Solutions: GSS was incorporated in 1994. The company provides
product lifecycle management solution.
E. Godrej Sara Lee Limited: GSSLL was incorporated in 1995 and manufactures home insecticides.
F. Godrej InfoTech Limited: GIL was incorporated in 1999. It is in the business of software
development, e-solutions development, ERP implementation, customization and ERP consulting
services.
G. Godrej Industries Limited: (Formerly GSL 1952) It was renamed in 2001 and is in the
business of manufacturing chemicals, foods products and medical diagnostics.
H. Godrej Consumer Products Limited: (Formerly Godrej Soaps Limited (GSL) until 1952) It
was renamed in 2001. It is in the business of manufacturing personal, hair, household and fabric
care products.
I. Godrej Upstream Limited: GUL was incorporated in 2003 and is in the business of business
process outsourcing.
2. TRAINING AND DEVELOPMENT ACTIVITIES:

A. Total Quality Management (TQM) Workshops: TQM workshops started in 1995, in 1997,
all the five thousand employees of GSL were put through a three days workshop in TQM as a part
of the visioning sessions at GSL. The aim of these workshops was to ask the employees to identify
what they wanted from their jobs and develop the values they required to achieve the business goals
of the company. In 1997-98, GSL initiated 5S throughout the organization including 5S audits.
Employees also participated in Quality Circle Programme. In 2000-2001, TQM programmes awareness
programmes were held for business partners, suppliers, C&F agents. In 2002, TQM was fully initiated
in all the major factories and units.
The objectives of TQM at GSL were to spread commitment to quality, team work, discipline,
dedication to work, customer care, honesty and integrity, openness and transparency, care and
concern for people, trust and transforming the company into a learning organisation.
B. Parivartan: Parivartan was launched in GSL in 2001 with the purpose of motivating employees
and making them aware of sales functions of GSL. A team of eighteen senior executives from all the
divisions such as sales, logistics, marketing, production and HR were asked to provide necessary
inputs for training all freshly recruited and three hundred fifty employees of distributors were invited
to attend the workshops.
C. Economic Value Added (EVA) Training: EVA was started in Godrej in 2001. Over five
hundred managers and officers were trained to manage EVA by making appropriate decisions involving
investment, trade-offs between the income statement and the balance sheet. The training was
conducted by Stern Stewart, a New York based management consultant who had pioneered the
concepts. The first year of implementing EVA resulted in zero debt and a corresponding increase in
market share.
The objective of the programme was to understand the concept of EVA and the employee control
over key measures affecting EVA. The key benefits of EVA training were:
 Improvement in capital efficiency and operating profitability.
 Greater focus on optimal capital structure.
 Improved strategic and scenario planning.
 Greater alignment in shareholders and employees interest.

 EVA and performance linked variable remuneration.
D. GALLOP: It was initiated in 2002 as a structured and organized induction-training programme
at Godrej. It aimed at nurturing the new recruits into leaders and dynamic performers through one
year programme. The trainees were rotated in four departments other tan primary department including
compulsory sales training which enabled the trainees to get hands-on-sales experience in understanding
the market. The last two months were spent in familiarization with the original department that the new
recruits were hired for. In 2004, due to the launching of agro business, another mandatory term in
rural projects was added to enable the students to understand the rural market.
E. Mentoring by Business Leaders: Each Galloper worked with a mentor chosen from the
class of senior level managers. The Gallopers assisted their mentors on various projects thus gaining
exposure and enhancing their professional knowledge.
F. Reverse Mentoring: In this approach, the CEOs and senior management personnel of Godrej
learned from the junior management staff. Adi Godrej took lessons on information technology and
sales and marketing from two young managers. These managers were selected to impart knowledge
and training because of their frontline experience with customers.
G. Red and Blue Teams: In an effort to encourage team work, Godrej stared red and blue
teams in 2001. Each team had eight members chosen from young employees. The aim of these
groups was to make recommendations and strategies for the future growth of their divisions. These
teams would work independently of each other; do intensive research for 3-4 months and prepare
blueprint of their strategies for the next three years. The teams would, thereafter, submit their plans
to a ’plum team’ consisting of senior managers from their respective businesses for reviewing,
choosing the best suggestions and come out with final plan to be implemented. The concept was
introduced in all the businesses of the group.
H. Spark: The concept of Spark was introduced by GIL in 2002 to ‘train the trainers’ in association
with a Delhi based consulting group. In the workshops, managers are exposed to the techniques that
will help them to internalise the attitudes and attributes that are needed to be a coach.
I. E-Gyan: The concept of e-learning was introduced by GIL in 2002 to move away from
traditional training methods and adopt e-learning systems of imparting training in association with
Satyam Education Services. The concept included the use of e-systems, access to educational
resources through personal computer and use of online libraries to expand the knowledge base of
employees.
J. Interpersonal Effectiveness and Negotiations Skills: In 2003, GIL started human resource
programmes which were directed towards bridging some of the practical needs that our employees
may be confronting rather than culminating them as theoretical exercise. To incorporate this learning
into their everyday functioning, every employee in collaboration with his or her immediate superior
conceptualized a business concept. These concepts then were sent to external experts for suggestions
and remarks. The final concept was presented to the top management. The workshops increased the
thinking scale of the employees for working on unbiased business plans.
K. BPO Training: The group ventured into BPO training in 2002. The training consisted of Pre-
Process training, Voice and Accent training, Process training and One to One Mentoring. To impart
the training, Godrej acquired a US company ‘Upstream LLC’ which has now become ‘Godrej Upstream
Limited’ with 800 employees and four major call centres in US and one in India which help to sharpen
the employees skills needed for BPO business.

1. Do SWOT analysis of policies and practices of training and development of Godrej Group and
write a critical appreciation.
2. Explain how Godrej Group has benefited from the various training programmes?
3. GALLOP was introduced in Godrej group in 2002. Explain how the various initiatives within
GALLOP can help in achieving its objectives?
4. What, in your opinion, are the limitations of the various training programmes and development
initiatives by the Godrej group?
LEVEL FIVE
STRATEGIC PLANNING IN PERFORMANCE MANAGEMENT
1. DEFINING PERFORMANCE MANANGEMENT:

Performance management is a joint process that involves both the supervisor and the employee,
who identify common goals, which correlate to the higher goals of the organization. This process
results in the establishment of written performance expectations later used as measures for feedback
and performance evaluation. Peter Drucker in ‘The Principles of Management’ observed “An organisation
is like tune; it is not constituted by individual sounds but by their synthesis”. The success of an
organisation will therefore depend upon its ability to measure accurately the performance of its
members and use it objectively to optimise them as a vital resource.
2. STEPS IN PERFORMANCE MANAGEMENT:

The performance appraisal process typically consists of four inter-related steps as follows:
A. Planning Performance:
This stage includes Formulating Objectives, Key Performance Indicators (KPI’s: Input and Output-
based), and Performance Standards (Quantitative, Qualitative, Behavioural) and targets for each
position/employee, using a suitably designed Performance Agreement Form.
Establish a common understanding between the manager (evaluator) and employee (evaluatee)
regarding work expectations; mainly, the work to be accomplished and how that work is to be
evaluated against set targets.
B. Managing Performance:
It includes Performance observation, measurement, recording, feedback and coaching, as well
as managing the performance environment.This stage also includes performance coaching and
counselling whenever, employees performance or behaviour is not up to standard/expectation.
Provisions should be made for the regular feedback of information to clarify and modify the goals and
expectations, to correct unacceptable performance before it is too late, and to reward superior
performance with proper praise and recognition.
C. Appraising Performance:
Using a suitably designed Performance Appraisal Form, the stage three facilitates the smooth
running of appraisal interviews. Preparation of formal documentation of performance through the
completion of a performance and development appraisal form appropriate to the job is essential.
D. Rewarding Performance:
Linking actual performance to appropriate rewards/remuneration to reinforce excellence in
performance is the final stage. The formal performance and development appraisal discussions based
on the completed appraisal form and ending in the construction of a development plan are essential.
Performance Management
Planning Managing
Performance Performance
Rewarding Reviewing
Performance Performance
3. STRATEGIC CONSIDERATIONS FOR PLANNING PERFORMANCE MANAGEMENT:
A. Strategic Consideration One:

Performance standards answer the question, How will the employee and the performance manager
know when the employee is meeting or exceeding expectations for his or her position?
B. Strategic Consideration Two:

When standards are developed in collaboration with the employees whose positions are being
developed, it is more likely that the standards will…
1. Be appropriate to the requirements of the job.
2. Reflect the realities of the work context and the conditions.
3. Be understood by the employees and performance manager.
4. Be accepted by the employee and the performance manager.
C. Strategic Consideration Three:
Better understanding leads to better performance.
D. Strategic Consideration Four:
It is more effective to ask employee to do something different rather than asking him to be
‘different’.
4. THE MOST IMPORTANT OBJECTIVES OF A WELL-DESIGNED PERFORMANCE

MANAGEMENT SYSTEM ARE TO:
A. Serve as the primary vehicle for implementing organisational goals and strategies (cascaded
from top to bottom throughout the organisation).
B. Align and integrate the objectives and key performance measures (KPMs) of the organisation
vertically and horizontally through all job categories and levels, including management. In this
way the entire system works together in pointing towards the critical bottom line measures, with
bottom line results following as a matter of course “What gets measured, gets done”.
C. Facilitate continuous performance improvement, organisation development and culture change.
D. Achieve quality and efficiency, i.e., to meet the customer’s needs as precisely, quickly and cost
effectively as possible.
E. Ensure clarity regarding work expectations and performance standards, reducing job holder
anxiety/stress, resource wastage and conflict.
F. Continually enhance employee competence through the identification of output-related training
and development needs and strategies.
G. Reduce line manager’s reluctance and fear to do performance appraisals with their staff.
H. Facilitate performance-based remuneration and rewards, so employees can see and experience
a clear link between their performance and the rewards they receive.
Organisations have to be very careful in deciding what performance or behaviour they reward,
and be acutely aware of potential unintended consequences. Behavioural psychology says that you
will get what you reward, even that which you did not foresee at the time (e.g., negative behaviour
of some sort). The timing of rewards also forms part of this equation, as do many other performance-
related factors that affect human behaviour.
5. METHODS OF ORGANIZATIONAL PERFORMANCE MANAGEMENT SYSTEMS:

A. There are numerous, major methods and movements to regularly increase the performance
of organizations. Each includes regular recurring activities to establish organizational goals, monitor
progress toward the goals, and make adjustments to achieve those goals more effectively and
efficiently. Typically, these become integrated into the overall recurring management systems in the
organization
B. Any or all of the following approaches will improve organizational performance depending on
if they are implemented comprehensively and remain focused on organizational results. Some of the
following, e.g., organizational learning and knowledge management, might be interpreted more as
movements than organization performance strategies because there are wide interpretations of the
concepts, not all of which include focussing on achieving top-level organizational results. However,
if these two concepts are installed across the organization and focus on organizational results, they
contribute strongly to organizational performance. On the other hand, the Balanced Scorecard, which
is deliberately designed to be comprehensive and focussed on organizational results, will not improve
performance if not implemented from a strong design.
1. Balanced Scorecard:
Balanced Scorecard focusses on four indicators, including customer perspective, internal-
business processes, learning and growth and financials, to monitor progress toward organization’s
strategic goals.
2. Benchmarking:
Used as a standard measurements in a service or industry for comparison to other organizations
in order to gain perspective on organizational performance. For example, there are emerging
standard benchmarks for universities, hospitals, etc. In and in itself, this is not an overall
comprehensive process assured to improve performance; rather the results from benchmark
comparisons can be used in more overall processes. Benchmarking is often perceived as a
quality initiative.
3. Business Process Reegineering:
Aims to increase performance by radically re-designing the organization’s structures and
processes, including by starting over from the ground up.
4. Continuous Improvement:
It focusses on improving customer satisfaction through continuous and incremental improvements
to processes, including by removing unnecessary activities and variations. Continuous
improvement is often perceived as a quality initiative.
5. Cultural Change:
Cultural change is a form of organizational transformation, that is, radical and fundamental form
of change. Cultural change involves changing the basic values, norms, beliefs, etc., among
members of the organization.
6. ISO9000/ISO14000:
Is an internationally recognised standard of quality, and includes guidelines to accomplish the
ISO9000/14000 standard. Organizations can be optionally audited to earn ISO9000 certification.
Another major quality standard is the Baldridge Award. ISO9000 is a quality initiative.
7. Knowledge Management:
This focus is on collection and management of critical knowledge in an organization to increase
its capacity for achieving results. Knowledge management often includes extensive use of
computer technology. In and by itself, this is not an overall comprehensive process assured to
improve performance. Its effectiveness toward reaching overall results for the organization
depends on how well the enhanced, critical knowledge is applied in the organization.
8. Learning Organization:
Peter Senge’s Learning Organization in his “Fifth Discipline” focusses on enhancing organizations
systems (including people) to increase an organization’s capacity for performance. Includes
extensive use of principles of systems theory. In and of it self, this is not an overall comprehensive
process assured to improve performance. Its effectiveness toward reaching overall results for
the organization depends on how well the enhanced ability to learn is applied in the organization.
9. Management by Objectives (MBO):
Peter Drucker’s MBO aims to align goals and subordinate objectives throughout the organization.
Ideally, employees get strong input to identifying their objectives, time lines for completion, etc.,
includes ongoing tracking and feedback in process to reach objectives. MBO’s are often
perceived as a form of planning.
10. Outcome-Based Evaluation:
Outcomes-based evaluation is increasingly used, particularly by non-profit organizations, to
assess the impact of their services and products on their target communities. The process
includes identifying preferred outcomes to accomplish with a certain target market, associate
indicators as measures for each of those outcomes and then carry out the measures to assess
the extent of outcomes reached.
11. Programme Evaluation:
Programme evaluation is used for a wide variety of applications, e.g., to increase efficiencies
of programme processes and thereby cut costs, to assess if programme goals were reached
or not, to quality programmes for accreditation, etc.
12. Strategic Planning:
This is an organization-wide process to identify strategic direction, including vision, mission,
values and overall goals. Direction is pursued by implementing associated action plans,
including multi-level goals, objectives, time lines and responsibilities. Strategic planning is, of
course, a form of planning.
13. Total Quality Management (TQM):
TQM includes set of management practices throughout the organization to ensure the organization
consistently meets or exceeds customer requirements. Strong focus on process measurement
and controls as means of continuous improvement. TQM is a quality initiative.
14. Behaviourally Anchored Rating Scales:
Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which combines
the graphic rating scale and critical incident method. It consists of predetermined critical areas
of job performance or sets of behavioural statements describing important job performance
qualities as good or bad (inter-personal relationships, adaptability and reliability, job knowledge
etc.) These statements are developed from critical incidents.
In this method, an employee’s actual job behaviour is judged against the desired behaviour by
recording and comparing the behaviour with BARS. Developing and practicing Behaviourally
Anchored Rating Scales requires expert knowledge.
15. Human Resource Accounting Method:
Human Resource Accounting method tries to find the relative worth of human assets in terms
of money. The performance of the employees is judged in terms of costs and the contribution
of employees. The cost includes all the expenses incurred on them such as compensation,
recruitment and selection costs, induction and training costs, etc., whereas the contribution
includes the total value added in terms of money. The difference between costs and the
contribution will be considered as the performance of the employees. Generally, output (contribution)
has to be higher than input (costs).
16. 360 Degree Performance Management Feedback System:
It has four integral components:
1. Self- Appraisal: Self appraisal provides an opportunity to an employee to look at his/her
strengths and weaknesses, achievements and judgment of his/her own performance.
2. Superior’s Appraisal: Superior’s appraisal forms the traditional part of the system where
an employee’s responsibilities and actual performance is rated by the superior.
3. Subordinates’ Appraisal: The appraisal by the subordinates rates an employee on the
parameters such as communication skills, motivational abilities, ability to delegate work,
leadership quality and other such competencies.
4. Peers’ Appraisal: Also known as internal customers, the correct feedback given by peers
rates an employee on abilities and competencies such as working in a team, cooperation
and sensitivity towards others.
17. Assessment Centres:
An assessment centre involves the use of methods like social or informal events, tests and
exercises, assignments administered to a group or set of employees to assess their competencies
such as interpersonal skills, intellectual capabilities, planning and organising abilities, motivation,
career orientation, etc., to take higher responsibilities in future. ATandT was the first organisation
in 1956 to use assessment centre as the basis of large scale study of managerial progress and
career development.
Some companies run a series of extended performance management sessions, called assessment
centers, each lasting one or two days or sometimes longer. They are commonly held either on
employers’ premises or in a hotel and are considered by many organizations to be the fairest
and most accurate method of performance management.
For example, MARICO assessment centre consists of a number of exercises, which will
include a presentation, an individual exercise, group work and an interview. The exercises are
designed to measure the skills and behaviours required to be successful, including flexibility,
challenge, customer focus, cooperative commitment and result focus.
18. Critical Incidents Method:
The evaluator rates an employee on the basis of critical events and how he behaved during
those events or incidents. It consists of negative as will as positive assessment points. The
drawback of this system is that the evaluator has to note down the critical incidents and
evidence of his behaviour as when they occur.
19. Paired Comparison Method:
This method compares each employee with all others in a group, one at a time. After all
comparisons come to end, employee is given his final ranking on the basis of overall comparisons.
20. Easy Appraisal Method:
This is a traditional form of appraisal popularly known as “Free Form Method” consists of
description of the performance of an employee by his superior on the basis of certain inputs
such as quantity of work, quality of work, attitude, sincerity, loyalty, hard work, ability to get
along with others, attendance and late coming record, punctuality, ability to accept command
of superiors and, obedience. A major weakness of this method is the inseparability of the bias
and subjectivity of the evaluator.
6. CASE STUDIES IN PERFORMANCE MANAGMENT:
1. PERFORMANCE MANAGEMENT AT INFOSYS TECHNOLOGIES:

A. The first step toward carrying out performance appraisal at Infosys was the evaluation of
personal skills for the tasks assigned to an employee during the period of appraisal. To evaluate the
performance, different criteria like timeliness, quality of work carried out by the employee, customer
satisfaction, peer satisfaction, and business potential, were considered. The personal skills of the
employees were also evaluated based on their learning and analytical ability, communication skills,
decision making, change management, and planning and organizing skills. Each of these criteria was
measured on a scale of 1 to 5 (with 1 signifying above the expected performance level and 5 below
the expected performance level).
B. 360 Degree Feedback: The employees also look at aspects of the managers’ performance,
strategic vision, ability to communicate, problem-solving skills, responsiveness. The results of the
survey (the rankings and comments) are then aggregated and published online for everyone to see.
C. Recognition for Adding Value: ‘What gets measured ‘gets reviewed and what gets reviewed,
gets improved’ is what the company believes in and rewards each employee whose innovation is
lauded by the customers.
D. Employee-Management Interface: It reduces the gap between the manager and the employee.
There are regular direct Q and A interface with the President himself, who is expected to respond
within a given time-frame.
E. Focus on Learning: A lot of investment is made in employee-focussed resources (e-Learning)

and creating libraries for employees, holding workshops. All employees are eligible for ESOPs after
one year of joining.
F. Innovation: To innovate and nurture your own business ideas by getting support and guidance
from the company itself. innovate@HCL is one such e-forum that enables employee involvement and
participation towards innovations in their work environment and beyond.
G. Business Continuity Plan: The company’s comprehensive succession plan ensures
continuity in the event of an employee-related contingency.
2. PERFORMANCE MANAGEMENT AT RELIANCE INFRASTRUCTURE LIMITED:
A. Performance Management:
To ensure that the talent we have attracted can help us achieve our goals, we create appropriate
working conditions, by adopting following steps:
1. Evaluating all jobs so as to assign them to the individuals best suited for them.
2. Designing customized jobs, if necessary, using techniques drawn for behavioural sciences and
industrial psychology.
3. Creating manpower configurations to boost the ability of the individuals.
4. Through it all, balancing corporate and employee interests by designing individual career paths.
B. Objectives of Performance Management System (PMS):
1. Create a culture of excellence that inspires every employee.
2. Match organizational objectives to individual aspirations.
3. Equip people with the skills necessary to perform their duties.
4. Clear growth paths for especially talented individuals.
5. Provide new challenges to rejuvenate plateauing careers.
6. Forge a partnership with people for managing their career.
7. Empower employees to take decisions without fear of failing.
8. Imbibe teamwork in all operational process.
C. Performance Appraisal System:
The Performance Appraisal System provides for
1. Recognition of individual performance.
2. Continual learning and development.
3. Better skills and employability.
4. Monetary and other rewards.
5. The achievement of the organization’s goals.
6. Increased productivity and profitability.
7. A motivated workforce.
7. CHECKLIST FOR PREPARATION AND STRATEGIC PLANNING IN PERFORMANCE

MANAGEMENT:
Once the foundation of developmental goals is in place, however, time to administer the system
decreases. Each of these steps is taken with the participation and cooperation of the employee, for
best results. The checklist, given here, is general in nature. Each organization may a follow a different
operating policy and system of performance management. For example, if an organization follows
MBO system for goal setting and performance appraisal, the activities in the checklist may differ. But
it is practical to prepare a checklist whichever method or system of performance management is
adopted.
A. Performance Appraisal Management and Development in the General Work System:

1. Define the purpose of the job, job duties, and responsibilities.
2. Define performance goals with measurable outcomes.
3. Define the priority of each job responsibility and goal.
4. Define performance standards for key components of the job.
5. Hold interim discussions and provide feedback about employee performance, preferably daily,
summarised and discussed, at least, quarterly. (Provide positive and constructive feedback.)
6. Maintain a record of performance through critical incident reports.
7. Provide the opportunity for broader feedback. Use a 360 degree performance feedback system
that incorporates feedback from the employee’s peers, customers, and people who may report
to him.
8. Develop and administer a coaching and improvement plan if the employee is not meeting
expectations.
B. Immediate Preparation for Performance Development Meeting:

1. Schedule the Performance Development Planning meeting and define pre-work with the staff
member to develop the performance development plan.
2. The staff member reviews personal performance, documents “self-assessment” comments
and gathers needed documentation, including 360 degree feedback results, when available.
3. The supervisor prepares for the PDP meeting by collecting data including work records,
reports, and input from others familiar with the staff person’s work.
4. Both examine how the employee is performing against all criteria, and think about areas for
potential development.
5. Develop a plan for the PDP meeting which includes answers to all questions on the performance
development tool with examples, documentation and so on.
6. Establish a comfortable, private setting and rapport with the staff person.
7. Discuss and agree upon the objective of the meeting, to create a performance development
plan.
8. The staff member discusses the achievements and progress he has accomplished during the
quarter.
9. The staff member identifies ways in which he would like to further develop his professional
performance, including training, assignments, new challenges and so on.
10. The supervisor discusses performance for the quarter and suggests ways in which the staff
member might further develop his performance.
11. Add the supervisor’s thoughts to the employee’s selected areas of development and improvement.
12. Discuss areas of agreement and disagreement, and reach consensus.
13. Examine job responsibilities for the coming quarter and in general.
14. Agree upon standards for performance for the key job responsibilities.
15. Set goals for the quarter.
16. Discuss how the goals support the accomplishment of the organization’s business plan, the
department’s objectives and so on.
17. Agree upon a measurement for each goal.
18. Assuming performance is satisfactory; establish a development plan with the staff person that
helps him grow professionally in ways important to him.
19. If performance is less than satisfactory, develop a written performance improvement plan, and
schedule more frequent feedback meetings.
20. The consequences connected with continued poor performance.
21. The supervisor and employee discuss employee feedback and constructive suggestions for
the supervisor and the department.
22. Discuss anything else the supervisor or employee would like to discuss, hopefully, maintaining
the positive and constructive environment established thus far, during the meeting.
23. Mutually sign the performance development tool to indicate the discussion has taken place.
24. End the meeting in a positive and supportive manner. The supervisor expresses confidence
that the employee can accomplish the plan and that the supervisor is available for support and
assistance.
25. Set a time-frame for formal follow up, generally quarterly.
C. Follow-up of Performance Development Process Meeting:

1. If a performance improvement plan was necessary, follow-up at the designated times.
2. Follow-up with performance feedback and discussions regularly throughout the quarter. (An
employee should never be surprised about the content of feedback at the performance development
meeting.)
3. The supervisor needs to keep commitments relative to the agreed upon development plan,
including time needed away from the job, payment for courses, agreed upon work assignments
and so on.
4. The supervisor needs to act upon the feedback from departmental members and let staff
members know what has changed, based upon their feedback.
5. Forward appropriate documentation to the human resources office and retain a copy of the plan
for easy access and referral.
SIMPLY SPEAKING...
Performance management is the practice of actively using performance data to improve
the public’s health. This practice involves strategic use of performance measures and standards
to establish performance targets and goals, to prioritize and allocate resources, to inform
managers about needed adjustments or changes in policy or program directions to meet
goals, to frame reports on the success in meeting performance goals, and to improve the
quality of public health practice.
Components:
Performance Management components include:
Performance Standards - establishment of organizational or system performance standards,
targets and goals and relevant indicators to improve practices.
Performance Measures - application performance indicators and measures and use of
performance indicators and measures.
Reporting of Progress - documentation and reporting of progress in meeting standards
and targets and sharing of such information through feedback.
Quality Improvement - establishment of a programme or process to manage change and
achieve quality improvement in public health policies, programs or infrastructure based on
performance standards, measurements and reports.
Focus is on Effectiveness:
A Performance Management System is the continuous use of all the above practices so
that they are integrated into the organization’s core operations. Performance management can
be carried out at multiple levels, including the program, organization, community, and state
levels.
Performance management reminds us that being busy is not the same as producing
results. It reminds us that training, strong commitment and lots of hard work alone is not
results. The major contribution of performance management is its focus on achieving results
— useful products and services for customers inside and outside the organization. Performance
management redirects our efforts away from busyness toward effectiveness.
Recently, organizations have been faced with challenges like never before. Increasing
competition from businesses across the world has meant that all businesses must be much
more careful about the choice of strategies to remain competitive. Everyone (and everything)
in the organization must be doing what they’re supposed to be doing to ensure strategies are
implemented effectively.
This situation has put more focus on effectiveness, that systems and processes in the
organization be applied in the right way to the right things: to achieve results. All of the
results across the organization must continue to be aligned to achieve the overall results
desired by the organization for it to survive and thrive. Only then it be said that the organization
and its various parts are really performing.
LEVEL SIX
STRATEGIC PLANNING IN LEADERSHIP DEVELOPMENT
CASE OF GURBIR SINGH JAISWAL:

Gurbir Singh Jaiswal was seen as an up-and-coming leader in East India Automobile Engineering
Limited. He had joined this company six years ago and he never looked back. People who worked
for him liked and respected him. His immediate superiors and other seniors saw his potential, and
were always proud of him.
His immediate boss, Vice-President Engineering, Ajay Bakshi, called him and handed over to
him an invitation to attend a five days Leadership Development Programme conducted by Administrative
Staff College of India at Hyderabad.
Gurbir Singh felt highly elated. He loved the organization and wanted to move up and contribute
as much as he could. He saw this opportunity as a positive step in that progression. Plus, he had
some challenges in his job that he hoped he could learn how to deal with them more successfully.
He was very much exited over the opportunity to develop and master the art of leadership. The
brochure gave him all the necessary details.
Because the training meant so much to him, Gurbir Singh was determined to be focused while
he was there, so he worked hard to get his projects all caught up before he left for the workshop.
Gurbir Singh loved the workshop! The facilitator was great, the faculty was excellent. the content
was helpful, and the food was even good! He was motivated by the new ideas and the people he met.
He gained in confidence as they practiced some of the things they learned. As a part of the programme
he built an action plan. He left the five days completely stoked about what he had learned and how
he would be able to apply it.
He attended his office on the following Monday.
On his table, he found a bunch of five different projects with a note from Ajay Bakshi, asking
him to prepare his action plan on each one of them and meet him two days later for final discussions
and approvals for initiating implementation.
His heart sank a little.
After finishing tea, Gurbir went to say hello to his team. This took a while because they had
questions and things they wanted to talk to him about – which was only natural since he had been
out for almost a week. An hour later he was back at his desk and started reading the new projects
to make action plans.
By 5.30 p.m. he had totally forgotten about his leadership action plan – he remembered it only
when he saw it in his briefcase after reaching home. He took it out and looked at it wistfully. He was
still committed to working on those items, but they would have to wait, as the next project meeting
was scheduled two days later. . .
Perhaps, the situation above sounds familiar to all of us. What is written up to the “After the
Workshop” heading looks good situation: a willing learner, a well designed workshop, and a person
feeling excited about his action plan. This story might be a bit too rosy – admittedly, not every one
who attends training will be as excited and motivated as Gurbir, but in the end it doesn’t really matter
– because a highly motivated person like Gurbir won’t get as much from this effort as he could or
even wants to.
WHY DOES IT HAPPEN ALL THE TIME?

Because while most leadership development programmes focus on developing a great training
programme, that is a small part of the overall likelihood of success. We must remember that
training is an event, but learning (including leadership development) is a process.
We don’t learn important, complex life skills in brief instant. In an instant we can get an insight,
an aha, and an inspiration. In an event we can get ideas, approaches, checklists and knowledge. But
skills come to us over time – not in a one shot, one time training course (regardless of how well it
is designed or how good the trainer is) Skills come with practice and application.
1. LEADERSHIP DEVELOPMENT IS A PROCESS WHILE TRAINING IS AN EVENT:
Leadership development is a process and as long as those efforts look like events, the return
on those investments will never be high. And if return on investment is low, the strategic planning in
leadership development may never be successful.
2. LEADERSHIP SKILLS DON’T DEVELOP OVERNIGHT:
The next day dejected and depressed Gurbir Singh walked over to Balkrishna Sharma, The
Vice-President-Human Resources and confided in him with his story. Sharma was empathetic but
advised him “Look, leadership skills do not develop overnight. Most of the time, an organization itself
does not provide opportunities and ambience to any person to exclusively practice what he or she
learns from a training programme. Because most of us believe that learning is always inbuilt in your
work and one has to snatch opportunity and time to experiment learning within the work and work
within assigned and working hours”, Sharma added further “ You are lucky that your boss, Ajay
Bakshi, is very proud of you and your abilities but at the same time, the projects are very important
to deal with and we are sure that you will be able to experiment your newer learning on leadership
development during the course of the implementation of each project.” Gurbir felt assured after talking
to Sharma.
Much can be written about specific things that can be done to make the process more effective,
but we can start without that list of ideas. Reread the story above. Connect it to your situation and
then think of two things you can do to make your leadership development process:
3. LEADERSHIP IS INFLUENCING PEOPLE:
Leadership is a process of influencing people to strive willingly for group objectives. It is a matter
of aligning people towards common goals and empowering them to take the actions needed to reach
them. The very essence of leadership is you have to have a vision. It’s got to be a vision you
articulate forcefully on every occasion Following is a useful framework to study leadership:
Leadertraits Leader behaviour
Personality Task-oriented
Abilities Person-oriented Effective Results
Motivation Initiating structure
Quality
Efficiency
Flexibility
Satisfaction
Situational variables Competitiveness
Follower’s needs Development
Task structure Survival
Position power
Leader-follower trust
Group readiness
A. JACK WELCH ON LEADERSHIP: IN “STRAIGHT FROM THE GUT”

1. There is only one way - the straight way. It sets the tone of the organisation.
2. Be open to the best of what everyone, everywhere, has to offer; transfer learning across your
organisation.
3. Get the right people in the right jobs - it is more important than developing a strategy.
4. An informal atmosphere is a competitive advantage.
5. Make sure everybody counts and everybody knows they count.
6. Legitimate self-confidence is a winner - the true test of self-confidence is the courage to be
open.
7. Business has to be fun - celebrations energize and organisation.
8. Never underestimate the other guy.
9. Understand where real value is added and put your best people there.
10. Know when to meddle and when to let go - this is pure instinct.
B. AS A LEADER, YOUR MAIN PRIORITY IS TO GET THE JOB DONE, WHATEVER THE
JOB IS. LEADERS MAKE THINGS HAPPEN BY:
1. Knowing your objectives and having a plan how to achieve them
2. Building a team committed to achieving the objectives
3. Helping each team member to give their best efforts
4. As a leader you must know yourself. Know your own strengths and weaknesses, so that you
can build the best team around you.
5. However - always remember the philosophical platform - this ethical platform is not a technique
or a process - it’s the foundation on which all the techniques and methodologies are based.
6. Plan carefully, with your people where appropriate, how you will achieve your aims. You may
have to redefine or develop your own new aims and priorities. Leadership can be daunting for
many people simply because no-one else is issuing the aims - leadership often means you have
to create your own from a blank sheet of paper. Set and agree clear standards. Keep the right
balance between ‘doing’ yourself and managing others ‘to do’.
7. Build teams. Ensure you look after people and that communications and relationships are good.
Select good people and help them to develop. Develop people via training and experience,
particularly by agreeing objectives and responsibilities that will interest and stretch them, and
always support people while they strive to improve and take on extra tasks. Follow the rules
about delegation closely - this process is crucial. Ensure that your managers are applying the
same principles. Good leadership principles must cascade down through the whole organisation.
This means that if you are leading a large organisation you must check that the processes for
managing, communicating and developing people are in place and working properly.
8. Communication is critical. Listen, consult, involve, and explain why as well as what needs to
be done.
9. Some leaders lead by example and are very ‘hands on’; others are more distanced and let their
people do it. Whatever - your example is paramount - the way you work and conduct yourself
will be the most you can possibly expect from your people. If you set low standards you are
to blame for low standards in your people.
10. “... Praise loudly, blame softly.”
11. If you seek one single most important behaviour that will rapidly earn you respect and trust
among your people, this is it: Always give your people the credit for your achievements and
successes. Never take the credit yourself - even if it’s all down to you, which would be unlikely
anyway. You must however take the blame and accept responsibility for any failings or
mistakes that your people make. Never never never publicly blame another person for a failing.
Their failing is your responsibility - true leadership offers is no hiding place for a true leader.
12. Take time to listen to and really understand people. Walk the job. Ask and learn about what
people do and think, and how they think improvements can be made.
13. Accentuate the positive. Express things in terms of what should be done, not what should not
be done. If you accentuate the negative, people are more likely to veer towards it.
14. Have faith in people to do great things - given space and air and time, everyone can achieve
more than they hope for. Provide people with relevant interesting opportunities, with proper
measures and rewards and they will more than repay your faith.
15. Take difficult decisions bravely, and be truthful and sensitive when you implement them.
16. Constantly seek to learn from the people around you - they will teach you more about yourself
than anything else. They will also tell you 90% of what you need to know to achieve your
business goals.
17. Embrace change, but not for change’s sake. Begin to plan your own succession as soon as
you take up your new post, and in this regard, ensure that the only promises you ever make
are those that you can guarantee to deliver.
2. WE MUST BEAR IN MIND THAT:
A. It is very difficult for any leader to internalise all the above qualities. Even Jack Welch could not
imbibe all these ideal qualities. But Jack Welch is right in observing that any persons who are
aspiring to be leader must internalise these qualities and make these as a way of his life.
B. Bear in mind that different leadership jobs require different types of leaders - Churchill was fine
for war but not good for peacetime re-building. Pandit Jawaharlal Lal Nehru – India’s first Prime
Minister was great statesman and peacetime re-builder but he could not take and accept
Chinese aggression on India in 1962.
There’s a big difference between short-term return on investment versus long-term change.
Each warrants a different type of leadership style, and actually very few leaders are able to adapt
from one to the other.
3. LEADERSHIP IS MOSTLY ABOUT BEHAVIOUR TOWARDS OTHERS:
Leadership is without doubt mostly about behaviour, especially towards others. People who
strive for these things generally come to be regarded and respected as a leader by their people:
 Integrity - the most important requirement; without it everything else is for nothing.
 Having an effective appreciation and approach towards corporate responsibility, (Triple
Bottom Line, Fair Trade, etc), so that the need to make profit is balanced with wider social and
environmental responsibilities.
 Being very grown-up - never getting emotionally negative with people - no shouting or ranting,
even if you feel very upset or angry.
 Leading by example - always be seen to be working harder and more determinedly than
anyone else.
 Helping alongside the people when they need it.
 Fairness - treating everyone equally and on merit.
 Being firm and clear in dealing with bad or unethical behaviour.
 Listening to and really understanding people, and show them that you understand (this doesn’t
mean you have to agree with everyone - understanding is different to agreeing).
 Always taking the responsibility and blame for your people’s mistakes.
 Always giving your people the credit for your successes.
 Never self-promoting.
 Backing-up and supporting your people.
 Being decisive - even if the decision is to delegate or do nothing if appropriate - but be seen
to be making fair and balanced decisions.
 Asking for people’s views, but remain neutral and objective.
 Being honest but sensitive in the way that you give bad news or criticism.
 Always doing what you say you will do - keeping your promises.
 Working hard to become expert at what you do technically, and at understanding your
people’s technical abilities and challenges.
 Encouraging your people to grow, to learn and to take on as much as they want to, at a pace
they can handle.
 Always accentuating the positive (say ‘do it like this’, not ‘don’t do it like that’).
 Smiling and encouraging others to be happy and enjoy themselves.
 Relaxing - breaking down the barriers and the leadership awe - and giving your people and
yourself time to get to know and respect each other.
 Taking notes and keeping good records.

 Planning and prioritizing.
 Managing time well and helping others to do so too.
 Involving your people in your thinking and especially in managing change.
 Reading good books, and taking advice from good people, to help develop your own
understanding of yourself, and particularly of other people’s weaknesses (some of the best
books for leadership are not about business at all - they are about people who triumph over
adversity).
 Achieve the company tasks and objectives, while maintaining your integrity, the trust of your
people, are a balancing the corporate aims with the needs of the world beyond.
4. LEADERSHIP DEVELOPMENT PROGRAMME IS THE MOST CRITICAL CORE ACTIVITY
IN THE STRATEGIC HUMAN RESOURCE PLANNING:
1. LEADERSHIP IS NOT SO EASY TO PRACTISE:
While leadership is easy to explain, leadership is not so easy to practise.
2. LEADERSHIP IS ABOUT BEHAVIOUR FIRST, SKILLS SECOND:
Leadership is about behaviour first, skills second. Good leaders are followed chiefly because
people trust and respect them, rather than the skills they possess.
3. LEADERSHIP IS DIFFERENT FROM MANAGEMENT:
Leadership is different from management. Management relies more on planning, organisational
and communications skills.
4. LEADERSHIP RELIES ON MANAGEMENT SKILLS TOO, BUT MORE SO ON
QUALITIES:
Leadership relies on management skills too, but more so on qualities such as integrity, honesty,
humility, courage, commitment, sincerity, passion, confidence, positivity, wisdom, determination,
compassion, sensitivity, and a degree of personal charisma.
5. LEADERSHIP COMES IN VARIOUS FROMS:

Leadership in present day scenario comes in various forms and employees at all levels may
require playing leadership role such as:
1. Team leaders of specific projects. (six sigma teams, kaizen teams).
2. Creators or innovators (gifted individuals with creative in sights).
3. Experts-Specialist in a particular area.
4. Translators-Translates an idea into specific product.
5. Change agents - Responsible for bringing in change in culture and turnaround in business and
profitability.
6. STEPS ESSENTIAL FOR STRATEGICALLY PLANNING LEADERSHIP DEVELOPMENT
PRORAMME:
There are various factors/ steps that need to be considered while strategically planning a
leadership development program in an organization. These factors are:
A. ALIGNING CULTURE WITH STRATEGY:

As the organization alters it business strategy in responses to changes in business environment,
it also needs to evolve and effectively align its culture in line with new strategy.
B. CHANGING ROLE OF LEADERS:
In the present times of competition, leadership role essentially has changed to more of
transformational nature whereby the leader steers the organization towards evolving better survival
and growth strategies through a combination of strengths including core values, vision, knowledge
and skills and Human Resource related competencies.
C. ALIGN HUMAN RESOURCE SYSTEMS WITH LEADERSHIP DEVELOPMENT:
Aligning various HR systems like Performance planning, succession planning, career development
and training system with that of leadership development will enhance the effectiveness of leadership
development programme.
D. WE NEED BOTH LEADING AND MANAGING:
An organization requires both leader as well as manager.
Lead People
Direction
Manage
Communication
Processes
Resources
Coach
Happy
Customers
Feedback
– What’s working?
– Need to do differently?
Healthy processes serving happy customers
Change in leadership framework: following diagram shows the change that has taken place
in leadership framework.
Input Output
Enterprise Enterprise
View View
Capability Business
Development Building
Customer Customer
Focus Focus
E. WIDE SPREAD LEADERSHIP:

Understanding competencies of leaders at various levels and type, building global leaders,
fostering diverse process and delivery capability, encouraging a culture of meritocracy and independent
thinking at all levels and institutionalizing knowledge management at the organizational level shall
contribute to successful strategic leadership development planning. Leadership is the lifting of a
man’s vision to higher sights, the raising of a man’s performance to a higher standard, the building
of a man’s personality beyond its normal limitations. Thus creating leaders in an organization will help
achieve better result from existing resources.
Every organization today are striving hard to create and retain leaders in an organization. But
this is possible only by strategically planning leadership development program and implementing it in
best possible way.
JOHN P. KOTTER ON CHANGE: WHY STRATEGIC LEADERSHIP DEVELOPMENT

PLANNING FAILS:
The author begins the article citing his experience with over 100 companies attempting to remake
themselves, from General Motors to Bristol-Meyers Squibb. Successful change within these companies
has ranged from very successful to total failure. Because of these experiences, it is recognized that
change is in itself a process which contains a series of phases that must all be completed in order
to produce satisfying leadership development and organisational change.
A. EIGHT FACTORES FOR FAILURE:

1. NOT ESTABLISHING A GREAT ENOUGH SENSE OF URGENCY:
A. Underestimating the difficulty of driving people from their comfort zones.
B. Becoming paralyzed by risks.
2. NOT CREATING A POWERFUL ENOUGH GUIDING COALITION:
A. No prior experience in teamwork at the top.
B. Relegating team leadership to an human resource, quality, or strategic-planning executive
rather than a senior line manager.
C. Companies that fail in phase two usually underestimate the difficulties of producing change and
thus the importance of a powerful guiding coalition, groups without strong line leadership never
achieve the power that is required.
3. LACKING A VISION:
A. Presenting a vision that’s too complicated or vague to be communicated in five minutes.
B. Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and
incompatible projects that can take the organization in the wrong direction or nowhere at all.
4. UNDERCOMMUNICATING THE VISION:
A. A good transformation vision is developed, but a single form of communication is used.
B. The head of the organization spends a considerable amount of time making speeches to
employee groups, but most people still don’t get it.
C. Much effort is put into communication, but some very visible senior executives still behave in
ways antithetical to the vision.
5. NOT REMOVING OBSTACLES TO THE NEW VISION:

A. Failing to remove powerful individuals who resist the change effort.
B. Communication is never sufficient by itself; renewal also requires the removal of obstacles.
6. NOT SYSTEMATICALLY PLANNING FOR AND CREATING SHORT-TERM WINS:
A. Without short-term wins, too many people give up or actively join the ranks of those people who
have been resisting change.
B. Leaving short-term successes up to chance.
C. Failing to score successes early enough (12-24 months into the change effort).
7. DECLARING VICTORY TOO SOON:
A. Until changes sink deeply into a companies culture, a process that can take five to ten years,
new approaches are fragile and subject to regression.
B. Declaring victory too soon – with the first performance improvement.
C. Allowing resistors to convince “troops” that the war has been won.
8. NOT ANCHORING CHANGES IN THE CORPORATION’S CULTURE:
A. Not creating new social norms and shared values consistent with changes.
B. Promoting people into leadership positions who don’t personify the new approach.
B. EIGHT PHASES FOR SUCCESS:
Kotter identifies eight phases or stages a company must successfully complete in order to obtain
lasting change:
1. ESTABLISH A SENSE OF URGENCY:
A. Examine market and competitive realities for potential crises and untapped opportunities.
B. Convince at least 75% of company managers that the status quo is more dangerous than the
unknown.
C. Identify and discuss crises, potential crises, or major opportunities.
2. FORM A POWERFUL GUIDING COALITION:
A. Assemble a group with enough power to lead the change effort.
B. Encourage the group to work together as a team outside of the normal hierarchy.
3. CREATE A VISION:
A. Create a vision to direct the change effort.
B. Develop strategies for realizing that vision.
4. COMMUNICATE THE VISION:
A. Use every vehicle possible to communicate the new vision and strategies for achieving it.
B. Teach new behaviors by the example of the guiding coalition.
5. EMPOWER OTHERS TO ACT ON THE VISION:
A. Remove or alter systems or structures that undermine the vision.
B. Encourage risk taking and nontraditional ideas, activities, and actions.
6. PLAN FOR AND CREATE SHORT-TERM WINS:

A. Define and engineer visible performance improvements.
B. Recognize and reward employees contributing to those improvements.
7. CONSOLIDATE IMPROVEMENTS AND PRODUCE MORE CHANGE:
A. Use increased credibility from early wins to change systems, structures, and policies undermining
the vision.
B. Reinvigorate the change process with new projects and change agents.
8. INSTITUTIONALIZE NEW APPROACHES:
A. Articulate connections between new behaviors and corporate success.
B. Create leadership development and succession plans consistent with the new approach.
LEADERSHIP DEVELOPMENT AT INFOSYS TECHNOLOGIES: CASE STUDY
INFOSYS BELIEVES:
1. Leadership Development must drive the creation of a leadership funnel at different levels of the
organization
2. Leadership Development must be centred around the individual
3. Leadership Development must be rooted in the organizational context
4. Development can happen through multiple methods – there is no single magic mantra that will
work for everybody or across time
5. Executive commitment is the key to leadership development
LEADERSHIP DEVELOPMENT INTERVENTIONS:

1. Customized Development Centers for tier 1 leaders.
2. 3600 feedback for all tier 1 leaders.
3. PDPs for all tier leaders.
4. Mentoring for all tier leaders - tier 1 leaders being mentored by board members.
5. Leaders Teach Series.
6. Leaders Teach Forums

7. Leadership Development Channel
8. Specific leadership competency development program in collaboration with Duke University
and IIM Ahmedabad.
9. Development of leadership Index
LEADERSHIP COMPETENCIES DEFINED:
• Focus on outcomes
– Focus on the future
– Focus on ‘what’ rather than ‘how’
– Focus on portfolio approach to leadership
• Strategic Leadership is about unique positioning
• Change Leadership is about changing the context
• Talent Leadership is about creating a top quality leadership team that is globally best in class
in that particular area
• Operational Leadership is about achieving high degrees of efficiency and productivity
• Relationship/Networking leadership is about developing, maintaining and leveraging long-
term internal and external relationships/networks
• Content Leadership is about thought leadership
• Transition Leadership is about acquiring and integrating new lines of business
• Adversity Leadership is about managing crisis
• Entrepreneurial Leadership is about taking ownership for business outcomes.
SIMPLY SPEAKING…
“At the age of seven, a young boy and his family were forced out of their home. The boy
had to work to support his family. At the age of nine, his mother passed away. When he grew
up, the young man was keen to go to law school, but had no education.
At 22, he lost his job as a store clerk. At 23, he ran for state legislature and lost. The same
year, he went into business. It failed, leaving him with a debt that took him 17 years to repay.
At 27, he had a nervous breakdown.
Two years later, he tried for the post of speaker in his state legislature. He lost. At 31, he
was defeated in his attempt to become an elector. By 35, he had been defeated twice while
running for Congress. Finally, he did manage to secure a brief term in Congress, but at 39 he
lost his re-election bid.
At 41, his four-year-old son died. At 42, he was rejected as a prospective land officer. At
45, he ran for the Senate and lost. Two years later, he lost the vice presidential nomination.
At 49, he ran for Senate and lost again.
At 51, he was elected the President of the United States of America.
The man in question: “Abraham Lincoln.”
Simply put, leadership development is an effort that enhances the learner’s capacity to lead
people. Very simply put, leading is setting direction and guiding others to follow that direction.
A critical skill for leaders is the ability to manage their own learning. The highly motivated,
self-directed reader can gain a great deal of learning and other results from using the guidelines
and materials in this library topic.
Many of us are acquainted with this eloquent example of persistence and determination
in achieving victory. We read it, stop for a moment and then sigh and say: “Wow! That’s the
stuff real leaders are made off.”
And in saying this, it’s all too easy for us to think about leaders like Lincoln almost as
“mythological creatures”, separate from the rest of humanity and empowered by some
mysterious quality that smoothes their path towards inevitable success. This is the view of
leadership that many people have traditionally taken: That leader are marked out for leadership
from early on in their lives, and that if you’re not a leader, there’s little that you can do to
become one.
However, that’s not the way we see it now. The modern view is that through patience,
persistence and hard work, you can be a highly effective leader.
The ability to manage one’s own learning is an increasingly critical skill. Bouchard explains,
“Over the years, it has become increasingly clear that traditional approaches to leadership
development training programme design and delivery in the workplace and in associative
organizations present some important weaknesses. Problem areas include: coping with the
short life span of useful knowledge; passing down acquired competencies to succeeding cohorts;
accommodating the demands of productivity while providing for a continuity of learning; enabling
learners to pursue activities that correspond to their learning styles and needs.
CASE OF PREM SINGH CHARSI: CASE STUDY FOR PRACTICE:

Prem Singh joined a multinational packaging company as a worker when he was nineteen. He
was promoted as a machine operator seven years later. He was given the task of handling an
automatic Roll Seal Closures (RSC) manufacturing single unit machine with one casual worker as a
helper to assist him in day-to-day operations related chores.
Prem Singh was a hardworking person. He was honest and sincere, had a tremendous sense
of humour and was always frank and forthright. He had shown some of his leadership qualities in the
past whenever there was a crises or an emergency, he came forward and offered his action filled
help. He was sensitive to the needs of fellow workmen. One could never hear Prem Singh shouting
or losing his temper on others. His respect for the chair was unbeatable.
But Prem Singh had weaknesses too. He was addicted to ‘Charas’ which he would consume
almost everyday. Every month he would approach the Human Resource Manager for advance against
his salary on one or the other pretext which money he would spend in buying charas. He was an
excellent machine operator and most of the time he would finish his eight hours work in half of his
shift time. The remaining time he would spend in gossiping and wasting his own as well as others’
time. But his superiors never objected to his (use) habits primarily because he was an excellent
machine operator and a human being.
Three years later, he was promoted as a supervisor and was asked to manage thirty five
workers in his shift. Every one, across the company, felt that he deserved the promotion. He was
almost thirty when he became the supervisor.
During the next four years, Prem Singh managed his supervisory role very well. He ensured that
there were no job related problems in his section and all his thirty five workers would always abide
his instructions. He also managed that there were no industrial relations issues or problems causing
disruption of work in his section. He managed the productivity above norms and ensured that his
workers would earn profitable incentives.
At the onset of the fifth year of his promotion, the company brought all the supervisory staff out
of the coverage of Labour Laws such as the Industrial Disputes Act and the Trade Union Act and
designated them as “Junior Management Staff (JMS)”. They were given fresh letters of appointment
in the new classification. The remuneration and benefits structure was redesigned, the salaries were
hiked and the new benefits were added. Prem Singh got grade IV (lowest) in the new nomenclature.
He was not expecting this. He went to the Human Resource Manager and thanked him for his
support.
Three years later, the manufacturing manager, his immediate superior, recommended his promotion
to grade one. The committee appointed by the management to consider yearly recommendations for
up-gradations and promotions rejected the recommendation of Prem Singh’s promotion on the grounds
that he was not a graduate, could barely speak English and he was still addicted to charas which
would adversely affect his work if promoted to grade one. The matter was sent to the Regional
Manager for his perusal and final decision. The Regional Manager asked the Human Resource
Manager to find the way out of this problem. The Human Resource manager consulted the others
members of the promotion committee and made the following recommendations:
1. Prem Singh should be asked to do his graduation from an evening college and for this he should
be given all the facilities including his college tuition fees and other necessary expenses for
books and stationery. These expenses should be reimbursed to him every year on successfully
passing his examinations.
2. In addition to above, he must attend English speaking and writing classes for which a lump sum
amount would be reimbursed to him at the end of the month.
3. He must get admitted into a ‘de-addiction centre’ to give up the habit of consuming charas. The
expenses of the de-addiction centre would be borne by the company.
4. Prem Singh would stand promoted to grade one with retrospective effect once he has complied
with all the above requirements/conditions. Human Resource Manager would make necessary
arrangements to enable Prem Singh to comply with the above conditions.
The Regional Manager approved the proposal. He called Prem Singh in the presence of the
Human Resource Manager, manufacturing manager and the other members of the promotion committee.
He asked Prem Singh whether he would be able to comply with these three pre-conditions. Prem
Singh thanked him and the other managers and said “Sir, justice has been done. I should have taken
care to complete my education at least 10 years earlier and would have, by now, learnt to speak and
write English. I was not prepared to take leadership challenges at such a senior level. I shall do every
thing to earn level one salary. You will never find me failing, sir”.
Today, at 54, Prem Singh is the Senior Vice-President – Technical and Human Resource
Management with another multinational company. But he commands respect more as a leader and
people down the line listen to him and try to follow his words of wisdom in action.

1. Do you believe that Prem Singh really deserved all those promotions he got in his first company? Support
your answer citing examples from the case study.
2. What was the philosophy of the company on promotions and developing leadership among employees?
3. Why did Prem Singh get so many promotions? Cite reasons to support your answer.
4. Do a SWOT analysis of the company and match it with that of Prem Singh. Write the reasons as to why
the company always adopted a soft approach towards Prem Singh?
5. What are the leadership qualities which Prem Singh was required to achieve and sustain a leadership role
in junior management staff?
6. What were the real reasons due to which company was constrained to stop the immediate promotion of
Prem Singh?
7. Write, in not more than one thousand words, the leadership profile of Prem Singh.
8. What factors contributed to a paradigm shift for Prem Singh to turn a leader from a manager?
LEVEL SEVEN
STRATEGIC PLANNING IN TEAM BUILDING
TEAMS
A team is a small group of people with complementary skills, who are committed to a common
purpose, set of performance goals and approach, for which they hold themselves mutually accountable.
Performance/Results
AC
CO
LS
UN
IL
Problem Mutual
SK
TA
Solving Small
BI
LIT
Technical/ number of
Y
Functional people/
Interpersonal Individual
Specific Goals
Common Approach
Meaningful Purpose
Collective Work COMMITMENT

Personal Growth
1. Basic Definition:
In the latter part of the 20th century, “Team Building” became recognised by many companies
as an important factor in providing a quality service and remaining competitive. Yet as we stride into
the 21st century, the term “team building” can still sometimes seem rather nebulous - people often
know that they need it, but aren’t quite sure what it is. As a result, team building is used in all sorts
of contexts, even when it is not appropriate.
Some people define a team as being “the whole is greater than the sum of its parts”. But this
isn’t the right definition; it is a feature of good teams. ‘Whole > sum’ shows that they are working well
together - but there are some teams whose collective performance falls short of what we might
expect given the quality of individuals. The Apollo Syndrome is a good example of this - where
highly intelligent people often perform worse than teams made of up ‘less-able’ members.
Some people define a team as being the people who report to the same boss. This can be
misleading. In a well-designed organisational structure, people reporting to one boss do often form
‘teams’. But when designing organisational hierarchies there are often compromises made because
of pay structures or the need to have traditional reporting lines.
2. Team is a Group of People – A Group is not Necessarily a Team:
While a team is a group of people, a group is not necessarily a team. Rather, a team is a group
of people working together towards a common goal. .
A. If a Team is a Group of People....?

If a team is a group of people working towards a common goal, ‘team building’ is the process
of enabling that group of people to reach their goal.
B. Stages in Team Building:
In its simplest terms, the stages involved in team building are:
 To clarify the collective goals.
 To identify those inhibitors that prevent them from reaching their goals and remove them.
 To put in place enablers that assist them.
 To measure and monitor progress, to ensure the goals are achieved.
Traditional techniques often address the inhibitors to collective performance: relationships,
communication, etc. However, if a group is only a group, then the benefits of such techniques may
be limited. At best, there may be no need to resolve relationship problems; at worst it can be a waste
of time and detract the people involved from achieving their individual goals.
C. Relationship Problems:
If there are problems between people working in a group, then this can have a negative impact
on their individual performance. However, traditional techniques are not the solution.
The stress in a relationship between two people is governed by the formula:
In a group, the ‘importance’ is low. However, traditional techniques implicitly try make the
importance score higher than it need be. This makes the stress score worse, because you are
forcing people to work well together when they don’t need to.
However, to reduce relationship stress in a group, it is better to focus on the factor that is easiest
to change: proximity. If they are only a group, then putting some distance between them (physically
or by managing the boundaries between their work) will achieve a satisfactory result, without having
to invest a lot of time.
SIMPLY SPEAKING…
 A team is a group of people working towards a common goal
 Team building is a process of enabling them to achieve that goal
 If they are only a group, then traditional techniques can be a waste of time/money or even
counter-productive
 There may be better ways to resolve problems in groups for example putting distance
between people who don’t get on or, if they are both willing, building some understanding
of personality differences
 Teams could be divided into
1. A formal Team: They have more disciplined leadership. Team’s rules and procedures have
to be followed. Reports are made for all activities done. Progress over a period of time is
noted and evaluated. Results are obtained on a regular basis.
2. An Informal Team: They follow informal procedures. Ideas and solutions to problems can
be generated on a more casual basis. Procedures are less stringent.
 High performing teams are characterized by:

A. Purpose.
B. Empowerment.
C. Relationships and communication.
D. Flexibility.
E. Optimal Performance.
F. Recognition and Appreciation.
G. Morale.
3. Types of Teams:
A. Task Force - a temporary team assembled to investigate a specific issue or problem.
B. Problem Solving Team - a temporary team assembled to solve a specific problem.
C. Product Design Team - a temporary team assembled to design a new product or service.
D. Committee - a temporary or permanent group of people assembled to act upon some matter.
E. Work Group - a permanent group of workers who receive direction from a designated leader.
F. Work Team (also called Self-Directed Work Team or Self-Managed Work Team) - an ongoing
group of workers who share a common mission who collectively manage their own affairs within
pre-determined boundaries.
G. Quality Circle - a group of workers from the same functional area who meet regularly to
uncover and solve work-related problems and seek work improvement opportunities.The name
of the group or team type is less important than the purpose for which it exists. These names
simply give us a common language to help us define team types.
4. Team Building:
Team Building accelerates the normal socialisation process. It creates and maintains a group of
people who can work well together. It aims towards the accomplishments of common goals and
objectives, and enjoy doing so.
Almost all team activity falls under two main topics: task accomplishment and team building.
Task accomplishment is any activity that accomplishes work and moves the team toward its mission.
Team building is any activity that builds and strengthens the team as a team. The experts agree
that teams that focus on both sets of activities tend to be stronger and more successful over time.
Task Accomplishment Team Building
A. Team Mission and Vision A. Team Values
B. Team Operating Processes B. Team Operating Principles
C. Team Task Roles C. Team Building Roles
5. Mechanisms for Strategic Planning in Team Building:

A. Vision and Mission:
Every organization has vision and mission which it tries to achieve over certain period of time.
Each department or team in an organization should also foster same vision and mission. This
results in effective achievement of the same, in less time span.
B. Cultural linkage:
Every organization has set of values that form its culture. For efficient achievement of organization’s
vision it is important that organization and its department have linkage in their culture.
C. Purpose:
Each team has the purpose for its existence, which is in alignment of organizational vision and
mission. Every member has to be aware of the purpose of the team so that efforts of all the
members are made in right direction.
D. Commitment:
When the purpose of existence of team is known it is also important that each member has high
commitment level towards the purpose or goal.
E. Team Members Roles:
Role of each member in an organization should be clearly defined. Clarity avoids duplication or
omission of any task.
F. Effective Communication:
Effective communication between the members of the group is very essential. It results in faster
and effective achievement of goals of the organization
G. Planning for Results:
Clarity of results to be achieved is very important. It gives direction to the team. Without clear
planning of results, efforts of team may become futile.
H. Accountability and Responsibility:
Every member in the team needs to be accountable and responsible for his/her actions. It is
important that every member contributes to the goal of team and is answerable for the same.
I. Conflict Resolution:
It is natural that while achieving goals team may have differences. These differences are
important for better performance of team. But they need to be resolved on time otherwise may
have negative impact on the environment of team.
J. Evaluation and Feedback in the right spirit:
Evaluating whether the team is able to achieve its goals helps team to set future directions. Also
contribution of individual in achieving those goals needs to be evaluated. Feedback needs to
be given to each member regarding the same for future improvements.
Thus, it is very essential to strategically plan the activities of team this helps in effective
achievement of team goals. The task of management is to arrange organisation climate and
methods of operation so that people can achieve their goals by directing their own efforts
towards organisational objectives. It is that each member of the team knows that he or she can
influence the team agenda. Each team member must be willing to contribute.
6. Team Building Excercise: Uncomfortable but Important Questions, Members
need to answer for Strategic Success of Team:
A. Clear Expectations:
Has executive leadership clearly communicated its expectations for the team’s performance
and expected outcomes? Do team members understand why the team was created? Is the
organization demonstrating constancy of purpose in supporting the team with resources of
people, time and money? Does the work of the team receive sufficient emphasis as a priority
in terms of the time, discussion, attention and interest directed its way by executive leaders?
B. Context:
Do team members understand why they are participating in the team? Do they understand
how the strategy of using teams will help the organization attain its communicated business
goals? Can team members define their team’s importance to the accomplishment of corporate
goals? Does the team understand where its work fits in the total context of the organization’s
goals, principles, vision and values?
C. Commitment:
Do team members want to participate in the team? Do team members feel the team mission
is important? Are members committed to accomplishing the team mission and expected
outcomes? Do team members perceive their service as valuable to the organization and to their
own careers? Do team members anticipate recognition for their contributions? Do team members
expect their skills to grow and develop on the team? Are team members excited and challenged
by the team opportunity?
D. Competence:
Does the team feel that it has the appropriate people participating? (As an example, in a process
improvement, is each step of the process represented on the team?) Does the team feel that
its members have the knowledge, skill and capability to address the issues for which the
team was formed? If not, does the team have access to the help it needs? Does the team feel
it has the resources, strategies and support needed to accomplish its mission?
E. Charter:
Has the team taken its assigned area of responsibility and designed its own mission,
vision and strategies to accomplish the mission. Has the team defined and communicated
its goals; its anticipated outcomes and contributions; its timelines; and how it will measure both
the outcomes of its work and the process the team followed to accomplish their task? Does the
leadership team or other coordinating group support what the team has designed?
F. Control:
Does the team have enough freedom and empowerment to feel the ownership necessary to
accomplish its charter? At the same time, do team members clearly understand their boundaries?
How far may members go in pursuit of solutions? Are limitations (i.e., monetary and time
resources) defined at the beginning of the project before the team experiences barriers and
rework?
G. Collaboration:
Does the team understand team and group process? Do members understand the stages of
group development? Are team members working together effectively interpersonally? Do
all team members understand the roles and responsibilities of team members? team leaders?
team recorders? Can the team approach problem solving, process improvement, goal setting
and measurement jointly? Do team members cooperate to accomplish the team charter? Has
the team established group norms or rules of conduct in areas such as conflict resolution,
consensus decision making and meeting management? Is the team using an appropriate
strategy to accomplish its action plan?
H. Communication:
Are team members clear about the priority of their tasks? Is there an established method for
the teams to give feedback and receive honest performance feedback? Does the organization
provide important business information regularly? Do the teams understand the complete
context for their existence? Do team members communicate clearly and honestly with each
other? Do team members bring diverse opinions to the table? Are necessary conflicts raised
and addressed?
I. Creative Innovation:
Is the organization really interested in change? Does it value creative thinking, unique
solutions, and new ideas? Does it reward people who take reasonable risks to make
improvements? Or does it reward the people who fit in and maintain the status quo? Does it
provide the training, education, access to books and films, and field trips necessary to stimulate
new thinking?
J. Consequences:
Do team members feel responsible and accountable for team achievements? Are rewards and
recognition given when teams are successful? Is reasonable risk respected and encouraged
in the organization? Do team members fear reprisal? Do team members spend their time finger
pointing rather than resolving problems? Is the organization designing reward systems that
recognize both team and individual performance? Is the organization planning to share gains
and increased profitability with team and individual contributors? Can contributors see their
impact on increased organization success?
K. Co-ordination:
Are teams coordinated by a central leadership team that assists the groups to obtain what they
need for success? Have priorities and resource allocation been planned across
departments? Do teams understand the concept of the internal customer—the next process,
anyone to whom they provide a product or a service? Are cross-functional and multi-department
teams common and working together effectively? Is the organization developing a customer-
focused process-focused orientation and moving away from traditional departmental thinking?
L. Cultural Change:
Does the organization recognize that the team-based, collaborative, empowering, enabling
organizational culture of the future is different than the traditional, hierarchical organization
it may currently be? Is the organization planning to or in the process of changing how it rewards,
recognizes, appraises, hires, develops, plans with, motivates and manages the people it
employs?
CASE OF ROVAN SHOES AND THREE GENERAL MANAGERS:

CASE STUDY FOR PRACTICE:
Rishab Sood was a semi-literate dropout from a Hindi medium school at Kanpur but he had a
business brain. He married Rajani when he was barely twenty. Rajani was a graduate from St.
Andrews College of Commerce Allahabad and came from a well to do business family. She was
mature and smart. She very soon realised that she will have to take a lead role in bringing up her
two sons, Rakesh and Rajesh, and daughter Sunayana. They married off Sunayana when she
finished her post-graduation in Economics. Rakesh and Rajesh graduated in engineering from IIT
Kanpur. Later, Rakesh chose to be leather technologist and Rajesh went to IIM Lucknow to complete
his MBA -Marketing
Meanwhile, Rishab got loan from State Bank of India to set up us his shoe manufacturing factory
“Rovan Shoes” at Kanpur. Rakesh and Rajesh joined the business as directors under the leadership
of Rishab taking over as the managing director. They appointed Manav Dyal as General Manger –
Production.
Failing health forced Rishab to retire from the active business. Rakesh took over as Director –
operations and Human Resource Management and Rajesh became Director – Research and
Development and Marketing. They appointed their cousin Sujit Kumar as General Manager – Finance,
who had returned from INSEAD University Singapore after finishing MBA-Finance,. Between three of
them, they managed to increase the sales turnover from Rs. 5 crores to 450 crores in about 10 years.
They also appointed Ravi Kishan as General Manager - Projects who was earlier working with Bata
Shoes.
A consortium of 4 financial institutions led by Industrial Finance Corporation of India Limited
(IFCI) sanctioned a loan of Rs.150 crores to Rovan Shoes for expansion. The loan was returnable
in 15 years @ 15% interest per annum. The phase one of the envisaged expansion was to be
completed in 3 years which got delayed by three years as a result of which phase two also got
delayed by one year. Rovan shoes started receiving reminders to complete the projects fast. No one
in the management had the time to analyse the issues which caused the delay in implementing the
expansion project but the inside observers claimed that much of the mess was management’s own
creation and mud slinging on each other within the top management.
It was known to everyone in the company that each of the three general managers were in a
constant competition to blame each other. It was a daily affair. Each was competent in his own field
but were very poor team players. The General Manger- Production Manav Dayal blamed Ravi Kishan,
the General Manger – Projects for the delay in commissioning phase one and two of the project and
Ravi Kishan blamed Sujit Kumar, General Manager –Finance for not releasing funds and giving
payments to suppliers in time. Sujit Kumar blamed Manav Dayal and Ravi Kishan for not giving him
adequate notice of requirements and other documentation as a result of which the letters of credit
were not opened up, shipments were delayed, demurrage costs were rising and the company earned
a bad reputation in the market. The factory had series of shut-downs as raw material supply became
erratic and the import duties were sharply going up.
Meanwhile, the directors appointed Amrish Pandey as Chief Commercial Manager reporting
directly to them. This was not appreciated by Sujit Kumar and Manav Dayal. Ravi Kishan did not mind
his appointment.
Three months later, after the appointment of Amrish Pandey, the production at Rovan Shoes
factory came to a standstill as there was no stock of raw material.
The ugly face of acrimony between the three general managers appeared again and rose to a
feverish pitch of mudslinging on each other. Amrish Pandey could not escape their tirade. They
abused and accused him of making and forwarding false complaints against them to the directors
while Amrish Pandey had complained to the directors that he was not getting any cooperation from
all of them.
The three general managers of Rovan Shoes were individually competent, efficient and strong
willed but they lacked team spirit due to their egoistic attitude and negative mindset. Their desire to
show their colleagues in poor light was overwhelming. Directors’ efforts to counsel them failed miserably.

1. What, according to you, were the major problems with Rovan Shoes?
2. Were the directors competent enough to counsel the three general managers? If so, what were their skill
sets and competencies to handle human and interpersonal relationships?
3. Do you think that the directors were directly or indirectly responsible and accountable for creating rift
among the three general managers? Explain the reasons, for or against, quoting excerpts from the case
study.
4. If you were the managing director of the company, how would you have developed and sustained your core
team? Explain in details with examples.
5. What strategic planning principles the directors should have applied once they realised that the three
general managers were not able to work as a coordinated cohesive team?
LEVEL EIGHT
STRATEGIC PLANNING IN PREPARING STANDARD OPERATING

PROCEDURE (SOP) IN COMPENSATION AND BENEFITS
A. DEFINING STANDARD OPERATING PROCEDURE:

An important aspect of a quality system is to work according to unambiguous Standard Operating
Procedures (SOPs). In fact the whole process from sampling to the filing of the analytical result
should be described by a continuous series of Standard Operating Procedures. A Standard Operating
Procedure can be defined as follows:
A Standard Operating Procedure is a document which describes the regularly recurring
operations relevant to the quality of the investigation. The purpose of a Standard Operating
Procedure is to carry out the operations correctly and always in the same manner. A Standard
Operating Procedure should be available at the place where the work is done.
Standard Operating Procedures are created to provide specific documentation for various
processes, usually highly-technical processes. Businesses are finding that they lack this kind of
documentation; either there has been inadequate process definitions altogether, or they have no
documentation in place. When reviewing the existing documentation, it is important to know where a
particular Standard Operating Procedure may be needed, or that the Standard Operating Procedure
available is too technical or not current for most users to be able to use.
A Standard Operating Procedure is a compulsory instruction. If deviations from this instruction
are allowed, the conditions for these should be documented including who can give permission for
this and what exactly the complete procedure will be. The original should rest at a secure place while
working copies should be authenticated with stamps and/or signatures of authorized persons.
1. TYPES OF STANDARD OPERATING PROCEDURE:
1. Fundamental Standard Operating Procedures. These give instructions how to make Standard
Operating Procedures of the other categories.
2. Methodic SOPs. These describe a complete testing system or method of investigation.
3. Standard Operating Procedures for safety precautions.
4. Standard procedures for operating instruments, apparatus and other equipment
5. Standard Operating Procedures for analytical methods.
6. Standard Operating Procedures for the preparation of reagents.
7. Standard Operating Procedures for receiving and registration of samples.
8. Standard Operating Procedures for Quality Assurance.
9. Standard Operating Procedures for archiving and how to deal with complaints.
2. INITIATING A STANDARD OPERATING PROCEDURE:
As implied above, the initiative and further procedure for the preparation, implementation and
management of the documents is a procedure in itself which should be described. These Standard
Operating Procedures should at least mention:
A. Who can or should make which type of Standard Operating Procedure.

B. To whom proposals for a Standard Operating Procedure should be submitted, and who
adjudges the draft.
C. The procedure of approval.
D. Who decides on the date of implementation, and who should be informed.
E. How revisions can be made or how a Standard Operating Procedure can be withdrawn.
It should be established and recorded who is responsible for the proper distribution of the
documents, the filing and administration (e.g. of the original and further copies). Finally, it should be
indicated how frequently a valid Standard Operating Procedure should be periodically evaluated
(usually 2 years) and by whom. Only officially issued copies may be used, only then the use of the
proper instruction is guaranteed.
3. HOW TO WRITE A STANDARD OPERATING PROCEDURE:
STEP 1:
Ask employees using the Standard Operating Procedure for their input on how the job should
be performed. Expect the document to undergo several drafts before a final can be generated. Have
the employees themselves review the drafts for additional suggestions.
STEP 2:
Prepare a first draft. This draft should map out all necessary steps in the procedure. Determine
if any large steps can be broken down into smaller steps. Create a simple flow chart to serve as a
valuable first draft.
STEP 3:
Write the first page including a short introduction giving an overview of the entire job. This way,
employees who normally read and perform one step at a time must preview the job from start to finish
before beginning.
STEP 4:
Prepare a header on the first page. It must include the company name and business unit logo,
document title, date of creation and specific document number as assigned by document control
personnel. Also include an issue number generated by change control.
STEP 5:
Create a table directly under the header entitled, “Amendment History and Approvals.” Include
columns for the issue date of the Standard Operating Procedure, description of changes and signatures
for the Standard Operating Procedure originator, department manager and the Quality Control manager.
The description of changes briefly should summarize any revisions made to the Standard Operating
Procedure since its creation. Each revision must be signed by its initiator.
STEP 6:
Begin the second page with the purpose of the Standard Operating Procedure. Include its scope,
the contents of the document, definitions of terms or abbreviations used in the Standard Operating
Procedure, responsibilities of personnel involved in the procedure and references to documents the
Standard Operating Procedure relied upon, such as trade standards.
STEP 7:
Finish the Standard Operating Procedure by describing the procedure in short steps.Use simple
language and avoid describing multiple steps in the same sentence. Once the task has been detailed,
date the document and have it signed by the appropriate regulatory authority.
B. DEFINING COMPENSATION:
Compensation is a systematic approach to providing monetary value to employees in exchange
for work performed. Compensation may achieve several purposes assisting in recruitment, job
performance, and job satisfaction.
1. HOW IS COMPENSATION USED?
Compensation is a tool used by management for a variety of purposes to further the existence
of the company. Compensation may be adjusted according the business needs, goals, and available
resources. Compensation may be used to:
A. Recruit and retain qualified employees.
B. Increase or maintain morale/satisfaction.
C. Reward and encourage peak performance.
D. Achieve internal and external equity.
E. Reduce turnover and encourage company loyalty.
F. Modify (through negotiations) practices of unions.
Recruitment and retention of qualified employees is a common goal shared by many employers.
To some extent, the availability and cost of qualified applicants for open positions is determined by
market factors beyond the control of the employer. While an employer may set compensation levels
for new hires and advertise those salary ranges, it does so in the context of other employers seeking
to hire from the same applicant pool.
Job Profile
Job Evaluation
Job Hierarchy
Pay Survey
Pricing Jobs
Individual Pay for

Each Job within a
Range
Morale and job satisfaction are affected by compensation. Often there is a balance (equity) that
must be reached between the monetary value the employer is willing to pay and the sentiments of
worth felt be the employee. In an attempt to save money, employers may opt to freeze salaries or
salary levels at the expense of satisfaction and morale. Conversely, an employer wishing to reduce
employee turnover may seek to increase salaries and salary levels.
Compensation may also be used as a reward for exceptional job performance. Examples of
such plans include: bonuses, commissions, stock, and profit sharing or gain sharing.
2. COMPONENTS OF A COMPENSATION SYSTEM:
Compensation will be perceived by employees as fair if based on systematic components.
Various compensation systems have developed to determine the value of positions. These systems
utilize many similar components including job descriptions, salary ranges/structures, and written
procedures.
The components of a compensation system include:
A. Job Profile: A critical component of both compensation and selection systems, job profile
define in writing the responsibilities, requirements, functions, duties, location, environment, conditions,
and other aspects of jobs. Profiles may be developed for jobs individually or for entire job families.
B. Job Analysis: The process of analyzing jobs from which job descriptions are developed. Job
analysis techniques include the use of interviews, questionnaires, and observation.
C. Job Evaluation: A system for comparing jobs for the purpose of determining appropriate
compensation levels for individual jobs or job elements. There are four main techniques: Ranking,
Classification, Factor Comparison, and Point Method.
D. Pay Structures: Useful for standardizing compensation practices. Most pay structures include
several grades with each grade containing a minimum salary/wage and either step increments or
grade range. Step increments are common with union positions where the pay for each job is pre-
determined through collective bargaining.
Common Examples Reward Elements Definition
Intrinsic
Total
Reward
Total
Retirement
Passive Remuneration
Extrinsic Health and Welfare Benefits
Holidays
Stock/Equity Long-Term Total Direct
Rewards/
Performance Shares Incentives Compensation
Annual Incentive
Short-Term
Bonus/Split Awards Variable
Team Award Total
Base Salary
Cash
Base Cash
Hourly Wage
E. Salary Surveys: Collections of salary and market data. May include average salaries, inflation
indicators, cost of living indicators, salary budget averages. Companies may purchase results of
surveys conducted by survey vendors or may conduct their own salary surveys. When purchasing
the results of salary surveys conducted by other vendors, note that surveys may be conducted within
a specific industry or across industries as well as within one geographical region or across different
geographical regions. Know which industry or geographic location the salary results pertain to before
comparing the results to your company.
F. Policies and Regulations: Company drafts procedures and practices in details under each
head of Policy statement to avoid confusion.
3. STANDARD OPERATING PROCEDURE AS A TOOL FOR CONTROLLING WORK
PROCEDURES:
A. Standard Operating Procedures are great tools for controlling work procedures.
B. Standard Operating Procedures define subtle details.
C. Standard Operating Procedures are effective communication tools that contribute to worker
understanding and job satisfaction
D. Standard Operating Procedures lead to performance improvements
4. COMPENSATION MODELS:
1. A COMPENSATION MODEL: FROM CREATING JOB PROFILE TO PAY STRUCTURE:
Job Profile: Job profiles are essential in designing pay systems, as they help to spot important
job characteristics. They also help determine, define and weigh compensable factors (factors for
which an organization is willing to pay-skill, experience, and effort).
Job Evaluation: The next step in pay fixation is to establish relative worth of jobs by employing
job evaluation. A number of techniques are available to evaluate jobs. For example, in the point-
ranking method of job evaluation, each job is analyzed and defined in terms of the compensable
factors an organization has agreed to adopt. Points are assigned to each degree of a compensable
factor, such as responsibility or any others. Finally the worth of jobs is arrived at.
Job Hierarchy: The points assigned to all compensable factors are aggregated. The total points
scored will help to establish the hierarchy of job worth, starting from the highest point total to the
lowest point total.
Pay Surveys: Job hierarchy being established, the next step is to establish pay differentials.
Before fixing salary differentials, prevailing salary rates in the labour market need to be ascertained.
Hence the relevance of pay surveys.
One way of collecting pay details is to conduct a survey. This requires that a sample of key jobs
and a sample of companies need to be selected. Questionnaires could be mailed to selected companies,
requesting them to furnish pay details relating to key jobs. Information can also be collected over the
telephone.
Pricing Jobs: In pricing jobs, the job evaluation worth is matched with the labour-market worth.
Two activities need to be performed:
1. Establishing the appropriate pay level for each job, and
2. Grouping the different pay levels into pay grades.
Individual Pay for Each Job within a Range: After following all the above steps a compensation
offer is arrived at for an individual based on his grade, experience, and function which should be
within the range decided by the organization.
2. TOTAL REWARD MODEL: HAY GROUP:

When we think of reward, we usually think first of the tangible elements of the remuneration
package - base salary, variable pay such as bonus payments, and benefits, such as the pension
scheme or holidays. In the private sector, incentive payments, share schemes, medical insurance
and a fully-expensed car may also be included in the package, often described as a total remuneration
package. Total Reward includes all the aspects of total remuneration, but also takes into account the
intangible benefits offered by an employer; the environmental rewards such as work-life balance or
training and development opportunities - the Elements of Total Reward.
STANDARD OPERATING PROCEDURES FOR COMPENSATION

AND BENEFITS FUNCTION AT ESSAR GROUP:
1. SHORT HISTORY OF ESSAR:

The Essar Group is a dynamic, high performance, multinational organisation.The Essar Group
was founded in 1969 by brothers Shashi Ruia and Ravi Ruia.
The Ruia family’s origins are in Rajasthan. Sometime in the 19th century, it moved to Mumbai
and set up its own business. In 1956, Nandkishore Ruia, father to Shashi and Ravi Ruia, moved to
Chennai, capital of the south Indian state of Tamil Nadu, to begin independent business activities. He
mentored his two sons in the intricacies of business. When Shri Nandkishore Ruia passed away in
1969, the brothers laid the foundation of the Group.
The Essar Group began its operations with the construction of an outer breakwater in Chennai
port. It quickly moved to capitalize on every emerging business opportunity, becoming India’s first
private company to buy a tanker in 1976. The Group also invested in a diverse shipping fleet and oil
rigs, when the Government of India opened up the shipping and drilling businesses to private players
in the 1980s.
Then, in the 1990s, Essar began its steelmaking business by setting up India’s first sponge iron
plant in Hazira, a coastal town in the western Indian state of Gujarat. The Group went on to build a
pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira.
Through the 1990s, with the gradual liberalization of the Indian economy, Essar seized every
opportunity that came its way. It diversified its shipping fleet, started oil and gas exploration and
production, laid the foundation of its oil refinery at Vadinar, Gujarat, and set up a power plant near
the steel complex in Hazira. The Construction business helped the Group build most of its business
assets. Essar also entered the GSM telephony business, establishing India’s first mobile phone
service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner.
The 21st century for the Essar Group has been all about consolidating and growing the businesses,
with M and As, new revenue streams and strategic geographical expansion.
Essar Global Limited is a diversified business corporation with a balanced portfolio of assets in
the manufacturing and services sectors of Steel, Energy, Power, Communications, Shipping Ports
and Logistics, and Construction. Essar Global employs over 50,000 people across offices in Asia,
Africa, Europe and the Americas.
With a firm foothold in India, Essar Global has been focusing on global expansion with projects/
investments in Canada, USA, Africa, the Middle East, the Caribbean and South East Asia. Privately
owned and professionally managed, Essar is judiciously invested in the commodity, annuity and
services businesses. Forward and backward integration, state-of-the-art technologies, in-house
research and innovation have made Essar Global a leading player in each of its businesses. Essar’s
abiding philosophy is to be a low cost, high quality, technology driven group with innovative customer
offerings.
2. PAST AND PRESENT WORK PRACTICES AT ESSAR:

PAST:
Earlier Essar followed the normal procedures followed by most of the industry. This system had
its strengths and weaknesses, the idea was to capitalize on the strength of the old system and
address the weaknesses therein.
The earlier system gave a lot of freedom to the managers and because of which, there was no
standardization in the procedures followed. This would lead to different results for same input
parameters.
The system allowed the liberty for managers to apply their perspective on the process and
sometimes missed the finer points of deriving the correct results.
The earlier system adopted adhoc solutions to new problems that emerged. The solution was
not recorded and hence led to non repeatable results.
The earlier system did not use industry standard data such as Mercer reports and other data
available, so compatibility with the industry was not maintained on actual data but was more on
hearsay.
PRESENT:
The idea of creating new systems was to institutionalize the process and to eliminate people
dependence. This gave consistent results, made each person aware of the action that one must take.
This led to greater satisfaction amongst all actors for the role.
The new system ensured that all the processes were well captured and documented, this
provided consistency in the results and also ensured that irrespective of the person doing the job the
result was same.
The new system ensured that a proper work flow was maintained and there by increasing the
efficiency of the process.
The new system ensured responsibility for the job to be done along with timeline matrix was
maintained. This ensured the people dependant on the result and people responsible for the result
were clear on what their role was and how long a particular task would take. The timeline matrix also
helped in getting to the root cause of a problem and made the procedure stronger.
The new system ensures that reviews of the procedures are done proactively so that new
challenges can be addressed. This also addresses the issue of taking inputs from individuals who
are responsible for the procedure.
3. THIRTEEN STANDARD OPERATING PROCEDURES AT ESSAR:

1. Compensation offer for a prospective candidate in India.
2. Overseas compensation offer.
3. Indian compensation offer for repatriates.
4. Compensation offer for an employee superannuating and being re-appointed as an advisor.

5. Overseas compensation offer for an employee relocating from one overseas location to another
overseas location.
6. Compensation offer for an employee relocating to an overseas location without work permit.
7. Benefits provided to expatriates.
8. Benefits provided to repatriates.
9. Value of benefits for rolling out compensation offer in India.
10. Approval of the compensation offer.
11. Communication of prospective candidate’s compensation offer.
12. Variable payout for employees’ across Essar.
13. Increments provided to employees’ across Essar.
STANDARD OPERATING PROCEDURE 1: COMPENSATION OFFERS FOR PROSPECTIVE
CANDIDATES IN INDIA:
Scope:
The scope of this Standard Operating Procedure is to compute compensation offers for prospective
candidates in India after the verification of inputs provided by the TA Anchor on the candidate’s
compensation.
Objective:
The objective of this Standard Operating Procedure is:
1. To ensure that the compensation offered to the prospective candidate is within the internal
comparators compensation band.
2. To recommend compensation offer that is competitive on a market/industry standard.
Records to be maintained:
(1) Proof of benefits provided by the current employer.
(2) Compensation Offer.
References:
(1) Essar internal comparators – compensation analytics dashboard.
(2) Essar policy on benefits.
(3) CV.
(4) Interview Evaluation Form.
(5) Pay slips.
(6) Salary capture form.
(7) Clarification sheet from TAT.
STANDARD OPERATING PROCEDURE 2: OVERSEAS COMPENSATION OFFER FOR A
NEW RECRUIT/ESSAR EMPLOYEE:
Scope:
1. The scope of the Standard Operating Procedure is to prepare a compensation offer for an
overseas location in the following cases:
CO: Computation of an Indian Compensation Offer
INPUT PROCESS
CO-1.1
1. CV Verify Salary capture

2. Interview Evaluation from from with pay slips
3. Salary capture from and proof of beneffits
4. Supporting documents
Discrepancy
in salary Clarification
CO-1.3 capture form and supporting from TA
YES
documents
Anchor
Calculation of
Evaluate CO-1.6
current CO-1.5 VOB
compensation
as per pay slip
CO-1.7
Benefits provided by current employer is

same as Benefits provided by Essar
YES
CO-1.8 CO-1.9
NO if VOB provided by
employer is substantially more NO Exclude the
than the VOB provided by Essar VOB
YES
co-1.10
Ascertain the VOB
co-1.11
Arrive at
CO-1.12 total compensation
and Benefits
Internal comparator
co-1.13
CO-1.15
YES
2. New employee being appointed to an overseas location.

3. Essar employee relocating to an overseas location.
Objective:
The objective of this Standard Operating Procedure is to ensure that regardless of the location
the new employee/Essar employee should not be substantially worse off in terms of the cost of living,
housing cost and taxation as compared to the home country.
1. Indian Compensation Offer of the new recruit/ Essar employees’ current CTC
2. Candidate related details
3. International compensation offer
References:
Internal references:
1. Essar reward and relocation policy
2. Internal comparator—compensation analytics dashboard
External references:
1. Taxation details – KPMG report / E and Y report
2. Mercer data points for COLI, housing cost and education cost per child.
STANDARD OPERATING PROCEDURE 3: INDIAN COMPENSATION OFFER FOR
REPATRIATES:
Scope:
This Standard Operating Procedure is applicable to all Essar employees who were transferred
to an overseas location from India on an expatriate basis or employees who were locally hired for
performing their duties and will now be repatriated/transferred back to India.
Objective:
The objective of this Standard Operating Procedure is to make adjustments in the compensation
offer so as to ensure that regardless of the location, the employee should not be substantially worse
off in terms of the cost of living, housing cost, education cost and taxation.
1. Mercer report
2. Original International compensation offer template.
3. The recommended Indian compensation offer
References:
Internal references:
2. Internal comparator- compensation analytics dashboard
3. Overseas compensation offer of the Essar employee repatriating from overseas.
CSI: Computation of International Compensation Offer

INPUT
CSI-1.1 PROCESS OUTPUT
New employee’s current
value of compensation and
benefits
OR
Essar employees current
CTC
CSI-1.2
Conversion rate Calculation of

(Rupees per USD) spendable CSI-1.4
income in USD
CSI-1.3
COLI of the host counry
CSI-1.5
15 % Relocation premium
on spendable income
Housing cost
CSI-1.7
Fixed CTC
CSI-1.8
Hypothetical tax rate
Adjusted fixed
CSI-1.10 CTC CSI-1.9
Variable percentage
International
compensation CSI-1.11
offer
CSI-1.12
If No
Employee has No adjustment
CSI-1.13 children
CSI-1.14
Education cost per child
(maximum 2)
YES
Final International
compensation CSI-1.15
CSI-1.16 offer
Prepare internal comparator

for the position offered with
50 th P, 66 th P and 75 th P at the
function level and at the grade CSI-1.18
level. CSI-1.17
If Make suitable
International offer is recommendation
within the expatriates No within the
compensation band compensation
for the candidate band
CSI-1.19
Recommend
YES International
Compensation
Offer
REPO : Computation of the CTC in India
INPUT PROCESS OUTPUT
REPO -1.1 Overseas CTC
REPO -1.2 Variable pay
Social security Calculate

REPO -1.3 (If paid by the company) current base
salary (as the
balancing
figure)
Housing cost (applicable for

REPO -1.4 current perirodr)
LTA (notional value of air

REPO -1.5 tickets)
COLI (Keeping host

REPO -1.7 country as base location)
Calculate
base salary in
India after
COLI REPO -1.8
adjustment
* Business expense
REPO -1.9 reimbursement as per
entitlement in USD
REPO -1.10 * Housing cost (in USD)

REPO -1.15
Calculation of
CTC after REPO -1.14
* LTA as per entitlement (in adding the CTC in India
REPO -1.11 USD) other (in USD)
compensation
inputs
* Provident fund 12% of

REPO -1.12 basic in USD
REPO -1.13 Variable pay
* The figures should be converted to USD at the prevailing conversion rate

REPO : Final Indian compensation offer
CTC in REPO -1.18 Employee REPO -1.19 If tax rate

India (in ON of home country more
locally than tax rate of host
USD) hired country
REPO -1.17
YES
REPO -1.20 REPO -1.22
If tax rate No
in home country more hypothetical REPO -1.23
ON tax
than tax rate in host
country adjustment
YES
REPO -1.21
Hypothetical REPO -1.24

tax ON
adjustment
REPO -1.26 Calculate

taxable REPO -1.25
Tax rate of components
home country
REPO -1.28 REPO -1.29

Tax rate of Gross salary
host country after Add non Indian
hypothetical taxable compensation
tax components offer
REPO -1.27 adjustment
REPO -1.31
Prepare internal
comparator for the
position offered with
th th th
50 P, 66 P, & 75 P
at the function & at
the grade level
REPO -1.33 REPO -1.34 REPO -1.35
Make
If Indian If Indian compensation
compensation compensation offer =
offer is within the YES offer is less YES REPO-1.32
Internal comparator than or equal however
compensation to REPO-1.32 within
REPO -1.32 band Repo-1.31
REPO -1.30
Current hypothetical
CTC assuming Essar
employee worked in REPO -1.36
No
No
India till date
Make suitable
recommendation
within the
band
External references:
1. Taxation details – KPMG report/E and Y report
2. Mercer data points for COLI, housing cost and education cost per child.
STANDARD OPERATING PROCEDURE 4: COMPENSATION OFFER FOR AN EMPLOYEE
SUPERANNUATING AND IS BEING RE-APPOINTED AS AN ADVISOR:
Scope:
The scope of this Standard Operating Procedure is to make a compensation offer for an employee
superannuating on attaining the age of 58 or the age of superannuation as mentioned in the appointment
letter.
The computation of this compensation is applicable across the group for all superannuated
employees being re-appointed in the capacity of an advisor.
Objective:
The objective of this Standard Operating Procedure is to ensure that a consistent approach is
adopted to arrive at a compensation offer for all superannuated employees appointed in advisory
roles.
Computation of the compensation offer:
The computation of the compensation offer for a superannuated employee who is re-appointed
as an advisor is based on the following inputs:
(1) The current Cost to the Company of the superannuated employee
(2) The internal comparator at the proposed advisor level; based on these inputs comprehensive
Cost to the Company offer is made for the superannuated employee.
1. Current Cost to the Company of the superannuated candidate
2. The offer for superannuated employee re-appointed as an advisor
References:
1. Advisors internal comparator
2. Current Cost to the Company and value of benefits of the superannuated employee from current
compensation.
STANDARD OPERATING PROCEDURE 5: OVERSEAS COMPENSATION OFFER FOR
AN EMPLOYEE RELOCATING FROM ONE OVERSEAS LOCATION TO ANOTHER
OVERSEAS LOCATION:
Scope:
This Standard Operating Procedure is applicable to all employees who will be relocating from
one overseas location to another for performing their duties.
Objective:
The objective of this Standard Operating Procedure is to compute the compensation offer for
an employee in case of transfer from one overseas location to another overseas relocation. The
Standard Operating Procedure ensures that the compensation arrived at, includes differences in
COLI, taxation and housing cost. All differences are taken considering India as the Home location.
SO: Compensation offer for superannuated employee reappointed as an advisor
SO-1.1 SO-1.2
Will the
70% of current CTC superannuated employee
excluding value of benefits be provided with current
like housing (if any) benefits in addition to
70% of CTC
SO-1.3
YES
Current Value of benefits
NO
SO-1.4
Add current or
revised Value of
benefits
SO-1.5
Arrive at total
compensation
SO-1.6 offer
Internal comparator at
proposed
th
advisor
th
level with
50 P, & 75 P at the
function & grade level
SO-1.7
SO-1.8
If the total
compensation offerr is within Recommend
the internal comparator NO offer within
compensation band the band
SO-1.9
Recommend
70% of the
CTC as
YES compensation
offer
O/S : Compensation offer of new overseas location

PROCESS OUTPUT
O/S-1.1 CTC in current overseas

location
Tax in current overseas O/S-1.6

O/S-1.2
location
International
compensation
O/S-1.3 Tax in home country offer process
using goal seek
Housing cost in current

O/S-1.4 overseas location
COLI of current overseas

O/S-1.5 location
O/S-1.7
CTC in India (Rs.)
COLI of new overseas

O/S-1.8 location
Housing cost of new

O/S-1.12
CTC of new
Tax rate of current overseas
location
O/S-1.11
Tax rate of new overseas
location
O/S-1.15
O/S-1.13
If
Employee has No
children adjustment
O/S-1.14 Education per child cost
O/S-1.16
Final new
overseas location
offer
O/S-1.17
Prepare internal compararator for
th
the position offered with 50
P, 66 th P & 75th P at the expatriates O/S-1.18
location and level
O/S-1.19
If
CTC of new overseas Make suitable
location is within the recommendation
internal comparators within the band
compensation band
O/S-1.20
Recommend
compensation
offer
Records to be maintained
1. Cost to the Company of the employee in the current overseas location
2. Mercer report
3. The recommended International compensation offer
STANDARD OPERATING PROCEDURE 6: COMPENSATION OFFER FOR AN EMPLOYEE
RELOCATING TO AN OVERSEAS LOCATION WITHOUT WORK PERMIT:
Scope:
The scope of this Standard Operating Procedure is to prepare a compensation offer for an
employee relocating to an overseas location for an International assignment without work permit.
Objective:
The objective of this Standard Operating Procedure is to make adjustment in the compensation
offer of the employee who is being relocated to an overseas location for an International assignment
without a work permit due to business exigencies.
Procedure:
Compensation of the employee relocating to an overseas location without a work permit:
When an employee relocates to an overseas location without a work permit he is offered the
following:
Compensation:
1. The current compensation of an employee in India will be continued to be paid in India.
2. The foreign travel allowance (accommodation and dearness allowance) will be paid to the
employee who is relocated to an overseas location for an International assignment and will be
governed by the foreign travel policy.
3. Foreign travel allowance is provided based on the classification of countries and on the grade
entitlement of the employee.
Classification of countries is as follows:
CLASS COUNTRIES
A+ USA (New York, Los Angeles, San Francisco, Chicago), UK

(London),Europe (Amsterdam, Paris, Moscow, Frankfurt), Canada
(Toronto),Japan (Tokyo), Singapore, Hong Kong, South Africa
(Johannesburg),Nigeria (Lagos)
A Rest of America, Rest of Europe, Australia, New Zealand, Rest of
Japan, UAE, South Korea
B Other APAC, Other Middle East, SAARC, Africa
Based on the class of countries and the grade entitlement of the employee the foreign travel
allowance is as follows:
For tour up to 15 days:
LEVEL HEAD CITY A+ CITY A CITY B
M1 and M2 Accommodation
DA
Total Eligibility
DA
Total Eligibility
M5 to M7 Accommodation
DA
Total Eligibility
DA
Total Eligibility
For tour more than 15 days:
LEVEL HEAD CITY A+ CITY A CITY B
DA
Total Eligibility
DA
Total Eligibility
DA
Total Eligibility
DA
Total Eligibility
All the above amounts are in USD and are on per day basis
*DA  Dearness Allowance
In case the employee is provided with Lodging and Boarding by the company the employee is
entitled for the allowance as per the foreign travel policy. The details of which are as follows:
LEVEL COUNTRIES WHEN LODGING PROVIDED BY LODGING AND BOARDING

ORGANISERS PROVIDED BY ORGANISERS
ONLY BOARDING EXPENSES
UPTO 15 DAYS MORE THAN UPTO 15 DAYS MORE THAN

15 DAYS 15 DAYS
($ PER DAY) ($ PER DAY) ($ PER DAY) ($ PER DAY)
M-01 to M-04 A+
A
B
M-05 and M-06 A+
A
B
M-07 and below A+
A
B
Payment of the foreign travel allowance:

The foreign travel allowance to the employee is reimbursed on submission of original bills. The
amount reimbursed to the employee is in Indian currency and is computed as follows:
= Foreign travel allowance X conversion rate applicable for the current period
Benefits:
The list of benefits that an employee gets in India is as follows:
Benefits that an employee is entitled to, in India will continue to remain the same.
 Medical Insurance: The insurance of the employee relocating for an International assignment
will continue to be covered under Oriental insurance.
 Group Personal Accident Insurance: The insurance will continue to be covered under our
current Insurer, Tata-AIG General Insurance Co. Ltd. The company covers accidental injury or
death, either while on duty or otherwise.
 Mobile reimbursement: Employees relocating to an overseas location for an International
assignment shall be given an additional mobile phone instrument fitted with a Matrix card which
shall be returned upon completion of the tour. International Roaming facilities shall be withdrawn
with immediate effect and these services shall only be activated for the period of overseas
travel.
 Gratuity: The employee will continue to be covered under the Gratuity Act 1972.
Benefits that an employee gets on relocation without a work permit are as follows:
 Miscellaneous expenses: Company will bear miscellaneous expenses which are related to
obtaining travel documents/inoculations/visas/airport taxes etc., which are essential requirements
of foreign travel. The expenses related to the work permit are also borne by the company
 Travel tickets: The travel tickets provided to the employee for the International assignment are
offered as per the foreign travel policy.
The class of travel depends on the grade entitlement as shown below:
LEVEL CLASS OF TRAVEL
M1 and M2 Business class

M3 and below Economy class
Work tools: If for purpose of work, the employee is expected to carry any company asset like
Laptop, data card or blackberry then the arrangement will be made by the CHR and BHR
(depending on the grade level) with the help of Essar IT.
The following information is communicated to the employee:
1. Laptop:
In case of laptop taken to the overseas location for the assignment the employee has to fill in
a temporary asset form.
2. Data card:
A prepaid office card is provided to the employee that is refilled from the home country for the
period that the employee goes to the host location for.
3. Blackberry:
Blackberry sim card is not provided to the employee since the cost of internet roaming is high.
In case of special approval a matrix card is provided to the employee that has a voice scheme
which is for making calls and a data scheme which provides internet access.
Any benefits over and above will require approval from the Business Head/HR Head.
In case the employee has obtained the work permit
 Travel tickets: Tickets for scouting trip will not be provided since the employee has already
been to the overseas location however tickets for the employee and his family will be provided
to return to the overseas location after obtaining the work permit.
 Work tools:
1. Laptop: In case the employee obtains the work permit then the business HR decides
whether to let him/her keep the laptop or not.
2. Data card: In case the employee obtains the work permit then he/she is not provided with
a data card.
3. Blackberry: For an employee who has obtained the work permit, the sim card of the host
country is to be provided to him.
Attendance: The employee relocating to an overseas location for an International assignment
should apply for an outdoor duty through my equations and the same should be approved by
his supervisor or the Business head for attendance purpose.
Visa and Work Permit: The help desk will ensure that the employee gets assistance in
procuring all the required travel documents like Visa, Work Permits, Travel Insurance etc. This
will include information on the documents required, the necessary forms to be filled, reminder
for important dates and all other services that are required in getting the Visa and Work Permit.
Responsibility Matrix
ACTIVITY RESPONSIBILITY
Tickets of the employee Futura

Work permit of the employee BHR
Attendance of the employee Supervisor
Record maintenance CHR and Futura
Communication of the entire procedure to the employee CHR
Work tools Help desk-IT
1. Attendance of the employee
Reference:
Foreign travel policy:
STANDARD OPERATING PROCEDURE 7: BENEFITS PROVIDED TO EXPATRIATES:

Scope:
The scope of this Standard Operating Procedure is to offer benefits to the employees relocating
to an overseas location for an International assignment.
Objective:
1. To provide a benefit structure that is aligned with the best market practices.
2. To provide the employees with benefits while they are in an overseas location so as to reduce
the inconveniences caused to them as a result of the relocation.
Procedure:
The list of benefits provided to an employee while he/she is on an International assignment is
categorized under three heads as follows:
BENEFITS AT THE TIME OF BENEFITS PROVIDED IN OVERSEAS LOCATION STATUS OF BENEFITS IN INDIA
RELOCATION
Travel Documents Social Security and Statutory Legal Benefits Gratuity

Medical Examination Insurance Superannuation
Relocation Assistance Vacation/Paid Leave
Travel Tickets Medical/Casual Leave of Absence
Scouting Trip Public Holidays
Temporary Accommodation Leave Encashment
Settling in Allowance Work Tools
Passage
NOTE: Any tax liability arising on any of the above mentioned benefits will be borne by the employee.
A. Benefits at the time of relocation:

1. Travel Documents:
 The Company will provide all necessary support in procuring travel document for the
employee and his/her family. The cost incurred for procuring the same, will be borne by the
company.
 The Expatriation Helpdesk will help the employee’s in procuring the necessary documents
(visa, work permit, travel insurance etc.) for the International assignment.
2. Medical Examination: The amount will be reimbursed by Essar only in case of transfer to
those locations where the vaccination is mandatory for obtaining Visa.
3. Relocation Assistance:
 Relocation facility is mainly to provide help to the employee with movement of hard
furnishings for the international assignment.
The eligibility is as follows:
GRADE ELIGIBILITY
M1 to M4 40 feet container
M5 and below 20 feet container
1. If the employee wishes to transfer the goods as luggage, then the company will pay for the
extra baggage instead of paying for the container.
2. This facility will be provided purely to assist the employee in relocation no allowance will be
provided in lieu of the same.
4. Travel Tickets:
1. The Company will bear the travel cost for the employee and his/her family while shifting from
home country to host country.
2. The employee and his/her family will not be eligible for tickets of any other location.
The eligibility for travel is as follows:
M1 to M2 Business Class Self + Family

M3 to M4 Economy Class Self + Family
4. Scouting Trip:
1. The purpose of this visit is to provide the employee an initial orientation to the host location.
2. This trip should also include home and school search (if applicable). The company provides up
to 7 working days for this visit.
The travel eligibility for the scouting trip is as follows:
GRADE ELIGIBILITY
M1 to M7 Two tickets are provided (Self and spouse)

M 8 to M11 One ticket is provided (Self)
Sanctions for the trip will be as per discretion of Business HR/ Business Head / Corporate HR
Head.
4. Temporary Accommodation:
 In those cases where either the employee is unable to find a suitable housing for himself
while on a scouting trip or was unable to go for a scouting trip, the company will allow initial
15 days in hotel/ guest house.
 This stay will be governed by the Foreign Travel Policy. The employee will be eligible only
for the accommodation allowance.
5. Settling in Allowance:
 The Company shall provide a ‘settling allowance’ to the employee and his/her family to
adjust comfortably in the foreign location.
 Submission of bills is not required for reimbursement of the allowance.
 This is a one-time allowance and needs to be paid within 7 working days of employee’s
arrival to the host location.
The eligibility, as per the grades are:
GRADE AMOUNT
M1 to M2
M3 to M4
M5 to M7
M8 to M11
A. BENEFITS PROVIDED IN OVERSEAS LOCATION

1. Social Security and Statutory Legal Benefits:In some countries there are the obligatory
social security deductions. In this event, the company shall incur the cost of all the statutory
deductions that an employee would have to bear in the host country. The same will be capped
up in the salary of the employee on a monthly basis.
2. Insurance:
 The Company will be responsible for arranging the insurance coverage for employees in
overseas location.
 The concerned insurance company (Inter-global) will ensure suitable overseas insurance
coverage against certain risks including medical emergencies.
3. Vacation/Paid Leave:
 The “Leave Policy” will continue to govern the administration of ‘Paid Leave’ for the
employees on international assignment.
 All employee sent on the International assignment are entitled to 30 days of paid leave in
a year.
4. Medical/Casual Leave of Absence:
 The “Leave Policy” will continue to govern the eligibility ‘Medical and Causal Leave’ for the
employee on the international deputation.
 An employee is entitled to 12 working days as Medical/Casual Leave out of which 6 working
days can be availed as the casual leave.
5. Public Holidays: An employee on an international assignment will be governed the public

holidays of the host country. The same will be decided by the country manager / business HR
of the host country.
6. Leave Encashment: The employee has the option of either encashing his accumulated
privilege leaves or carrying it forward to his next assignment.
At the time of severance, while on the international assignment; the encashment will take place
with the last drawn basic salary in India.
7. Work Tools: The expatriate is also provided with the benefit of carrying work tools like the
laptop, data card and blackberry to the overseas location which he/she requires for the purpose
of work.
8. Passage:
 The Company will provide for ‘passage’ to the employee for traveling back to ‘Base
Location’ once a year. The duration of one year will be considered 12 months from the date
of joining.
Eligibly will be as per the employee’s grades
 In case the employee is not able to avail of the passage in a given year, the cost of the same
will be given as an allowance.
 Due to work exigencies, if an employee is unable to travel within 12 months from the
contract date he/she can claim amount against it. The amount will be completely taxable and
the leave balance will be managed by the Business HR.
 In case if the employee desires to travel to some other location instead of the base location,
then we reimburse the amount equivalent to the amount of the air ticket that he/she would
have got for travelling to the base location.
B. STATUS OF BENEFITS IN INDIA:
1. Gratuity: Employees on the international deputation will continue as Group employment and
hence gratuity will not be paid out at the time of transfer to the host location. However, the same
will be paid at the time of severance (resignation, retirement, death or illness) from the group;
only after the completion of 5 years.
2. Superannuation: Superannuation will be paid out once the employee is transferred to the
international deputation. In case of new recruits this rule will not be applicable. Superannuation
can be withdrawn on resignation or retirement.
BENEFITS FOR M-01 TO M-04 FOR M-05 AND BELOW
Travel Tickets CHR with help of (Futura) BHR with help of (Futura)
Temporary Accommodation CHR with help of (Futura) BHR with help of (Futura)
Medical Insurance Interglobal Interglobal
Laptop, Data card and Blackberry CHR with help of (Essar IT) BHR with help of (Essar IT)
Important decisions Business Head / Group Business Head / Group
President HR. President HR.
References:
2. International compensation policy
STANDARD OPERATING PROCEDURE 8 : BENEFITS PROVIDED TO REPATRIATES:
Scope:
The scope of this Standard Operating Procedure is to offer benefits to employees who were
relocated to an overseas location from India on an expatriate basis for an International assignment
and will now be repatriating back to India.
Objective:
The objective of this Standard Operating Procedure is to provide the employees with benefits
while they are repatriating back to their home country so as to reduce the inconveniences caused
to them as a result of the relocation.
Procedure:
The following are the benefits provided to repatriates:
BENEFITS AT THE TIME OF RELOCATION BENEFITS PROVIDED IN HOME COUNTRY
Travel Documents Medical Insurance

Transit expenses Joining Time
Relocation Assistance Privilege Leave
Travel Tickets Medical/ Casual Leave of Absence
Temporary Accommodation Public Holidays
Settling in Allowance Leave Encashment
Work Tools
Superannuation
Gratuity
Performance Bonus
Benefits at the time of relocation:

1. Travel Documents:
 The Company will provide all necessary support in procuring travel document for the
employee and his/her family. The cost incurred for procuring the same, will be borne by the
company.
 The Relocation Helpdesk will help the employee’s in procuring the necessary documents
for relocating to their home country.
2. Transit expenses: Reasonable expenses for journey such as food, including tea etc. incurred
by employees and their family will be reimbursed at actual, supported by vouchers, wherever
possible.
3. Relocation Assistance:
 Relocation facility is provided to the employee for movement of hard furnishings only from
host to home country.
The eligibility is as follows:
GRADE ELIGIBILITY
M1 to M4 40 feet container
M5 and below 20 feet container
 In case the employee arranges for his own relocation assistance then we reimburse the
lowest rate that we obtain from the administration department.
 If the employee wishes to transfer the goods as luggage, then the company will pay for the
extra baggage instead of paying for the container.
 This facility will be provided purely to assist the employee in relocation no allowance will be
provided in lieu of the same.
4. Travel Tickets:
 The Company will bear the travel cost for the employee and his/her family while shifting from
host country to home country.
 The employee and his/her family will not be eligible for tickets of any other location.
The eligibility for travel is as follows:
 CHR is responsible for arranging the travel tickets for M-01 to M-04
 BHR is responsible for arranging the travel tickets for M-05 and below
 However CHR and BHR get the tickets arranged through Futura.
 In case the employee has arranged for the travel tickets on his/her own then we reimburse
the lowest rate that we obtain from Futura.
 All the information related to the travel tickets is informed to the employee by the HR
depending on their grade.
5. Temporary Accommodation:
 In those cases where the employee is unable to find a suitable house for himself while his
repatriation, the company will allow initial 15 days in hotel/ guest house.
 The booking for the accommodation is done by Futura and the same is informed to the
employee by the HR depending on their grade.
6. Settling in Allowance:
 The Company shall provide a ‘settling allowance’ to the employee and his/her family to
adjust comfortably once he/she is back from the host country.
 Submission of bills is not required for reimbursement of the allowance.
 This is a one-time allowance and needs to be paid within 7 working days of employee’s
arrival to the home country.
The eligibility, as per the grades are:
GRADE AMOUNT
M1
M2
M3
M4
M5 to M7
M8 and below
A. Benefits provided in Home country

1. Medical Insurance:
 The Company will be responsible for arranging the insurance coverage for employees once
they are back in the home country.
 The concerned insurance company (Oriental) will ensure suitable insurance coverage
against certain medical emergencies.
2. Joining Time:
 In addition to actual time spent in journey, employees will be entitled to avail leave of total
3 days with the prior approval of the Business Head/Group President HR.
 This period will be treated as special transfer leave. This has to be used within 1 month of
the transfer.
3. Privilege Leave: All repatriated employees will be entitled to 24 working days privilege leave
in a year from date of joining.
4. Medical/Casual Leave of Absence:
 All repatriated employees will be entitled to 12 working days as Medical / Casual Leave out
of which 6 working days may be availed of as casual leave and 6 as medical leave.
 Encashment of medical leave/causal leave is not permitted.
 Casual leave cannot be accumulated and will lapse at the end of a calendar year.
5. Public Holidays: All repatriated employees will be entitled to public holidays, weekly offs,
Saturday offs (wherever applicable) of the home country.
6. Leave Encashment: The overseas leave encashment will take place with the last drawn basic
salary in India
Method of calculation for encashment of paid leave
 Level M1-M4: _% of per month CTC / 26 * Number of days accumulated.
 Level M5-M7: _% of per month CTC/26 * Number of days accumulated.
 Level M8: _% of CTC per month / 26 * Number of days accumulated.

 Level M9-M11: _% of CTC per month / 26 * Number of days accumulated.
7. Work Tools:
 The repatriate is provided with the benefit of work tools like the laptop, data card and
blackberry by the CHR, with the help of Essar IT.
 The repatriate is provided with the benefit of the local sim by the CHR, with the help of Essar
Infrastructure Services.
 The work tools benefit varies from grade level:
o Blackberry is provided only to senior management that is from M-1 to M-4
o Laptop and data card is provided to senior management that is from M-1 to M-4 however
for M-5 and below it is provided on need basis.
8. Superannuation:
 Employees who have opted for Superannuation shall contribute 15% of their Basic Salary
till they opt out from the Scheme.
 The coverage limit at M-01-M-07 level is 65Years and M-08 and below is 58years.
9. Gratuity:
 The repatriated employee will be paid gratuity at the completion of 5 years of service in the
company. The total duration of service in the host and home country will be considered.
 It will be paid only on Resignation/Retirement from employment.
10. Performance Bonus: The employee will be entitled to the performance bonus only if it is
declared for the entire organization.
BENEFITS FOR M-01 TO M-04 FOR M-05 AND BELOW
Travel Tickets CHR with help of (Futura) BHR with help of (Futura)
Temporary Accommodation CHR with help of (Futura) BHR with help of (Futura)
Medical Insurance Oriental Oriental
Laptop, Data card and Blackberry CHR with help of (Essar IT) BHR with help of (Essar IT)
Local sim CHR with help of (Essar Infrastructure BHR with help of (Essar
Services) Infrastructure Services)
Important decisions Business Head / Group President HR. Business Head/Group
President HR.
References
2. Transfer policy-third eye
STANDARD OPERATING PROCEDURE-9: VALUE OF BENEFITS FOR ROLLING OUT
COMPENSATION OFFER IN INDIA:
Scope
The scope of this SOP is to evaluate the value of benefits
(a) Provided to the prospective candidate by his/her current employer but not by Essar
(b) Provided to the prospective candidate by his/her current employer as well as Essar
Objective:
The objective of this SOP is to compensate a prospective candidate for the benefits that he/she
will forgo in his/her current organization; to join Essar.
Procedure:
The following points need to be considered while computing the value of benefits:
 The benefits that the prospective candidate declares should be provided by the current
employer on a continuous basis.
 The prospective candidate should also provide supporting documents as proof for the benefits
he/she claims to receive from his/her current employer.
A. BENEFITS PROVIDED BY CURRENT EMPLOYER:
Company provided car:
Proof The appointment/offer letter or any other communication on the company letterhead
provided to the employee by his current employer.
Benefit details  In case the value of the car provided to the employee by his/her current employer
is not mentioned in the letter then we consider the value of the car as per the
current market value.
 In case the value of the car is mentioned in the letter provided by the current
employer then we consider the value as per the letter.
Value of benefit Assuming the lease period of 3 years, the value of benefit provided to the employee
will be:
value of the car

3
Driver:
Proof Receipt of the salary paid to the driver
Benefit details The salary paid to the driver
Value of benefit The value of benefit is as mentioned on the receipt or the approximate value
as mentioned below:
For metros: Rs. 7000 to Rs. 10000
For non-metros: Rs 4000 to Rs.6000
Accommodation
a. Unfurnished accommodation:
NOTE: HRA and company accommodation should not be given together, if it is given together then
necessary clarification is required from the TA Anchor.
provided to the employee by his current employer
Benefit details Rental value per month of the house (if the value is mentioned in the proof then
consider that or else find out the approximate value by considering the size and
location of the accommodation)
Value of benefit The value of benefit provided to the employee will be the rental value of the
unfurnished accommodation.
b. Furnished accommodation:
Proof As above
Benefit details As above plus the furniture details as below:Furniture: Actual value if mentioned or
10% of rental value of the house
Value of benefit The value of benefit will be:The rental value of the house + Actual value or 10%
of the rental value of the house (for furniture)
House help
Proof Receipt of the salary paid to the house help

Benefit details The salary paid to the house help
Value of benefit The value of benefit is as mentioned on the receipt or the approximate value as
mentioned below:For non-metros: 1500 to 3000For metros: 3000 to 5000
Tax free reimbursements:

Proof  The appointment/offer letter or any other communication on the company
letterhead provided to the employee by his current employer
 Bank statement
 Email or any other proof
Benefit details The amount paid to the employee by the current employer
Value of benefit The Value of benefit for tax free reimbursements is found by grossing up the
compensation for tax as follows:
Taxable income
(1 – 0.3333) *
*the income tax rate is as per the highest income bracket
Club membership:
Benefit details  The name of club that the employee is a member of
 To check if only the employee or the entire family is a member of the club
 The annual membership fees paid by the current employer for the club
membership provided to the employee
Value of benefit The value of benefit provided to the employee will be the annual membership
renewal fees.
Holiday:
Proof Communication on the company letterhead provided to the employee by his current
employer
Benefit details  Location
 Number of times the employee is entitled for the holiday
 Mode of travel
 Standard of hotel
Value of benefit The value of benefit provided to the employee will be the approximate cost or the
value mentioned in the proof provided
ESOPs/Phantom stock options:

Proof ESOPs/Phantom stock options allotment letter provided by the current employer
Benefit details  The issue price at which the employee received the stock options
 Vesting period
 Percentage of shares that are granted to the employee in the current year
 Market price(in case of ESOPs)
 Purchase price(in case of phantom stock options)
Value of benefit The value of benefit:
ESOPs = number of shares X (market price – issue price) X percentage of shares
granted to the employee in the current year
Phantom stock options = number of shares X (purchase price – issue price) X
percentage of shares granted to the employee in the current year
Loan at subsidized rates:

employer
Benefit details  Total loan taken by the employee
 Rate of interest that the employee pays
 Market rate of interest
 Principal amount repaid by the employee
Value of benefit The Value of benefit provided to the employee will be: =(Total loan taken by the
employee - Principal amount repaid by the employee) X (Current rate of interest –
Market rate of interest)
Retention/Loyalty bonus:
Proof The retention/loyalty bonus letter provided by the current employer
Benefit details The amount that the employee receives as retention/loyalty bonus.
Value of benefit The retention bonus will not be considered as a part of current compensation and
benefit however the employee will be entitled to a one time joining bonus when he/
she joins the company.
Commission/Profit sharing:
employer
Benefit details  Percentage of commission the employee is entitled to
 Target sales/revenue on which the commission is based
 Total amount of commission actually received by the employee in the last three
years or for the period for which he has received commission.
Value of benefit The value of benefit is the total amount of commission actually received by the
employee in the last three years or for the period for which he has received commission
B. Benefits provided by Essar:
The benefits provided to the employees by Essar are all as per their grade entitlement.
Mobile bill reimbursement:
Proof  Appointment/offer letter or any other communication on the company letterhead
 Copy of the HR policy stating the entitlement
Benefit details Reimbursement of mobile bill according to the grade of the employee in the current organization
Value of benefit The value of benefit provided to the employee is the difference between the
reimbursement of mobile bill that the employee receives from his/her current employer
and the reimbursement that Essar provides
Mobile handset:
Benefit details The value of the handset that the employee receives from his/her current employer
Value of benefit The Value of benefit provided to the employee will be:
The difference between the value of the handset that the employee receives from
his/her current employer and the reimbursement that Essar provides
= ______________________________________________________________________
3
Since Essar provides handset every 3 years we divide the difference by 3 to get the
value for 1 year
Insurance:
Benefit details Premium paid by the current employer
Value of benefit The value of benefit provided to the employee will be the difference between the
premium paid by the current employer and the premium paid by Essar.
Group Personal Accident Insurance:

Proof  Appointment/offer letter or communication on company letterhead provided to
the employee by his current employer
Benefit details Premium paid by the current employer
Value of benefit The value of benefit provided to the employee will be the difference between the
premium paid by the current employer and the premium paid by Essar.
Gratuity:
Value of benefit Since it is mandatory for all the organizations to pay gratuity as per Gratuity Act 1972
there won’t be any Value of benefit in this case.
STANDARD OPERATING PROCEDURE-10: APPROVAL OF THE COMPENSATION

OFFER:
Scope
The scope of this Standard Operating Procedure is to ensure validation at multiple levels of C&B
Team and to address all issues raised by the C&B Team Lead and the C&B Team Head VAS.
The scope even includes transfer of this compensation offer to the TA Anchor.
Objective
The objective of the SOP is to ensure that the compensation offer is validated by the C&B Team
Lead and C&B Team Head VAS and the approved compensation offer be communicated to the TA
Anchor.
References
1. The Compensation offer
2. The internal comparator compensation band
COM-1: Approval of the compensation offer
COM-1.1
COM-1.2
Mail the
C compensation recommendation
offer for Compensation
offer to C & B
Team Lead for
review
COM-1.4
Send to C & B
COM-1.3 Approved NO Team Executive
with comments
for review
YES
Mail the
COM-1.5 recommendation
for Compensation
offer to C & B
Head VAS for
review
COM-1.7
COM-1.6 Mail the

Approved recommendation
NO for Compensation
offer to C & B
Head VAS for
review
COM-1.8
Recommend
YES the
Compensation
Offer to the TA
Anchor
STANDARD OPERATING PROCEDURE – 11: COMMUNICATION OF PROSPECTIVE

CANDIDATE’S COMPENSATION OFFER:
Scope:
The scope of this Standard Operating Procedure includes communication of the compensation
offer, comparator, take home salary and compensation analytics of the prospective candidate to the
TA Head.
Objective:
The objective of this Standard Operating Procedure is to ensure that a detailed explanation of
the entire offer of the prospective candidate is communicated to the TA Anchor.
The highlights:
The communication to the TA Head includes the following:
1. Compensation offer
2. Comparator
3. Take home salary
4. Compensation analytics
STANDARD OPERATING PROCEDURE – 12: VARIABLE PAYOUT:
Scope
The scope of this SOP is to provide guidelines on variable payout in different situations.
Objective
The objective of this SOP is to ensure that the variable pay of the package offered to Essar
employees is standardized and is in line with Essar’s policies.
Procedure
1. Variable payout in India:
The variable percentage in the employee’s compensation structure is defined by the grade
entitlement as follows:
GRADE VARIABLE PAYOUT
Senior Management _% of CTC

Middle Management _% of CTC
Junior Management _% of CTC
 Variable payout is largely dependent on the company’s as well as the employee’s performance
during the year.
 Employee’s performance is dependent on the rating that is finalized at the end of the year
based on the performance appraisal process
·  Company’s variable pay policy is dependent on:
a. The market conditions
b. The company performance
2. Variable payout for employees overseas:

The variable pay structure for employees located overseas is same as the Indian structure
(refer to the above table)
3. In case the fixed and variable break-up is not as per the Essar compensation structure:
In such cases Essar will take remedial action to correct the discrepancy so that the employee
does not suffer any monetary loss.
Examples of Fixed-Variable Pay breakups.
An employee is appointed as a senior manager and based on his/her level he/she is entitled to
80% fixed and 20% variable pay however due to some reasons his compensation break-up is not as
per the Essar compensation structure.
His CTC is Rs.100 from which Rs.90 is his/her fixed pay and Rs.10 is variable pay.
CTC FIXED PAY VARIABLE PAY
100 90 10
(a) In case the employee is given an increment and the fixed pay increases with the new
break up of fixed and variable (80:20)
In case the employee’s CTC was incremented to Rs.120 and the variable pay was decided at
20% then his/her fixed pay would be Rs. 96 and variable pay would be Rs. 24.
120 96 24
In such a case, since the fixed pay is not reduced, a new compensation letter will be issued
to him/her with revised fixed and variable pay.
(b) In case the employee is given an increment and the fixed pay decreases with the new
break up of fixed and variable (80:20)
In case his/her CTC was incremented to Rs. 110 and the variable pay was decided at 20% then
his fixed pay would be Rs. 88 and variable pay would be Rs. 22.
110 88 22
A new compensation letter will not be issued when the fixed pay is reduced.
 In the first year suitable adjustments are made so that his/her fixed and variable break-up gets
close to the Essar compensation structure.
 In the second year again suitable adjustments are made so that his fixed and variable break-
up is finally as per the Essar compensation structure.
4. Variable payout for expatriates:
Variable pay is not provided to the employees who relocate to an overseas location in mid-term
unless the employee’s performance rating is finalized at the end of the year
For example
An employee’s compensation in India is Rs 20, 00,000 and he/she is offered 20% variable pay.
The employee is now being expatriated to Dubai (overseas) on 31st August 2009 at the
compensation of 100,000 USD, variable pay remaining the same at 20 %
Suppose if the employee’s performance rating for the year is 4, he/she will be paid variable pay
proportionately for India and Dubai as follows:
India = 20, 00,000 X 20 % X 8/12
Dubai = 100,000 USD X applicable conversion rate for the current period X 20% X 4/12
The sum of the variable pay of India and Dubai is offered to the employee at the end of the year.
5. Variable payout for repatriates:
Variable pay is not provided to the employees who repatriate to the home location in mid-term
unless the employees performance rating is finalized at the end of the year.
The calculation for repatriates will also be done proportionately as done for expatriates in point
3.
6. Variable payout at the time of resignation:
An employee will be offered Variable pay at the time of his/her full and final settlement only if
he/she is working as on the last date of the financial year.
For example
If an employee resigns on January 2009 then variable pay will not be paid to him/her.
To receive the variable pay at the time of his/her full and final settlement he/she should be
working as on 31st March, 2009.
7. Variable payout for advisor consultants:
Not all advisor consultants have the variable component in their compensation however if they
have it then it is governed by Essar compensation policy.
8. Calculation of Variable payout:
 The calculation of variable pay is decided in the policy of variable pay by the top management
every year.
 The variable payout is decided at each rating of the employee’s performance on the scale
of 1 to 5.
For example:
RATING VARIABLE PAYOUT
1 No variable payout
2 No variable payout
3 As per company policy
4 Payout at rating 3 + additional payment as per company policy
5 Payout at rating 4 + additional payment as per company policy
9. Taxation:
The variable payout is paid to the employee at the end of the year on his/her CTC based on
the employee’s grade and is subject to Income tax.
STANDARD OPERATING PROCEDURE – 13: INCREMENTS

Scope:
The scope of thisStandard Operating Procedure is to provide guidelines on different cases of
increments.
Objective:
The objective of this Standard Operating Procedure is to ensure that increment offered to Essar
employees is standardized and is in line with Essar’s policies.
Procedure:
1. Mid-term increment: Mid-term increment is not provided to employees however if the salary
of the employee is below the median of the salary of the internal comparator then with the
consent of the Human Resource Head and Business Head necessary adjustment is made and
mid-term increment is provided.
2. Annual increment-(market survey): For the purpose of providing increment to employees’ a
market survey is conducted once a year. The market survey is conducted by an outside
consultant. The increment for the year in which the market survey is conducted is based on the
company policy and the market data provided by the consultant.
Specific market data is collected for the following:
 Level-wise market data is collected in general
 Function-wise market data is collected
 Market data is collected for critical job
Steps involved in the market survey conducted on compensation:
Step-1: Find the gap between current compensation and market compensation
Step-2: Adjust the percentage gap with the company’s policy
Step-3: Arrive at the compa-ratio from the above two steps
Compa-ratio is the ratio of an employee’s current salary to the organization’s benchmark rate,
usually the salary grade midpoint. Compa-ratios are normally expressed as a percent of the benchmark.
Step-4: The increment percentage is communicated to all business heads for executing increment
in their business for M-05 and below.
The increment percentage is communicated to the CHR for executing it for M-01 to M-04
Step-5: The increment grid for the year is finalized by keeping in mind the compa-ratio and the
company’s policy
Step-6: After the increment grid is finalized the increment is provided on the employee’s Cost
to the Company
3. Annual increment-(no market survey): In case market survey is not conducted then increment
is provided on average inflation rate for that year and on the company’s policy.
4. Increment at the time of change in role of an employee: The increment at the time of change
in role of an employee is dependent on the market data and the internal comparator. A market
survey is conducted for the new role that the employee is appointed for and the increment
should be provided within the internal comparators band.
In case market data is not available then for that year the increment is based only on the internal
comparators.
5. Increment at the time of promotion of an employee: Considering the fixed policy at Essar,
the increment on promotion of an employee is provided at 10% of the previous salary.
For example: If an employee’s salary before increment is Rs.100 then 10% is calculated as
increment on Rs.100 which will make his revised salary with increment Rs.110.
GLOSSARY
The terms used throughout the Standard Operating Procedure are explained bellow:
1. Talent Acquisition Anchor: It is a centralized team responsible at Essar for getting the
required talent for all the group businesses of Essar across levels.
2. CHR – Compensation and Benefit Team (CandB Team): It is a centralized team responsible
to roll out compensation offers for prospective candidates.
3. CTC (Cost To Company): The total cost incurred by a company for the year on an employee.
CTC is a term given to the compensation package offered by the employer to the employee.
4. Value of Benefits: Benefits offered to the employees in addition to their wages or salaries and
include these benefits in their package. These benefits include ESOP’s – share options,
company cars, loans provided at reduced interest rates, medical insurance and others given
to the employees.
5. Compensation Offer: A compensation offer is an approach to provide monetary value to the
employees in exchange for the work performed by them.
6. Comparator: Internal comparator is used for making compensation offers.
Internal comparator is a group of employees in Essar who are at the same level and experience
as the prospective candidate. Also, the set of internal comparators have similar work profile in
the business in which the prospective candidate will be hired.
We calculate 50th Percentile, 66th Percentile and 75th Percentile of the relevant comparator to
make a compensation offer.
7. Salary Capture Form: This is a form which is provided to the candidate by the TA Anchor
when he comes for an interview. He is required to fill in the details of his current jobs
compensation components like base salary, reimbursements, retrials and benefits and any
others to get his current jobs CTC. The salary capture form needs to be supported by the proof
of salary slips and other benefits. This form is then given to the CandB Team for making a
compensation offer for the candidate.
8. Foreign Service Premium: Foreign Service premium is provided to the new recruit/Essar
employee with the purpose of compensating for the inconveniences caused to him due to
relocation. Essar will pay a 5% to 15% Foreign Service premium on the Spendable Income. In
case of senior management; this premium will be given on spendable income and car allowance.
9. Car allowance: It is applicable only to grade M-01, M-02, M-03 and M-04. To get the car
allowance, convert the employee welfare to USD and multiply by the COLI of the host country.
10. Housing allowance: The company will provide a housing allowance to all new recruit’s/Essar
employee’s who fall under the purview of this offer. The company considers the costs of
furnished apartments when arriving at a price point. However, the size of the house will be
determined as per the grade of the new recruit/Essar employee.
The valuation of a house at the host country will be as per the prices affixed for the following
type of accommodations. This classification will enable exact costing (in USD).
LEVEL SIZE AREA
M-01 to M-02 3 BHK Very Good Area

M-03 to M-04 2 BHK Very Good Area
M-05 to M-07 2 BHK Good Area
M-08 to M-11 1 BHK Good Area
In the case of those countries with the current politically unsafe conditions; the housing allowance
will priced at ‘Very Good area’ for all levels.
‘Very Good area’ and ‘Good area’ will be as per the Mercer data points.
11. Education allowance: Education allowance will be factored in as per cost of tuition in an
English School in the host country (a maximum of two school going children). New recruits’/
Essar employees’ children will be eligible to a good school with an Indian curriculum or an
equivalent English Medium School in the host country. This is applicable only to those new
recruit’s/Essar employee’s who take their children along.
12. Family members: The family members considered under this offer is the spouse of the new
recruit/Essar employee and at most two children below the age of 18 years.
13. International assignment employee: The new recruit/Essar employee of any resident who
has been offered an international offer is termed as an international assignment employee.
14. Home country: Home country is defined as the country of which the new recruit/Essar
employee holds the citizenship and resident passport of.
15. Host country: Host country is defined as the country where the new recruit/Essar employee
is deputed to for more than 184 days of continuous stay.
16. Cost of living index: Cost of living index indicates the difference in the cost of living either
between the cities or the host and base countries.
For the purpose of calculation Mumbai is assumed to be the base at 100. All the indices are
comparable to that of Mumbai.
The Cost of Living Index (COLI) is procured from Mercer report; which has three distinct cost
of living (COL) indices for different expatriate shoppers:
 Mean-to-Mean Index
 Efficient Index
 Convenience Index
However we use the ‘Efficient’ index for all our calculations.
17. Mercer’s Balance sheet approach: This approach provides the new recruit/Essar employee
with the same standard of living in the host location as in the home location and follows the “no
win-no loss” rule, guaranteeing the new recruit/Essar employee the home country purchasing
power.
The calculation of the new recruit’s/Essar employee’s new salary is based on the home country
salary structure and adjustments to the cost of living differential, housing, premiums and tax
equalizations.
18. Variable pay: The variable pay is grade driven. It is calculated on CTC
GRADE VARIABLE PAY
Senior management _%
Middle management _%
Junior management _%
19. Spendable income: Spendable income is the fixed income which is remaining after incurring
expenditure on housing, travel and retrials.
20. CandB Team executive: The CandB Team executive prepares the compensation offer by
considering all factors adjoining the compensation offer.
21. CandB Team Lead: The CandB Team Lead is the reviewer of the compensation offer which
is prepared by the CandB Team executive
22. Head VAS(value added services): Head VAS is the final approver of the compensation offer
which has been reviewed by the CandB Team Lead
NOTE: The below mentioned points are standard for all SOP’s
Timeline for making the compensation offer:
The compensation offer should be made within 48 hours
Responsibility matrix:
Clarification on inputs TA Anchor TA Anchor
For M-01 to M-07 For M-08 and below
Input, process and output CHR-CandB Team executive BHR Team executive
Reviewer CHR-CandB Team Lead BHR Team Lead
Approver CHR-CandB Head VAS BHR Head VAS
Benchmarking compensation offers with internal comparator:

1. The CandB Team then needs to check whether the total compensation and benefit of the
candidate is within the internal comparator compensation band.
2. In case the total compensation and benefit for the candidate does not fall within the internal
comparator compensation band then the CandB Team should make suitable recommendations
within the band.
3. In case the total compensation and benefit for the candidate falls within the band then the CandB
Team should recommend a compensation offer to the TA Anchor.
Abbreviations:
 CHR: Corporate Human Resource
 BHR: Business Human Resource
 CandB: Compensation and Benefits
 TA: Talent Acquisition
 VOB: Value of Benefits
 SLA: Service Level Agreement
*The explanation of the procedure (flowcharts) is confidential hence not disclosed

*The templates (annexure) referred by me are confidential hence not disclosed
SIMPLY SPEAKING...
Most of the organizations are shifting from family run business model to professionally
run business models this transition enhances qualities of the organization. One of the key
components of quality is to have a well documented procedure manual across the organization.
The procedure manual is more important for the HR compensation and benefit team as
this function is very personnel dependent. To remove any interpersonal biases the Standard
operating procedure for this department for each of these activities are very crucial.
Most of the quality certification authorities have the procedure manual as a pre-requisite.
The Standard operating procedure institutionalizes and makes the procedures independent of
the people operating it.
The standard operating procedures are very important tools for training of employees
they cut down on lead time, reduce errors, improve efficiency, and develop consistency.
But like most powerful tools they can if not control well can be dangerous too. So
creating Standard operating procedure requires top management commitment and continuous
reviews, correction and monitoring of the same. Many organizations looking at the great
power are scared to document the procedure but like all great things an organization can start
even with draft Standard operating procedure and build on them. In the long run the resources
spent on creating the Standard operating procedures return much greater values to the
organization.
360-DEGREE PERFORMANCE APPRAISAL SYSTEM AND ITS

LINKAGE TO COMPENSATION IN A PUBLIC SECTOR
UNDERTAKING (PSU):
A. COMPENSATION:
The present competitive environment requires new strategies towards employee compensation,
new management and employee practices and new methods of educating employees to the shifting
competitive environment that has brought about the necessity for these changes.
1. Purpose of Compensation:
 Recruit and Retain qualified employees.
 Increase or maintain morale\ satisfaction.
 Reward and encourage peak performance.
 Modify (through negotiations) practices of Unions.
2. Types of Compensation:
 Formal Bonus or Incentive plans
 Profit sharing plan
 Lump sum merit award
 Spot bonuses
 Stock plans
 Health and Welfare plans
B. DYNAMICS OF LABOUR MARKET:
In contrast to the period 1985-1995, when wages and salaries grew only modestly, the period
1996-1997 has been marked by an increasingly dynamic labour market in which wages and salaries
are beginning to grow at a pace not seen in many years. The tightened labour market means greater
attention must be given to the traditional role of compensation i.e. attraction and retention.
Compensation includes many things beyond straight salary. It also includes benefits, perks,
stock options etc.
The most important aspect of compensation plan for the employees is to keep them motivated
to do the job the best they can.
Compensation is a systematic approach to providing monetary value to employees in exchange
for work performed. Compensation may achieve several purposes assisting in recruitment, job
performance and job satisfaction.
Compensation is a tool used by management for a variety of purposes and may be adjusted
according to the business needs, goals and available resources.
Employee compensation is a critical component to financial success. Careful attention must be
placed on the development of reward systems that reflects the financial capability of the company.
The 360 Degree Appraisal can effectively be used in planning a compensation package based on
performance appraisal.
C. INTERACTION WITH EMPLOYEES ON 360-DEGREE FEEDBACK SYSTEM:
An opportunity was provided to interact with a large number of executives in various PSUs. Free
and frank discussions could be held with a cross section of executives belonging to all major disciplines
in the organization which included engineers, scientists, executives from Finance, MM and HR
disciplines to cross check the above inference and moderate the observations\opinions.
D. VIEWS ARE GROUPED AS UNDER:

Apprehensions about Bosses View:
A. In the present system, the final Accepting Authority does not know me. So the grade I get does
not have any real significance.
My boss would give me a “Good” remark but that does not make me qualify for promotion,
because there are employees with “Very Good” and “Excellent” grades or A+ and A-. At the
same time, he cannot give me less than “Good” because that will need to be explained. I feel
that 360-Deg Appraisal will make a lot of difference if implemented.
B. Many skilled people leave PSUs because of wrong, imperfect or biased appraisal and its effect
on their career growth. There cannot be an equitable Performance Evaluation as for similar type
of performance different appraisers at different work units could give different ratings.
C. There cannot be a standardized system of grading even in e-PAR. Human nature being
different, the system becomes imperfect. One Appraiser may be very liberal while another too
rigid in their assessment. Accepting Authority’s decision is mainly dependent on the evaluation
at the lower levels. Any bias at lower level may result in de-motivation of even a brilliant skilled
worker.
D. In the present system of evaluation, a person at a lower level is vulnerable to personal bias of
a person at higher level. For example an employee who received several Awards/Prizes during
a particular year was not considered for promotion due to poor PAR grading that very year.
E. Some Boss lack required technical knowledge and when junior technical people keep their point
of view, Boss does not like and their ACR is spoiled, so people do not share their knowledge
which in turn effects the overall performance of the organization.
E. FEEDBACK IN SUPPORT OF 360-DEGREE APPRAISAL:
A. I feel that the organization is years behind when it comes to appraisal system. When better tools
like 360-degree Appraisal are available then why do we hesitate to use or implement it? 360-
degree is a holistic approach and results are visible in many organizations like Maruti Udyog
Ltd, Wipro, Infosys, Tata, etc and if so many people can benefit by this tool then why can’t we
(PSUs)?
B. When my performance depends on several other people and if for their performance appraisal
they have to depend on me, this system is definitely going to make a difference and would
obviously improve efficiency.
C. In PSUs there are people who want to improve and also those do not want to improve. But when
there is some pressure, everybody is bound to improve.
D. In an organization, we have to place the right person on the right job so as to get optimum output.
In a 360-Degree Appraisal system we can discern the strengths and weaknesses of individual
employees and job-analysis, job description, placements, etc. can be done in a more scientific
way.
E. Using 360-degree Appraisal we can work on the weaknesses of employees through proper
training and development. Sometimes when an employee is transferred, he finds it very difficult
to learn the new job and skills required to perform the same. As new person on the new job,
he cannot always perform with the same efficiency on his previous job and his PAR grading
suffers. This can be tackled by the use of 360-degree appraisal as employees will be placed
according to their strengths rather than according to the number of years they have put in an
installation or work centre.
F. 360-degree is definitely a much better system for PSUs as the appraisal does not depend solely
on the mood or perception of a single individual.
Influence of human tendencies in appraisal systems need to be controlled and this can only be
done by using 360-degree Appraisal System.
Not only job but attitude towards job should be judged and your work should speak for you. This
kind of assessment can be done by the use of 360-degree Appraisal system.
G. My efficiency depends on several other persons like my counterparts in MM and Finance. If
they are unable to give me what I want in time, how can I accomplish my job? So, the 360
Degree Appraisals is a better option.
H. In the present e-PAR system, if an Appraiser is more happy with an under performer, he could
get a better grading and get promoted. I strongly recommend 360-Degree Appraisal because
in this process, others are also involved.
Nothing can really solve the problem till such time we overhaul our promotion policy. If only 10%
of the executives are to be promoted, despite excellent performance, we end up spoiling 90%
of the PARs.
F. CONCLUSIONS:
A. In order to asses all the pros and cons of the introduction of 360-degree Appraisal System in
lieu of the existing E-PAR System, a detailed survey was conducted among the staff members
of several PSUs at different levels.
B. From the feedback collected through the survey and through personal interaction with employees
as explained above, it appears that most of the employees prefer an e-enabled PAR system
like the newly introduced e-PAR in ONGC. However, quite a large number of employees are
skeptical about the PAR system in itself in ACR in the present e-PAR system are getting
affected by factors such as :- personal likes and dislikes, prejudices/ partialities, degree of
strictness or leniency of appraising executives, Halo and Horn effects etc. resulting in neglect
of really skilled / talented staff in promotions.
C. However, as far as the suggestions from the employees for introduction of 360-degree Appraisal
is concerned, majority of employees (86%) welcomed the idea of 360-degree Appraisal system
and favoured its introduction in the PSUs as they feel it can remove bias and improve accuracy
in PAR process, being a multilevel assessment.
D. Compensation is directly related to the Cadre /level of the employee which in turn depend on
the correct and impartial assessment of the employee’s capabilities through ACR .Since 360-
degree Appraisal system ensures perfect and impartial assessments of an employee, thus the
compensation is automatically taken care of by 360-degree Appraisal system once the 360-
degree Appraisal system is adopted in the organization.
E. HR has thus the crucial task ahead to further upgrade and innovate its HR practices, systems
and procedures, especially those relating to performance appraisal to achieve global benchmarks
in keeping with the company’s position in the world today.
Evidently any system which is capable of removing the lacunae of the existing system and also
enjoys confidence and support of majority of employees is worth introduction in lieu of the existing
system. 360-degree Appraisal System is, therefore, worth introducing in the Public Sector Undertakings.
SUITABILITY OF 360-DEGREE APPRAISAL SYSTEM IN PUBLIC SECTOR

UNDERTAKINGS:
Any new system of working is worth adoption in the industry if it can cater for both the improved
performance of the industry as well as improved working conditions of its employees. Fortunately
360-degree appraisal system is one such system. Some of the salient features of this system are
as under:
A. 360-degree Appraisal System can be easily adopted as SAP platform is already in use in
various PSUs and now a days most of the people are well versed with On-line Systems, also
360-degree is a user friendly system. 360-degree Appraisal System may result in increased
production in PSUs: - As it lay emphasis on “Job Fitness” i.e. each task should be manned by
right person with the right talent required for the task. So, the big problem of interdepartmental
transfer can be solved up to certain extent by transferring people according to their strengths
in the Organization setup which is reflected in an individual’s performance.
B. 360-degree appraisal System can act as a catalyst to Organizational development: as it allows

each individual to understand how his effectiveness as an Employee, Co-Worker or Staff
member is viewed by others and no one likes to be underestimated.
C. 360 degree appraisal system acts as a self imposed stimulant: In PSUs there are people who
want to improve and also those do not want to improve. But when there is some pressure \
compulsion, everybody is bound to improve.
D. 360 degree appraisal improves Interdepartmental relationship: One department say drilling,
depends on several other departments for its performance so if certain sanction is not given or
material not supplied in time then it definitely effects the performance but 360-deg can make a
lot of difference by the fact that each is dependent on one another for their appraisal.
E. 360-degree appraisal system ensures right training for right person: This system provides more
accurate information regarding any individual as his strengths and weaknesses are fully
exposed and hence right type of training can be imparted to the right person. This will result in
improved performance.
F. 360-degree appraisal system overcomes Stagnant Human tendencies: By nature every human
being prefers to lead a comfortable lifestyle and exerts only when left with no option. This
system exposes his self and hence he is forced to modify his approach.
RECOMMENDATIONS:
A. In view of the above mentioned facts and figures arrived at as a result of detailed survey
conducted and based on feedback received from the employees during personal interaction, it
can be inferred that the employees generally do not think that the existing PAR System is
perfect and impartial. On the other hand majority of employees (86%) welcome the idea of 360-
degree Appraisal System and favour its introduction in the organization.
B. 360 Degree Appraisal can be applied in this context for accounting for Performance Related
Pay at least partially, if not fully, especially when PSUs accounts for value of human resources
in the company through modern HR Accounting system
C. 360-degree appraisal System can act as a catalyst to Organizational development.
D. 360 degree appraisal system acts as a self imposed stimulant in PSUs.
E. 360-degree appraisal system ensures right training for right person.
From this, it follows that PSUs should also consider Performance Analysis in the company as
an important tool for Human Resource Accounting.
Thus, introduction of 360-degree Appraisal System deserves a serious consideration by PSUs
Administration as an efficacious alternative to the existing PAR Systems.
LEVEL NINE
STRATEGIC PLANNING IN INDUSTRIAL RELATIONS
1. CHARACTERISTICS OF INDUSTRIAL RELATIONS:
A. INDUSTRIAL RELATIONS IS A DELICATE AND COMPLEX ISSUE:

Industrial relations constitute one of the most delicate and complex issue of the modern industrial
society that is characterised by rapid change, industrial unrest and conflicting ideologies in the
national and international spheres.
B. IT IS A DYNAMIC CONCEPT:
It is a dynamic concept that depends upon the pattern of the society, economic system and
political set-up of a country and changes with the changing economic and social order.
C. IT IS AN ART OF LIVING TOGETHER:

It is an art of living together for the purposes of production, productive efficiency, human well-
being and industrial progress. It comprises a network of institutions, such as, trade unionism, collective
bargaining, employers, the law, and the state, which are bound together by a set of common values
and aspirations. Knowledge of such institutions is important if we are to understand every day
industrial relations phenomena. These institutions are a social network of organisations, participants,
processes and decisions: all of which interact and inter-relate together within the industrial relations
environment and even beyond it.
D. IT IS A NETWORK OF SOCIAL RELATIONSHIPS:

It denotes all types of inter-group and intragroup relations within industry, both formal and informal.
It consists of a complex network of relations that arise out of functional interdependence between
workers and managements and between industrial organisations and society. Industrial relations is
a social concept because it deals with social relationships in different walks of life.
E. INDUSTRIAL RELATIONS IS A RELATIVE CONCEPT: GROWS, FLOURISHES,

STAGNATES OR DECAYS WITH PREVAILING ECONMIC, SOCIAL, POLITICAL
AND LEGAL CONDITIONS:
It is also a relative concept because it grows and flourishes or stagnates and decays in accordance
with the economic, social and political conditions prevailing in a society and the laws made by the
state to regulate them. The advances made in the field of science and technology also influence the
state of industrial relations. There is greater divergence in industrial relations systems as a result of
the divergent economic, social, political and cultural environments.
F. IT IS A COMPREHENSIVE AND TOTAL CONCEPT: DEALS WITH SUM TOTAL OF

RELATIONSHIPS:
With the growth of professional management, the industrial relations scene is being represented
by the representatives of both the employers and the employees. But the scope of industrial relations
cannot merely be confined to common labour-management relations or employer-employee relations.
It is a comprehensive and total concept embracing the sum total of relationships that exists at various
levels of the organisational structure.
More specifically, it connotes relationships among workers themselves within the class of
employees, relations among the managements within the managerial class, and relations between the
two distinct classes of workers and management. It denotes all types of inter-group and intragroup
relations within industry, both formal and informal.
2. CONCEPT AND SCOPE:

There are different views on the meaning and scope of industrial relations since different terms,
such as labour-management relations, employer-employee relations, union management relations,
personnel relations, human relations, are in use and are used synonymously. In its stricter sense,
the term “industrial relations” means relationship between management and workmen in a unit or an
industry. In its wider connotation, it means the organisation and practice of multi-pronged relationships
between workers and management, unions and workers, and the unions and managements in an
industry.
3. DEFINITIONS:
A. DALE YODER:
Dale Yoder defines it as a “whole field of relationship that exists because of the necessary
collaboration of men and women in the employment process of an industry.”
B. TEAD AND METCALFE:
Tead and Metcalfe observed that “industrial relations are the composite result of the attitudes
and approaches of employers and employees towards each other with regard to planning, supervision,
direction and coordination of the activities of an organization with a minimum of human efforts and
frictions with an animating spirit of cooperation and with proper regard for the genuine well-being of
all members of the organization.”
C. ALLAN FLANDERS:
According to Allan Flanders, “the subject of industrial relations deals with certain regulated or
institutionalised relationships in industry. Personal or in the language of sociology, “unstructured”
relationships have their importance for management and workers, but they lie outside the scope of
a system of industrial relations.”
D. CLEFF, G:
Professor Clegg defines industrial relations in the broadest terms as encompassing the rules
governing employment together with the ways in which the rules are made and changed and their
interpretation and administration.”
E. LEGAL DEFINITION:
“Industrial Relations” means relation between employers and employers, or between employers
and workmen, or between workmen and workmen in a company.
SIMPLY SPEAKING...
Simply speaking, industrial relations is that part of management which is concerned with
the manpower of the enterprise. It is, thus, the relation created at different levels of the
organisation by the diverse, complex and composite needs and aspirations and attitudes and
approaches among the participants.
4. OBJECTIVES:
A. Facilitate production and productivity;
B. Safeguard the rights and interests of both labour and management by enlisting their co-
operation through collective bargaining.
C. Achieve a sound, harmonious, and mutually beneficial labour management relations.
D. Avoid unhealthy atmosphere in the industry, especially work, stoppages, go slows, gheraos,
strikes, lockouts.
E. Establish and maintain industrial democracy.
F. The state endeavour to correct, through effective industrial relations, an imbalanced, disordered
and maladjusted social and economic order with a view to reshaping the complex socio-
economic relationships following technological and economic progress. It also controls and
disciplines the parties concerned and adjusts their conflicting interests. In this process, it
protects some and restrains others, depending upon the situation.
G. Kirkaldy observes the industrial relations in a country are intimately connected with the form of
its political government. He divides the objectives of industrial relations into four categories.
KIRKALDY divides the objectives of industrial relations into four categories:
1. Improvement in the economic conditions of workers in the existing state of industrial management
and political government;
2. Control exercised by the state over industrial undertakings with a view to regulating production
and promoting harmonious industrial relations;
3. Socialization or rationalisation of industries by making the state itself a major employer; and
4. Vesting of a proprietary interest of the workers in the industries in which they are employed.
5. COMPONEMENTS OF INDUSTRIAL RELATIONS SYSTEM:
A. Participants:
The participants in the industrial relations sphere are composed of duly recognised representatives
of the parties interacting in several roles within the system.
B. Issues:
The power interactions of the participants in a workplace create industrial relations issues.
These issues and the consequences of power interactions find their expression in a web of rules
governing the behaviour of the parties at a workplace.
C. Structure:
The structure consists of all forms of institutionalised behaviour in a system. The structure may
include collective procedures, grievances, and settlement practices. Legal enactments relevant to
power interactions may also be considered to be a part of the structure.
D. Boundaries:
In systems analysis, it is possible to find an issue which one participant is totally indifferent to
resolving while, at the same time, the other participant is highly concerned about resolution of the
same. These issues may serve to delimit systems boundaries.
6. APPROACHES TO INDUSTRIAL RELATIONS

A. A. PROF. JOHN T. DUNLOP: SYSTEMS APPROACH IN “INDUSTRIAL RELATIONS
SYSTEMS” 1958:
1. Among the contributions, the most outstanding has been that of Harvard University. His
systems treatment deserves special mention in view of its wider applicability. His book
Industrial Relations Systems (1958) was a pioneering volume in which he presented an
analytical framework of industrial relations.
2. Dunlop defines an industrial relations system in the following way: An industrial relations
system at any one time in its development is regarded as comprised of certain actors, certain
contexts, an ideology, which binds the industrial relations system together, and a body of rules
created to govern the actors at the workplace and work community. There are three sets of
independent variables: the ‘actors’, the ‘contexts’ and the ‘ideology’ of the system.
3. The actors are: (a) hierarchy of managers and their representatives in supervision, (b) a
hierarchy of workers (non-managerial) and any spokesmen, and (c) specialised governmental
agencies (and specialised private agencies created by the first two actors) concerned with
workers, enterprises, and their relationships. The contexts is the environment in which the
actors are interacting with each other at various levels and the ideology is their philosophy of
industrial reations.
B. FLANDERS: THE OXFORD APPROACH:
1. According to this approach, the industrial relations system is a study of institutions of job
regulations and the stress is on the substantive and procedural rules as in Dunlop’s model.
2. Flanders, the exponent of this approach, considers every business enterprise a social system
of production and distribution, which has a structured pattern of relationships. The “institution
of job regulation” is categorised by him as internal and external – the former being an internal
part of the industrial relations system such as code of work rules, wage structure, internal
procedure of joint consultation, and grievance procedure.
3. He views trade unions as an external organisation and excludes collective agreements from the
sphere of internal regulation. According to him, collective bargaining is central to the industrial
relations system.
4. The “Oxford Approach” can be expressed in the form of an equation: r = f (b) or r = f (c)
where, r = the rules governing industrial relations
b = collective bargaining
c = conflict resolved through collective bargaining.
5. The “Oxford Approach” can be criticised on the ground that it is too narrow to provide a
comprehensive framework for analysing industrial relations problems.
6. It over emphasises the significance of the political process of collective bargaming in and gives
insufficient weight to the role of the deeper influences in the determination of rules. Institutional
and power factors are viewed as of paramount importance, while variables such as technology,
market, status of the parties, and ideology, are not given any prominence.
C. MARGERISON: THE INDUSTRIAL SOCIOLOGY APPROACH:
1. G. Margerison, an industrial sociologist, holds the view that the core of industrial relations is the
nature and development of the conflict itself. Margerison argued that conflict is the basic
concept that should form the basis of the study of industrial relations. The author criticised the
prevalent approach to industrial relations, which was more concerned with studying the resolution
of industrial conflict than its generation; with the consequences of industrial disputes than on
their causes.
2. According to this school of thought, there are two major conceptual levels of industrial relations.
One is the intra plant level where situational factors, such as job content, work task and
technology, and interaction factors produce three types of conflict – distributive, structural, and
human relations. These conflicts are being resolved through collective bargaining, structural
analysis of the socio-technical systems and man-management analysis respectively. The
second level is outside the firm and, in the main, concerns with the conflict not resolved at the
intraorganisational level. However, this approach rejects the special emphasis given to rule
determination by the “Systems and Oxford models”. In its place, it suggests a method of inquiry,
which attempts to develop sociological models of conflicts.
D. HENRY SANDERS: THE ACTION THEORY APPROACH:
Like the systems model, the action theory approach takes the collective regulation of industrial
labour as its focal point. The actors operate within a framework, which can at best be described as
a coalition relationship. The actors, it is claimed, agree in principle to cooperate in the resolution of
the conflict, their cooperation taking the form of bargaining. Thus, the action theory analysis of
industrial relations focusses primarily on bargaining as a mechanism for the resolution of conflicts.
Whereas, the systems model of industrial relations constitutes a more or less comprehensive
approach, it is hardly possible to speak of one uniform action theory concept.
E. KARL MARX: THE MARXIST APPROACH:
1. The class conflict analysis of industrial relations derives its impetus from Marxist social thinking
and interpretation. Marxism is essentially a method of social enquiry into the power relationships
of society and a way of interpreting social reality. The application of Marxian theory as it relates
to industrial relations derives indirectly from later Marxist scholars rather than directly from the
works of Marx himself. Industrial relations, according to Marxists, are in the first instance,
market-relations.
2. To Marxists, industrial relations are essentially politicised and part of the class struggle.
For Marxists industrial and employee relations can only be understood as part of a broader
analysis of capitalist society in particular the social relations of production and the dynamics
of capital accumulation. As Marx himself put it, “the mode of production in material life determines
the general character of the social, political and spiritual process of life.”
3. The Marxist approach is primarily oriented towards the historical development of the power
relationship between capital and labour. It is also characterised by the struggle of these classes
to consolidate and strengthen their respective positions with a view to exerting greater influence
on each other. In this approach, industrial relations is equated with a power-struggle. The price
payable for labour is determined by a confrontation between conflicting interests.
4. The capitalist ownership of the enterprise endeavour to purchase labour at the lowest possible
price in order to maximise their profits. The lower the price paid by the owner of the means of
production for the labour he employs, the greater is his profit. The Marxist analysis of
industrial relations, however, is not a comprehensive approach as it only takes into
account the relations between capital and labour. It is rather, a general theory of society and
of social change, which has implications for the analysis of industrial relations within what
Marxists would describe as capitalist societies.
F. KERR: THE PLURALIST APPROACH:

1. Pluralism is a major theory in labour-management relations, which has many powerful advocates.
The focus is on the resolution of conflict rather than its generation, or, in the words of
the pluralist, on ‘the institutions of job regulation.’
2. Kerr is one of the important exponents of pluralism. According to him, the social
environment is an important factor in industrial conflicts. The isolated masses of workers
are more strike-prone as compared to dispersed groups. When industrial jobs become more
pleasant and employees’ get more integrated into the wider society, strikes will become less
frequent.
3. Ross and Hartman’s cross national comparison of strikes postulates the declining
incidents of strikes as societies industrialise and develop appropriate institutional
framework. They claim that there has been a decline in strike activity all over the world in spite
of an increase in union membership. The theories on pluralism were evolved in the mid-sixties
and early seventies when England witnessed a dramatic resurgence of industrial conflicts.
However, the recent theories of pluralism emanate from British scholars, and in particular from
Flanders and Fox. According to Flanders, conflict is inherent in the industrial system. He
highlighted the need for a formal system of collective bargaining as a method of conflict
resolution.
4. Fox distinguishes between two distinct aspects of relationship between workers and
management. The first is the market relationship, which concerns with the terms and conditions
on which labour is hired. This relationship is essentially economic in character and based on
contracts executed between the parties. The second aspect relates to the management’s
dealing with labour, the nature of their interaction, negotiations between the union and management,
distribution of power in the organisation, and participation of the union in joint decision-making.
5. The major critics of the pluralist approach are the Marxists according to whom exploitation and
slavery will continue unabated in the institutional structure of pluralism. The only difference is
that in such a social structure, the worker will be deemed to be a better-paid wage slave.
G. MAX WEBER: THE SOCIAL ACTION APPROACH:
1. The social action approach of Weber has laid considerable importance to the question
of control in the context of increasing rationalisation and bureaucratization.
2. Closely related to Weber’s concern related to control in organisations was his concern with
“power of control and dispersal”. Thus, a trade union in the Weber’s scheme of things has both
economic purposes as well as the goal of involvement in political and power struggles.
3. Some of the major orientations in the Weberian approach have been to analyse the impact of
techno-economic and politico-organisational changes on trade union structure and processes,
to analyse the subjective interpretation of workers’ approaches to trade unionism and finally to
analyse the power of various components of the industrial relations environment – government,
employers, trade unions and political parties.
4. Thus, the Weberian approach gives the theoretical and operational importance to “control”
as well as to the power struggle to control work organisations – a power struggle in
which all the actors in the industrial relations drama are caught up.
H. ELTON MAYO WITH ROETHLISBERGER, WHITEHEAD, W.F. WHYTE AND

HOMANS: THE HUMAN RELATIONS APPROACH:
1. In the words of Keith Davies, human relations are “the integration of people into a work situation
that motivates them to work together productively, cooperatively and with economic, psychological
and social satisfactions.”
2. According to him, the goals of human relations are: (a) to get people to produce, (b) to cooperate
through mutuality of interest, and (c) to gain satisfaction from their relationships. The human
relations school founded by Elton Mayo and later propagated by Roethlisberger, Whitehead,
W.F. Whyte and Homans offers a coherent view of the nature of industrial conflict and harmony.
3. The human relations approach highlights certain policies and techniques to improve
employee morale, efficiency and job satisfaction. It encourages the small work group to
exercise considerable control over its environment and in the process helps to remove
a major irritant in labour-management relations. But there was reaction against the excessive
claims of this school of thought in the sixties. Some of its views were criticised by Marxists,
pluralists, and others on the ground that it encouraged dependency and discouraged individual
development, and ignored the importance of technology and culture in industry.
4. Taking a balanced view, however, it must be admitted that the human relations school has
thrown a lot of light on certain aspects such as communication, management development, and
acceptance of work place as a social system, group dynamics, and participation in management.
I. M K GANDHI: THE GANDHIAN APPROACH:
1. Gandhiji can be called one of the greatest labour leaders of modern India. His approach to
labour problems was completely new and refreshingly human. He held definite views regarding
fixation and regulation of wages, organisation and functions of trade unions, necessity and
desirability of collective bargaining, use and abuse of strikes, labour indiscipline, and workers
participation in management, conditions of work and living, and duties of workers. The Ahmedabad
Textile Labour Association, a unique and successful experiment in Gandhian trade unionism,
implemented many of his ideas.
2. Gandhiji had immense faith in the goodness of man and he believed that many of the evils of
the modern world have been brought about by wrong systems and not by wrong individuals.
He insisted on recognising each individual worker as a human being. He believed in non-
violent communism, going so far as to say that “if communism comes without any
violence, it would be welcome.”
3. Gandhiji laid down certain conditions for a successful strike. These are: (a) the cause of the
strike must be just and there should be no strike without a grievance; (b) there should be no
violence; and (c) non-strikers or “blacklegs” should never be molested.
4. He was not against strikes but pleaded that they should be the last weapon in the armoury of
industrial workers and hence, should not be resorted to unless all peaceful and constitutional
methods of negotiations, conciliation and arbitration are exhausted. His concept of trusteeship
is a significant contribution in the sphere of industrial relations.
5. According to him, employers should not regard themselves as sole owners of mills and
factories of which they may be the legal owners. They should regard themselves only as
trustees, or co-owners. He also appealed to the workers to behave as trustees, not to
regard the mill and machinery as belonging to the exploiting agents but to regard them
as their own, protect them and put to the best use they can. In short, the theory of
trusteeship is based on the view that all forms of property and human accomplishments
are gifts of nature and as such, they belong not to any one individual but to society. Thus,
the trusteeship system is totally different from other contemporary labour relations systems. It
aimed at achieving economic equality and the material advancement of the “have-nots” in a
capitalist society by non-violent means.
6. Gandhiji realised that relations between labour and management can either be a powerful
stimulus to economic and social progress or an important factor in economic and social
stagnation. According to him, industrial peace was an essential condition not only for the growth
and development of the industry itself, but also in a great measure, for the improvement in the
conditions of work and wages. At the same time, he not only endorsed the workers’ right to
adopt the method of collective bargaining but also actively supported it. He advocated voluntary
arbitration and mutual settlement of disputes.
7. He also pleaded for perfect understanding between capital and labour, mutual respect, recognition
of equality, and strong labour organisation as the essential factors for happy and constructive
industrial relations. For him, means and ends are equally important.
J. HUMAN RESOURCE MANAGEMENT APPROACH:
1. The term, human resource management (HRM) has become increasingly used in the literature
of personnel/industrial relations. The term has been applied to a diverse range of management
strategies and, indeed, sometimes used simply as a more modern, and therefore more acceptable,
term for personnel or industrial relations management.
2. Some of the components of human resource management are: (i) human resource organisation;
(ii) human resource planning; (iii) human resource systems; (iv) human resource development;
(v) human resource relationships; (vi) human resource utilisation; (vii) human resource accounting;
and (viii) human resource audit. This approach emphasises individualism and the direct
relationship between management and its employees. Therefore, it questions the collective
regulation basis of traditional industrial relations.
SIMPLY SPEAKING…
1. The term “industrial relations” refers to the complexity of human relationships, which
emerge in work situations. The subject of industrial relations deals with certain regulated
and institutionalised relationships in industry.
2. The employment relationship in any work situation provides the setting for industrial
relations. With this objective, the workers as a group form trade unions, the employers
form their own associations, and the state provides institutions for the regulation of
relations. The field of industrial relations has a multi-disciplinary base.
3. Industrial relations is a relative concept and it grows, flourishes, stagnates or decays
with prevailing economic, social, political and legal conditions and situations of a
country. It is not true or correct to say that in today’s business environment, industrial
relations is no more an integral part of human resource management though, most of the
human resource practitioners and students in industry have stopped talking and thinking
about industrial relations anymore because in the new and the emerging businesses it
has become irrelevant for the time being due to many obvious reasons.
7. TOOLS OF INDUSTRIAL RELATIONS: THE INDIAN CONTEXT

1. COLLECTIVE BARGAINING: WHAT IS IT ?
A. Collective bargaining is defined as a process of settling differences of opinion or disputes
mutually between the workers and the management across the table in a win-win situation to
develop and maintain healthy and peaceful industrial relations. Legally, it is known as “bipartite
settlement“ of disputes or differences of opinion.
B. Collective bargaining is concerned with the relations between management representatives and
union representatives. Collective bargaining has been characterised as a form of industrial
democracy and industrial government. It involves the process of negotiation, administration,
and interpretation of collective agreements covering wages, hours of work, and other conditions
of employment for a specific period of time. For some issues, collective bargaining occurs when
one party’s goals conflict with those of the other party.
C. The style and substance of the negotiations are affected by the legal requirement to bargain in
good faith. The final product of negotiation process is a collective bargaining agreement.
Effective administration of collective agreement is vital to the health of the union-management
relationship.
D. Types of Collective Bargaining:
1. Industry Bargaining:
The industry level collective bargaining is common in the case of core industries in public
sector like coal, steel, cement, ports, and banks and insurance. The collective bargaining
on industry basis is practised by traditional industry groups like textiles, plantations and
engineering in the private sector. The recent trend in the field of collective bargaining in India
has been a gradual shift from national/industry level to local level leadership; and enterprise/
job level bargaining.
2. Enterprise Bargaining:
The importance of enterprise is growing as a bargaining level as the industry-wide bargaining
is losing ground. Even in case of industry-wide bargaining, sufficient scope is offered for
enterprise level negotiations. Enterprise level agreements are steadily increasing in number
and becoming a point of decision making. In the industrialised countries, the trend is towards
increasing autonomy of enterprises and individualisation of labour relations.
3. Concession Bargaining:
Concession bargaining, during economic recession, was undertaken by the employers to
face increased competition and cope up with higher productivity requirements. The trade
unions preferred wage cuts or wage moderation to that of job losses and displacement. The
trade unions indicated their readiness to accept other options to avoid labour redundancies.
Apart from accepting wage reduction, other options considered under concession bargaining
were: (a) shorter working hours; (b) freeze on fresh recruitment; (c) restriction on overtime;
and (d) training and retraining of workers. It has also taken the form of downsizing of
employees and offering of voluntary retirement schemes.
4. Compositie Bargaining:
The contents of conventional bargaining are mainly wages, allowances and benefits, and
conditions of work and employment. The composite bargaining calls for a strategic shift from
conventional bargaining to include issues like quality of work life, productivity improvement,
enhancing of market share or even financial matters.
Composite bargaining reflects a change in strategy from confrontation to coordination

between management and labour for the promotion of their common interest of survival and
progress of enterprises.
5. Major Issues In Collective Bargaining:
1. Wage and benefit negotiations.
2. Job security.
3. Productivity.
4. Technological changes.
5. Employment of relations.
6. Quality of work life.
7. Total quality management.
8. Personnel and human resource management issues.
9. Industrial relations and dispute settlement.
2. WORKS COMMITTEE: MANDATORY UNDER SECTION 3 OF THE INDUSTRIAL

DISPUTES ACT 1947:
Works Committee - In the case of any industrial establishment in which one hundred or more
workmen are employed or have been employed on any day in the preceding twelve months the
appropriate Government may by general or special order require the employer to constitute in the
prescribed manner a Works Committee consisting of representatives of employers and workmen
engaged in the establishment so however that the number of representatives of workmen on the
Committee shall not be less than the number of representatives of the employer. The representatives
of the workmen shall be chosen in the prescribed manner from among the workmen engaged in the
establishment and in consultation with their trade union, if any, registered under the Indian Trade
Unions Act, 1926.
It shall be the duty of the Works Committee to Promote measures for securing and
preserving amity and good relations between the employer and workmen and, to that end, to
comment upon matters of their common interest or concern and endeavor to compose any
material difference of opinion in respect of such matters.
3. CANTEEN COMMITTEE:
Canteen committee, which has equal number of representatives from workers and management,
looks into any complaint or problem arising out of the menu, quality and pricing of food items and other
related issues. Provision of canteen facilities is mandatory under the Factories Act 1948 wherever
there are more than 250 employees are employed
4. SAFETY COMMITTEE:
Every company wherever there are 1000 or more employees are employed, the company must
employ a qualified Safety Officer. However, management may voluntarily form a safety committee
inviting equal number of representatives from the workers and the management. The function of the
committee is to look into the periodic arrangement of safety of plant, machinery and the employees.
5. GRIEVANCE COMMITTEE:
Grievance procedure is a formal communication between an employee and the management
designed for the settlement of a grievance. The grievance procedures differ from organization to
organization.
A. Open door policy: Under this policy, the aggrieved employee is free to meet the top executives
of the organization and get his grievances redressed. Such a policy works well only in small
organizations. However, in bigger organizations, top management executives are usually busy with
other concerned matters of the company.
B. Step ladder policy: Under this policy, the aggrieved employee has to follow a step by step
procedure for getting his grievance redressed. In this procedure, whenever, an employee is confronted
with a grievance, he presents his problem to his immediate supervisor. If the employee is not satisfied
with superior’s decision, then he discusses his grievance with the departmental head. The departmental
head discusses the problem with joint grievance committees to find a solution. However, if the
committee also fails to redress the grievance, then it may be referred to chief executive. If the chief
executive also fails to redress the grievance, then such a grievance is referred to voluntary arbitration
where the award of arbitrator is binding on both the parties.
Grievance Procedure In Indian Industry:
The Indian Labour Conference emphasized the need of an established grievance procedure for
the country which would be acceptable to unions as well as to management. In the 16th session of
Indian Labor Conference, a model for grievance procedure was drawn up. This model helps in
creation of grievance machinery. According to it, workers’ representatives are to be elected for a
department or their union is to nominate them. Management has to specify the persons in each
department who are to be approached first and the departmental heads who are supposed to be
approached in the second step. The Model Grievance Procedure specifies the details of all the steps
that are to be followed while redressing grievances. These steps are:
Step 1: In the first step the grievance is to be submitted to departmental representative, who is
a representative of management. He has to give his answer within 48 hours.
Step 2: If the departmental representative fails to provide a solution, the aggrieved employee can
take his grievance to head of the department, who has to give his decision within 3 days.
Step 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can
take the grievance to Grievance Committee. The Grievance Committee makes its recommendations
to the manager within 7 days in the form of a report. The final decision of the management on the
report of Grievance Committee must be communicated to the aggrieved employee within three days
of the receipt of report. An appeal for revision of final decision can be made by the worker if he is
not satisfied with it. The management must communicate its decision to the worker within 7 days.
6. SPORTS COMMITTEE:
The sports committee is formed to look into the measures to be taken by the company to
promote various sports among the employees as welfare and health improvement plans. It has an
equal number of representatives from the workers and the management.
SIMPLY SPEAKING...
1. There are number of ways an employer and his employees can maintain and sustain
industrial peace and thus, have cordial and harmonious industrial relations.
2. The industrial relations is a complex interplay of nerves and the games people play with
each other all the time. The inherent politics makes it yet more complex. The industrial
relations changes its tunes depending upon the economic, social, political and legal
compulsions of all the actors involved in the game. There are no ‘absolutes’ in industrial
relations.
3. It takes a lot of time to understand the depth of industrial relations but no industrial
relations tactic or game can played without strategic planning. Therefore, let us now try
to understand various strategic issues in IRs through a short story enumerated below:
CASE OF MADHU VERMA: CASE STUDY FOR PRACTICE:

Miss Madhu Verma was hired by Sell-Well Retail Stores as Manager - HR and Administration
on 15th January 2007. She always wanted to make name for herself. She came with broad experience
in HR from Pantaloon, Shoppers Stop and Bimani Retail Stores. In about 6 months time she
demonstrated her knowledge, skill and expertise instreamlining various HR systems, procedures and
practices which were applauded by her seniors. She was often heard saying “where there is a
system, there is always a better way”
During January-March 2007, two important incidents happened. She came to know that an
officer Mr. Eknath Solkar in the Supply Chain department had duped the store to the extent of
Rs. 5 lakhs by adopting unethical practices with the help of certain vendors on 20 different occasion
during January, 2007. Miss Verma collected all the evidence from the vendors and the management
suspended Mr. Solkar pending a departmental enquiry against him. Everyone in the company was
full of appreciation for Miss Verma. She told one of her colleagues “ I had told all of you if systems
are foolproof, nothing can go wrong.” She was in high spirits.
On 17th March, 2007, she signed a notice, which she directed to the staff employed at all the
counters from ground floor to 4th floor. The notice stated “the company has purchased special wax
coated dusters. Each of the counter staff will be issued fresh dusters every month. Effective 1st April
2007, each staff member will wipe all the display counters and other wooden furniture in his or her
workplace every evening before going home and close of the business hours.
In the afternoon that day, a committee of 5 counter staff members approached Madhu Verma and
told her “Ms Verma, we speak for the rest of the staff, we say that your notice is totally unwarranted,
unjustified and illegal and is against the rules of the company. We are not employed to perform menial
jobs. We are not going to do it and shall be forced to stop work if you do not withdraw the notice
immediately”
Ms Madhu Verma did not ‘withdraw the notice. The ‘work at all the counters stopped immediately.
The counter staff members requested the customers to leave the premises. While the ‘work stoppage
continued, the enquiry officer concluded the enquiry against Mr. Solkar and submitted his findings to
the management holding Mr. Solkar not guilty” of the charges of duping the company. The enquiry
officer passed strictures against Ms Madhu Verma stating the evidence collected by her from the
vendors was fabricated by Ms Verma to implicate Mr. Solkar.

1. Identify the critical industrial relations issues in this case.
2. What principles of strategic planning could Madhu Verma have applied here to resolve the issues in her
favour? What were compulsions for not Withdrawing the notice?
3. If you ‘were Madhu Verma, ‘What you would have done to successfully resolve the issues?
4. Define industrial relations. What are the various characteristics of industrial relations? Why is industrial
relations called a complex game of nerves?
5. What are the objectives of Industrial relations?
6. What is collective bargaining? Why is it important as a strategy in handling and management of wages
and salary negotiations between workers and the management?
7. What are the various theories and approaches to industrial relations?
8. Explain in details the various strategies you would need to manage industrial relations.
LEVEL NINE A
STRATEGIC PLANNING IN ACTION IN INDUSTRIAL

RELATIONS: STORY OF PUSHPA AND ANAND
PUSHPA: THE PROTAGONIST:
ANAND: THE STORY TELLER:
The minute I saw her, I knew she was the one I was looking for long. She was fair, not so tall,
had startling bright black eyes, was around 25 and looked lonely.
I met her in a park some 25 years ago. I started visiting the park regularly from that day. “My
name is Pushpa” she approached me “Are you looking for someone? I see you here every day” she
asked me, her eyes searching for an answer. “Yes! I am Anand and work for a Multinational company.
I am in search for a solution to my confusion. You look bright, intelligent, experienced, at least more
than me. Would you be my consciousness and source of my awareness throughout?” I asked her.
CONCEPTUAL PERSPECTIVE:
“Look Anand, let us start talking straight” she laughed “I have got your first confusion; you want
to know what is Industrial Relations in reality? Am I right?”
“Absolutely, I said “Thousands of Human Resource, Industrial Relations and Labour Law
Practitioners vouch that it is the relationship between employers and employees, employers and
unions and employees and unions and employers and employers”
“Well, that is on paper and whatever is on paper is never a reality. In real it has four sides of
one’s mental framework. Though, I don’t use jargons but the experts call it Strategic Management of
Industrial Relations” She added.
“My God, how do you know so much”? I could feel an expression of surprise on my face.
Pushpa chuckled while her eyes shined and the smiling face showed beautiful dimples, “well, the
first one is “How to create a problem, solve it yourself and then take the entire credit for it.”
The second is “How to create a problem and then blame someone else for that.” She went on
adding without waiting any reaction from me.
The third is “How to make someone else to create a problem, get him blamed and your come
out of it successfully”
And the fourth one is “How to create a problem and get stuck in it while someone else takes
the credit for solving the problem” She was still smiling
“Wow, that is great” I told Pushpa” but come on, that is not straight. You must be joking because
that is not what our human resource and industrial relations experts and legal luminaries say about
industrial relations”
“Stupid”, Pushpa echoed, “I am sorry to call you so but the Industrial Relations are never straight
and simple. If that were so, the Labour Courts and Industrial Tribunals would not have been over
burdened with backlog of thousands of industrial relations cases pending for final hearing and verdicts.
By and large, the management of industrial relations has either been war of nerves and muscle power
or war of such games between managements and the unions.”
“But, how does one learn this never ending zig-zag art of handling Industrial Relations” I asked
her wondering whether she would know it and if she does, whether she would disclose the secret.
“Most of us in ‘human resource profession’ become single track at one stage or the other. We
start looking for ‘tools’ to resolve issues and problems in every arena of human resource management.
For example, take 360 degree feedback system in performance management. Roughly about
80% human resource professionals who had never experienced or or experimented with performance
management in their respective organizations, held seminars, conferences and in-house discussions
as to how to implement 360 degree feedback system. A management association conducted a
survey and found out that only two percent of the Indian industry was able to implement 360 degree
feedback system.” Her disappointment was genuine when she finished talking.
“I have not understood what you want to say” I told her frankly “Would you like to make it
simpler”
“Of course I will do so. I never thought you would come out to be such a sweet dud” she was
serious this time. “Look, human resource professionals have become like doctors. Doctors have
started depending, during last thirty years, upon machines and tools to arrive at diagnosis. In the
process of technological advancements, they have forgotten to feel the pulse and their own assessment
of diagnosis. Similarly, human resource professionals are aimlessly running after tools and other
mechanical methods for decision making rather than using their own skills and competencies to deal
with people and their problems” Pushpa looked at me with a sense of scrutiny.
“You mean to say that human resource tools and other mechanical support systems can never
make human resource professionals to learn the nuances and art of industrial relations unless they
strengthen their own skills and competencies” I asked her seeking confirmation.
ACADEMIC PERSPECTIVE:
“Well, it is true but you can’t really learn this art overnight and in the management institutes and
B-School classrooms. I can understand your confusion because you are also one of those hundreds
of post graduates students passed with or without merit from one of those 5 star management
institutes which try their best to teach and train you in the knowledge and the art of handling industrial
relations in air conditioned classrooms forgetting that one learns to fight a war on a battle ground and
not sitting in a general’s room.”, Pushpa sounded serious.
Pushpa! This is not on, you are now hitting below the belt. I understand your concern” I told her
“but if one does not attend classes, how would one understand the length and the breadth of the
Industrial Relations?” I tried to convince her.
“Anand, please don’t tell me all that rot. Where do the students attend classes? In such a
scenario it would be better if we tell them to learn industrial relations by spending time in industry
where industrial relations happen.” Pushpa was still serious.
“Come on now, you are behaving too much like a headmistress of primary school, this is not
the way to scold human resource and industrial relations professionals, students and the management
institutes” I was upset with her.
REALITY PERSPECTIVE:
“Ok, Anand, you say you have studied industrial relations from a management institute, tell me
what do you know about it?” She smiled, trying to test my knowledge.
“Well, I am not so smart and knowledgeable as you are but I experienced some funny as well
as serious incidents in industrial relations. Would you digest these with a pinch of salt and don’t
criticise the industrial relations and human resource professionals any further” I warned Pushpa
 “Many years ago, in the late 60’s or early 70’s, the employees of a Heavy Engineering Company
in Mumbai went on a strike for 11 days because the size of “Batata vada” (Potato Cutlets) was
reduced from 20 grams to 16 grams.
 I also know that in a well-known multinational packaging company, the employees resorted to
strike for 32 days because the canteen contractor did not serve fish curry as the company
refused to increase the canteen subsidy to the contractor.
 The employees of an another well-known manufacturing brand in home appliances decided to
go on strike because a worker from “shudra” (untouchable) community married a brahmin co-
worker’s sister and management supported it.
 At coal mines in Dhanbad, where Dr. Dutta Samant took his initial training in industrial relations
and then became the secretary of the coal mine workers union, resorted to strike for over forty
days because a supervisor refused to share lunch in subordinate’s place for taking rest during
lunch break.
 In an Electrical Engineering Company, the union owing allegiance to a CPM affiliated union lost
its members when Dr. Dutta Samant made an entry after huge violent show of muscle power
and support from Indian National Trade Union Congress.” He later left INTUC and formed his
own outfit known as Maharashtra General Kamgar Union.
 The workers of a British Company, later owned by a Marwari, manufacturing cycle rims in
Thane-Belapur industrial belt, resorted to strike for over 96 days to protest against the bad
personnel and human resource practices. The company used to direct new appointees to sign
the offer letter and the resignation letter together at the time of joining.
 In 1981, the employees of all public sector companies at Banglore organized 78 days strike for
uniform wages, pay scales and other amenities.
 In 1982, Dr. Dutta Samant was chosen by a large number of Bombay Textile Mill workers to
lead them into a precarious conflict between Bombay Mill Owners Association and Maharashtra
General Kamgar Union, rejecting the years old hold of INTUC (Congress) affiliated Rashtriya
Mill Mazdoor Sangh (RMMS) over textile industry. Dr. Samant organized a massive strike at
the beginning of which an estimated 3 lakh workers walked out forcing the textile industry to
close down for over a year. The strike fizzled out leaving almost entire workforce of textile
industry unemployed. The textile strike proved to be a boon for mill owners 15 years later.
“Good!” smiled Pushpa “Now you know why I was insisting that you can’t learn industrial
relations in class rooms. I tend to agree with you to an extent that theories are important and these
can be taught only in class room but in the real life field of industrial relations, theories don’t work,
the strategies alone work and you can’t learn strategies in a class room” she glanced at me to see
if I was annoyed. I kept quiet for a while.
“Any way what did you learn in your class room” she interrupted seeing me not reacting. Her
face glittered with a mischief. I smiled to her indicating that she need not be so proud of her knowledge.
I turned away my face and looked at the west end of the park. It was getting slightly dark. I tried to
remember what we were taught at the institute many years ago. Did I attend those sessions at the
institute or did someone proxy for me? I just could not recall and gave up.
“Do you see my point now? If you would have practiced what you learnt, you would have
remembered” Pushpa was at it once again. “I will tell you” she said gleefully. She told me about
“Unitary Perspective” wherein management and the workers share each other’s trust and loyalty. She
said something about “Pluralistic Perspective” where the two powerful groups are the management
and the unions. She added “Marxist Perspective” where in conflict is inevitable and the unions are
natural response of labour to their exploitation by capital.”
“But there is nothing new and great about it, it existed even before you were born” I told Pushpa
feeling exalted.
LABOUR LAWS PERSPECTIVE:

“Anand, you are absolutely right. There is nothing new I can really talk about in the industrial
relations scenario.
Look at our antiquated Labour Laws which have undermined its competitiveness in the global
economy.
The understanding and openness to the impact of competition on industry is not something that
needs to be imbibed because it is academically interesting. It must be absorbed and internalised
because today’s world is a tiny village where the efforts of one player has bearing on all other fellow
players.” Pushpa explained with sadness in her voice.
“To be frank, Pushpa, I have not understood a bit what are you trying to say. You have any
example to give” I looked at her with a big question mark on my face.
“You are a real dumbo” She said “I never expected that you would not understand such a simple
statement of fact.” What I want to say is:
 God only knows as to why we titled “The Industrial Disputes Act” as the “Disputes” Act
especially when the emphasis has always been on creating and maintaining harmonious
industrial relations. The Act should have been named as “ The Industrial Relations Act”
 Comprehensive reforms in Labour Laws are pending for over 3 decades. Incompetence and
failure to do so has played havoc with maintenance of harmonious industrial relations in the past
throughout the country.
 Some of the prime Labour Laws such as The Industrial Disputes Act 1947, The Trade Union
Act 1926, The Payment of Wages Act 1936, The Minimum Wages Act 1948, The Factories Act
1948 and The Workmen Compensation Act 1923 are totally outdated in the context of global
competition.
“Thank you, Pushpa; it is a very interesting analysis. I believe I have begun to understand what
you are trying to say. If I continue to be in your company as my protagonist, I am sure you would
not call me a dumbo” I told her feeling little wise for the first time.
GLOBAL PERSPECTIVES:
“But I have question for you before you go further” I told her. “Your analysis reads like you are
blaming the government for not doing many things important for the survival of the industry and the
harmonious industrial relations. Whatever may be the shortcomings in The labour laws but the intention
of the government has always been to encourage collective bargaining despite the elaborate machinery
provided under the laws for tripartite or adjudication of the disputes.”
“No, I am not blaming the government for anything” said Pushpa seriously “In fact I can realise
the dilemma of the government.
In 1990/91, when, the then Finance Minister, now the Prime Minister, opened up the economy,
the government neither expected the growth of our economy @ 8 to 9.5 % of the GDP nor did it
expect the swiftness with which the new technology and new businesses landed with us, opening
tremendous opportunities in Service Sectors like Information Technology, ITES, Business Process
and Knowledge Process Outsourcing and Communications. Simultaneously, the manufacturing sector
began dismantling and disappearing, especially from places like Mumbai and other states of India
which started with the closure of textile industry in Mumbai.
The outcome was expected: the unions and industrial relations became progressively irrelevant
because of government’s initiative to open up the economy and compete in a global economy and
the method of doing business went through a tremendous change during last 10-12 years. The
statistics below show the reduction in the strikes, lockouts and mandays lost from 1997-2006. This
has happened because the industrial relations, unions and the labour laws became irrelevant in the
new economy and the new businesses in the emerging markets. The direct contribution of human
resource and industrial relations professionals and the government in reducing the conflict has been
pretty negligent.
Year Strikes Lockouts Mandays Lost

(in million)
1997 793 512 17.0
1998 665 432 22.1
1999 540 387 26.8
2000 426 345 28.8
2001 372 302 23.7
2002 295 284 26.5
2003 255 297 30.2
2004 236 241 23.9
2005 227 229 29.6
2006 154 192 13.7
INDUSTRIAL RELATIONS CONCERNS:

“I am sorry Pushpa, I have taken lot of your time and you seemed to be in hurry to return home
but I have a very important question for you” I said my apologies to her.
“Anand, Please don’t worry about my time, after all I am your protagonist” She said warmly.
“ Are you concerned about the apparent widening incompatibility between Human Resource and
Industrial Relations? How would human resource professionals cope up with industrial relations when
the labour laws would cover entire service sector including business process, knowledge process
and legal process outsourcing and then the politicians and the trade unions leaders would fight street
battles to form unions and gain control over the employees?” I asked her.
“There is nothing to worry about that right now because we are quite capable to rise to the
occasion whenever situation demands so.” She tried to comfort me.
“But I am concerned about general apathy of the human resource professionals towards learning
and practicing industrial relations and labour laws and picking it up as a profession or job within
human resource management. The other day I met a human resource Executive who passed her
MBA from Mumbai 4 years ago. She confided in me complaining that she has changed 2 jobs since
passing out as she got fed up doing recruitment for both the companies which held no challenge for
her. She always wanted to take up a job in a manufacturing unit but as a student she took no interest
in learning basic skills of industrial relations and thus, landed in a recruitment job with a business
process outsourcing company.” She lamented.
“On the other hand, in today’s business environment and the corporate human resource
management, all of us talk about four basic processes central to Human Resource Management
system that is ‘Selection, Appraisal, Rewards and Development’ leaving only a “limited room for
Industrial Relations” as a central element.
My third concern is that “any Human Resource issue is capable of turning into an Industrial
Relations problem and then it will wait for none to explode”, the dichotomy between human resource
and industrial relations is not good for professionals from a long term point of view.
The decline of employment in manufacturing sector, low union activities in sunrise sectors, the
rise of service sector, decentralised collective bargaining and direct communication with individual
worker and lack of his involvement and loyalty and the government’s inability to modernise the labour
laws and bring in reforms can be seen as barriers to political restructuring of industrial relations.”
Pushpa added further “And above all, it is a continuous feeling of disappointment from human resource
professionals to treat industrial relations as an ‘untouchable’ part of human resource management.”
“You are right” I was at loss of words to say and add anything more to what Pushpa believed.
I just wanted to thank her for giving me her valuable thoughts and knowledge.
“Pushpa” I smiled to her “thank you very much for everything. Would you like to leave any other
message for our human resource management professionals”? “Well, let them digest whatever I have
said. They need to pull up their socks, act out of box and learn to practice strategies in managing
industrial relations. They need industrial relations skills and competencies all the time as long as they
decide to stay with human resource function. They must remember that industrial relation cannot be
separated or isolated from human resource management”. She smiled trying to reassure me again.
Pushpa has been my wonderful protagonist without creating even an iota of jealousy in my wife’s mind
SIMPLY SPEAKING…
1. Learn and practice strategies in handling and management of industrial relations.
2. Learn and practice strategic planning in:
A. How to create a problem, solve it yourself and then take the entire credit for it.
B. How to create a problem and then blame someone else for that.
C. How to make someone else to create a problem, get him blamed and your come out
of it successfully
D. How to create a problem and get stuck in it while someone else takes the credit for
solving the problem
3. Industrial relations is never straight and plain vanilla. It is a complex game of nerves. If
you are an emotional human resource professional, you may not win a battle in a war
of nerves.
4. There are no tools for management of industrial relations. Human Resource Professional
have to be sound in their industrial relations skills and competencies.
5. We cannot learn industrial relations in B School class room setting.
6. Any human resource issue or matter can suddenly turn into an industrial relations
problem. We have to be sure of our industrial skills and competencies to handle such
situations. Be prepared always.
7. Collective bargaining is itself a competency. Learn its art, skill and practice it to manage
negotiations with workers and unions.
LEVEL TEN
STRATEGIC PLANNING IN MANAGEMENT OF SEXUAL

HARASSMENT AT WORKPLACE
A. EARLY HISTORY:
The term sexual harassment began coming to public attention in the 1970s, starting at a “Speak
Out” in 1975 in Ithaca New York, USA. In her book In Our Time: Memoir of a Revolution (1999),
journalist Susan Brownmiller quotes the Cornell activists who in 1975 thought they had coined the
term sexual harassment: “Eight of us were sitting in an office ... brainstorming about what we were
going to write on posters for our speak-out. We were referring to it as ‘sexual intimidation,’ ‘sexual
coercion,’ ‘sexual exploitation on the job.’ None of those names seemed quite right. We wanted
something that embraced a whole range of subtle and un-subtle persistent behaviours. Somebody
came up with ‘harassment.’ ‘Sexual harassment!’ Instantly we agreed. That’s what it was.” These
activists (Lin Farley, Susan Meyer and Karen Sauvigne) went on to form Working Women’s Institute
which, along with the “Alliance Against Sexual Coercion” founded in 1976 by Elizabeth Cohn-Stuntz,
Freada Klein and Lynn Wehrli, and were among the pioneer organizations to bring sexual harassment
at work to public attention in the late 1970s.
The term sexual harassment was used in 1973 by Dr Mary Rowe in a report to the then
President and Chancellor of MIT about various forms of gender issues. Rowe has stated that she
believes she was not the first to use the term, since sexual harassment was being discussed in
women’s groups in Massachusetts in the early 1970s, but that MIT may have been the first or one
of the first large organizations to discuss the topic (in the MIT Academic Council), and to develop
relevant policies and procedures.
B. HISTORY OF SEXUAL HARASSMENT AT WORKPLACE: INDIA

Sexual Harassment at the Workplace has remained one of the central concerns of the women’s
movement in India since the early-80s (Patel, 2002). During the 1980s, militant action by the Forum
Against Oppression of Women (Mumbai) against the sexual harassment of nurses in public and
private hospitals by patients and their male relatives, ward-boys and other hospital staff; of air-
hostesses by their colleagues and passengers; of teachers by their colleagues, principals and
management representatives; of PhD students by their guides and so on and so forth received a
lukewarm response from the trade unions and adverse publicity in the media. But this trivialisation
did not deter the women’s’ rights activists.
More and more working women started taking systematic action against sexual harassment at
the workplace. Baailancho Saad (Women’s Voice) in Goa mobilised public opinion against a public
servant, who allegedly harassed his secretary, through demonstrations, rallies and sit-ins till the
public servant was forced to resign.
In 1990, the same organisation filed a public interest litigation to bring amendments in the antiquated
rape law that defined rape in the narrowest sense. Several women’s groups came forward in support
of a new concern about a variety of sexually violent acts against women, including sexual harassment
at the workplace (Chorine et.al., 1999)
During the 1990s, the most controversial and brutal gang rape at the workplace involved
a Rajasthan state government employee who tried to prevent child marriage as part of her
duties as a worker of the Women Development Programme. The feudal patriarchs, who were
enraged by her (a lowly woman from a poor and potter community) guts, decided to teach her
a lesson. (Samhita, 2001). After an extremely humiliating legal battle in the Rajasthan High
Court the victim did not get justice and the rapists — educated and upper caste affluent men
were allowed to go scot free. This enraged a women’s rights group called “Vishakha” that
filed public interest litigation (PIL) in the Supreme Court of India (Combat Law, 2003).
C. STATUS PRIOR TO VISHAKHA’S CASE:

Before 1997, women experiencing sexual harassment at the workplace had to lodge a complaint
mainly under Section 354 of the Indian Penal Code that deals with the criminal assault of women to
outrage women’s modesty and Section 509 that punishes individual/individuals for using a word,
gesture or act intended to insult the modesty of a woman. These sections left the interpretation of
outraging women’s modesty to the discretion of the police officer.
Prior to the landmark judgement in Vishakha’s case, offences in sexual harassment at the
workplace were directly/indirectly covered by following sections of the Indian Penal Code (IPC)
Section 209: Obscene acts and songs, to the annoyance of others like:
(a) Does any obscene act in any public place or
(b) Sings, recites or utters any obscene song, ballad or words in or near any public place.
Punishment: Imprisonment for a term up to 3 months or fine, or both. (Cognizable, bailable and
triable offence)
Section 354: Assault or use of criminal force on a woman with intent to outrage her modesty.
Punishment: 2 years imprisonment or fine, or both
Section 376: Rape Punishment: Imprisonment for life or 10 years and fine
Section 509: Uttering any word or making any gesture intended to insult the modesty of a
woman. Punishment: Imprisonment for 1 year, or fine, or both. (Cognizable and bailable offence)
Apart from Indian Penal Code, The Indecent Representation of Women (Prohibition) Act
1987 also covers the following circumstances:
If an individual harasses another with books, photographs, paintings, films, pamphlets, packages,
etc., containing ‘indecent representation of women’; they are liable for a minimum sentence of two
years.
D. STATUS AFTER VISHAKHA’S CASE:

In 1997, the Supreme Court passed a landmark judgment in the Vishakha case laying down
guidelines to be followed by establishments in dealing with complaints about sexual harassment. The
court stated that these guidelines were to be implemented until legislation is passed to deal with the
issue (Mathew, 2002).
E. DEFINING SEXUAL HARASSMENT:

Sexual harassment is a legal term, created for the purpose of ending harassment and discrimination
against women at the workplace. The term is constantly being redefined and extended in legislation
and court decisions and the laws against sexual harassment do not extend to situations outside the
workplace:
1. US Equal Employment Opporunity Commission:

US Equal Employment Opportunity Commission has defined sexual harassment as “unwelcome
sexual advances, requests for sexual favours, and other verbal or physical conduct of a sexual
nature when submission to or rejection of this conduct explicitly or implicitly affects an individual’s
employment, unreasonably interferes with an individual’s work performance or creates an intimidating,
hostile or offensive work environment.
2. Supreme Court of India:
In Vishaka vs. State of Rajasthan (AIR 1997 Supreme Court 3011), Supreme Court of India has
observed as to what is sexual harassment:
“Sexual harassment includes such unwelcome sexually determined behaviour (Whether directly
or by implication) as:
a. Physical contact and advances;
b. A demand or request for sexual favours;
c. Sexually coloured remarks;
d. Showing pornography;
e. Any other unwelcome physical, verbal or non - verbal conduct of sexual nature.”
3. Wikipedia:
Sexual harassment at work is intimidation, bullying or coercion of a sexual nature, or the
unwelcome or inappropriate promise of rewards in exchange for sexual favours. In some contexts
or circumstances, sexual harassment may be illegal. It includes a range of behaviour from seemingly
mild transgressions and annoyances to actual sexual abuse or sexual assault. Sexual harassment is
a form of illegal employment discrimination in many countries, and is a form of abuse (sexual and
psychological) and bullying. For many businesses, preventing sexual harassment, and defending
employees from sexual harassment charges, have become key goals of legal decision making.
4. The United Nations:
General Recommendation 19 to the Convention on the Elimination of all Forms of
Discrimination Against Women defines sexual harassment of women to include:
“such unwelcome sexually determined behaviour as physical contact and advances, sexually
coloured remarks, showing pornography and sexual demands, whether by words or actions. Such
conduct can be humiliating and may constitute a health and safety problem; it is discriminatory when
the woman has reasonable ground to believe that her objection would disadvantage her in connection
with her employment, including recruitment or promotion, or when it creates a hostile working
environment.”
While such conduct can be harassment of women by men, many laws around the world which
prohibit sexual harassment are more enlightened and recognise that both men and women may be
harassers or victims of sexual harassment. It is important to note, most claims of sexual harassment
are made by women.
G. TYPES OF SEXUAL HARASSERS AT WORK:

1. Power-player - Legally termed “quid pro quo” harassment, these harassers insist on sexual
favours in exchange for benefits they can dispense because of their positions in hierarchies:
getting or keeping a job, favourable grades, recommendations, credentials, projects, promotions,

and other types of opportunities.
2. Mother/Father Figure - These harassers will try to create mentor-like relationships with their
targets, all the while masking their sexual intentions with pretences towards personal, professional,
or academic attention.
3. One-of-the-Gang - Harassment occurs when groups of men or women embarrass others with
lewd comments, physical evaluations, or other unwanted sexual attention. Harassers may act
individually in order to belong or impress the others, or groups may gang up on a particular
target.
4. Third Party Sexual Harassment - Describes sexual harassment of employees or peers who
are not themselves the target of the harassment; this includes groping. Third-party sexual
harassment may be either quid pro quo or hostile environment.
5. Serial Harasser - Harassers of this type carefully build up an image so that, people would find
it hard to believe that they would do anyone any harm. They plan their approaches carefully,
and strike in private so that, it is their word against that of their victims.
6. Groper - Whenever the opportunity presents itself, these harassers’ eyes and hands begin to
wander, engaging in unwanted physical contact that may start innocuous but lead to worse.
7. Opportunist - Opportunist use physical settings and circumstances, or infrequently occurring
opportunities, to mask premeditated or intentional sexual behaviour towards targets. This will
often involve changing the environment in order to minimise inhibitory effects of the workplace
or school or taking advantage of physical tasks to ‘accidentally’ grope a target.
8. Bully - In this case, sexual harassment is used to punish the victim for some transgression,
such as rejection of the harasser’s interest or advances, or making the harasser feel insecure
about himself or herself or his or her abilities. The bully uses sexual harassment to put the victim
in his or her “proper place.”
9. Confidante - Harassers of this type approach subordinates, or students, as equals or friends,
sharing about their own life experiences and difficulties, sharing stories to win admiration and
sympathy, and inviting subordinates to share theirs so as to make them feel valued and trusted.
Soon these relationships move into an intimate domain.
10. Situational Harasser - Harassing behaviour begins when the perpetrator endures a traumatic
event (psychological), or begins to experience very stressful life situations, such as psychological
or medical problems, marital problems, or divorce. The harassment will usually stop if the
situation changes or the pressures are removed.
11. Pest - This is the stereotypical “won’t take ‘no’ for an answer” harasser who persists in
hounding a target for attention and dates even after persistent rejections. This behaviour is
usually misguided, with no malicious intent.
12. Great Gallant - This mostly verbal harassment involves excessive compliments and personal
comments that focus on appearance and gender, and are out of place or embarrassing to the
recipient. Such comments are sometimes accompanied by leering looks.
13. Intellectual Seducer - Most often found in educational settings, these harassers will try to use
their knowledge and skills as an avenue to gain access to students, or information about
students, for sexual purposes. They may require students participate in exercises or “studies”
that reveal information about their sexual experiences, preferences, and habits.
14. Incompetent - These are socially inept individuals who desire the attentions of their targets,
who do not reciprocate these feelings. They may display a sense of entitlement, believing their
targets should feel flattered by their attentions. When rejected, this type of harasser may use
bullying methods as a form of revenge.
15. Stalking - There is often a sexual component to stalking, which becomes especially evident
if the stalker observes the stalked at all times, including uses of the restroom.
16. Unintentional - Acts or comments of a sexual nature, not intended to harass, can constitute
sexual harassment if another person feels uncomfortable with such subjects.
17. Hostile - This occurs when an employee is subjected to comments of a sexual nature,
unwelcome physical contact, or offensive sexual materials as a regular part of the work
environment. For the most part, a single isolated incident will not be enough to prove hostile
environment harassment unless it involves extremely outrageous and egregious conduct.
The line between “quid pro quo” and “hostile environment” harassment is not always clear and
the two forms of harassment often occur together. For example, an employee’s job conditions are
affected when a sexually hostile work environment results in a constructive discharge. At the same
time, a supervisor who makes sexual advances toward a subordinate employee may communicate
an implicit threat to retaliate against her if she does not comply.
“Hostile environment” harassment may acquire characteristics of “quid pro quo” harassment if
the offending supervisor abuses his authority over employment decisions to force the victim to endure
or participate in the sexual conduct. Sexual harassment may culminate in a retaliatory discharge if
a victim tells the harasser or her employer she will no longer submit to the harassment, and is then
fired in retaliation for this protest.
H. GENERAL EFFECTS ON THE VICTIMS:

General professional, academic, financial, and social effects of sexual harassment are:
1. Decreased work/performance.
2. Increased absenteeism.
3. Loss of job or career.
5. Loss of income.
6. Having one’s personal life offered up for public scrutiny, the victim becomes the “accused,” and
her dress, lifestyle, and private life will often come under attack.
7. Being objectified and humiliated by scrutiny and gossip.
8. Becoming publicly sexualised (i.e., groups of people “evaluate” the victim to establish if he or
she is “worth” the sexual attention or the risk to the harasser’s career).
9. Defamation of character and reputation.
10. Loss of trust in environments similar to where the harassment occurred.
11. Loss of trust in the types of people that occupy similar positions as the harasser or his or her
colleagues.
12. Extreme stress upon relationships with significant others, sometimes resulting in divorce;
extreme stress on peer relationships, or relationships with colleagues.
13. Weakening of support network, or being ostracised from professional or academic circles
(friends, colleagues, or family members may distance themselves from the victim, or shun her
altogether).
14. Having to relocate to another city, another job, or another school.

15. Loss of references/recommendations.
16. Some of the psychological and health effects that can occur in someone who has been sexually
harassed: depression, anxiety and/or panic attacks, sleeplessness and/or nightmares, shame
and guilt, difficulty concentrating, headaches, fatigue or loss of motivation, stomach problems,
eating disorders (weight loss or gain), alcoholism, feeling betrayed and/or violated, feeling angry
or violent towards the perpetrator, feeling powerless or out of control, increased blood pressure,
loss of confidence and self esteem, withdrawal and isolation, overall loss of trust in people,
traumatic stress, post-traumatic stress disorders.
17. The post-traumatic stress disorders, complex post-traumatic stress disorder and/or suicidal
thoughts or attempts to commit suicide.
I. GENERAL EFFECTS OF SEXUAL HARASSMENT ON ORGANIZATIONS:
1. Decreased productivity and increased team conflict.
2. Decrease in success at meeting financial goals (because of team conflict).
3. Decreased job satisfaction.
4. Loss of staff and expertise from resignations to avoid harassment or resignations/firings of
alleged harassers; loss of students who leave school to avoid harassment.
5. Decreased productivity and/or increased absenteeism by staff or students experiencing
harassment.
6. Increased health care costs and sick pay costs because of the health consequences of
harassment.
7. The knowledge that harassment is permitted can undermine ethical standards and discipline in
the organization in general, as staff and/or students lose respect for, and trust in, their seniors
who indulge in, or turn a blind eye to, sexual harassment.
8. If the problem is ignored, a company’s or school’s image can suffer.
9. Legal costs if the problem is ignored and complainants take the issue to court.
J. CORPORATE SEXUAL HARASSMENT POLICIES:
1. BAYER INDIA’S GROUP SEXUAL HARASSMENT POLICY ACCORDING TO

SUPREME COURT GUIDELINES:
Introduction
Bayer’s quest for competitive excellence consists of our commitment to lawful and ethical conduct
and adhering to Bayer’s values. Integrity, honesty and respect for people remain some of our core
values.
The company is committed to provide a safe and conducive work environment to its employees
and expects them to combine “Expertise with responsibility”. Towards this it is essential that each
employee deals with their colleagues and third parties with full fairness and respect and realises that
his/her behaviour will be attributed to the company and can affect its inward and outward reputation.
Under the corporate compliance, harassment of any kind including sexual harassment is forbidden.
Every employee has the right to be protected against harassment, regardless of whether the accused
considers his or her own behaviour to be normal or acceptable and of whether the harassed person
has the opportunity to avoid the harassment. Bayer Group guidelines 1066 for legal compliance and
corporate responsibility emphasise on the above principle.
Bayer is committed to providing a work environment free of sexual harassment. Sexual harassment
is a form of workplace harassment of a sexual nature that affects the dignity of men and women at
work.
The Bayer Prevention of Sexual Harassment Policy has been formed to prohibit, prevent or deter
the commission of acts of sexual harassment at workplace and to provide the procedure for the
redressal of complaints pertaining to sexual harassment.
Applicability:
This Policy applies to all the employees, workers and trainees (whether in the office premises
or outside while on assignment) of the following Bayer group companies in India “Bayer Crop Science
Limited, Bayer Polychem (India) Limited, Bayer Material Science Private Limited, Bayer Pharmaceuticals
Private Limited, Bayer Diagnostics India Limited, Bayer Bio Science Private Limited, Bilag Industries
Private Limited and Nunhems Seeds Private Limited (hereinafter referred to as Bayer or the Company).
Where sexual harassment occurs to a Bayer employee as a result of an act by a third party or
outsider while on official duty, Bayer will take all necessary and reasonable steps to assist the
affected person in terms of support and preventive action.
What is Sexual Harassment?
Sexual Harassment includes such unwelcome sexually determined behaviour, as physical
contacts and advances, sexually coloured remarks, showing pornography and sexual demands whether
by words, gestures or actions. Such conduct can be humiliating and may constitute a health and
safety problem. It is discriminatory when the complainant has reasonable grounds to believe that his
or her objection would disadvantage them in connection with employment, including recruiting or
promotion or when it creates a hostile working environment.
Sexual harassment includes such unwelcome sexually determined behaviour (whether directly
or by implication) as:
(a) physical contact and advances;
(b) a demand or request for sexual favours;
(c) sexually coloured remarks;
(d) showing pornography;
(e) any other unwelcome physical, verbal or non-verbal conduct of sexual nature.
Sexual harassment is emotionally abusive and creates an unhealthy, unproductive atmosphere
at the workplace. Sexual harassment cases can be classified into two categories - quid pro quo and
creation of a hostile working environment. (a) Under the quid pro quo (meaning this for that) form of
harassment, a person or authority, usually the superior of the victim, demands sexual favours for
getting or keeping a job benefit and threatens to fire the employee if the conditions are not met.
(b) A hostile work environment arises when a co-worker or supervisor creates a work environment
through verbal or physical conduct that interferes with another co-worker’s job performance or creates
the workplace atmosphere which is intimidating, hostile, offensive or humiliating and experienced as
an attack on personal dignity. For example, an employee tells offensive jokes. No person shall
indulge or caused to be indulged under instructions from superior in sexual harassment of co-
workers.
However, an employee who is sexually harassed can complain about the same even if there is
no adverse job consequence.
If you are Being Harassed:
(a) Tell the accused that his/her behaviour is unwelcome and ask him/her to stop.
(b) Keep a record of incidents (dates, times, locations, possible witness, what happened, your
response). It is not mandatory to have a record of events to file a complaint, but a record can
strengthen your case and help you remember the details over time, in case the complaint is not
filed immediately. (c) File a complaint as soon as possible. If, after asking the accused to stop
his/her behaviour, the harassment continues, report the abuse to the Complaints Committee
formed for this purpose.
The Complaints Committee:
A Complaints Committee has been formed consisting of the following:
Sr. No Name Designation
1. Ms Shirin V. Balsara (General Counsel and Chairperson
Secretarial, Bayer Group Companies, India)
2. Ms Bhawana Mishra (Independent Member) Member
3. Mr K. S. Harish (Vice President – Human Member
Resource,Bayer Crop Science Limited)
Dealing With the Complaint:

1. It is the obligation of all employees to report sexual harassment experienced by them personally.
A concerned co-worker may also inform the Complaints Committee of any instance or behaviour
of sexual harassment by a co-worker towards another employee
2. The concerned employee shall give his complaint in writing to the Chairperson of the Committee
giving details of the incident within a week of its occurrence.
3. Once the complaint is received, it will be kept strictly confidential.
4. The person accused will be informed that a complaint has been filed against him/her and no
unfair acts of retaliation or unethical action will be tolerated.
5. The Committee shall ensure that a fair and just investigation is undertaken immediately.
6. Both the complainant and the alleged accused initially will be questioned separately with a view
to ascertain the veracity of their contentions. If required, the person who has been named as
a witness will need to provide the necessary information to assist in resolving the matter
satisfactorily.
7. The complainant and the accused shall be informed of the outcome of the investigation. The
investigation shall be completed within 3 months of the receipt of the complaint. If the investigation
reveals that the complainant has been sexually harassed as claimed, the accused will be
disciplined accordingly.
8. The victim of sexual harassment has the option to seek transfer of the accused or his/her own
transfer.
Disciplinary Action:
Where any misconduct is found by the Committee, appropriate disciplinary action shall be taken
against the accused. Disciplinary action may include transfer, withholding promotion, suspension or
even dismissal. This action shall be in addition to any legal recourse sought by the complainant.
Confidentiality:
All information received shall be kept confidential. Any person (including witnesses) who breaches
confidentiality shall be subject to disciplinary action.
Protection Against Retaliation:
Regardless of the outcome of the complaint made in good faith, the employee lodging the
complaint and any person providing information or any witness, will be protected from any form of
retaliation. While dealing with complaints of sexual harassment, the Committee shall ensure that the
Complainant or the witness are not victimized or discriminated against by the accused. Any unwarranted
pressures, retaliatory or any other type of unethical behaviour from the accused against the complainant
while the investigation is in progress should be reported by the complainant to the Complaints Committee
as soon as possible. Disciplinary action will be taken by the Complaints Committee against any such
complaints which are found genuine.
Documentation:
The Committee shall keep complete and accurate documentation of the complaint, its investigation
and the resolution thereof. The incident would be documented in both the complainant’s and the
accused’s files with the full report of the Complaints Committee.
Dissemination of the Policy:
A copy of this Policy shall be given to all employees and to all new recruits and they shall sign
a statement acknowledging that they have received, read, understood and will abide by the Policy.
Complaints Made with a Malicious Intent:
This policy has been evolved as a tool to ensure that in the interest of justice and fair play, our
employees have a forum to approach in the event of instances of sexual harassment. However, if
on investigation it is revealed that the complaint was made with a malicious intent and with the motive
of maligning the concerned individual/tarnishing his/her image in the company and to settle personal/
professional scores, strict action will be taken against the complainant. The employees who are
victims of sexual harassment may, in addition to the above, seek legal remedies as may be provided
under the various laws for the time being in force.
2. ALLAHABAD AGRICULTURAL INSTITUTE – DEEMED UNIVERSITY:

Grievance redressal mechanism for faculty, staff and students:
A. For Students:
1. Dean Student’s Welfare.
2. House of Representatives.
B. For Faculty and Staff:
1. Through staff meetings.
2. Through special grievance redressal committee.
3. Policy on sexual harassment for women employee.
Sexual Harassment Exterminator Cell (S.H.E. Cell):

As a means to curb Sexual violence within its arena the AAI-DU has formed a S.H.E Cell, so
as to combat sexual harassment and violence against women. The Sexual Harassment Exterminator
Cell has been constituted on the guidelines of the Supreme Court Judgment in Vishakha vs. State
of Rajasthan and others (AIR 1997 SC 3011), and the notification issued by the UGC and AICTE vide
letter dated 26th march 1999.
The Committee has been empowered to conduct enquiry and submit a report of their investigation
along with recommendations if any, to the Vice Chancellor for Disciplinary action within 10 days of
any such report being lodged.
What is meant by ‘Sexual Harassment’?
Sexual harassment is a form of violence against women. It is a form of assault, which can
manifest itself in terms of physical and psychological acts. Physically, the recipient may be the victim
of pinching, grabbing, hugging, patting, leering, brushing against and forms of touching. Psychological
harassment can occur through the proposal of physical intimacy by requesting dates and sexual
favours, or by making lewd and indecent remarks which embarrass the recipient.
The Supreme Court has defined ‘Sexual harassment’ in the case of Vishakha vs. State of
Rajasthan as follows:
”Sexual harassment includes such unwelcome sexually determined behaviour [whether directly
or by implication] such as:
1. Physical contact and advances;
2. A demand or request for sexual favours;
3. Sexually coloured remarks;
4. Showing pornography;
5. Any other unwelcome physical, verbal or non-verbal conduct of a sexual nature.
The National Commission of Women adopted a Code of Conduct which was based on this
definition of Supreme Court: Accordingly, sexual harassment has been defined as follows:
Sexual harassment shall include such unwelcome, sexually determined behaviour by any
person, either individually or, in association with other persons or, by any person in authority,
whether directly or by implication. These include the following:-
1. Eve teasing;
2. Unsavory remarks;
3. Jokes that cause or are likely to cause awkwardness or embarrassment;
4. Innuendos and taunts;
5. Gender based insults or sexist remarks;
6. Unwelcome sexual tone in any manner such as over telephone (obnoxious telephone calls) and
the like; touching or brushing against any part of the body and the like; displaying pornographic
or other offensive or derogatory pictures, cartoons, pamphlets or sayings;
7. Forcible physical touch or molestation; and
8. Physical confinement against one’s will and any other act likely to affect one’s privacy. This
includes any act or conduct by a person in authority and belonging to one sex, which denies
or would deny equal opportunity in pursuit of career development or, otherwise make the
environment at the workplace hostile or intimidating to a person, who belongs to the other sex,
only on the ground of sex.
Q: What is ‘quid pro quo’ sexual harassment?
‘Quid pro quo’ is a Latin expression which means ‘this for that.’ It is applicable to the business
environment. It is a type of sexual harassment where an employee is confronted with sexual demands
to keep her job or obtain a promotion. For instance, an employer may propose an employee by saying
that she should sleep with him and then she would be promoted. This would be considered to be an
instance of ‘quid pro quo’ sexual harassment.
Thus, ‘quid pro quo’ harassment consists of receiving some employment benefits on a pre-
condition that the victim agrees to provide the employer with sexual favours.
Q: What is meant by sexual harassment with regard to ‘hostile environment’?
Sexual harassment, leading to unreasonable interference with an individual’s work performance,
or creating an intimidating, hostile, or offensive working environment constitutes ‘hostile environment’
sexual harassment.
Q: Can a single incident amount to sexual harassment?
Generally, it depends upon the severity of the offence. If the harassment is severe, it is not
necessary to show repetitive series of incidents.
Thus, in case of quid pro quo sexual harassment, a single sexual advance may constitute
harassment if it is linked to the granting or denial of employment benefits. However, in other cases,
unless the conduct is quite severe, a single incident or isolated incidents of offensive sexual conduct
or remarks, generally do not amount to sexual harassment.
Q: What remedy is available to the victim of sexual harassment?
Generally, the victim can sue the perpetrator for damages in a civil suit of torts. These damages
are basically for loss of wages, physical and mental harassment, punitive damages and costs of the
suit. She can also file a criminal complaint against the perpetrator under Section 354 of the Indian
Penal Code (attempt to outrage the modesty of a woman).
Q: Can criminal proceedings be initiated against the perperator of sexual
harassment?
In the guidelines laid down in the case of Vishakha v/s. State of Rajasthan, the Supreme Court
has defined the conduct that constitutes sexual harassment. It held - “Where such conduct amounts
to a specific offence under Indian Penal Code or any other law, the employer shall initiate appropriate
action in accordance with law by making a complaint with the appropriate authority.”
Under the Indian Penal Code, two sections deal with sexual harassment. Thus, an act of assault
or the use of criminal force against a woman, with the intent to outrage her modesty, is an offence,
punishable under Section 354 with an imprisonment for two years or fine or both. Using words,
gestures or acts or, exhibiting any object with the intention to insult the modesty of a woman or to
intrude upon her privacy is an offence under section 509 of IPC and, the same is punishable with an
imprisonment for one year or fine or both.
Also, under the Indian Penal Code, any act which causes annoyance to others, doing any
obscene act in any public place or singing, reciting or uttering any obscene song, ballad or words
in or near any public place, is punishable with an imprisonment of 3 months or fine or both under
section 294 of Indian Penal Code.
Thus, when a case of sexual harassment falls within the purview of any of the above sections,
the victim can file a criminal complaint with the police station which has jurisdiction.
K. SEXUAL HARASSMENT AT WORKPLACE: CASE STUDIES:
1. CASE OF SAINEE GOSAWI:

Fifty-year-old Sainee Gosawi (name changed to protect the identity) has been fighting a lone
battle with the Railways for the last two years — ever since she complained against the alleged
sexual harassment by her boss.
Though, a committee was formed within the railways, the panel did not find her complaint tenable
as she could not attend the hearings called by it and the statements made by witnesses did not
match.
Sainee, however, feels that justice has not been done and has been trying to meet senior
officials to plead her case. She has also approached a group of lawyers for help.
“I have given valid reasons for my absence from the hearings. But they are not ready to hear
my please. I was not even given a copy of the report of the committee. I finally filed an RTI after which
they gave me a copy. I want justice,” says Sainee.
But railway officials differ. “If there has been a case before my appointment, I am sure that the
committee would have looked into the complaint. If the complainant feels that justice has not been
done, her pleas will be looked into. We have women as senior officials who form the committee as
per the Vishakha judgment,” said Sadhu Sengupta (name changed to protect the identity), divisional
railway manager. “Ever since I have taken over, there have been no complaints about sexual
harassment,” he claimed.
Sainee is not alone. A few months ago, two cases of sexual harassment of women at workplace
were reported in Mumbai. A former employee of an audit organisation lodged a complaint with the N
M Joshi Marg police station alleging sexual harassment at workplace through lewd e-mails and
gestures. In another case, a senior official of a public sector utility undertaking was suspended
pending departmental inquiry into the allegations made last week.
According to the State Women Commission, majority of the cases are reported from educational
institutes and hospitals, besides women working in BPOs. In most cases, the Supreme Court’s
landmark judgment in the Vishakha and others vs. the State of Rajasthan case of sexual harassment
at the workplace is the only recourse for victims.
2. CASE OF BHANU SARKAR:
Bhanu Sarkar (name changed to protect the identity) case, is the first case in which the Supreme
Court applied the law laid down in Vishakha’s case and upheld the dismissal of a superior officer of
the Delhi based Apparel Export Promotion Council who was found guilty of sexual harassment of a
subordinate female employee at the place of work on the ground that it violated her fundamental right
guaranteed by Article 21 of the Constitution.
In both cases the Supreme Court observed, that “In cases involving Human Rights, the Courts
must be alive to the International Conventions and Instruments as far as possible to give effect to
the principles contained therein- such as the Convention on the Eradication of All forms of Discrimination
Against Women, 1979 [CE DAW] and the Beijing Declaration directing all state parties to take
appropriate measures to prevent such discrimination.”
The guidelines and judgments have identified sexual harassment as a question of power exerted
by the perpetrator on the victim. Therefore, sexual harassment in addition to being a violation of the
right to safe working conditions is also a violation of the right to body integrity of the woman.
3. CASE OF DYAL SINGH AND OTHER COLLEGES: DELHI UNIVERSITY:
The University community has been seized of the issue in Dyal Singh College wherein a lady
teacher has complained that a male colleague used foul and sexually abusive language towards her.
This matter culminated in the recommendation of the termination of the male teacher’s services by
the College Governing Body on 2nd May 2006. The entire case needs to be viewed against the
backdrop of the history of sexual harassment in the University and struggle against it which culminated
in the enactment of the Ordinance XV-D on sexual harassment.
The University of Delhi has had a long history of sexual harassment. Each case that has
surfaced in the University during the past two decades shows how deeply entrenched sexual
harassment is and how difficult it is to fight it and take each case to its logical conclusion. The
University witnessed a series of suicides by female research scholars in the 1980s in science
department. A huge agitation in and outside the campus forced the authorities to set up an inquiry.
The inquiry found the Professor guilty of sexual harassment which had led to serial suicides. A
combined committee of the Executive Council and Academic Council was formed to recommend the
course of action in the case, but the Professor virtually escaped punishment; he acquired an exclusive
laboratory in the South Campus. It took Seema Guha (name changed to protect the identity) of the
Department of Adult Education eight years just to be heard. The Justice Wad Committee was set up
only when the Vice-Chancellor was confronted with an issue of the magazine Manushi at an international
feminist conference abroad. This contained details of Seema Guha harassment. The inquiry revealed
that not only Seema Guha but nearly twenty other women had been subjected to sexual harassment
by Brijesh Nath (name changed to protect the identity), the Head of the Department. In this instance,
too, the culprit continued to be in his position with demotion for a long time. In the specific instance
of Bhanmati (name changed to protect the identity), a menial worker, the college authorities whitewashed
the whole issue. It was only through a struggle by a tiny but determined section of the students,
teachers and non-teaching staff of the University that the university saw the first inquiry committee
being set up according to the Supreme Court guidelines in the Vishakha case. In this instance it was
the intervention of the National Commission of Scheduled Castes and Scheduled Tribes that led to
the constitution of this committee. Here the committee left its task unfinished; it did not consider a
crucial piece of evidence saying that it was not in their purview to get someone’s signatures
authenticated. The NGO representative on the committee was not from one having tackled such
cases and it substantially represented the interests of the authorities. In another instance at Hindu
College, a female teacher was abused and chased by a male colleague in the staff-room in the
presence of a large number of her colleagues including some feminist activists. The Staff Association
and authorities of the college did nothing in the case. In a case of sexual harassment of a librarian
in Ramjas College, the inquiry remained incomplete because the complainant withdrew the case
under family pressure.
4. CASE OF COL. RAGHAV DUBEY AND PREMA LAVYA:

In this case Col Raghav Dubey (name changed to protect the identity), a deputy commander,
Mountain Brigade and vice chairman of the school’s managing committee posted at Pithoragarh,
Sonmarg, for providing security cover to pilgrims of Amarnath Yatra, allegedly wrote a letter to the
Prema Lavya (name changed to protect the identity) making sexual advances.
She filed a complaint with the college management committee chairman M S Chawla (name
changed to protect the identity). But instead of acting on her complaint it was alleged the victim was
terminated from services on charges of misappropriation of school funds.
The victim filed a writ petition in the State High Court which upheld the charges of sexual
harassment on the basis of a letter purportedly written by Col Raghav Dubey.
It directed the Army to take disciplinary action against the officer, following which the management
filed the SLP in the apex court.
The apex court while finding fault with the army authorities for not constituting a proper complaints’
committee to probe the allegation, however, disagreed with the findings of the high court.
“Before a disciplinary proceeding is initiated in a case of this nature, a prima facie finding has
to be arrived at as regards the role of the delinquent,” the bench observed.
It further observed “It is not in dispute that no complaint committee has been constituted; no
mechanism has been put in place for redressal of the complaint made by the victim. For one reason
or the other, Chawla (Chairman) failed or neglected to take appropriate action,” the apex court said.
The apex court slapped a cost of Rs 50,000 on the school noting that a complaint committee,
as per ‘Vishakha’ case directions, was not constituted over complaints made by other teachers and
staff members, but committee was constituted for handling the principal’s plea.
“The High Court, in our opinion, without getting the matter enquired into could not have opined
that it was a clear cut case of sexual harassment of the writ petitioner and on that basis directed
initiation of a disciplinary action,” the apex court said.
Hence, the apex court directed the High Court to appoint a three-member committee headed by
a woman to probe the allegation. If it is found that the school principal was subjected to sexual
harassment, its report may be sent to the army authorities for initiation of a disciplinary action against
Col Raghav Dubey and also Chawla”, the apex court said.
5. CASE OF BIMLA BHAGCHANDANI:
Bimla Bhagchandani (name changed to protect the identity), a junior stenographer with the
Chandigarh Industrial and Tourism Development Corporation, a public sector unit, has been fighting
the harassment battle against general manager (tourism), Abhay Raj (name changed to protect the
indentify), for six years.
Abhay Raj headed CITCO’s harassment cell till Bimla filed her complaint in 2001, though, the
apex court’s guidelines in the Vishakha case say only a woman should head such a cell.
The complaint said Abhay Raj was passing comments loaded with sexual innuendoes and had
dropped in at her place several times. Bimla’s husband, also a junior stenographer with CITCO,
testified to Abhay Raj’s visits.
Bimla says Abhay Raj retaliated by downgrading her annual confidential reports and, after a
spat, recommended she be disciplined and transferred.
The complaints committee sat on the inquiry for over two years and came out with a clean chit
only after a nudge from the high court. The panel said Bimla had not “sufficiently proven” her case
but recommended she never be posted under Abhay Raj again.
Bimla has now filed a criminal complaint against Abhay Raj and must fight her case in a Chandigarh
court. Here, the police will investigate and the office panel’s findings will not matter.
The Vishakha judgment aimed at providing a better alternative by defining harassment in terms
of casual physical contact, demand or request for sexual favours, vulgar jokes or loaded remarks,
display of pornography and the like. The judgment asked offices to set up harassment cells and laid
down guidelines, saying that, for example, at least half the members should be women.
The Supreme Court has reiterated that the findings of an office’s sexual harassment probe panel
cannot be challenged and thrown out a woman’s appeal against the clean chit to her superior.
“The findings of the (complaints) committee are final. We will not look into the facts,” a bench
headed by Chief Justice K.G. Balakrishnan observed.
This was an echo of what the apex court had said last year in a clarification to the 1997
Vishakha judgment that set the benchmarks for dealing with sexual harassment at the workplace.
Punjab and Haryana High Court had earlier rejected Bimla appeal without even a hearing. It said
that since there were three senior women on the panel, it saw no injustice being done.
6. CASE OF PHANEESH MURTHY AND REKA MAXIMOVITCH: INFOSYS 1999-2003:
A. CHRONOLOGY OF EVENTS:
1. October 1999: Reka Maximovitch joins Infosys as Phaneesh Murthy’s assistant at US office.
2. December 2000: Reka Maximovitch quits Infosys.
3. January-June 2001: Reka takes out two restraining orders against Phaneesh; of which she
alleges at least one was violated.
4. December 2001: Reka files a case against Phaneesh Murthy and Infosys for “sexual harassment
and wrongful termination”.
5. January 2002: Phaneesh warns Nilekani of the possibility of a sexual harassment case against
him and the organization. Says he is innocent and the company is not at risk.
6. 23 July 2002: Phaneesh quits Infosys.
7. 25 April 2003: Case settled out of court for $3 million, payable in a month.
B. REKA’S COMPLAINT:
Maximovitch alleges: “I was subjected to verbal sexual harassment, to unwanted sexual advances,
and to visual sexual harassment.” The organization failed “to take reasonable steps to keep harassment
from occurring and recurring.
C. PARA 9 OF THE COMPLAINT:
Murthy repeatedly told the petitioner (Reka) that he was in complete charge of all of Infosys’ US
operations, that he answered to no one regarding how he ran the US offices, and that no one in United
States had the authority to compel him to take, or not to take, any action regarding Infosys or its
employees. The plaintiff observed that Murthy in fact had such authority, that he hired and fired employees
on whim, and that he took pride in his ability to control people’s lives and careers in this way.”
D. SOURED REALTIONSHIPS:
And while Reka Maximovitch moved out of the picture with the settlement, Phaneesh Murthy and
the company have been on a war of words.
Announcing the settlement, Infosys chairman NR Narayana Murthy said under the terms of the
agreement, Infosys “reserved the right” to take action against Phaneesh for non-participation in the
settlement (not paying up any part of $3 million) and for his conduct.
According to Narayana Murthy, Phaneesh did not inform the company about his consensual
relationship with Maximovitch, who was his executive assistant from October 1999 to December
2000... nor did he tell the company about two restraining orders she had obtained from the court after
she left the company. Finally, he informed chief executive officer Nandan Nilekani that there was a
“possibility of a case being filed” a month after the case had already been filed.
The company sees this as a serious breach of trust.
Despite his relationship with Maximovitch going public, Phaneesh Murthy, on the other hand, has
repeatedly claimed innocence. Speaking to Dataquest on the issue, he said: “I was not guilty, so I
didn’t want to participate financially in the settlement.”
On the contrary, he says Infosys is speaking of a right to take action more in retaliation than
anything else. In a statement sent to the media the day Narayana Murthy announced the settlement,
Phaneesh said—”Regarding the mention of rights of legal action against me, I feel this is in retaliation
to the fact that my lawyers have initiated action to retrieve my vested and paid-for shares which
Infosys is withholding, and as a result of which I have suffered significant financial losses.”
MURTHY VS MURTHY
PHANEESH... INFOSYS...
 “I am innocent and do not  “The case was settled as the charges were serious
believe I have to pay for a enough to affect both the plaintiff and the company
crime I haven’t committed” negatively if dragged to court”
 “Infosys settled this case  “The company disclosed all its SEC filings as early
with Reka because of as October 2002, with the risks of the case
company’s upcoming ADR mentioned. Therefore, this cannot affect the ADR
offering” offering”
 “The settlement was not  “Infosys had made clear that it was willing to settle
my preferred route and that with Reka by itself. Phaneesh volunteered to sign
is why I refused to pay any the settlement and agreed to every condition”
part of it”
 “The company settled  “Phaneesh’s shares have been withheld as part of

because it wanted to a tax indemnity signed in 1997. Shares of more
retaliate against me. I have than a 1,000 other employees have also been
filed a case against them for similarly withheld and, therefore, there is no question
holding on to my shares on him been singled out by the company...”
without proper reason”
7. CASE OF AVINASH NAGRA VS. NAVODYA VIDYALAYA SAMITI AND OTHERS

(1997 2 SCC 534):
The appellant service was terminated in terms of his letter of appointment giving salary in lieu
of notice on the ground of his improper conduct with a girl student. The appellant was earlier given
a warning of his sexual advances but instead of mending his ways, the appellant went to the girl’s
hostel at 10 p.m. in the night and tricked the girl into coming out of the hostel. Not only did he make
sexual advances to her, but when she ran away, he pursued her to her room and created a scene
in the hostel. An enquiry was conducted into his misconduct by the Assistant Director. Based on the
enquiry report, the Director found him not worthy to be a teacher in the institution and accordingly,
the appellant’s services were terminated.
The Appellant challenged his termination in a writ petition before the Himachal Pradesh High
Court. He then withdrew the writ petition of the first instance without permission of the Court granting
him liberty and filed a fresh writ petition. The High Court dismissed the second petition finding that
it was not maintainable as the principle of constructive res judicata would apply.
The Appellant filed Special Leave Petition before the Supreme Court with the contention that
since the charges leveled against him impinged upon his character, conduct and career he ought to
have been given an opportunity to cross-examine the victim and the witnesses. He further contended
that since the he had filed the writ petition initially which was dismissed as withdrawn, the second
writ petition cannot be dismissed on the principle of constructive res judicata.
The issues that were before the Supreme Court were: (i) whether the dismissal of the appellant
is vitiated by any error of law and whether the appellant entitled to a full-fledged enquiry? (ii) Whether
the High Court was right in dismissing the second writ petition?
The Supreme Court made lengthy observations about the importance of spreading education
particularly among girls and of imparting the right values. Under those circumstances, the Court had
no hesitation in holding that “the conduct of the appellant is unbecoming of a teacher much less a
loco parentis and, therefore, dispensing with regular enquiry under the rules and denial of cross-
examination are legal and not vitiated by violation of the principles of natural justice.”
The Court held that the High Court applied the correct principle of law in concluding that the
Appellant’s second writ petition before it was not maintainable as the principle of constructive res
judicata would apply. He filed the writ petition in the first instance but withdrew the same without
permission of the Court with liberty to file the second writ petition which was dismissed. Therefore,
the Supreme Court found no merit in the appeal for interference.
8. CASE OF ARATI DURGARAM GAVANDI VS. MANAGING DIRECTOR, TATA
METALIKS LIMITED AND ORS. (WP NO 8826 OF 2004 DECIDED ON 6-10-08)
HIGH COURT OF BOMBAY:
The Petitioner was working at various levels in Steel Plants in the Redig and Satara areas. She
was sexually harassed by a senior officer who joined the employer company in 1993. Harassment
included lewd remarks, vulgar gestures, placement of the petitioner as the only woman at the Satara
plant in the company of 22 male security guards, and refusal to transfer her to the operational Redig
plant despite her request for the same. In 2004 the Petitioner made representations to the District
Collector, Sindhudurg, and the Maharashtra Women’s Commission. An FIR was lodged at Vengurla
Police Station in July 2004. In August 2004, a representation was lodged with the management. The
employer appointed an advocate as an Enquiry Officer, who in his report dated 7th Oct 2004, exonerated
the third Respondent. The Petitioner’s services were terminated on 12th October 2004.
The petition was instituted on 19th October 2004, seeking direction to the First and Second
Respondents to enquire into her complaint in accordance with guidelines laid down by the Supreme
Court in Vishakha and orders not to remove her from service.
The Court found that the employer had acted in breach of the guidelines of Vishakha by not
appointing a Complaint Committee. The employer was directed to constitute such a committee. In the
meantime, as the Labour Court had granted reinstatement to the Petitioner, she was given liberty to
take steps for non-compliance of the reinstatement order and to pursue remedies for promotion.
9. CASE OF RUPAN DEOL BAJAJ VS. K P S GILL (1995 6' SCC 194): SUPREME
COURT HOLDS GILL GUILTY IN RUPAN DEOL BAJAJ CASE:
Former DGP of Punjab and Indian Hockey Federation chief K.P.S. Gill failed in his efforts to
clear himself of the stigma of being found guilty of outraging the modesty of a senior woman IAS
officer as the Supreme Court upheld his conviction for the offence. But he was spared from undergoing
the three-month jail sentence as it was converted into probation by the Punjab and Haryana High
Court.
Dismissing his appeal against the conviction and the award of the sentence, a bench of Mr.
Justice K.G. Balakrishnan and Mr. Justice B.N. Srikrishna said that the Punjab and Haryana High
Court judgment is upheld.
The High Court though had modified his sentence by reducing the uprobationu from three years
to one year and keeping the sentence suspended during this period on his undertaking of maintaining
good behaviour and not indulge in drinking in public places and parties, it had not cleared him of the
three-month jail term.
The High Court had also upheld the award of Rs 2 lakh compensation by Gill to victim IAS officer
Rupan Deol Bajaj, apart from imposing a litigation cost on him.
The apex court also directed that the Rs 2 lakh compensation deposited by Gill with the High
Court for payment to Ms Bajaj would go to some woman organisations as the she had declined to
accept it.
The former Punjab Police chief was found guilty by the Chandigarh Chief Judicial Magistrate
(CJM) under Section 345 (outraging the modesty of a woman) and under Section 509 (insulting a
Woman with word and gesture) in an initial verdict on January 6, 1996 for patting Ms Bajaj, a senior
IAS officer, in the posterior while he was allegedly in inebriated condition at a party hosted by then
Finance Commissioner (Home) S.L. Kapur at his residence on July 18, 1988.
The party was attended by several top lAS, IPS officers based in Chandigarh and senior journalists
from the city, many of whom were later cited as witnesses in the case.
The apex court simultaneously dismissed the revision petition of Ms Bajaj challenging the High
Court order, modifying the verdict of the CJM and the Sessions Court.
The Sessions Court though had maintained the sentence; it kept it suspended during a probation
period of three years, during which Gill’s public behaviour was to be supervised by the Probation
Officer of Delhi, where the former DGP lives.
The Sessions Judge, who had also imposed a litigation cost of Rs 50,000 on Gill, of which Rs
25,000 would go to Ms Bajaj, had bound Gill to abide by the probation conditions with his executing
a bond of Rs 20,000 and two sureties of the like amount.
On failure to abide by the conditions, he would have to serve the awarded sentence.
But on his appeal, the High Court in its order on August 20, 1998 had made some more
modifications in the sentence with upholding the three-month jail term, removing the condition of
supervision by the Probation Officer and reducing the period of probation to one year, which had
ended on January 5, 1999.
SIMPLY SPEAKING…
A few thoughts about sexual harassment at work before we talk about the strategic
planning in handling the bigger issues:
1. Law alone cannot deal with the tricky issue of sexual harassment at work.
2. There is always a fine dividing line between good-natured teasing and remarks that are
aimed to make woman uncomfortable, demeaned and reminded of her gender. Women
don’t enjoy ‘eve-teasing’ and sexual harassment.
3. Men need to think that women are not commodities. Women have the right to act, dress
and move around freely without the threat of attack or harassment.
4. The issues and the consequences attached with of sexual harassment are women
sensitive.
5. Women’s rights at workplace are human rights.
6. Freedom from sexual harassment is a condition of work that an employee is entitled to
expect from an employer.
7. Women keep quiet to avoid the stigma attached and retaliation from the harasser.
Women are afraid that they will be accused of provoking it, of being victimised, of being
called liars and made the subject of gossip.
8. Women subjected to sexual harassment experience a wide range of physical and
psychological ailments. There are economic consequences for the victim’s physical and
mental well-being and the organisation’s productivity, efficiency and work-ethics.
9. Don’t ignore sexual harassment in the hope that it will stop. It won’t. Take positive steps
now.
L. STEPS IN STRATEGIC PLANNING TO MANAGE SEXUAL HARASSMENT AT WORK
1. STEP ONE: IMPLEMENT SUPREME COURT’S GUIDELINES: VISHAKHA VS. STATE

OF RAJASTHAN (AIR 1997 SUPREME COURT 3011)
In Vishakha vs. State of Rajasthan (AIR 1997 Supreme Court 3011), Supreme Court of India laid
down the guidelines for instituting an anti-sexual harassment policy at the workplace.
A. The Preventive Steps:
Supreme Court did not restrict it to defining the offence only, but further laid down guidelines for
the employers, to prevent sexual harassment at the workplace.
“All employers or persons in charge of work place whether in the public or private sector should
take appropriate steps to prevent sexual harassment. Without prejudice to the generality of this
obligation they should take the following steps:
1. Express prohibition of sexual harassment as defined above at the work place should be
notified, published and circulated in appropriate ways.
2. The Rules/Regulations of Government and Public Sector bodies relating to conduct and
discipline should include rules/regulations prohibiting sexual harassment and provide for
appropriate penalties in such rules against the offender.
3. As regards private employers steps should be taken to include the aforesaid prohibitions in the
standing orders under the Industrial Employment (Standing Orders) Act, 1946.
4. Appropriate work conditions should be provided in respect of work, leisure, health and hygiene
to further ensure that there is no hostile environment towards women at work places and no
employee woman should have reasonable grounds to believe that she is disadvantaged in
connection with her employment.”
B. Supreme Court’s Further Directions:
1. To initiate appropriate action in accordance with law by making a complaint with the appropriate
authority, if the conduct amounts to a specific offence under the Indian Penal Code.
2. To ensure that victims, or witnesses are not victimized or discriminated against while dealing
with complaints of sexual harassment. The victims of sexual harassment should have the
option to seek transfer of the perpetrator or their own transfer.
3. An appropriate complaint mechanism should be created in the employer’s organization for
redress of the complaint made by the victim. Such complaint mechanism should ensure time
bound treatment of complaints. The complaint mechanism should be adequate to provide,
where necessary, complaints committee, a special counselor or other support service, including
the maintenance of confidentiality.
4. The Complaints Committee should be headed by a woman and not less than half of its member
should be women. Further, to prevent the possibility of any undue pressure or influence from
senior levels, such complaints committee should involve a third party, either NGO or other body
who is familiar with the issue of sexual harassment. The complaints committee must make an
annual report to the government or non-government department concerned of the complaints
and action taken by them.
2. STEP TWO: ACCEPT IT AS REALITY:
1. Recognise sexual harassment as a serious offence.
2. Recognise the responsibility of the company/ factory/workplace to prevent and deal with sexual
harassment at the workplace.
3. STEP THREE: ACCEPT ACCOUNTABILITY:
Recognise the liability of the company for sexual harassment by the employees or management.
Employers are not insulated from that liability because because they are not aware of sexual
harassment by the staff.
4. STEP FOUR: FORMULATE AN ANTI-SEXUAL HARASSMENT POLICY. THIS SHOULD

INCLUDE:
1. A clear statement of the employer’s commitment to a workplace free of unlawful discrimination
and harassment.
2. Clear definition of sexual harassment (using examples), and prohibition of such behaviour as
an offence.
3. The Supreme Court guidelines envisage a pro-active role for the complaints committee and
prevention of sexual harassment at work is a crucial role. It is thus, imperative that the
committee must consist of persons who are sensitive and open to the issues faced by women.
4. A statement that anyone found guilty of harassment after investigation will be subject to
disciplinary action.
5. The range of penalties that the complaints committee can levy against the offender.
6. Explicit protection of the confidentiality of the victim of harassment and of witnesses.
7. A guarantee that neither complainant nor witnesses will be subjected to retaliation.
8. Review the Policy with all employees (from CEO to down the hierarchy) at inception and at least
yearly thereafter. Document presentations and include these as a part of orientation of new
employees (have them acknowledge by signature that they have been provided a copy of the
policy and have read and understand the same.
5. STEP FIVE: ESTABLISH PROCEDURES:
1. Appoint a Senior Corporate Officer to oversee implementation of the Policy.
2. Designate a human resource professional officer to receive sexual harassment, discrimination,
allegations complaints.
3. Outline procedures to be used to report any sexual harassment, discrimination, including
alternative routes for filing allegations and complaints.
4. Keep all sexual harassment, discrimination allegations and complaints confidential.
5. Train supervisors and managers to recognise and prevent sexual harassment/ discrimination.
6. STEP SIX: PROPAGATE THE POLICY:
1. Publish the policy and make copies available at the workplace.
2. Discuss the policy with all new recruits and existing employees.
3. Third party suppliers and clients should also be aware of the policy.
7. STEP SEVEN: ENFORCE POLICY:
1. Encourage employees to report any incidents of sexual harassment/ discrimination without fear
of reprisal.
2. Investigate all the allegations of sexual harassment and discrimination quickly and thoroughly,
while safeguarding the rights of the accused.
3. Maintain accurate records of the investigation, discovery of facts and evidence, statements of
witnesses (pro and con), and findings.
4. Where sexual harassment is found, take immediate, appropriate action against any employee,
from President to lowest employee, non-employee such as customer, vendor, or visitor found
to have engaged in sexual harassment or discrimination.
8. STEP EIGHT: CONDUCT EDUCATIVE TRAINING FOR ALL THE EMPLOYEES
One major problem in dealing with sexual harassment in organizations is its perceptual nature
(Popovich, Gehlauf, Jolton, Somers, and Godinho, 1992) because men and women generally differ
in what they perceive to be sexual harassment (Dunwoody- Miller and Gutek, 1985; Reilly et.al.,
1992; Riger, 1991). Findings in survey indicated that women have broader definitions of sexual
harassment than males, have more negative attitudes, are less tolerant and consider teasing, looks,
gestures, unnecessary physical contact and remarks to be sexual harassment (Mazer and Percival,
1989; McKinney, 1990, Sabitha, 2005a), and see it as a more serious problem (McKinney, 1990).
On the other hand men typically do not find the same behaviours to be offensive and label
teasing, looks, gestures and comments as “normal” interactions between males and females (Johnson,
Stockdale and Saal, 1991). Men label fewer behaviours at work as sexual harassment and they tend
to find sexual overtures from women to be flattering, whereas women find similar approaches from
men to be insulting (Konrad and Gutek, 1986; Gutek, 1985). Similarly Konrad and Gutek stated
(1986) men were four times more likely to be flattered by sexual overtures and four times less likely
to be insulted. According to Riger (1991) men generally do not perceive the behaviour to be offensive
and, therefore, they do not see it as a crime or problem. Hence, an overall pattern that men and
women tend to differ in what they perceive to be sexual harassment.
9. STEP NINE: PREVENTIVE TRAINING IS THE BEST SOLUTION OF SEXUAL HARASSMENT:

Prevention is the best tool for the elimination of sexual harassment. Thus, a good training
programme will prepare workers to recognize sexual advances and developing strategies to deal with
them. Hence training programmes might best be utilized as a catalyst and intervention in removing
harassment from the workplace. Finally it is not the sole responsibility of the management but also
the employee’s responsibility to speak up and not allow them to be victimised. Meanwhile it is also
the society’s moral responsibility to involve itself in the awareness-raising sexual harassment
programmes. In sum, there should be concerted effort by governments, employers, employees and
women’s organizations to help to create zero tolerance towards sexual harassment at workplace.
M. CONTENTS OF A SAMPLE TRAINING PROGRAMME: EDUCATE EMPLOYEES TO

PREVENT SEXUAL HARASSMENT:
1. BASICS OF SEXUAL HARASSMENT:

A. What is sexual harassment?
B. What are its consequences and impact?
C. Myths and facts related to sexual harassment.
D. Supreme Court guidelines.
E. Redressal: What organizations are supposed to do?
G. Gender and sexual harassment?
2. IDENTIFYING WORKPLACE RISK FACTORS:

A. Working with unstable or volatile persons in health care, social services, or criminal justice
settings.
B. Working alone or in small numbers.
C. Working late at night or during early morning hours.
D. Working in high crime areas.
3. PREVENTING VIOLENCE IN THE WORKPLACE:

A. Dealing with emergencies.
B. Discuss the best management practices and implementing your organizations own policy to
reduce the risk of violence at work.
C. Documenting problems of potential violence.
D. Learn the warning signs and risk factors that can lead to violent behaviour.
E. Managing conflict resolution techniques.
F. Personal safety tips.
G. Planning ahead.
H. Special precautions for night, weekend, and remote area employees.
I. Training and education on what to do in case of violence.
4. BEHAVIOURAL STRATEGIES:
A. Training employees in non-violent response and conflict resolution has been suggested to
reduce the risk that volatile situations will escalate to physical violence.
B. Address the hazard associated with specific tasks or worksites and relevant prevention
strategies.
C. Increase vigilance to potential violence.
D. Maintain protective equipment and ensure that it is in working order.
E. Adhere to administrative controls.
F. Increase knowledge and awareness of the risk of workplace violence.
5. PREVENTING WORKPLACE SUBSTANCE ABUSE:

A. Early intervention, know and identify the signs of an employee while they are under the
influence.
B. Dealing with emergencies and managing substance abuse in the workplace.
C. Discuss the best management practices and implementing organization’s own policy to reduce
the risk of substance abuse.
D. Documenting problems of potential substance abuse.
E. Learn the warning signs and risk factors that can lead to substance abuse.
6. TEAM DEVELOPMENT PROCESS:

A. Understand “perceptual filters” biases, triggers.
B. Substantive, Procedural, and Psychological Needs.
C. Agreement ground rules.
D. Using active listening techniques.
E. Using “I-messages” as tools for clarification.
F. Identify Issues Clearly and Concisely.
G. Clarify Feelings.
H. Build an agreement that works.
7. PREVENTING SEXUAL HARASSMENT:

First, adopt a clear sexual harassment policy. Devote a section in your employee policy handbook
to sexual harassment that should:
A. Define sexual harassment.
B. State in no uncertain terms that you will not tolerate sexual harassment.
C. State that you will discipline or fire any wrongdoers.
D. Set out a clear procedure for filing sexual harassment complaint.
E. State that you will investigate fully any complaints that you receive.
F. State that you will not tolerate retaliation against anyone who complains about sexual harassment.
8. PREVENTING WORKPLACE DISCRIMINATION:

Steps to realizing a culturally diverse workplace include:
A. Treating people as individuals.
B. Promoting awareness and sensitivity of cultural issues.
C. Leading based on individuality.
D. Creating a positive environment conducive to individual contribution and excellence.
E. Personal safety tips.
F. Individual differences and unique abilities are resources that can give competitive strength to
a company.
G. The company is committed to making diversity one of its strengths and to establishing an
environment where all employees feel valued.
H. Equal opportunity employer.
9. POWER, SEXUALITY AND PERSONAL BOUNDARIES:

A. Explain that sexual harassment is an exertion of power used to oppress or undermine the other.
Since it includes misuse of power with the exercise of one’s sexuality, we need to address
issues of sexuality, gender and body to understand the complex issue of sexual harassment.
B. Define “power.” Emphasise that power comes from a variety of sources such as gender, class,
religion, status etc.
SIMPLY SPEAKING…
The goals of the training are to:
A. Help employees understand the law and the organization’s harassment prevention
policy.
B. Recognise early signs of sexual harassment, and encourage interaction and candid
dialogue.
C. Investigate and resolve sexual harassment complaints according to the policies and the
Supreme Court Guidelines.
D. Maintain open communication in a respectful environment.
E. Understand the practical steps that must be taken to prevent the escalation of an
incident into a harassment complaint or legal action.
F. Promote clear communication of organization’s anti-harassment policies.

G. Demonstrate that we treat harassment prevention and complaints seriously.
H. Clarify behaviours that constitute harassment and suggest methods of diffusing conflict.
Understand the concept of a “hostile” work environment”.
I. Establish a clear role for supervisors and managers in harassment prevention.
J. Create a complaints committee within the organization.
K. Resolve conflicts and protect the organization from costly lawsuits.
L. A small investment will ultimately protect the organization’s greatest asset, its People.
CASE OF SMITA NAGPAL: SEXUAL HARASSMENT AT WORK:

CASE STUDY FOR PRACTICE:
Smita Nagpal (Name changed to protect her identity) was a 22-year old, confident graduate from
Delhi when she started working. Earning to do her little weekend shopping was something she had
wanted to do for long. And what would have been more easy and convenient than working in a call
center which most of her other batch-mates were doing? Finally, she landed herself a job in one of
the leading call centers in Gurgaon, Haryana.
Little did she know what was in store for her? She would often stay back late for night shifts.
Her pretty face attracted a lot of unwanted attention from her male colleagues which made her
uncomfortable, especially during night shifts. Her outgoing, friendly nature was often misconstrued.
But what brought things to a head was the behaviour of her immediate senior, who happened to be
her team leader as well. He would always make lewd comments on whatever she wore.
“He would read out loud what was written on my t-shirt and give me lecherous looks. When I
did a good job, he would call me into his cubicle and pat me in ways which repulsed me”, says Smita.
She ignored it for a while, after having discussed with another female colleague who happened to be
a close friend. But the audacity with which he did all this was frustrating to say the least, she says.
Even though there was little room for action against him, as he happened to be good friends with the
head of HR, Smita decided not to take this lying down. She went ahead and filed a written complaint.
She wasn’t surprised when in a month’s time her performance was appraised and she got a rating
beyond company standards.
Smita, who is now pursuing further studies from the University of Delhi, says “such instances
are very common. I wouldn’t say there is a problem with the whole BPO industry, but definitely the
issue is much more serious than we actually make it out to be. The complaint redressal system or
committee has to become much more proactive, if at all it exists, she adds. I would also say that
it’s a pity that “Women hardly know what all sexual harassment constitutes”.
QUESTIONS FOR PRACTICE

1. Why Smita decided to work for a call centre?
2. Why did she attract unwanted attention from her male colleagues?
3. Why did she say that “it’s a pity that women hardly know what all sexual harassment constitutes”?
4. Do you think that a strategic training on sexual harassment at work shall eliminate sexual harassment
wholly? Explain in details citing examples.
5. What, according to you, would be the best way to eliminate sexual harassment at work?
6. If you are in place of Smita, how would you have handled your senior’s harassment?
RECRUITMENT AND SELECTION:

1. Define Recruitment and Selection as a process. What are its objectives?
2. What is the contribution of strategic planning in recruitment and selection?
3. Why strategic planning process is essential in recruitment and selection?
4. What are the various steps in planning recruitment and selection process?
5. Write a checklist of recruitment and selection process.
INDUSTRIAL RELATIONS:
1. Define industrial relations. What are the various characteristics of industrial relations? Why is industrial
relations called a complex game of nerves?
2. What are the objectives of Industrial relations?
3. What is collective bargaining? Why is it important as a strategy in handling and management of wages
and salary negotiations between workers and the management?
4. What are the various theories and approaches to industrial relations?
5. Explain in details the various strategies you would need to manage industrial relations.
LEADERSHIP:
1. Why leadership skills cannot be developed overnight? Explain in details citing the reason for your answer.
2. Read the case study of Gurbir Singh Jaiswal. What lessons have you learnt in leadership development?
PERFORMANCE APPRAISAL:
1. What are the various methods used in performance management systems?
2. What are the various steps followed in performance management system?
TEAM BUILDING:
1. What are the mechanisms for strategic planning in team building?
TRAINING AND DEVELOPMENT:

1. What are the various mechanisms for influencing training plans and training priorities?
2. What is training needs assessment planning? What are the stages involved in preparing training needs
assessment programme?

t er
ap
h
9
STRATEGIC
C
SUCCESSION
PLANNING
HPH
topics:
 Basic Concepts of Succession Planning.
 Difference between Traditional and Strategic Succession
Planning.
 Succession Planning at ICICI Bank
 Models of Succession Planning.
 Implementing Succession Planning.
 Succession Planning at Ranbaxy.
Strategic Succession Planning 429
CHAPTER NINE
STRATEGIC SUCCESSION PLANNING
LEVEL ONE: BASICS OF SUCCESSION PLANNING 430 – 439

LEVEL TWO: TRADITIONAL AND STRATEGIC 440 – 441
SUCCESSION PLANNING
LEVEL THREE: STRATEGIC SUCCESSION PLANNING AT ICICI BANK 442 – 444
LEVEL FOUR: MODELS OF SUCCESSION PLANNING 445 – 451
LEVEL FIVE: SUCCESSION PLANNING: IMPORTANT 452 – 454
QUESTIONS
LEVEL SIX: STRATEGIC SUCCESSION PLANNING AT RANBAXY 455 – 456
LABORATIORIES
LEVEL ONE
BASICS OF SUCCESSION PLANNING
BKC COMMUNICATIONS LIMITED: CASE STUDY IN SUCCESSION PLANNING:

Uday Bhaskar, Navin Pandit, Ravi Shankar Sharma, Prem Kapur and Amish Damania started
a partnership firm “BKC Communications” twenty years ago. Five years later, the firm became a
private limited company. Three years down the line, “BKC Communications” registered itself into a
public limited company. Uday Bhaskar took over as the chairman and managing director of the
company. All others became whole time directors of the company. The company got listed on Mumbai
Stock Exchange with its first IPO three years later. Journey of growth and prosperity from partnership
firm to public limited company was cherished by all the directors and their family members. Three
more independent directors’ joined the board of directors. The return on investment was bullish and
the company has been paying dividend to its shareholders every year.
BKC’s TODAY..... “BKC” is a preferred by investors for its good management and corporate
governance resulting into a successful and profitable business.
BKC’s TOMORROW..... Uday Bhaskar, Chairman and Managing Director, an astute business
man, dies and the business is disrupted instantly. Who will take over the reins of the company? Who
will run the business of the company as successfully? Uday Bhaskar was not only involved in the
business; he had evolved himself among the people down the line cutting across the levels and the
hierarchies. His open door policy had made him accessible to every one.
BKC’s FUTURE..... The surviving directors faced a critical decision. What are the options
available to them to choose Uday’s successor? What are the options available after the event has
happened?
CRITICAL…. BKC Communications was not ready for smooth succession to Uday Bhaskar as
CMD.
1. SUCCESSION PLANNING: CONCEPT

Succession planning is a process of determining critical roles within the company, identifying
and assessing possible successors, and providing them with the appropriate skills and experience
for present and future opportunities.
Succession planning is a process by which successors are identified for key positions throughout
an organization including vital roles in each department of the organization.
It should take into account the strategic vision and objectives of the organization. With good
succession planning in place, employees are ready for new leadership roles so when someone
leaves the company, another is skilled and ready to step-up to that position.
Tom Bartridge observes in “Planning for Tomorrow” that Succession planning is nothing more
than having a systematic process where managers identify, assess and develop their staff to make
sure they are ready to assume key roles within the company.
A succession plan, simply put, is a component of good Human Resource planning and
management. Succession planning acknowledges that staff will not be with an organization indefinitely
and it provides a plan and process for addressing the changes that will occur when they leave.
Identify
possible
successors
Understand
development needs
Develop and
READY train successors
FOR
MOVEMENT
Promote
and
compensate
2. SUCCESSION PLANNING: A CORPORATE INITIATIVE

Succession planning is one of those initiatives that many companies don’t find the time to start
until it’s too late — if you don’t address succession planning now your organization may end up facing
the burden in the middle of a crisis.
Moreover, organizations that understand the need to manage the development of their high
performers are a step ahead of their competitors! The effort required to establish a development
programme for future leaders is worthwhile because it creates a motivated and capable group of
employees that are ready to move forward in the organization when the need arises.
3. SOME EXAMPLES:
1. JACK WELCH-GE:
Jack Welch started working at General Electric in 1960. As he moved upward in the organization
he displayed leadership qualities that set him apart from his peers. But what did Jack Welch think
of succession planning? One of his most admired skills was the ability to develop his subordinates
so there was always someone ready to take his place.
In 1981 he became the CEO of General Electric and served in that position until he retired in
2000. In 1991, Jack Welch stated: ‘From now on, choosing my successor is the most important
decision I’ll make. Jeffrey R. Immelt took over from Jack Welch as the ninth Chairman and CEO of
GE in 2001.
2. MALVINDER SINGH: RANBAXY:
Mr. Malvinder Mohan Singh took over as the Chief Executive Officer and Managing Director of
Ranbaxy Laboratories Ltd in 2006 and its Chairman in 2008 after a very hectic and aggressive
succession struggle in Ranbaxy.
Analjit Singh, Malvinder Singh and Shivinder Mohan Singh of “Ranbaxy, India’s first MNC
pharmaceutical giant,” have also had its share of break-ups. Patriarch Bhai Mohan Singh divided it
between his three sons—the late Parvinder got Ranbaxy Labs, Manjit got Montari Industries and
Analjit got Max India. But Analjit is now up against Manjit and the late Parvinder’s sons, Malvinder
and Shivinder, who are contesting Analjit’s claims as the sole legal heir of Bhai Mohan Singh.
3. MUKESH & ANIL AMBANI RELIANCE:
Inheritance wars between feuding siblings Mukesh and Anil Ambani, the world’s fifth and sixth
richest people according to Forbes magazine, have tarnished India’s allure as a top investment
destination, raising risks for investors in a country where corporate legislation and regulation are in
their infancy and shareholders largely stand passively on the sidelines.
Dhirubhai Ambani’s maturity was lost in the clamour around the squabbling Ambani siblings and
other corporate succession battles. Mukesh, the elder brother, took control of energy and petrochemical
giant Reliance Industries Ltd, India’s biggest private sector company after the Ambani Empire was
split in 2005, three years after its founder Dhirubhai’s death. However, the history so far, shows that
Dhirubhai Ambani gave no credence to succession planning during his life time.
Anil gained control of mobile services firm Reliance Communications, Reliance Capital and other
power, infrastructure and entertainment assets. The two brothers, however, have continued to fight
till date in the full glare of the media.
4. RATAN TATA:TATA GROUP:
Even the widely respected Tata Group, the second-largest Indian conglomerate which controls
the world’s sixth-largest steel maker, has not identified a successor to Chairman Ratan Tata, who
is scheduled to retire when he turns 75 in 2012.
5. RAHUL BAJAJ: BAJAJ AUTO:
Rahul Bajaj, chairman, Bajaj Auto, may have “settled” succession issues between his sons but
has had no such luck with brother Shishir Bajaj. Shishir was to exit from the Bajaj group with Bajaj
Hindustan and Bajaj Healthcare but the settlement soured over valuations. The six-year-old dispute
has Rahul and his cousins, Neeraj Bajaj, Shekhar Bajaj and Madhur Bajaj pitted against Shishir. And
it’s not over yet.
6. RAJAN & ANIL NANDA ESCORTS:
“You can’t fight destiny,” says Rajan Nanda, Chairman, Escorts Ltd, who has seen many
boardroom battles, the most bitter of which was with younger brother Anil Nanda over his move to
sell a chunk of Escorts Heart and Research Institute. The group split with Anil quitting as vice-
chairman and taking control of Goetze India Ltd.
7. AJAY & URVI PIRAMAL: PIRAMAL GROUP:
The diversified Piramal Group, inherited by Ajay Piramal after the death of elder brother Ashok
in 1984 was a motley bag of companies in textiles, automobile ancillaries and pharmaceuticals. The
family business split in 2004.
According to the settlement, Ajay took charge of Nicholas Piramal, a pharma major, and Gujarat
Glass. Urvi Piramal, wife of his late elder brother, got control of Piramal Holdings and the mall chain
Crossroads.
8. S L KIRLOSKAR: KIRLOSKAR GROUP:

The incapability to work together in later generations is a lament of family businesses like
Kirloskars. After the death of Shantanurao Kirloskar (SLK), his fortunes were divided between his
grandsons—Atul (Kirloskar Oil Engines), Sanjay (Kirloskar Brothers) and Rahul (Kirloskar Pneumatic).
9. AJAY SHRIRAM: SHRIRAM DCM:
Conflicting aspirations within the family took their toll on the DCM Shriram Group. The group
was parcelled out into DCM Ltd led by Vinay Bharat Ram, DCM Shriram Consolidated Ltd led by Ajay
Shriram and Siel Ltd under Siddharth Shriram. The split left their companies in a financial mess.
10. G M MODI: MODI GROUP:
The Modi Group companies ranging from chemicals and sugar to sponge iron also succumbed
to the contagion of family squabbles. After some fierce wrangling, the group was split between the
five sons of founder Rai Bahadur Gujar Mal Modi led by K.K. Modi and K.N. Modi with his three sons.
Following an agreement, Modi Rubber went to the K.K. Modi faction, while Modi Mills came under the
control of K.N. Modi. Later, M.K. Modi, son of K.N. Modi became the head of another group company,
Modipon Fibres.
11. G D BIRLA:BIRLA GROUP:
India’s first corporate dynasty could not hold on to its cohesiveness for long. After patriarch G.
D Birla’s death in 1983, one of India’s biggest conglomerate groups was carved out. Of G. D Birla’s
three sons, K.K. Birla got Zuari Agro, Hindustan Times and four sugar mills. B.K. got Century Textiles
and Kesoram, and his son Aditya got Hindalco and Grasim. The rest was broken up between eldest
grandson S.K. Birla, son of L.N. Birla, and others.
12. K P GOENKA: GOENKA GROUP:
Even the Goenkas could not survive as a unified business structure. Patriarch K.P. Goenka split
the group between his three sons—Gouri Prasad got Duncan Agro, Jagdish got Anglo-India Jute
among others, and R.P. got Phillips, Carbon Black, Asian Cables, Ceat Tyres, Agarpara Jute and
Murphy India.
There is enough evidence to prove that if a patriarch, specially in family run businesses,
does not give importance to succession planning during his life time, the family and the legal
heirs in the business face such succession problems and issues which take a long time to
resolve as it is happening between Ambani brothers or what Ranbaxy has gone through or
what Bajaj Auto is still going through. Succession Planning is important in all organizations.
Why? We try to find the answer in the following columns:
4. WHY SUCCESSION PLANNING IS IMPORTANT?

1. Succession Planning is a means of ensuring the organization is prepared with a plan to support
service continuity when the executive director, senior managers or key people leave.
2. Succession Planning is a continuing supply of qualified, motivated people who are prepared to
take over when current senior staff and other key employees leave the organization.
3. Succession Planning is an alignment between the organization’s vision and the human resources
that demonstrates an understanding of the need to have appropriate staffing to achieve
strategic plans.
4. Succession Planning is a commitment to develop career paths for employees who will facilitate
the organization’s ability to recruit and retain top-performing employees.
5. Succession Planning is an external reputation as an employer that invests in its people and
provides opportunities and support for advancement.
6. Succession Planning is a message to the employees that they are valuable
7. The absence of a succession plan can undermine an organization’s effectiveness and its
sustainability.
8. Without a succession planning process, an organization may not have means of ensuring that
the programmes and services that are crucial to its operation are sustained beyond the tenure
of the individual currently responsible for them.
9. Succession planning helps in nurturing and developing employees from within an organization.
Employees who are perceived to have the skills, knowledge, qualities, experience and the
desire can be groomed to move up to fill specific key positions.
10. Succession Planning ensures that there are qualified and motivated employees who are able
to take over when the senior or other key people leave an organization.
11. Succession Planning also demonstrates to stakeholders such as clients, funders and employees
that the organization is committed to and able to provide excellent programmes and services
at all times, including during times of transition.
5. CHALLENGES TO SUCCESSION PLANNING:

1. Size of the Organization:
Some organizations have so few positions that they may not have the ability to offer opportunities
for advancement; employees with the potential and the desire to advance their careers may move to
larger organizations .
2. Lack of Financial Resources:
Employees may leave for better salaries and benefits offered in other workplaces.
3. The Nature of Funding:
As more and more organizations depend on funding as opposed to core funding, there are fewer
core staff members available to take up positions in the organizations.
4. Attrition:
Staff come and go and may not be seen to be part of the talent pool available to organizations.
5. Absence of Young Talent:
In some cases, senior managers are staying on in their positions, despite the fact that the skills
needed for the job may have changed or they are no longer making a meaningful and productive
contribution to the organization.
6. Bad Succession Plan:
Indiscriminate inclusion of employees in the succession plan including those who are disinterested,
demotivated or lack capacity to advance in their profession.
7. Inadequate Training and Development:
This results in an employee getting promoted but is not prepared for a higher job.
8. Plan without Promotional Avenues:

A plan that does not promote people in time, leading potential successors to leave the organization
to seek new opportunities
9. Poor Communication:
This results in confusion and turmoil within the organization as staff members speculate about
what the succession plan really is?
10. Essence of Time and organisational Needs:
Potential candidates for promotion cannot be guaranteed that they will be promoted; a lot depends
on timing and need of the organization.
If these challenges glare at the chances for implementing succession plan in an organisation and
many a times we find that these challenges become barriers and control the entire process of
succession plan, then what is the way out? The way out is to develop a roadmap for developing
succession plan and implementing it without hiccups.
The steps outlined below provide a roadmap for organizations interested in developing succession
plans. Different organizations will implement these activities differently. While there is no right or
wrong way to develop a succession plan, the following provides important components that need to
be considered
6. COMPONENTS IN PREPARING ROADMAP FOR SUCCESSION PLANNING:

1. Capacity and Needs Assessment:
1. Identify Key Positions for the Organization:
These include the executive directors, senior management and other staff members, who
would, for their specialized skills or level of experience, be hard to replace. Ask which positions
would need to be filled almost immediately to ensure that organization continues to function
effectively.
2. Review and Prioritize Current and Emerging Needs:
This will involve examining strategic and operational plans to clearly articulate priorities.
3. Prepare Charts Identifying Key Position and Individuals:
Prepare a chart that identifies the key positions and individuals in the organization. The
positions might include those listed in step 1 and/or others that are pertinent to an organization.
4. Indentify and List Gaps:
Identify and list the gaps by asking questions such as:
1. Which individuals are slated to or likely to leave (through retirement, project completion,
etc.) and when?
2. Which new positions will be required to support the strategic plan?
3. Which positions have become or will become obsolete (for example, those related to a
programme that has been terminated)?
4. What skills and knowledge will need to be developed (for example, to support a new
programme)?
5. Evaluate and Assess Staff Members for Goal Identification:

Evaluate/assess all staff members with the goal of identifying those who have the skills and
knowledge or the potential along with the desire to be promoted to existing and new positions.
1. The evaluation can be formal or informal and can include, but is not limited to, performance
reviews, 360 degree assessments and informal conversations with the individuals under
consideration.
2. Every employee has aspirations to and the capacity to move up. This may be an opportunity
to recognise this goal and support it.
3. Take this opportunity to give younger workers a chance. Many young people enthusiastically
enter the sector and then, finding few opportunities for advancement, leave. Younger workers
can remain engaged if you help to match their interests to opportunities provided through
effective succession planning.
2. DEVELOPMENT AND IMPLEMENTATION OF SUCCESSION PLAN:
1. Develop and Nurture Key People for Future:

Based on the evaluation and on the requirements of strategic plan, identify the key person, one
would like to develop and nurture for the future, the position we would like to groom them for, and
the time frame required to prepare them. Consider different ways of developing employees like: self-
development, books/journals, mentor programmes, special project work.
2. Identify Career Paths for Key Talent:

Identify the career paths that the selected individuals should be following. Customise the path
to fit the individual’s abilities and talents by developing an action plan. The plan must be dynamic —
able to be changed as the individual’s and the organization’s needs change. It must also consider the
specific needs, learning style and personality of the individuals involved in order to be effective.
3. Formalize Coaching and Mentoring Actions:

Formalise education, training, coaching, mentoring and assessment activities. The mix of activities
included within the action plan should be linked to timeliness and specific outcomes
4. Formalise Aggressive Job Rotation:

If possible, move people into different areas for experience and training before they are needed
in critical positions. Have individuals job-shadow for an agreed upon period of time to give the
successor a real sense of the responsibilities and to allow the organization the chance to determine
whether, the individual really is suited for the new position.
3. MONITOR AND MANAGE THE PLAN:

1. Always Update Grooming Plans:
As people leave and new people assume their responsibilities, the plan will have to be updated
to identify the next person to be groomed for promotion and the requirements of his or her individual
action plan. For organizations that engage in an annual (or regular) strategic planning process, the
succession plan should be included in that discussion.
2. Address Concerns of Staff not Selected in Career Advancement or Succession Plans:

Be prepared to address issues such as concerns of staff who have not been selected for career
advancement. Ensure alternative paths are identified to allow all employees who are interested in
career enhancement to be given some type of professional development opportunity. Professional
development can include such wide ranging activities as formal education and training, workshops
and seminars as well as less formal learning opportunities such as the chance to represent the
organization at a consultation.
3. Address Contingencies: Events Which may or may not Happen:

Recognise that no matter how well you plan, something can still happen which the succession
plan doesn’t address. For example, you may have dutifully trained a “second” only to have that
person leave. Even though, there may be no one able to fill the breach immediately, the succession
plan will ensure that there is a process to follow in filling the position.
1. The initiative to venture into succession plan depends solely on the chief executive and
the top most authority of an organization.
2. In family run organizations, the choice depends upon the level of personal insecurity and
other compulsions of the chief executive officer whether he or she would do succession
plan during his or her life time.
3. Drafting and implementing succession plan takes lot of time. Therefore, it would be
prudent for the chief executive officer to initiate it at right time.
7. Defining Strategic Succession Planning:

1. It is a Process of Change:
A. Strategic Succession planning is a process whereby an organization ensures that employees
are recruited and developed to fill each key role within the company. Through the succession
planning process, we recruit superior employees, develop their knowledge, skills, and abilities,
and prepare them for advancement or promotion into ever more challenging roles.
B. We need to identify and understand the developmental needs of our employees. We must
ensure that all key employees understand their career paths and the roles they are being
developed to fill. We need to focus resources on key employee retention. We need to be aware
of employment trends to know the roles which would be difficult to fill up externally.
C. Strategic Succession Planning involves having senior executives periodically review their top
executives and those in the next lower level to determine several backups for each senior
position. This is important because it often takes years of grooming to develop effective senior
managers.
D. It is needed for the senior level executive to see whether his successor employee is satisfied
with his current job or not. If in case he is not satisfied the firm may end up losing his employee.
The employee may leave his current job for any reason such as:
1. Suddenly and unexpectedly unable or unwilling to continue their role within the organization;
2. Accepting an approach from another organization or external opportunity which will
terminate or lessen their value to the current organization;
2. Succession Planning becomes Strategic when we Invest in Talent Management:

A. The other problem that an organization may face to find his successor is that the junior level
employee is not sufficiently trained to take charge of the executive. In such situation the
executive has to train the employee in a manner to attain higher responsibility. The executive
has to keep record of his employees’ performance appraisal so that he can evaluate his
employees’ performance.
B. What is likely to happen to the organization when a key leader is eliminated without succession
planning in place? Here are some things to expect. First, there would be either no able
successor or where there is, the successor is often either unprepared to handle the heavy
responsibilities placed upon them or he/she simply does not have the ability to manage the
organization in the way it used to be.
C. Without succession planning, a business that has become successful can just as easily fall.
The business grows because there is a leader (probably the owner) with experience, drive and
ability. Without proper succession planning, the future success of the business is left to chance
once that leader is gone. Therefore, the business succession planning has to be a priority and
should be part of every business planning. There are two options available to business
succession planning, which are:
1. Retention of business within the organization or family
2. Hiring the successor from outside or from within the organization.
D. Succession is linked to strategic planning and investment in the future. Therefore a pool of talent
is identified and developed early for long-term needs. Development is based on challenging and
varied job-based experiences. In order to have an effective succession planning, the organization
has to keep certain points into consideration:
1. The future requirements for products and services need to be analysed.
2. The data that has been collected throughout the period has to be put to use.
3. The relation between succession planning and values of the organizations has to be
interconnected.
4. The relation of the succession planning to the needs and interests of senior leaders.
5. Identify the main area of competencies and its requirements.
6. Determine the demand of the firm in relation to its current supply.
7. Determine the talent required for the long term.
8. Identifying “real” continuity issues.
3. Talent Management is Vital Part of Strategic Succession Planning:
A. Talent management is a vital programme in succession planning. A record of large number of
employees has to be maintained and according to their development in work, their position also
should be raised. An organization must analyse the talent of the employee that could be
developed to fit into the succession planning. The skills of the employee must be assessed and
evaluated on the regular basis and their performance must be analysed and judged by using
the 360 degree feedback.
B. Apart from analysing and improving the talent of the employee, an organization must also follow
certain strategies for the succession planning. First of all, the organisation must identify the
recruitment sources in search for the suitable candidate and special programmes must be
conducted for recruitment purpose. The company employee must be retained by providing
incentives on their working standards. This will not only help in retaining the employee but also
motivate them to perform better and thereby, help the firm to grow. Only incentives won’t help
the employee to work effectively, he must be provided with proper training to perform the task.
To improve his skill of working he must be assigned a planned task, a project through which
he can learn new techniques of working and must be mentored and coached on regular basis.
Based on their performance, they must be provided with a feedback not with an intention to
demotivate but to improve their performance.
C. On the basis of all the above mentioned details the suitable employee must be selected for the
succession planning. If an internal employee fits to the executive position then there is no need
to search for a suitable candidate from external source. For the replacement of the senior
executive, the lower level employee must be trained in a fashion to undertake his position and
must be able to make proper judgments.
SIMPLY SPEAKING...
Strategic Succession planning is a systematic approach to:
1. Building a leadership pipeline/talent pool to ensure leadership continuity
2. Developing potential successors in ways that best fit their strengths
3. Identifying the best candidates for various categories of positions. Our concentrating on
resources in the talent development process yields a far greater return on investment.
4. Succession planning recognises that some jobs are the lifeblood of the organization and
too critical to be left vacant or filled by any but the best qualified persons. Effectively
done, succession planning is critical to mission success and creates an effective process
for recognising, developing, and retaining top leadership talent.
LEVEL TWO
TRADITIONAL AND STRATEGIC SUCCESSION PLANNING
TRADITIONAL STRATEGIC
When we think of succession planning, we Strategic and only strategic succession planning
mostly focus on the desire to build leadership is the process of building a viable talent pool that
and talent from within and not from outside of contributes to the current and future success of
our organization. any organization.
Often this is focused at the senior levels When implemented well, strategic succession
where a few lucky blue eyed right hands are planning meets the talent needs of the organization
groomed to fill key positions. This is the and the career development needs of your
greatest pitfall of traditional succession employees.
planning and its biggest distinction from a
strategic application to the succession
planning process.
Any traditional succession planning is largely The biggest difference between traditional and
a human resource driven process that seeks strategic succession planning is strategic
replacements for important positions. This was succession planning’s ability to develop talent
available alternative during the middle of the where it does not currently exist. Employees aren’t
last century when employees committed their considered to be future candidates for one and only
careers to one organization. position. Some employees build skills and reach
their potential in unexpected ways. Others
underperform and self-select out of the talent-
building chain.
With today’s workforce, talent is the key driver With strategic succession planning, mediocre,
of organizational success and mobility is average and marginal performers are not tolerated.
common amongst employees. We can’t Organizations now have to compete aggressively
assume we are going to have the talent around for talent, employees have to perform to obtain the
us when we need it. position they want.
The ‘promises’ delivered in any traditional Strategic and only strategic succession planning
succession planning are problematic for meets the needs of an organization and its people.
employees as well. Waiting for a vacancy to
open is an invitation for the employees ‘waiting
in line’ to find the job they want somewhere
else, where opportunities for career
development are readily available.
A STRATEGIC SUCCESSION PLANNING MODEL

2. Identify
initial competencies Recruit
required for each from the
1. Determine the position outside
function and when the
position will be 3. Competency
available Gap Analysis
SUCCESSION
PLANNING
4. Design
MODEL developmental
opportunities for each
set of competencies
6. Reassess &
track overall progress 5. Develop
& maintain skills and maintain a
inventory talent pool
5B. Conduct
and individual
gap analysis 5A. Acquire * Clearly Inform volunteers
Volunteers this development does not
5C. Prepare
individual guarantee selection
development
plans 5D. Reassess &
track individual
progress
CHARACTERISTICS OF TRADITIONAL AND STRATEGIC SUCCESSION PLANNING:
TRADITIONAL STRATEGIC
1. Groom a backup for each position. 1. Seasoning needs to be developed sooner

in careers.
2. Speciality disciplines in candidates.
2. Develop pools of broadly qualified
3. Narrow career growth. candidates; have position pools.
4. Largely human resources driven. 3. More broadly disciplined candidates.
5. Personality/image-oriented. 4. Cross-border experience to develop

broader skills and perspectives.
6. Technical competence is key.
5. Largely line driven.
7. Marginal, mediocre and average
performers tolerated. 6. Strategic competencies and models define
success; 3600 feedback.
8. The company directs and controls career.
7. Quick learners manage change cross-
9. Controlled & confidential process. functionally.
10. Built on “Promises”. 8. Individual sets career direction/s.
11. Focus and based on training as basic 9. Input from multiple sources.
primary development.
10. No “promises”.
12. Wait for vacancies to promote.
11. Job assignments and projects provide
13. Promote from within when fully qualified. primary development experience
supplemented by specific training.
12. Promote when about 70% qualified; hire less

experienced talent at entry level.
LEVEL THREE
STRATEGIC SUCCESSION PLANNING AT ICICI BANK

The ICICI Group prepared a contingent succession plan for top-level executives of its subsidiaries
in the event of an exit of the present heads of its two subsidiaries ICICI Prudential and ICICI
Ventures. At present, Shikha Sharma is managing director and chief executive officer (CEO) of ICICI
Prudential Life Insurance, while Renuka Ramanathan is managing director and CEO of ICICI Ventures.
According to sources familiar with the developments, V Vaidyanathan, ICICI Bank Executive
Director, will replace Sharma in case she moves out. Sonjoy Chatterjee, executive director, is the
likely candidate to replace Ramanathan
Vaidyanathan joined the bank in 2000 with over 10 years experience in Citibank. He has been
responsible for setting up consumer finance business, which was a separate company called ICICI
Personal Finance Services. The company later merged with ICICI Bank. At present, he is heading
the retail banking, SME banking and rural banking divisions.
Chatterjee, who joined the erstwhile ICICI’s project finance business in 1994, has been in-charge
of their international business. Earlier, he was the managing director and CEO of ICICI Bank UK.
Currently, he is responsible for corporate and investment banking, government banking and international
banking divisions. Chatterjee was also tipped to step into the slot created by Joint Managing Director
and CFO Chanda Kochhar who is to replace K V Kamath as managing director and CEO from May
1, 2009.
Senior executives in ICICI Bank said that they have a policy whereby, succession plans are
there from the deputy general manager level. In response to an e-mail from Business Standard, the
bank said that it does not respond to speculation. Sources also said that in a continuation with the
succession plan, the likely replacements for Vaidyanathan and Chatterjee on the board of ICICI Bank
could be Vijay Chandok, senior general manager and global head of SME banking division and B
Madhivanan, senior general manager, customer service and phone banking.
As part of the top deck reshuffle, ICICI Prudential Executive Director N S Kannan is moving to
the bank as its CFO, while Madhabi Puri Buch, who was earlier an Executive Director at ICICI Bank,
has been appointed the CEO of ICICI Securities. Prior to her appointment, Madhabi was an Executive
Director on the Board of ICICI Bank.
PLAYERS IN SUCCESSION PLAN AT ICICI BANK:
CHANDA D. KOCHHAR:
Chanda Kochhar took over CEO position at ICICI in May 2009. Forty-seven-year-old Kochhar,
a mother of two, says it is her passion for excellence that keeps her at the top. Joining ICICI in 1984
soon after acquiring her MBA (when she had topped her class), her term as CEO in ICICI will
continue until 2014. Kochhar’s rise to the top is also reflected in the portfolios that she has handled
at the Bank, virtually everything from retail banking to corporate finance and international business.
SHIKHA SHARMA:
CEO of group company ICICI Prudential Life Insurance, she has spent 25 years with the Group.
Recognised as a start-up specialist, she has been particularly instrumental in setting up two
organisations in the ICICI fold: ICICI Securities (I-Sec) and ICICI Prudential Life. Currently as the
head of the latter, she manages India’s largest private sector life insurer. However, Ms. Shikha
Sharma, aggrieved with the decision of ICICI Board to appoint Chanda Kochhar as the successor of
K V Kamath, quit as the Managing Director, ICICI Prudential Life Insurance Company, and joined Axis
Bank as the Managing Director and CEO.
RENUKA RAMANATHAN:
Another woman to head an ICICI company, Renuka Ramnathan is the CEO of ICICI Venture,
the private equity fund from the group. She has been steering the company for more than five years,
during which time it invested in some of the high profile and successful start-ups in the country in
recent times including Air Deccan, TV Today and Naukri.com.
MADHABI PURI-BUCH:
Madhabi Puri-Buch is currently one of the bank’s three executive directors – in February 2009
was made MD and CEO of I-Sec. Her career path at ICICI reflects some of the best practices it has
developed in building an equal opportunity organization. Although, she left ICICI for four years, she
rejoined the organisation and now oversees several important functions, including customer service,
operations, technology, and brand management.
VISHAKHA MULYE:
Executive director at ICICI Lombard, she was CFO and Treasurer at ICICI Bank in her earlier
role. Joining ICICI soon after qualifying as a chartered accountant in 1993, her abilities were noted
when she played an important role in the establishment of the Special Asset Management Group with
its focus on large Non-Performing Assets. She quit ICICI recently and is now the head of JPMorgan
in India.
K V KAMATH: NON-EXECUTIVE CHAIRMAN AND FORMER MD AND CEO - ICICI BANK:

ON SUCCESSION PLANNING AT ICICI BANK:
With Chanda Kochhar as its next chief executive, KV Kamath’s 13-year stint at ICICI Bank drew
to an end. During Kamath’s tenure, the bank transformed itself from a staid development finance
institution to a new-age commercial establishment that has gone on to become the second largest in
the country and revolutionised the way banking services are delivered. Here are some of his answers
on ‘succession plan’@ ICICI Bank drawn from his interview with several national newspapers and
magazines:
1. Over the years, succession planning has been relatively smooth and proactive
at ICICI with a large number of women managers taking up leadership
positions. How have you been able to achieve this?
I would think that in this area, there has been a lot of learning from GE. The process of
succession planning starts about two years after an employee joins and thereafter, you subtly push
people into positions where they need to take decisions or several decisions. You then filter the
outcomes and take a view on their leadership. I would think that in every organisation at different
points in time, different qualities of managers come to the fore. I think it would not be right to say that
one quality or a set of qualities in a particular sequence are ideal. I guess that we put out those quality
attributes and then we start observing and evaluating people. Frankly, I do not think there is any other
way.
2. Compared to when you took charge, has the process of selecting a CEO
turned very competitive?
Over the past 12-13 years, governance processes have clearly been more defined. I am sure
that leading up to my appointment there was a process but that was not codified. Since everybody
on the board had the benefit of codified practices, they have followed the practices leading to the
present choice.
3. What are the key circumstances that led to the building of an organisation
in India based on equal opportunities for all employees?
As I look back to 1996 when I came into the Bank, I realised that we had to de-risk ourselves.
All the rules of the game that we knew till then were being changed. The economy was opened up;
scale was coming in; in technology there was a paradigm shift; quality became foremost; and cost
was all important. All the equations were rapidly changing. We were then a single-product company.
So we were like entrepreneurs when we took our first few steps. We were about 40 years old then.
If I then look back from 1996 to 2009, a key aspect of our transformation was that the Group had
become an entrepreneurial institution. Crucially, as we did this, issues of leadership and building our
human capital came to the fore. The clear take-away from this was that as you build your cadre of
employees, you need to ensure that there is complete meritocracy. And if you need to bring in
meritocracy, you then need to build an equal opportunity organisation.
4. Where did you draw the conviction and inspiration to build such a model?
I must confess that there was no model or a set goal for building an equal opportunity organisation.
But it is a goal that was actually fairly plain to us and the truth is that, to create equal opportunity you
need to truly believe that everyone is equal. Once you believe that, then things fall in place. For
example, in the recruitment process there is no bias that this is a job that only a man can do or a
woman can do. The moment you drop that bias you are one step into building equal opportunity. “As
you build your cadre of employees, you need to ensure that there is complete meritocracy. And if you
need to bring in meritocracy, you then need to build an equal opportunity organisation.
5. You have a number of stars at the top level, particularly women stars.
What is your approach in managing stars because that creates its own set
of leadership and gender challenges?
Initially, I thought it would be a huge challenge to manage stars. But I must say that it was much
easier, significantly easier than what I had initially thought. The reason is that stars manage themselves.
When we started calling people stars and putting them on an accelerated track based on meritocracy,
I thought that this would create a whole of set of challenges in managing disappointments. Actually,
it worked completely the other way. When a star is not recognised as a star, the person actually
seeks out new opportunities and migrates out to other jobs. But for this, the processes should be very
open and transparent and then the person will actually become an ambassador for your company.
Once this happens and the collection of deadwood is removed, the organisation is rejuvenated and
refreshed.
LEVEL FOUR
MODELS OF SUCCESSION PLANNING
1. DEVELOPMENT MODEL:
A. COMMUNICATE POSSIBLE OPPORTUNITIES:

A. Inform employees of the possible job opportunities that are anticipated over the designated time
period (e.g., next three years).
B. Communicate what key competencies are needed for those jobs. That is, what level of
demonstrated skills and knowledge is management looking for in potential candidates for these
jobs?
C. Inform employees of the succession planning process that the organization intends to use (e.g.,
the steps in this model).
B. IDENTIFY WHO IS INTERESTED:

A. Open it up. Give employees the opportunity to indicate interest in possible job openings and
willingness to participate in succession planning activities.
B. Clarify that participation in succession planning is not a guarantee of advancement. However,
participation could help one’s chances.
C. ASSESS COMPETENCY READINESS:

A. Assess individuals’ readiness to assume possible job openings for which they have indicated
interest.
B. That is, compare the employee’s present competency level to that required of the anticipated
opening. Identify competencies that need development to help ready the employee for that job
or occupation.
C. It is advisable to use an assessment instrument that actively engages the employee as well as
the supervisor in determining the employee’s competency levels.
D. PREPARE DEVELOPMENT PLANS:

A. Together with the employee, prepare an individual development plan that outlines specific
activities that the employees engage in to develop needed competencies. Include a timetable
with milestones for assessing progress
B. The list of activities and timetable should be reflected in the employee’s performance plan.
C. In addition to individual plans, it may make sense to have a group development plan applicable
to core competencies for a particular occupation level that all interested employees should
participate in.
D. Consultation in preparing training plans and determining appropriate activities is available
through the human resource development.
E. PROVIDE DEVELOPMENT OPPORTUNITIES:

A. Help the employee follow through with the development plan by setting up training options and
providing realistic time to participate in the training activities indicated in the employee’s
development plan.
B. The employee should also take personal responsibility to take the initiative and seek out
activities that will help develop the targeted competencies. This display of initiative and follow
through can show that the employee is serious about succession and may, in itself, be a key
competency.
C. Training options go well beyond the traditional classroom setting and do not have to be costly.
Examples of development activities include: mentoring, job shadowing, and task force participation,
special projects/assignments, Internet and journal research, conferences, time-limited job
rotations, video/audio tapes, committee participation, etc.
F. FORMALISE ELIGIBILITY:
A. Use “until further notice” recruitment announcements so that, employees can submit their
application at any time.
B. Use desirable, not minimum, qualifications.
C. Streamline selection procedures – avoid using complicated multiple choice examples.
D. Use the “in-training” program that allows bringing the employee in at a lower level with automatic
advancement to the higher level.
E. Use competency based classification structures.
2. SHORT-TERM MODEL:
A. This is the most common model of succession planning and serves as a crucial point for all
types of businesses. Short-term replacement planning is focussed on an urgent need caused
by a sudden development within the organization – skilled employee leaving the company,
expansion or contraction of business. Sometimes, emergency replacement planning must work
to retain knowledge that is about to be lost. Emergency knowledge retention is an option to
consider if the organization is about to lose specialised knowledge and does not have a
successor to take the knowledge.
B. Emergency succession planning can come into play any time the organization expands in a
new direction or discovers the talent gaps to fill the required managerial position. Generally,
human resources will try to fill the role from within the organization, but often go outside, if no
one has been trained for the job in the organization.
3. TALENT MANAGEMENT MODEL:
A. Talent management focuses on the future needs of the organization. Working within the
strategic framework for the company’s future goals, senior management identifies the positions
necessary for growth and the best candidates to fill those roles. Some organizations invite all
employees to take part in an assessment process, while others have managers identify
leadership candidates.
B. A careful and considered plan of action ensures that the least possible disruption to the
person’s responsibilities and therefore, the organization’s effectiveness. Examples include
such a persons who are:

1. Suddenly and unexpectedly unable or unwilling to continue their role within the organization;
2. Accepting an approach from another organization or external opportunity which will terminate
or lessen their value to the current organization;
3. Indicating the conclusion of a contract or time-limited project; or
4. Moving to another position and different set of responsibilities within the organization.
C. If companies wish to grow leaders from within their existing talent pool and have the time and
resources to develop a useful programme, effective talent management will become a key
component of its long-term human capital strategy. The advantages of this model include:
1. Identifies a specialised talent pool.
2. Defines and builds future skills required for the success of the organization.
3. Motivates and retains employees by involvement in their career growth.
Disadvantages:
A. Expensive and time consuming.
B. Existing employee-base may not have required skills and experience for key posts and outside
hiring can lead to resentment.
C. Managers may be frustrated by not being allowed to choose a successor.
4. COMPENTENCY BASED MODEL:
A. DETERMINE FUNCTIONS AND WHEN POSITIONS WILL BE AVAILABLE:

A. Review the associated functions and anticipated future work requirements.
B. Fully understand how real and anticipated changes in functions and new technologies will
impact on future job requirements.
B. DETERMINE INITIAL COMPETENCIES REQUIRED FOR EACH POSITION:

Determine the skill, knowledge, ability, aptitude, values, motivation, initiative, self-control, work
style, and attitude that contribute to exemplary job performance.
C. COMPETENCY GAP ANALYSIS:

A. Identify the job competencies that will be required for future positions in the organization.
B. Determine the type of tool to be used to gather data on whether current employees possess
the competencies that will be required by the identified positions.
C. Analyse the difference (if any) between current employee competencies and future organizational
needs.
D. Document findings. The “gaps” would be the competencies that developmental opportunities
should be identified for.
D. DESIGN DEVELOPMENTAL OPPORTUNITIES FOR EACH SET OF COMPETENCIES:

Tailor opportunities to develop each of the competency sets to the needs of the individual(s) and
the future work requirements.
E. DEVELOP AND MAINTAIN A TALENT POOL:

1. Aquire volunteers.
2. Conduct individual gap analysis.
3. Prepare individual development plans.
4. Re-assess and track individual progress.
F. RE-ASSESS AND TRACK OVERALL PROGRESS AND MAINTAIN SKILLS INVENTORY:
1. Continually monitor skills and needs to determine any gaps and develop plans to meet
deficiencies.
2. Track individual progress over time for use with reporting and determining adding or changing
developmental opportunities.
3. Inventory current and future needs and maintain that information for individual and group
developments.
5. POSITION MODEL:
A. Incumbent identifies the individual(s) who are in their view best qualified to move into the
position in the short term (say within 1 year); the medium term (within 2 years) or the longer term
(3-5 years);
B. The incumbent may also identify their perception of the development needs of the candidates
they have named;
C. Sometimes the organisation decides that the succession plan is a strictly confidential document;
consequently the only people who are aware of the succession plan are those who develop it.
Even when there is some awareness that a succession plan exists, frequently the people on
the succession list are not told that they are, unless the company decides to create “fast track”
programmes for these individuals. Sometimes the information is leaked informally, however
employees are rarely consulted or asked to participate in the process; and
D. Following the development of the succession plan, there may or may not be specific development
for the individuals who made the list. Sometimes the incumbent will take a special interest in one
individual who has been identified as a potential successor, and will develop a mentor/
relationship, in which the incumbent coaches and guides the person who has been identified
for their role.
Advantages:
A. This is the simplest model; based on the assumption that the best person to identify who would
be able to do the job is the person who is currently doing it;
B. The most common reason why organisations use this model is that it is often the approach the
CEO is most comfortable with. He/she is able to scan the list and see if there are any positions
which have no identified successors (thus, identifying succession gaps in the organisation);
and is able to look at which names tend to arise most frequently; providing a snapshot of those
who are generally perceived to be the “stars”; and
C. This approach is the least costly and the quickest; and does not require a high level of
organisational commitment. It serves the purpose of ensuring at a minimum that managers are
thinking about succession issues; and are aware that succession planning is partly their
responsibility.
Disadvantages:
A. High risk of encouraging corporate “cloning”. This can have serious business implications. The
incumbent (who may have a fairly narrow perspective of the world) tends to identify individuals
who are most like him/her in terms of educational background, experience, and personality
style. Unconsciously, they may be also looking for someone of the same gender, socio-
economic status, and family situation (indeed some will even acknowledge that they believe
these to be relevant to the ability to do the job; although such biases often “go underground” and
the managers know better than to openly acknowledge that these are their belief systems!);
B. Problematic in large organisations in which the incumbent in the position does not know
employees across the organisation. The identified successors tend to be people the incumbent
works with, and candidates from other areas are not considered; and
D. Risk that the person identified does not aspire to the promotional positions they have been
identified for.
6. POOL MODEL:
A. In this model, high potential candidates are identified within the organisation as the senior
managers of the future;
B. They are usually selected by a task force of senior managers (often with the assistance of
Human Resource) who set aside a day or more to go through a list of all employees above a
certain level and assess which individuals should be identified as high potential. To facilitate
decision-making, they will often agree on some criteria by which to select the individuals, and
may have the person’s most recent performance appraisal as an additional resource;
C. In some cases, candidates may be further narrowed down through an assessment centre
process or through an interview/evaluation process; and
D. Once the pool has been identified, those who make the list will generally receive some special
attention. How much attention will depend on the organisation’s willingness to make a financial
commitment to the programme. Often the Human Resource Department puts together a “fast
track” programme, in which they assist the person to develop an individual development plan.
They may provide some group training; they may institute a mentoring programme, and identify
certain training programmes these people should attend.
Advantages:
A. This type of approach tends to be somewhat fairer because more managers are involved in the
selection of the people who are identified for the High Potential programme; thus, providing
some checks to offset bias. However for this to be effective it is essential that the committee
undertaking the selection is itself both diverse and open to organisational diversity. It also tends
to be fairer because some criteria for selection of high potentials are usually applied; and
B. This approach is also more likely to recognise the value of providing broad background for the
high potential employees rather than a single functional stream of experience.
Disadvantages:
A. In large organisations the majority of employees may not be well known to the task force
members, and their view of the person may be influenced by the level of visibility the person
has in the organisation (which of course can be limited by the type of work they do and even
their relationship with their manager). As a result, talented employees who do not have a high
profile may be overlooked all together.
B. An even more insidious problem is the effect on employee morale of having such a programme
for those who are sometimes called “the anointed ones”. In many organisations, it is widely
known which employees have been identified as high-potentials, the other non-identified employees
can be severely discouraged and demoralised. Some organisations have discovered that the
backlash from a high-potential program offsets any benefits it may have. Some organisations
discontinue their high potential/fast track programmes for this reason.
7. TOP-DOWN/BOTTOM-UP MODEL:
A. This model is based on the current and expected future needs of the organisation, as well as
on ongoing two-way communication with employees. It has the greatest potential to be able to
deliver improved outcomes for women. This process involves:
B. Senior management as a group determines what competencies are required to enable a person
to take on the key roles, for example, at a middle or senior management level, considering
organisational requirements for “the manager/employee of the future”. Certain criteria for
progression are determined as across-the-board requirements for development, for example,
education levels, organisational cross training, participation in management training;
C. All employees at a pre-determined level are provided with the information developed by senior
management thourgh a session about succession planning and career development. This
session outlines clearly the requirements for progression in the organisation. This enables staff
to determine whether or not they are interested in progression; and to self-identify if they wish to
be involved in a programme which will help them to meet the criteria for development and
progression;
D. Employees who signal their interest in progression then participate in a workshop in which they
are given guidance and led through such processes as: (a) using 360 degree feedback to
determine their strengths and weaknesses particularly relating to management skills,
(b) developing their own individual development plan and reviewing it with other appropriate
people, (c) learning how to take responsibility for their own career growth, and d) considering
what would be good “next moves” for them to make in their careers. Assessment centres could
also be used as part of the workshops;
E. The results of the 360 degree feedback, as well as the individual development plans, and
possible “next moves” would be maintained by a manager on a human resource information
system. Each person’s file would be updated annually or more frequently;
F. A report on each of the people participating in the development programme would be generated
annually. This report would provide input for any senior level succession planning taking place. Thus
senior management would be able to get a snapshot of how many people aspire to progression, and
what progress they are making in working through organisational requirements; and
G. Employees who initially opted not to participate in the development programme are able to
change their mind at any time and join the development programme.
Advantages:
A. Because the programme leans so much on employee self-selection, there is less likely to be
conflict with equal opportunity principles and thus ensure that a broader group of people
participate;
B. The programme serves to empower employees; to help them feel that they have some control
over their careers and are not at the mercy of others;
C. The across-the-board criteria for progression ensure that there is less chance to “work the
system” (e.g., to wire jobs for favoured applicants); and
D. The process is transparent. There need be no secrets or hidden agendas. This engenders a
higher level of trust.
1. No model can be introduced if there is no a strong commitment to its continuation. At
a minimum, two years would be required in order to see significant results and a
changing culture.
2. Succession planning is essential to:
A. Accelerate the development and improve the retention of talented people. This
argument is particularly relevant to the development and retention of talented women,
a group often neglected in organisations;
B. Identify ongoing needs for replacement and design appropriate training and employee
development programmes;
C. Increase the pool of talented employees to fill key positions;
D. Add value to the organisation strategic plan and contribute to ongoing business
strategies;
E. Ensure individuals receive appropriate developmental opportunities and are successful
in their career goals;
F. Ensure that the organisation has full access to the intellectual capital of their employees;
F. Improve employee morale and commitment to the organisation; and
H. Encourage the development and advancement of the diverse group of employees.
3. Evaluating succession planning is necessary for the following reasons:
A. Participant satisfaction:
This includes evaluating overall satisfaction, satisfaction with each component of the
programme, including job descriptions, competency models, performance appraisal
processes and satisfaction with individual career plans, etc;
B. Programme progress:
This includes an assessment of how well the program has worked when compared
with the stated objectives and how well an individual is progressing through their
developmental experiences;
C. Effective placements:
This includes what percentages of vacancies in key positions are filled internally,
how quickly are vacancies in key positions filled, how quickly are internal replacements
for key positions able to perform to the level required in the position.
D. Organisational results:
What successes or failures in the organisational plan are attributable to the succession
plan and have there been changes in the gender and diversity profile of employees
filling key organisational positions?
LEVEL FIVE
SUCCESSION PLANNING: IMPORTANT QUESTIONS
1. WHAT CHOICES DO WE HAVE OVER SUCCESSION?

1. If we give ourselves a plenty of time to decide about the succession, we could think about the
following options:
1. Selling the business.
2. Handing over control to a family member.
3. Grooming one of our existing team leader as successor.
4. Appointing a professional manager from outside.
2. One of the essential things about succession planning is to allow as much time as possible to
think through and decide on the best option.
3. Ideally, the process should be planned out over a couple of years, rather than being made
hurriedly a few months before a person leaves.
4. If we are able to identify a possible successor, the longer we give this person to understand
the way the business operates and the responsibilities they must assume, the better the
eventual outcome could be.
2. WHAT SHOULD A SUCCESSION PLAN INVOLVE?
1. The plan describes and clarifies the succession process and should be developed as part of
the overall strategy for the business. It will detail how we’ll choose our successor and the role
we’ll have, if any, after we hand over control.
2. The plan may outline, for example, how the future leader of our business will go about
managing its operations, and the structure and responsibilities of the team that will be involved.
3. Grooming the leader of tomorrow, his multi skilling abilities, competencies which his role would
require, his ability and capacity to turn around the business, his involvement in his people and
his overall approach and his being evolved over a period of time.
3. WHAT SHOULD WE CONSIDER IN INDENTIFYING A SUCCESSOR?
1. When we begin drawing up your succession plan, describe his functions and responsibilities
and the kind of qualities required of the person who will take over from.
2. This involves listing the skills, interests, and abilities that the successor should possess. Bear
in mind that the future leader of business may need different skills and attributes as the
business has moved on, so a strong entrepreneurial drive, for instance, may be less important
than managerial and administrative expertise and vice versa.
3. You can then draw up a list of possible contenders and a summary of their experience,
qualifications, and career history. This will be easier, of course, if a potential successor is
already on our staff or is a family member, but be as objective as possible.
4. HOW TO MAKE A SUCCESSION PLAN HAPPEN?
A. Prepare Succession Plan:

1. It’s crucial that, before we put our succession plan in writing, we discuss our intentions and the
changes we envisage with as many as possible of the people who’ll be affected and the top
management.
2. Once the plan is complete, put it in writing to reduce the possibility of misunderstandings, and
to make sure that everyone involved is clear about what is going to happen to the business and
where they fit in. Tell everyone concerned about the main points of the plan so that, the
succession process gets off to the right start.
B. Prepare a Timetable:
A detailed time-table for the transition process is vital. Set targets for the training of the successor,
if required, Unexpected events such as the resignation of a key member of staff, and unanticipated
changes such as the appearance of new competitors or the loss of a major customer, may occur if
we are planning a lengthy transition period, we should provide a degree of flexibility.
C. Seek Support:
Depending on the nature of the business, succession planning could prove complex and hazardous
if we are uncertain about the right steps to take or make the wrong decisions. The support of top
management is vital and necessary
D. Choose the Successor:
In addition to the list of skills, qualities, and experience that we should have compiled on the
probable successors for succession, when it comes to evaluating them and making a choice there
are some other attributes we should consider. For example:
1. How committed are they to the business?
2. Can they develop it further?
3. Do they have the leadership qualities and interpersonal skills needed to motivate others?
4. Can they operate independently and in an appropriate manner?
5. Do they have the right motivations and aspirations?
6. Do that they relate well to the employees and not provoke rivalries or ill feelings.
7. What is their philosophy, experience and track record?
E. Do Not Wait Until Last....

Don’t wait until a crisis strikes the business before we decide to search for a successor. The
kind of crisis that usually precipitates this sort of move is ill health or a sudden change in the market
that requires radical changes in the way a business is run.
It’s much better to decide on a succession plan while the business is stable and profitable, as
this will allow us to choose from a full range of options rather than be forced into a hasty decision
we would regret later.
F. Do Not Rush:
Keep an open mind about the succession options. The best course is to leave as much time as
possible to make the right decisions, giving ourselves plenty of opportunities to consult and seek
advice from the right quarters.
7. Do not Hang to Long:
A person may believe that he is indispensable to the business and be tempted to hang on for
too long. This is one of the worst things can happen. We should not leave the succession plan
decision too late and when we do decide to go, then we don’t hang on too long. Letting go is really
hard, but if we plan your succession properly we should feel confident about our choice. The most
appropriate example here is the succession of Chanda Kochhar as the CEO of ICICI Bank following
the retirement of K V Kamath. The succession plan was initiated and implemented in eighteen months.
LEVEL SIX
STRATEGIC SUCCESSION PLANNING AT RANBAXY

LABORATIORIES: CASE STUDY FOR PRACTICE
In 1952, Bhai Mohan Singh incorporated Ranbaxy. The company was engaged in producing
drugs by reverse engineering the molecules of established drug brands.
In 1967, Dr. Parvinder Singh, son of Bhai Mohan Singh joined the company. In 1982, he took
over as the Managing Director of the company.
In 1982, the family business was partitioned when two family members, Bhai Manjit Singh and
Analjit Singh decided to leave the company to pursue their other interests. Dr. Parvinder Singh took
the full control of the company’s business affairs. Bhai Mohan Singh got formally retired. Dr. Singh
sets up ambitious plan of reaching one billion sales turnover by 2004.
Dr. Parvinder Singh adopted highly professional work standards. He was well known for his
commitment to corporate governance and ethics. Ranbaxy was run by professional managers. He
wanted to transform Ranbaxy into a multinational pharma giant and to achieve this target; he carefully
chose a team of professionals. Accordingly, he was not in favour of his sons, Malvinder Singh and
Shivinder Singh joining the high ranks as he wanted them to earn their positions through hard work
and merit. Dr. Parvinder Singh stuck to his stand despite the opposition of his father Bhai Mohan
Singh. Both the sons decided to follow their father’s wishes.
Dr. Parvinder Singh took retirement in 1977 and two months later, Ranbaxy implemented his
succession plan by appointing a professional Dr. Davinder Singh Brar as the Managing Director and
Chief Executive Officer. The company did not have any family representation on the board when Dr.
Brar took over. Meanwhile, in 1998, Malvinder Singh joined Ranbaxy as a Manager.
By the beginning of 2000, the Singh family decided to take control of the firm. Bhai Mohan Singh
had been pressing the board to elevate Malvinder Singh to the board of directors. The disagreements
over Ranbaxy’s international expansion strategy between Brar and the Singh family were common
knowledge by now. Sources within the company denied the differences. Dr. Brar had stated at a
forum that he would retire by 2002 after completing 25 years with Ranbaxy. In December 2003, Bhai
Mohan Singh spoke to the media on the issue and praised Dr. Brar for his valuable contribution made
to the company. However, his statements reflected his unhappiness with Brar having been made the
CEO in the first place. He said “My problem was not with Brar. It was with my son. He was upgrading
Brar over others. I was angry that he was displeasing others who had been with me for long and had
worked hard for the company. And when Brar was named CEO of Ranbaxy, I left the company.”
Bhai Mohan Singh was happy with Brar’s decision to quit after having laid out succession plan.
Dr. Brian Tempest was appointed as the new CEO since he was the most senior member of the
board and had a lot of experience. Malvinder Singh was appointed as the President – Pharmaceuticals
and was also included as the member on the board of directors. This was also the standing wish of
Bhai Mohan Singh.
In 2000, Malvinder Singh was appointed as Director Global licensing. He was credited with the
rapid growth of domestic as well as the expansion of global markets business.
In 2006, Malvinder Mohan Singh took over as the Managing Director and CEO of Ranbaxy.
In June 2008, Malvinder Singh and his family decided to sell their entire stake of 35% in the
country’s largest pharma company to Daiichi Sankyo for Rs 10,000 crore. It was announced that
Malvinder Singh will continue at the helm till 2013.
On 25th May 2009, Ranbaxy Laboratories and Daiichi Sankyo announced that Malvinder Mohan
Singh has stepped down from the positions of Chairman, CEO and Managing Director of Ranbaxy
with immediate effect. The decision to quit the company four years ahead of schedule signaled the
end of the long association between the Singh family and the pharmaceutical company. “It is my own
decision to step down which I have communicated to the Board” Malvinder Singh announced to the
media.
The company had posted a net loss of over Rs.1, 032/- crore for the year ended December 2008
as compared to net profit of Rs. 617.72/- crore in the previous year. This could have triggered change
of guard at the top level.

1. Discuss how the concept of succession planning was adopted and implemented at Ranbaxy? What lessons
do you learn from the succession planning envisaged by Dr. Parvinder Singh and Dr. Brar subsequently?
2. Crtically examine the controversies over the issue of succession planning at Ranbaxy. Was Dr. Brar’s
decision to quit was forced upon him or was it his personal choice?
3. Why Dr. Parvinder Singh told his father Bhai Mohan Singh that both his sons, Malvinder Singh and
Shivinder Singh, should earn their positions by hard work and merit?
4. How would you justify Dr. Brar’s Succession plan when he appointed Brian Tempest as the CEO of Ranbaxy?
5. Do you think it would have been justified for Dr. Brar to announce Malvinder Singh as his successor in
place of Brian Tempest?
6. Why Malvinder Singh and his family decided to sell their entire stake of 35% in the Ranbaxy to Daiichi
Sankyo for Rs 10,000 crore? Was the sale justified in terms of its financial performance?

1. Define Succession Planning. Why is it important?
2. What are the components for preparing roadmap of succession planning?
3. What is the difference between succession planning and strategic succession planning? When succession
planning becomes strategic succession planning?
4. What are the challenges to a strategic succession planning? Write your answer citing examples.
5. Crtically analyse the case study of ‘BKC Communications’. Why succession planning failed in the
company?
6. Why succession planning becomes difficult especially in family owned companies. Support your answer
with examples.
7. What is the difference between traditional and strategic succession planning? What are their characteristics?
8. Examine the case study ‘Succession Planning at ICICI Bank’. Was it a strategic succession planning?
Who was responsible for preparing the roadmap of succession planning at ICICI Bank?
9. What are the various models of succession planning? What are the advantages and disadvanges of each
model?

Human Resource Audit 457
t er
ap
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10
HUMAN RESOURCE
AUDIT
HPH
topics:
 Basic Concepts and Definitions of Human Resource Audit
 Human Resource Audit Process.
 Audit of Business Strategy.
 Audit of Business Goals and Assumptions.
 Audit of Employee Turnover.
 Approaches to Human Resource audit.
 Balanced Scorecard.
 Comprehensive Human Resource Audit.
 Audit of Labour Laws Compliance.
 Workplace Audit Checklist: Factories Act Compliance.
 Essential steps in Human Resource Audit.
CHAPTER TEN
HUMAN RESOURCE AUDIT
LEVEL ONE: BASICS OF HUMAN RESOURCE AUDIT 459 – 463

LEVEL ONE-A: ESSENTIAL STEPS IN HUMAN RESOURCE AUDIT 464 – 468
LEVEL TWO: A FOUR STEP APPROACH IN HUMAN RESOURCE
AUDIT AS AN IMPROVEMENT TOOL 469 – 472
LEVEL THREE: APPROACHES TO HUMAN RESOURCE AUDIT 473 – 479
LEVEL FOUR : BALANCED SCORECARD 480 – 486
LEVEL FIVE: COMPREHENSIVE HUMAN RESOURCE AUDIT 487 – 491
LEVEL SIX: AUDIT OF BUSINESS STRATEGY 492 – 500
LEVEL SEVEN: AUDIT OF BUSINESS GOALS AND ASSUMPTIONS 501 – 506
LEVEL EIGHT: AUDIT OF EMPLOYEE TURNOVER 507 – 517
LEVEL NINE: AUDIT OF LABOUR LAWS COMPLIANCE 518 – 540
LEVEL TEN : WORKPLACE COMPLIANCE: AUDIT OF SAFETY 541 – 550
PROVISIONS UNDER THE FACTORIES ACT, 1948:
LEVEL ONE
BASICS OF HUMAN RESOURCE AUDIT
A. CHARACTERISTICS OF HUMAN RESOURCE AUDIT:
1. Human Resource Audit is a Process of Examination:

The human resources (HR) Audit is a process of examining policies, procedures, documentation,
systems, and practices with respect to an organization’s human resource functions.
2. Human Resource Audit is SWOT Analysis of Human Resource Systems:

The purpose of the audit is to reveal the strengths and weaknesses in the organization’s human
resources system, and any issues needing resolution. The audit works best when the focus is on
analysing and improving the human resource function in the organization.
3. Human Resource Audit is a Diagnostic Tool:

The audit itself is a diagnostic tool, not a prescriptive instrument. It helps to identify what you
are missing or need to improve, and it may even tell you what you need to do to address these
issues. It is most useful when an organization is ready to act on the findings, and to evolve its human
resource function to a level where its full potential to support the organization’s mission and objectives
can be realized.
4. Human Resource Audit is the Root Canal of Human Resource World:

Human resource audit used to be the “root canal” of the human resource world, considered to
be a painful and frightening event. As with so many traditions in human resource, this one has also
faded in recent years. Human resource professionals have come to understand that sometimes an
audit is not only necessary — it can yield truly helpful information to help implement change.
5. Human Resource Audit Helps in Implementing Metrics and Benchmark Practices:

And as human resource professionals continue on the path to greater strategic involvement in
the business goals of the organization, they know that the audit not only plays an important role in
keeping tabs on practices and procedures — it can also help set the stage for implementing metrics
and benchmark practices. An audit can put your organization’s metrics to the test by using the
measures to monitor key information and trends
B. DEFINING HUMAN RESOURCE AUDIT:
1. Human Resource Audit is a Systematic Review of Human Resource Functions:

A human resource audit is a systematic review of the human resource functions, its strategic
direction, structure and resources, systems and procedures; cost and capabilities; and ultimately, its
contribution to the organization.
A well-designed audit provides a diagnostic tool to measure human resource’s performance
against organization expectations and leading practices, and target areas that would benefit from
improvement.
2. Human Resource Audit Contributes to Organizational Effectiveness:

The human resource function is charged with building values, culture and a set of practices that
recruit, retain, develop and motivate high-performing talent.
An effective human resource function is also engaged in establishing work practices that allow
the ideas and capabilities of all members of the workforce to become known and utilised effectively.
Hence, an audit can help demonstrate to what extent the human resource function contributes
to organizational effectiveness as a whole.
3. Human Resource Audit is a Systematic Way of Achieving Company’s Goals:

Human resource audit means the systematic verification of job analysis and design, recruitment
and selection, orientation and placement, training and development, performance appraisal and job
evaluation, employee and executive remuneration, motivation and morale, participative management,
communication, welfare and social security, safety and health, industrial relations, trade unionism,
and disputes and their resolution.
Human Resource audit is very much useful to achieve the organizational goal and also is a vital
tool which helps to assess the effectiveness of human resource functions of an organization.
4. Flamholtz: Human Resource Audit Analysis 1987:

An audit is a means by which an organization can measure where it currently stands and
determine what it has to accomplish to improve its human resource function. It involves systematically
reviewing all aspects of human resources, usually in a checklist fashion, ensuring that government
regulations and company policies are being adhered to. The key to an audit is to remember it is a
learning or discovery tool, not a test. There will always be room for improvement in every organization.
Human resource audit is a systematic assessment of the strengths, limitations, and developmental
needs of its existing human resources in the context of organizational performance.
C. WHY DO HUMAN RESOURCE AUDIT?

1. To insure the effective utilisation of an organization’s human resources.
2. To review compliance with a myriad of administrative regulations.
3. To instill a sense of confidence in management and the human resource function that it is well
managed and prepared to meet potential challenges.
4. To maintain or enhance the organization’s and the department’s reputation in the community.
5. To perform a “due diligence” review for shareholders or potential investors/owners.
D. SCOPE OF HUMAN RESOURCE AUDIT
1. Audit of all the human resource functions.
2. Audit of managerial compliance of personnel policies, procedures and legal provisions.
3. Audit of corporate strategy regarding human resource planning, staffing, Information systems,
remuneration and other human resource activities.
4. Audit of the Human Resource climate on employee motivation, morale and job satisfaction.
E. SCOPE OF FULL HUMAN RESOURCE AUDIT:

1. Legal compliances.
2. Compensation/Salary Administration.
3. Employment/Recruiting.
4. Orientation.
5. Terminations.
6. Training and Development.
7. Employee Relations.
8. Communications.
9. Files/Record Maintenance/Technology.
10. Policies and procedures (including employee handbook).
11. Communications.
F. BENEFITS OF HUMAN RESOURCE AUDIT:
1. It helps to find out the proper contribution of the human resource department towards the
organization.
2. It helps in the development of the professional image of the Human Resource department of the
organization.
3. Reduce the human resource cost.
4. It results in the motivation of the human resource personnel.
5. Finds out the problems and solve them smoothly.
6. Provides timely legal requirements.
7. It helps in creating a sound performance appraisal systems.
8. It helps in conducting systematic job analysis.
9. It helps in smooth adoption of the changing mindset.
G. OBJECTIVES OF HUMAN RESOURCE AUDIT:
1. To review the performance of the human resource department and its relative activities in order
to assess the effectiveness on the implementation of the various policies to realise the
organizational goals.
2. To identify the gaps, lapses, irregularities, short-comings, in the implementation of the policies,
procedures, practices, directives of the human resource Department and to suggest remedial
actions.
3. To know the factors which are detrimental to the non-implementation or wrong implementation
of the planned programmes and activities.
4. To suggest measures and corrective steps to rectify the mistakes, shortcomings if any, for
future guidance, and advise for effective performance of the work of the human resource
Department.
5. To evaluate the Personnel staff and employees with reference to the performance appraisal
reports and suggest suitable recommendations for improving the efficiency of the employees.
6. To evaluate the job chart of the human resource managers, executives, administrative officers,
executive officers, recruitment officers, whether they have implemented the directives and
guidelines for effective management of the human resources in their respective departments.
H. PURPOSE OF HUMAN RESOURCE AUDIT:
1. To clarify desired practices of human resource work and roles within the organization.
2. To establish a baseline for future improvement.
3. To evaluate current effectiveness.
4. To standardise practices across multiple sites within a division or company.
5. To assess current knowledge and skills required of human resource practitioners.
6. To improve performance levels of key customers within the organization.
HR AUDIT AT HIDE TECHNOLOGIES: A CASE STUDY IN DESIGNING CONCEPTUAL
FRAMEWORK:
1. HUMAN RESOURCE AUDIT BASED ON BALANCE SCORECARD:

Hide Technologies work and operate on human resource development framework which is
integrative of the Balanced Scorecard approach and which defines what the Business should focus
on, as well as the strategic human resource approach which aims to leverage and/or align Human
Resource practices with an aim to build critical organizational capabilities enabling business to achieve
its goals.
2. OBJECTIVES OF OUR HUMAN RESOURCE AUDIT SYSTEM:

1. To make human resource systems and processes more business-driven and relevant to
business goals.
2. To take stock of things and improve the human resource function for expanding, diversifying
and entering into a fast growth phase.
3. MAJOR FEATURES OF HUMAN RESOURCE AUDIT SYSTEM:

The most significant characteristic of human resource audit is to enable the organization to
evaluate and realign human resource development on a continuous basis. Such an alignment is multi-
dimensional as it is essential to examine it in terms of variables such as:
1. Strategy.
2. Systems.
3. Structure.
4. Competencies.
5. Styles.
6. Culture
4. FEATURES OF HUMAN RESOURCE AUDIT

1. Hide Technologies,follows comprehensive audit covering entire gamut of human resource
development.
2. The human resource audit framework has in-built flexibility to sharply focus on one or more
systems.
3. The audit provides an implementation-based solution as it gives us insights into the sources of
problems that the organization is faced with and facilitates a systematic action planning for
corrective and preventive measures.
4. The audit encompasses multiple methods and tools such as interviews, observations,
questionnaires, analysis of records and other secondary data.
5. The audit are more intellectual and systems-driven rather than feelings-driven
5. METHODOLOGY FOLLOWED:
1. The audit starts by defining the scope of contents that need to be covered in a particular audit
schedule.
2. Understanding of human resource policies, Processes, Systems and Structure to enable
designing of various audit tools.
3. Customization of tools to be used for interviews, observations and capturing of variables to be
audited.
4. Scheduling and logistics for data collection.
5. Administration of audit tools.
6. Analysis of data collected.
7. Presentation to top management with an aim to help them understand the various strengths and
weaknesses as highlighted in the audit.
8. Appointment of a task force that will study and prioritize areas for improvement.
9. Designing an implementation schedule with clear time frames for action.
10. Monitoring the implementation to ensure systemic improvement.
LEVEL ONE A
ESSENTIAL STEPS IN HUMAN RESOURCE AUDIT
1. INTRODUCTION:
Human resource audit is an addition to the various tools and concepts used for effective
management of human resources. It has a vital role to perform – particularly in the service industry
where the human resources are a part and parcel of the product or service that is being consumed.
Hence, in this part, we introduce you to the basic concepts of human resource audit and the issues
related to it.
2. NEED AND PURPOSE OF FORMAL HUMAN RESOURCE AUDIT:

Human resource audit is a systematic assessment of the strengths, limitations, and developmental
needs of its existing human resources in the context of organisational performance. (Flamholtz,
1987).
Human resource audits give an account of the skills, abilities and limitation of its employees. The
audit of non-managers are called skills inventory while the audit of managers are called management
inventories. Basically, the audit is an inventory that catalogues each employee’s skills and abilities
which enables the planners to have a understanding of the organisation’s workforce. (William B.
Werther, Jr. and Keith Davies).
3. NO LEGAL BINDING:
The commonly understood audits are the established and regular accounting audits carried out
in accordance with specific statutory regulations. However, in the case of human resource audits,
there is no legal obligation, but enlightened managements have voluntarily accepted its usefulness
depending upon the circumstances. The following circumstances may be cited as examples:
 felt concern by top management,
 compulsions of the external forces necessitating a situational audit,
 business changing significantly influenced by international business decisions affecting human
resource management, and
 an urge on the part of human resource management professionals towards advancement of the
practices and systems.
4. HUMAN RESOURCE AUDIT: WHAT IT DOES?

The premise on which the human resource audit is based is that opportunities are being missed
by staying with the current approaches. It considers the human resource process as dynamic and
that it must continually be redirected and revitalized to be responsive to the ever changing needs.
Human resource audit is a sort of feedback on the duties and working of the managers and other
employees of the organisation. It is a sort of quality control of the human resource of an organisation.
Human resource audit can be conducted for a department or the whole organisation. It gives a more
professional image and helps in bringing out the problem not necessarily linked with the Human
resource division of an organisation. Human resource audit helps clarify a department’s role in an
organisation and brings about more uniformity in action.
Human resource audit is the critical analysis of the existing human resource within the organisation.
To be able to do that, the audit will have to be served with the data that is quantitative, qualitative,
as well as comprehensive. In other words, the success of this stage of human resource planning
solely rests upon the manner in which personnel records and other information are maintained. It is
from the base of the current situation that the human resource audit is to take-off in order that the
future must be planned. Hence, the information needs of such a critical exercise must be met.
5. APPROACH TO HUMAN RESOURCE AUDIT

Every time a human resource audit is to be taken up, the scope is decided. The audit need not
be exhaustive but may focus on a particular function of human resource management such as
training and development, compensation, performance appraisal, etc. Nevertheless, the objective and
approach of Human resources audit – more or less – remains the same, regardless of scope.
In routine audits, auditors are engaged to verify the accuracy of financial information and the
reasonableness of the accounting practices followed by an organisation. In the course of these
audits, the auditors at times provide inputs that may serve as pointers to the state of affairs with
regard to financial planning and accounting procedures, inviting attention of the top management.
Essentially, human resource audits are not routine. These are in fact, studies of unusual nature.
The manner of conduct can be self-directed surveys, or task force within the organisation, or reserved
for intervention by outside consultants.
The audit can be a one time affair or an occurrence after a regular interval or an ongoing audit
function for operating units within the organisation. For example, in one company, the focus of audit
was on analysing the extent to which managers and supervisors complied with established personnel
policies and practices.
6. OUTSIDE CONSULTANTS AND HUMAN RESOURCE AUDIT: SOME PERCEIVED

ADVANTAGES:
Many companies prefer to have independent consultants conduct the audit in order to obtain
greater objectivity and impartiality in reporting. Consultants who have wider experience and
specialisation in the particular field are asked for conducting human resource audit. Most of them
possess an uncanny eye on details and data that might otherwise be looked as insignificant. They
are supposed to act with impartiality and make judgements on what they review and analyse without
risk of prejudice.
7. AUDITING PROCESS:
Though, the process would vary from organisation to organisation, generally it involves the
following steps:
(1) Briefing and orientation: This is a preparatory meeting of key staff members to:
(i) discuss particular issues considered to be significant,
(ii) Chart out audit procedures, and
(iii) Develop plans and programme of audit.
(2) Scanning material information: This involves scrutiny of all available information pertaining
to the personnel, personnel handbooks and manuals, guides, appraisal forms, material on
recruitment, computer capabilities and all such other information considered material.
(3) Surveying employees: Surveying employees involves interview with key managers, functional
executives, top functionaries in the organisation, and even employees’ representatives, if
necessary. The purpose is to pinpoint issues of concern, present strengths, anticipated needs
and managerial philosophies on human resources.
(4) Conducting interviews: What questions to ask? The direction which audit must follow is
based on issues developed through the scanning of information gathered for the purpose.
However, the audit efforts will get impetus if clarity is obtained as to the key factors of human
resource management selected for audit and the related questions that need to be examined.
The following model depicts the various key factors on which information needs during human
resource audit need to be focussed. It is developed from the interview guide used in an
electronics company. It covers a wide range of topics of profound interest relating to human
resource management practices in the organisation. The questions to be asked on these topics
need to be framed very carefully. These questions may be developed by the interviewer/audit
team on the following aspects as indicated against each topic.
(5) Synthesizing: The data thus, gathered is synthesised to present the
 current situation
 priorities
 staff pattern, and
 Issues identified.
Similarly, future needs are identified and appropriate criteria developed for spotlighting the human
resource priorities and specific recommendations made.
(6) Reporting: Just as the planning meetings of briefing and orientation, the results of the audit are
discussed several rounds with the managers and staff specialists. In the process, the issues
that get crystallised are brought to the notice of the management in a formal report. Follow-ups
are necessary after an audit to see if the action plan used to solve problems found in the audit
worked or not.
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Topic Related aspects to be covered
1. INFORMATION Coverage.
Source.
Adequacy.
Gaps.
2. FORECASTING Methodology.
Reliability.
Testability.
Budgeting.
Time orientation.
Technology perspective.
3. TRAINING AND DEVELOPMENT Need assessment.
Selection criteria.
Levels covered and.
Frequency internal vs. external training.
Quality consciousness.
Changing needs.
Climate for self-development.
4 PERFORMANCE APPRAISAL Validity of appraisal process

Fitness.
Benefits and/or drawbacks/problems.
Know-how of appraising.
Clear objectives.
Uniformity in process.
Underlying benchmarks.
Consistency in ratings.
Linkages with pay.
Feedback to employees.
Changing needs.
5 MANAGEMENT Policy formulation.

SUCCESSION Identifying key positions.
PLANNING Availability of successors.
Matching future needs.
Responsibility for grooming and developing.
Handing non/poor performers.
6 COMPENSATION Appropriateness of policies.

Company philosophy.
Adequacy of rewards.
Nature of job descriptions.
Flexibility in job evaluation systems.
Control over costs.
Rationale of reward system.
Opportunities for improvement.
7 AFFIRMATIVE ACTION Efficiency of action programmes.

Lessons for future.
8 SPECIAL ASSIGNMENT Clarity.

(other human resource functions) Comments.
Activities’ jurisdiction.
9 NEED FOR INTER-RELATIONSHIPS Uniqueness.

Distinctiveness.
Presence and awareness of about company’s
human resource policy.
Clarity of objectives of human resource audit.
Future outlook on philosophy.
Capabilities of implementation.
10 THE STAFF FUNCTION Expectation from human resource staff.
(the human resource Degree of satisfaction.
staff) Adequacy.
Attitude and approach.
Capability and potential.
Suggestion for change.
8. KEY FACTORS: HUMAN RESOURCE AUDIT:

Topics for Interview Questionnaire and the aspects to be
The process of the interview and the sequence of questions is often as important as their
content. Another effective method is the ‘focus interview’. A focus interview involves meetings between
a trained interviewer and selected members of the organisation. Here, the interviewer asks a variety
of questions planned and prepared in the same fashion as the interview questionnaire.
SIMPLY SPEAKING…
Human resource audit is the critical analysis of the existing human resources within the
organisation. It is a systematic review and assessment of human resource management
philosophies, policies, systems and practices. In terms of need, approach and procedures,
human resource audit is different from the commonly understood accounting audits carried
out in compliance of certain mandatory or statutory requirements.
The reason for conducting a human resource audit is that it is from the base of the
current situation that the future must be planned. Thus, an enormous amount of information
needs to be available. But similar to the case of human resource planning, the success of this
audit is dependent upon the availability of the quantitative as well as qualitative information
and its use by the auditor. The purpose of human resource audit is to gather data about the
organisation’s human resource management and to use those data to make judgements about
how its functioning, effectiveness, and requirements for future planning and development.
The decision to conduct a human resource audit and its frequency would be guided by
the top management’s concern or, amongst other considerations, a desire on the part of the
human resource professionals to advance the current practices and systems prevailing in the
enterprise. The audit may be conducted by the management either ‘in house’ or by engaging
an outside consultant in order to obtain greater objectivity in reporting.
LEVEL TWO
A FOUR STEP APPROACH IN HUMAN REOURCE AUDIT AS AN

IMPROVEMENT TOOL
A. HUMAN RESOURCE AUDIT LOCATES GAPS IN PERFORMANCE AND AIMS TO

CREATE REMEDIAL MEASURES:
Human resource management (HRM) has experienced a strong evolution. In order to provide
useful information to managers, it is necessary to evaluate the results generated by the design and
implementation of personnel policies.
The goal of the Human resource audit that includes two different analyses and valuations: the Human
Resource policies and the level of their matching with the strategy of the company, and the characteristics
of human capital. Several criteria have been used to assess different Human Resource policies.
Nevertheless, the measurement of the value that human capital brings to the company is a very complex.
Consequently, different models are being presented that aim to properly solve this challenge.
Human resource audit is a powerful tool which helps an organization evaluate the effectiveness
of its Human Resource management practices. Human resource performance is one of the most
difficult aspects of organizational performance to measure. One valuable tool which helps to assess
the effectiveness of human resource functions within an organization is Human Resource audit.
Human resource audit provides for the systematic verification of an organization’s recruitment
and selection practices, job design and analysis, training and development, orientation and placement,
performance assessment and job evaluation, employee and executive compensation, employee
motivation and morale, participative management, inter-department communication, safety and health,
welfare and social security, industrial relations, trade unionism, as well as disputes and their resolution.
Human resource audit covers a broad range of organizational functions, such as policy and
regulation compliance; corporate strategies in relation to human resource planning, staffing, and
compensation; “Human Resource Climate” on employee morale, motivation, and job satisfaction; etc.
Human resource audit provides key information on the actual contribution of the human resource
department towards the organization. It helps improve human resource personnel motivation and
reduce total human resource costs, as well as provides timely legal requirement. Another benefit of
a systematic human resource audit is the quick adoption of the changing employee mindset.
Human resource evaluation activities may differ depending on the purpose of human resource
audit. Various approaches to human resource audit includes: comparative and statistical approach,
regulatory and policy compliance, and management by objectives (MBO). Human resource audit
represents the gaps in performance and helps create various remedial measures. It helps an
organization to face the challenges and increase the potentiality of its human resource personnel.
B. FOUR STEP APPROACH TO HUMAN RESOURCE AUDIT PROCESS:

A simple four-step approach can be repeated as the annual planning and goal setting process
occurs within the company. Progress can be measured against goals and a continuous improvement
cycle naturally unfolds.
1. STEP ONE: DEFINING AUDIT STATEMENTS:

A. Definition of desired human resource practices can occur through in a variety of ways. A
good starting point is to take some time and reflect on the legal requirements and programmes that
the department must administer. Simply listing them is a good first step.
B. Next, consider the areas of responsibility and traditional Human resource practices covered
by Human Resource function: They may include human resource planning, staffing, performance
management, employee relations, compensation and benefits, training and development, safety and
welfare.
C. Employee surveys are important audit statements. Finally, other areas to consider are company
initiatives that the human resource function may be required to support, i.e., internal customer
requirements. Specifics are unique to our company, but examples could include supporting a total
quality Management initiative, team based work system, etc. With this list in hand, a statement can
be written about each major practice that we want to define. Typically, they are stated in the present
tense and in a positive manner. The following examples illustrate these traits;
1. The staffing process is documented so that the responsibility of each person in the process is
clear and understood.
2. Performance appraisals are completed for each employee in the organization.
3. There is a train-the-trainer programme for each major training programme within the company.
4. New employees complete a new hire orientation programme of key company policies and
procedures within the first 30 days of work.
5. There is an issue resolution process that is well-understood and used by employees.
We may notice, definitions can be as complete or detailed, as the developer desires. In starting
out, it is better to make more general statements and improve from year to year in those areas that
we choose to raise the level of performance.
In summary, we may end up with as many as 60-70 statements depending upon size of the
company and the level of detail that we prefer to measure. Regardless of the number, we are
developing a description of the level and quality of performance we desire for the human resource
function.
2. STEP TWO: ASSESSING CURRENT PRACTICES:

A. With the list of statements completed, the assessing current practices require is to be objective.
A good approach is to look for evidence that supports or refutes each statement made. Evidence may
take the form of policies and procedures, output from employee surveys, interviews with key customers,
data collection from a human resource information system, reports issued to regulatory departments,
statistics,etc.
B. The first time the assessment is made, it may become apparent that the definition in step one
needs improvement or modification. These changes should be noted and made a part of the next
“improvement cycle.” As we review the summary of statements and our assessment, there are
several analysis that can help.
3. STEP THREE: ANALYZE THE RESULTS:

A. It is important to recognise strengths and opportunities for improvement. As results are
reviewed, themes will emerge around specific human resource areas. For example, one company
may be very strong in administration and managing legal requirements. On the other hand, it may
need improvement in developing higher-level systems definition. Another company may be very
strong in areas of safety, security, and training, but need improvement in communication practices
that run across the company.
B. Reviewing the data in a variety of perspectives is helpful to formulate a picture of overall
human resource performance against the audit. It can reflect the positive effect of actions taken in
previous years as well as provide information for future actions. It may become apparent that all
definitions are ‘not equal in importance’. The effort required to meet the definition is one factor to
consider. For example, having performance appraisals for all employees may require significant
effort. On the other hand, if you already have a good new hire orientation programme in place, that
definition is more easily met.
C. The contribution that meeting a definition may have to the organization is another factor to
consider. For example, supporting a company initiative like total quality management may be more
meaningful to the organization at this point in time than other statements.
D. In summary, the purpose of analysis is to sort through the areas of strength and opportunities
for improvement in order to take positive action steps to improve the effectiveness of the Human
Resource function. It may become apparent that all definitions are ‘not equal in importance’
4. STEP FOUR: ESTABLISH IMPROVEMENT GOALS AND TAKE ACTION:

A. The ideal time to complete an audit is just prior to the annual planning process. With audit
information in hand, you can be poised to take advantage of your insights into setting next year’s
goals.
B. There are two aspects of setting goals: maintenance of current good practices and development
of improved practices. Knowing the capacity and capability of the human resource department and
system is critical in developing a realistic plan. Good practices need to become a part of the human
resource system and ‘baked in’, so that, they occur in a reliable, predictable fashion.
C. With little discretionary time available, it is prudent to review the analysis of Step Three and
decide which one or two areas will provide the greatest overall improvement for the Human Resource
function, its customers and the organization. These need to be the areas that goals are established
for the next year. This is the point in the audit process, where definitions are reviewed and modified
to create a new and improved vision of the human resource system as you wish it to be. Doing this
on an annual basis allows practices to be improved and benefits shared.
SIMPLY SPEAKING…
1. The Human Resource Audit can be a powerful lever of change in an organization. In one
sense it is simple, in that each step can be completed fairly quickly and with ease. Also,
the degree of detail and definition of performance is within the control of the audit
developer.
2. At time passes, the Audit enriches itself through better definition development and
higher levels of performance expectations. It takes on a systems approach because it is
comprehensive, inclusive of all traditional Human Resource practices, yet accommodating
to the uniqueness of company cultures and business initiatives.
3. Finally, it moves Human Resource professionals into an active state of defining their
direction, making sense of their choices, and contributing to the business in a more
definitive way.
LEVEL THREE
APPROACHES TO HUMAN RESOURCE AUDIT
1. BENCHMARKING: APPROACH
A. Benchmarking is the process of continuously comparing and measuring performance.
Organisations can measure against “best in class,” or against internal benchmarks.
B. “More than 80% of Fortune 500 companies use benchmarking to reinforce their own philosophy
of continuous change and improvement.”
C. Benchmarking externally is about learning from the best. Benchmarking internally typically
implies an undertaking to work hard for year over year improvement.
D. Some organisations distinguish between two levels of benchmarking. At one end of the
spectrum we have strategic benchmarking that involves using best practices to develop corporate,
programmes, product strategies and results. At the other end we have operational benchmarking,
which involves assessing and implementing best practices to improve processes.
E. Regardless of what we are trying to improve with benchmarking, the following steps will
usually apply.
1. Identify a management practice, work process or result to be improved.
2. Analyse your practice, flow-chart process and identify results indicators.
3. Measure our own performance.
4. Identify benchmarking partners (if benchmarking externally).
5. Determine data collection methods.
6. Collect data.
7. Determine performance gap.
8. Project future performance.
9. Develop action plan.
10. Implement action plan.
11. Monitor results.
12. Recalibrate benchmarks. (Repeat process.)
F. It is important to remember that benchmarking isn’t about the wholesale copying of another
organisation’s best practices. If we are benchmarking externally, it entails measuring our performance
and processes against “best-in-class” organisations and integrating those relevant processes and
practices into your organisation and its culture where/if appropriate. Internally, it speaks to
benchmarking the current state, setting improvement standards and then taking subsequent measures.
2. RETURN ON INVESTMENT APPROACH:

A. Over the last several years, most human resources professionals have read articles or books
advocating that “Human Resource” must have a seat at the strategic decision-making table within
organisations.” Although, typically speaking, Human Resource executives seek to be full partners
with senior management team colleagues from finance, marketing, operations, etc., the reality too
often is that some difficulty is experienced in explaining to operational managers why the invitation
to the table should be extended.
B. Return on Investment (ROI), as explained in details in Jack Phillips’ book, Accountability
in Human Resources Management, offers human resource managers a very worthwhile tool to
explain in financial, as well as other terms, how human resource contributes to the bottom line.
C. It provides human resource managers with a methodology to outline to colleagues that human
resource is more than simply “overhead.” Finance is an international language, and human resource
professionals must learn to converse well in this area. Return on Investment, as explained by
Phillips, describes a detailed cost-benefit analysis methodology. It permits managers to conduct
an assessment of a given human resource initiative and present in concrete numbers how this
has saved the organisation money.
D. In discussing the Return on Investment measurement process in human resources management
at a recent conference, Jack Phillips was careful to point out and emphasise the importance of
isolating the effect of the human resource intervention as calculations are being made. Unless
a clear and indisputable link can be established between the intervention and the saving, the
methodology will lose credibility. Moreover, Phillips also suggested that human resource
professionals take a conservative approach with colleagues when describing the saving/return.
F. Jack Phillips is not alone in his support for “return on investment” as a credible tool to
measure performance in Human Resource. Adapting the work of Michael W. Mercer (Turning
Your Human Resources Department into a Profit Center), Diane Lustenader of Lake Associates
points to the “Human Resource Cost Analysis Model.” It reflects the same goals as return on
investment methodology. She suggests asking the following eight questions that will lead to a potential
measure as to the cost/benefit of a given Human Resource solution:
1. What problem are we trying to solve?
2. What are the causes of the problem?
3. What is the problem costing the company? Has it been measured?
4. What are the possible solutions?
5. What are the costs to the solution?
6. Does the solution cost less than the problem?
7. What is the cost/benefit ratio?
3. KEY PERFORMANCE MEASURES APPROACH:
A. In 1995, the conference board established an international working group of representatives
from major global corporations to support its research into performance measures. In striving to find
tools to help companies better manage their business, non-financial measures were developed by the
working group to augment more traditional indicators. These measures evolved and became known
as key performance measures. The Conference Board Report 1118-95 entitled New Corporate
Performance Measures offers this typical sample of key measures:
1. Quality of output;
2. Customer satisfaction/retention;
3. Employee turnover;
4. Employee training;
5. R&D investments;
6. R&D productivity;
7. New product development;
8. Market growth/success;
9. Environmental competitiveness; and
10. Other measures specific to each company.
B. While there is no hard and fast rule as to how many measures are appropriate, the tendency,
when beginning to think about measurement, is usually to start with a significant number and work
the list down to a manageable group.
4. PROGRAMME EVALUATION APPROACH:

A. Most organisations, at one time or another, have had occasion to engage in program evaluation.
Various human resources programmes such as recruiting, career management, new employee
orientation, training, succession planning, employee relocation, to mention only a few, are processes
where programme evaluation methodology is an entirely suitable assessment tool.
B. Conceptually, programme evaluation findings may be used in a similar fashion to those that
might result from an audit. Programme evaluation results can help answer the questions:
1. Are we doing the right things?
2. And, if so, are we doing the right things well?
C. A programme evaluation can provide baseline data that can serve as benchmarks against
which to set improvement/measurement targets for the future.
5. STRATEGIC HUMAN RESOURCE MANAGEMENT PROFILING APPROACH:

A. In the recent publication, Tomorrow’s Human Resource Management, Michael Beer argues
that “for an Human Resource function to develop a strategic role it will have to develop and
institutionalize a core action learning process.” He describes Strategic Human Resource Management
Profiling as such a process. It permits managers to assess the alignment of their organisations with
strategy and values. He explains that this is done in partnership with employees.
B. The process is facilitated by a “profiler” from human resources or the strategic planning
department.
C. The process begins with the leadership team defining its strategic task and its values.
D. An employee task force of eight high-potential employees, one or two levels below the top
team, is appointed to interview 100 employees and customers about what barriers to strategy
implementation they perceive and about the extent to which management’s behaviour is aligned with
its stated values.
E. Data collected by the task force is fed back to top management and processed in a three-
day profiling meeting.
F. The first day of the meeting is devoted to feedback with the task force using a fishbowl
method to facilitate open communication. The second day is devoted to rigorous diagnosis using a
diagnostic model. The third day is devoted to developing a vision as to how the organisation and its
management processes must be redesigned and to the creation of a number of design teams which
will be engaged in the actual redesign activity.
G. To create accountability, it is intended that the general manager will report task force findings
to the next level after reviewing them with the employee task force.
H. Issues identified through Strategic Human Resource Management Profiling in several
corporations revealed six key barriers to strategy implementation and reformulation:
1. Poor co-ordination and teamwork;
2. Unclear strategy and priorities;
3. An ineffective top team;
4. Top-down or laissez-faire management;
5. Poor vertical communication (particularly upward communication); and
6. Inadequate management and management development throughout the organisation. (“The
Transformation of the Human Resource Function: Resolving the Tension between a Traditional
Administrative and New Strategic Role,” Tomorrow’s HR Management, pp. 91-92)
I. Findings of this nature give a clear picture of where an organisation can set its sights with
regard to benchmarking, seeking out best practices, etc., and then measuring improvement.
6. LEGAL COMPLIANCES APPROACH:

A. Legal concept of Human Resource auditing is based on a legal outlook. According to Antona
[1993, p. 2], the audit of performance or conformity consists of “making an inventory of the social
situation of the company, considering the labour law norms and regularly verifying the company’s
compliance with the applicable regulations.”
B. Thus, this concept is centered on the verification that the current labour laws are being
fulfilled. The audit should verify if the firm’s policies, practices, and documents regarding employee
hiring, retention, discipline, termination, and post-employment are both fair and legal [Higgins, 1997].
These practices and policies must: prohibit discrimination by offering equal employment opportunities;
protect the employment seeker from being discriminated against on the basis of age; carry out
minimum wages; and contain provisions regarding child labour in both organised unorganised sector.
C. According to Nevado [1998, p. 49], the basic functions of the audit of conformity or of
performance as an element of human resource auditing are threefold. The first function is examining
to see if the firm is fulfilling all its administrative social obligations, as well as those relative to the
collective rights of its personnel. The second is to study the relationship between the employees and
the company based on the legal statutes. The final function is verifying if the company fulfills its
financial obligations (for example, social security payments), as well as its informative ones.
D. Concern about labour risks has created a function within human resource management with
the purpose of altering working conditions by identifying the risks that could stem from them and
implementing necessary preventive measures. Such preventive activity could fit perfectly into the
legal approach of human resource, although, the effort that the company can make in this sense can
go beyond the application of the existing risk prevention laws. The requirement for labour security and
hygiene is a part of the search for quality of life in the workplace, which is becoming increasingly
demanded from companies.
7. FINANCIAL ANALYSIS MODEL APPROACH:

A. Financial analysis models applied to Human Resource development programmes are
increasingly being seen in the literature [Head, 1995; Swanson and Gradous, 1998; Mosier, 1990] and
in cases that document for their use [Prifrel, 1985; Jacobs et.al., 1992; Sleezer et.al., 1992].
B. Grossman [2000] proposes a three-pronged approach for the measurement of the Human
Resource function. First, according to this model, there should be efficiency measurements that help
to determine the way in which the resources are being used. Within this group are the measurements
of turnover, quits, and discharges as a percentage of total employees, average tenure of employees
in various jobs, absenteeism, employee productivity, and intellectual capital. After calculating the
measurements of efficiency, they must be compared to the results obtained in previous periods.
Nevertheless, this is not sufficient, and it is critical to benchmark against others in the same industry
or profession. When inefficiencies are revealed, careful analysis of the problem should follow before
expenditures are slashed. These cover the efficiency side, but one must also look at the value-
creation side. Thus, it is necessary to develop a new set of strategic measurements that connect
directly with the mission and strategies of the company.
C. The creation and selection of these ratios is more difficult, given that they depend greatly on
the specific company of which one is talking about. Fitzenz [1999] proposes a measurement that
includes quality, efficiency, and service. He suggests using a ratio constructed around five factors
that can be applied to anything that one chooses to measure. These five factors are cost, completion
time, quantity, quality, and the human reaction.
D. This system concludes with the calculation of measurements of the human resource activities,
which try to demonstrate their financial viability. These measurements are based on the idea of the
ROI ratio, which is calculated by dividing the monetary value of a human resource programme by its
costs. For this, the cost of the programme that is being measured must first be determined, and then
it must be translated into monetary terms.
8. VALUE ADDITION APPROACH:

A. Hudson (2006) talks about a human resources audit approach with the aim of optimising the
results of human resource audit. This involves three key stages:
1. Diagnosis: we seek to identify the level of maturity of the human resources which matches the
current situation in a company by means of a questionnaire.
2. Defining the strategy: the results are obtained through this questionnaire with the situation
existing in the marketplace. Using benchmarks, the tool determines the key development areas
a company should implement to optimise its human resource management policy.
3. Production of an audit report: the process ends by identifying the key points for development
and by drawing up an estimate of the financial and human investments required to achieve the
objectives.
B. A COMPREHENSIVE TOOL COVERING ENTIRE HUMAN RESOURCE FIELD: The
questionnaire is intended to be filled in primarily by the human resource management. The questionnaire
covers a broad range of services that are likely to be dealt with by the human resource department
of a company such as personnel management (management of salaries and services, individual
record management, legal compliance, etc.), talent management (management of remuneration,
management of competencies, coaching, training, etc.), organisational development (change
management, improvement in operating processes, planning of work, etc.) and management of working
conditions (health and safety at work, taking account of staff satisfaction, relations with trade union
organisations, conflict management, etc).
C. A TOOL BUILT AROUND THE IDEA OF THE ‘ADDED VALUE’ OF HUMAN RESOURCE:
By virtue of its central position within the company, human resource management must assume
various roles:
1. THE HUMAN RESOURCE DEPARTMENT AS A STRATEGIC PARTNER:
As a strategic partner, the objective of the human resource department is to align the practices
of the Human Resource group with the main company strategies. This takes the form of
constantly improving the contribution the human resource department makes towards achieving
the strategic objectives of the organisation.
2. THE HUMAN RESOURCE DEPARTMENT AS EMPLOYEE PARTNER:
As a partner of the employees, the human resource department must endeavour to improve
meeting the needs of the staff, their motivation and their performance. Its primary role is to listen
to staff and to respond to their needs in order to maximise their contribution.
3. THE HUMAN RESOURCE DEPARTMENT AS BUSINESS PARTNER:
As a partner of the management, the human resource function makes an active contribution to
operational managers by making available the tools, actions, programmes and projects needed
to ensure that departments operate to the best of their ability.
4. THE HUMAN RESOURCE DEPARTMENT AS ADMINISTRATIVE PARTNER:
As an administrative partner, the human resource function aims to optimise managing all the
administrative tasks and in this way contributing to the day-to-day smooth running of the
company. Unlike existing questionnaires, the questions are not asked in order to know the level
of satisfaction of these various ‘clients’ of human resources as such but rather to identify the
actions, programmes, projects and initiatives which have been set up within the company to
meet these expectations.
D. THE BENEFITS OF THIS APPROACH:
1. A fast, low cost approach: The questionnaire has been developed by Hudson in a way
which limits diagnosis time (it only requires a few hours’ investment). Consequently, the organisation
can devote the greater part of its efforts to implementing the human resource solutions and not to
investigating malfunctions.
2. A mixed approach: This approach combines a classic approach using a questionnaire with
a dynamic approach based on group thinking (thinking conducted under the framework of a strategic
workshop). Using this approach, a key set of quantitative and qualitative data, plus maximum
involvement by those involved in implementing human resource policy within your company, can be
obtained.
3. A full, in-depth approach: The questionnaire ensures that the Human Resource policy of a
company will be covered in full. It analyses all the fields involving Human Resource and also takes
the point of view of all the clients of this department into account, namely: the employees, the Human
Resource staff, the operational management and company managers.
4. A creative approach in which everyone participates: The questionnaire is used to initiate
in-depth thinking which in time will lead to a human resource strategy being defined, produced and
therefore, supported by all the stakeholders in the company. Thinking about the results of the
questionnaire is in fact the key trigger for launching stimulating thinking about the challenges that the
human resources department will have to respond to tomorrow.
SIMPLY SPEAKING…
1. To get the best out of human resource, there should be a good alignment of the function,
its strategies, structure, systems, and styles with business and its goals (financial,
customer, etc., parameters). It should be aligned with both the short-term goals and
long-term strategies. If it is not aligned, human resource could become a big liability to
corporations. Besides this alignment, the skills and styles of human resource staff, the
line managers and the top management should synergise with the human resource
goals and strategies. human resource Development audit is an attempt to assess these
alignments and ensure the same irrespective whichever model or approach an organisation
adopts for human resource audit.
LEVEL FOUR
BALANCED SCORECARD
1. A FRAMEWORK TO MANAGE STRATEGY:

The Balanced Scorecard (BSC) is a proven management system that is in use by over 50% of
the Fortune 500 companies and countless non-profit and public sector organizations. Based on the
simple premise that “measurement motivates,” the balance Scorecard has stood the test of time
because it works.
2. “ DEATH OF STRATEGY” IN CORPORATE WORLD DURING 1989-1999 ECONOMIC UP

SWING:
1989 to 1999 were arguably the best ten years in economic upswing. Productivity increased,
market values rose, and unemployment fell to lowest. On the surface, it looked like the increase in
market values would continue forever – and people began talking about the “death of strategy.” The idea
that strategy was in fact appealing – all types of organizations with little strategy other than those which
did not use the opportunity - were winning venture capital and market capitalization in the millions.
When we look beneath the surface, however, the story is a little different. While over two-thirds
of the companies surveyed by Ceis Zook in his book “Profit from the Core” had growth targets of over
nine percent but less than ten percent actually achieved these growth targets. In fact, only 13% of
the organisations surveyed by Zook achieved shareholder returns greater than the cost of capital.
3. ALAN GREENSPAN: EXCESSIVE ECONOMIC EXUBERANCE AND SUBPRIME ISSUE:

While this clearly indicates that the market returns in the 1990s were the result of “excessive
exuberance” - thanks to Alan Greenspan - it also shows the dangers of companies abandoning
strategy, to focus on instead on “first to market,” “operational excellence,” or “customer relationship
management” or other panaceas. While all of these are good ideas – and worthy of implementation
at an organization, they are not strategies. They are tactics.
4. STRATEGY IS ABOUT HARD CHOICES:

Strategy, to put it in its simplest form, is about hard choices – about what trade-offs; it’s about
deliberately choosing to be different. And when companies abandon strategy, they pay the price,
perhaps not in the short term, but definitely in the long term. Many of the companies that had no
strategy in the 1990s are now gone – just a few years into the 2000s.
5. THE PROBLEM: IMPLEMENTING STRATEGY:

But just having a strategy is not enough. Even an effectively developed strategy that reflects the
hard choices an organization must make is completely worthless if it just sits on a shelf in an
executive office. A recent study in Fortune magazine found that less than ten percent of
strategies effectively developed were effectively implemented. And, in another study, Fortune
found that in over seventy percent of the cases when CEOs fail, it’s not the strategy, but the
execution that went wrong.
6. REASONS: WHY IMPLEMENTATION FAILED?

There are many reasons that make it difficult to implement strategy today. The pace of change
continues to accelerate, technology changes frequently, and the workforce is more diverse and
mobile than ever before. But the underlying reason it’s difficult to implement strategy today, is because
business and business strategy are fundamentally different today than they were even ten years ago.
The industrial age has been replaced by the knowledge age, with transformational effects on the
economy and the workplace:
From To
1. Production driven Customer Driven
2. Functional (silo) Process (Integrated)
3. Tangible assets Intangible Assets
4. Top down Bottoms up
5. Incremental change Transformational change
Management Leadership
The shift from tangible assets (property, plant, and equipment) to intangible assets (brands,
intellectual property, people) is hard to understate in the economy today. Much of the market
valuation of the market today is based on intangible assets (take Microsoft for example – their
physical assets are minor compared with their brand and intellectual property).
7. WHILE BUSINESS CONTINUOUS TO EVOLVE, MEASUREMENT SYSTEMS HAVE NOT:

But while the business world continues to evolve, management systems have remained not kept
up. Most management systems – and measurement systems – were designed to meet the needs of
a stable, incrementally changing world – they do not meet the needs of today’s dynamic economy.
Walk into almost any organization today, and they can show you their balance sheet and
income statement. These tools have remained stable, basically unchanged over the past 100
years. They’re good at measuring tangible assets (you can depreciate a piece of heavy equipment
over ten years and the book value may be closely related to the market value), but can’t keep
up with intangible assets – where do you find the brand equity line? Similar problems exist
with the income statement – where you go to look for how an organization is creating value.
But the income statement often fails to do that. It can’t capture cycle times or experience
levels, and it cannot deal with timing issues of cause and effect (accrual accounting is
inadequate).
THE SOLUTION: BALANCED SCORECARD:

This is the problem that the Balanced Scorecard was designed to address. The Balanced
Scorecard can be thought of as the “strategic chart of accounts” for an organization. It captures both
the financial and the non-financial elements of a company’s strategy, and discusses the cause and
effect relationships that drive business results. It allows, for the first time, an organization to look
ahead – using leading indicators – instead of only looking back using lagging indicators. The Balanced
Scorecard puts strategy – the key driver of results today – at the centre of the management process.
A. Measurement Motivates: Basic Premise of Balance Scorecard:
The basic premise behind the Balanced Scorecard is quite simple: Measurement motivates.
Even if there are no incentives tied to the achievement of a particular goal, the simple measurement
of it will make people pay attention. But measurement systems are rarely tied to the strategy. They
exist in a world of “last year + 10%” or “50% of industry benchmark.”
B. Balance Scorecard: Strategic Planning and Management System:

The balanced scorecard is a strategic planning and management system that is used extensively
in business and industry, government, and nonprofit organizations worldwide to align business activities
to the vision and strategy of the organization, improve internal and external communications, and
monitor organization performance against strategic goals.
C. Balance Scorecard: Dr. Robert Kaplan (Harvard Business School) and Dr. David
Norton:
It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a
performance measurement framework that added strategic non-financial performance measures to
traditional financial metrics to give managers and executives a more ‘balanced’ view of organizational
performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the
this type of approach are deep, and include the pioneering work of General Electric on performance
measurement reporting in the 1950’s and the work of French process engineers (who created the
Tableau de Bord – literally, a “dashboard” of performance measures) in the early part of the 20th
century.
The balanced scorecard is a management system (not only a measurement system) that enables
organizations to clarify their vision and strategy and translate them into action. It provides feedback
around both the internal business processes and external outcomes in order to continuously improve
strategic performance and results. When fully deployed, the balanced scorecard transforms strategic
planning from an academic exercise into the nerve centre of an enterprise.
D. Balance Scorecard: In the Words of Kaplan and Norton
Kaplan and Norton describe the innovation of the balanced scorecard as follows:
“The balanced scorecard retains traditional financial measures. But financial measures tell the
story of past events, an adequate story for industrial age companies for which investments in long-
term capabilities and customer relationships were not critical for success. These financial measures
are inadequate, however, for guiding and evaluating the journey that information age companies must
make to create future value through investment in customers, suppliers, employees, processes,
technology, and innovation.”
Financial
“To succeed
financially. how
should we
appear to our
shareholders?”
Customer Internal Business

“To achieve our Vision Processes
vision, how
should we and
appear to our Strategy
customer?”
Learning and
Growth
“To achive our
vision, now will
we sustain our
ability to
change and
improve?”
Adapted from The Balanced Scorecard by Kaplan and Norton

E. Perspectives in Balanced Scorecard:

The balanced scorecard suggests that we view the organization from four perspectives, and to
develop metrics, collect data and analyse it relative to each of these perspectives:
1. The Learning and Growth Perspective:
This perspective includes employee training and corporate cultural attitudes related to both
individual and corporate self-improvement. In a knowledge-worker organization, people — the only
repository of knowledge — are the main resource. In the current climate of rapid technological
change, it is becoming necessary for knowledge workers to be in a continuous learning mode.
Metrics can be put into place to guide managers in focusing training funds where they can help the
most. In any case, learning and growth constitute the essential foundation for success of any knowledge-
worker organization.
Kaplan and Norton emphasize that ‘learning’ is more than ‘training’; it also includes things like
mentors and tutors within the organization, as well as that ease of communication among workers
that allows them to readily get help on a problem when it is needed. It also includes technological
tools; what the Baldridge criteria call “high performance work systems.”
2. The Business Process Perspective:
This perspective refers to internal business processes. Metrics based on this perspective allow
the managers to know how well their business is running, and whether its products and services
conform to customer requirements (the mission). These metrics have to be carefully designed by
those who know these processes most intimately; with our unique missions these are not something
that can be developed by outside consultants.
3. The Customer Perspective:
Recent management philosophy has shown an increasing realisation of the importance of customer
focus and customer satisfaction in any business. These are leading indicators: if customers are not
satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from
this perspective is thus a leading indicator of future decline, even though, the current financial picture
may look good.
In developing metrics for satisfaction, customers should be analysed in terms of kinds of customers
and the kinds of processes for which we are providing a product or service to those customer
groups.
4. The Financial Perspective:
Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate
funding data will always be a priority, and managers will do whatever, necessary to provide it. In fact,
often there is more than enough handling and processing of financial data. With the implementation
of a corporate database, it is hoped that more of the processing can be centralized and automated.
But the point is that the current emphasis on financials leads to the “unbalanced” situation with regard
to other perspectives. There is perhaps a need to include additional financial-related data, such as
risk assessment and cost-benefit data, in this category.
F. Strategy Focused Organizations built Management Systems based on Strategy:
Kaplan and Norton asked this very question in the research for their second book on the
Balanced Scorecard: The Strategy-Focused Organization. With all of the executives that they
interviewed, three concepts kept arising (hence the name of the book):
STRATEGY They made strategy the central organization agenda

FOCUSSED They created incredible focus on the strategy
ORGANIZATION They made strategy the central organization agenda
Strategy-Focussed Organizations, therefore, were able to break free of the traditional measurement
and management systems and build management systems based on strategy. They were able to
succeed where so many others had failed because they understood the cause and effect linkages
of the strategy, were able to see the leading indicators of strategic change, and were able to motivate
their organizations to focus on the strategy.
G. Five Principles of Successful Balance Scorecard Users:
Five principles of successful organizations emerged from Kaplan and Norton’s research on
successful Balanced Scorecard users. These five principles describe the key elements of building
an organization able to focus on strategy and deliver break-through results. They are:
1. Mobilize Change through Executive Leadership:Action for Audit:
Breakthrough results do not happen by accident. They are the result of a clear strategy, execution,
and leadership. To drive change, executives must develop a case for change and a vision and
strategy on where they want to drive the organization. They must create accountability and ensure
the entire executive team is aligned. Another critical step is to define the “roadmap” towards becoming
a Strategy-Focused Organization
2. Translate Strategy into Strategy into Operational Terms:Look for Evidence for Audit:
The Balanced Scorecard and Strategy Map (a one-page visual representation of the key objectives
of the strategy outlined in a cause-and-effect diagram) take the corporate strategy and translate it into
terms that the organization can understand and act upon. A critical part of this step in the process
is determining the key objectives, measures, targets, and initiatives to drive the strategy.
3. Align the Organisation to the Strategy: Has it got into Action? Audit this with Care:
Once a Balanced Scorecard has been created at the top level of an organization, it can be
“cascaded” down to operating and support units. This allows each area of the organization to understand
how they contribute to the strategy. Additionally, best practice organizations have worked to develop
external alignment with customers and partner Balanced Scorecards. Many boards are now working
to roll out the Balanced Scorecard to understand the entire enterprise.
4. Making Strategy everyone’s Job: Scorecard will show Evidence for Audit:
While strategy may be formulated from the rear, it is executed at the front lines. Communication
and education is therefore critical to executing strategy. Aligning incentives and personal objectives
is also critical for success. Leading organizations are also developing personal Balanced Scorecards
to further link the personal development process to the strategic management process.
5. Make Strategy a Continual Process: Check it for Audit:
One key feature of the Balanced Scorecard is that is allows strategy to happen continually, not
just at an annual strategy review session. Monthly or quarterly management meetings become about
the strategy as opposed to the operations. Linking in business intelligence systems, linking the
Balanced Scorecard to planning and budgeting systems, and best practice and knowledge management
systems are critical to developing an organization that continually reviews strategy.
Kaplan and Norton found that these principles were central to the strategic success of organizations
like the City of Charlotte, ABB, Switzerland, and many others. Recent studies by Balanced Scorecard
Collaborative have backed up these results – those organizations who have implemented all five
principles of the Strategy Focussed Organisation have a much greater chance of success.
I. How does Balance Scorecard Work as a Tool for Measuring Alignment of Goals
with Strategy? Time Starts now for Initiating Audit:
A. Strategy Map:
When a set of linked objectives is displayed graphically, it is called a Strategy Map. A Strategy
Map is a one-page visual depiction of an organization’s strategy, expressed as a series of linked
objectives. The strategy map visualises the logic behind your strategic hypotheses. Good strategy
maps can “tell the story of your strategy:”
if we provide employees with the necessary training, technology, and culture then they will be
able to develop the necessary internal processes that will provide customers the right value proposition
that in turn will result in achieving our financial objectives.
B. Themes:
Within a Strategy Map, there may be a set of overriding themes that describe some of the key
goals of the organization. The themes simply group together a set of objectives. These themes might
include:
 Product Innovation
 Customer Relationship Management
 Operational Excellence
Themes may run across the four perspectives of the Balanced Scorecard vertically, may be
contained in the internal perspective, or may simply be anywhere on the Strategy Map. They are used
to describe the key elements and goals of the organization more rapidly than the objectives.
C. Measures:
“What gets measured, gets managed.” Progress in achieving objectives is determined through
measurement. By creating a set of measures, linked to the organization’s strategy, you can ensure
that you are measuring and managing your organization based on your strategy.
It’s important to develop a set of balanced measures in a Balanced Scorecard (hence the name).
Most Balanced Scorecards have between 20-25 measures, distributed across the four perspectives
equally. It’s also important to have a mix of leading and lagging indicators – so that, you can fore-
see and plan for issues before they arise.
D. Targets:
Targets describe the level at which a measure must be achieved in order to execute the strategy.
Generally, a stretch target is set from 3-5 years out, and the current period targets are backed into
based on the stretch targets.
Targets also help determine the level of investment in particular areas of the strategy. For
example, a revenue growth strategy might have particularly high revenue targets, and more achievable
cost targets. A profitability strategy might have equally hard cost and revenue targets.
E. Initiatives:
Initiatives are the projects that are put in place to help close the performance gap between the
actual and the target on a measure. An initiative is not the “day-to-day” business operations, but they
are special projects that generally have a budget, timeline, person accountable, and other resources.
Initiatives may be large or small in scope. They generally are owned by a person or group, and are
managed like projects.
Organizations are usually overrun with initiatives. In many organizations, paring down the number
of initiatives to a manageable few is a critical first step to getting value out of the Balanced Scorecard
project and getting focus on the strategy. In most cases, over 50% of the initiatives currently underway
will not be mapped to the overall strategy of the organization.
SIMPLY SPEAKING…
How does it work?
The results of the Balanced Scorecard, when developed and implemented in the Strategy-
Focussed Organization frame-work, are clear. But what, exactly, is a Balanced Scorecard, and
how would you know if you were looking at one?
A central idea of the Balanced Scorecard is the idea of cause-and-effect relationships
between elements of the strategy. In the traditional Balanced Scorecard model, there are four
perspectives, linked in a cause and effect relationship. They are:
Financial To succeed financially, how should we appear to our stakeholders?
Customer To get our financial results, how must we serve our customers?
Internal To satisfy our customers, at what business processes Process must we
excel?
Learning To execute on our processes, how will we sustain our ability to change
and Growth and improve?
LEVEL FIVE
COMPREHENSIVE HUMAN RESOURCE AUDIT
A. TOTAL AND COMPREHENSIVE HUMAN RESOURCE AUDIT:

The following lists the core human resource functional areas and summarises what will be
reviewed during an audit; it is not all-inclusive, and it may be subject to change. The scope of work
for the audit may include a review of internal policies and processes, a review of filing and tracking
systems, and surveys and questionnaires of employees and managers on the effectiveness of the
human resources operation in the department. The audit schedule outlines who will be audited, when
the audits will occur, and the functional area to be audited.
1. HUMAN RESOURCE ORGANIZATION/ADMINISTRATION:

Organization of human resource function, including appropriate class of professional positions;
delegation of authority to and within the department; quality control to ensure consistency in authorities
delegated within the department; documentation of processes, operating standards and practices,
and internal controls; retention, matrix, use of separation incentives, and outplacement practices; how
staff remain current and up to date with the human resource field and the personnel systems; and
techniques for communicating with employees and appointing authorities in department.
2. RECRUITMENT AND SELECTION:

Recruitment methods, methods used in workforce and succession planning, and use of turnover
data; access to and quality of job announcements; quality of job analyses; exam development,
administration, and scoring; length of eligible lists, including merged lists and notice of appeal rights;
and referrals and interviewing practices.
3. JOB EVALUATION:
Standards, processes, and internal and quality control methods for reviewing and updating
essential functions, turnaround times, and repeat requests; internships for new evaluators; allocation
process including quality of reports and employee notification; process to address concerns with non-
appealable decisions.
4. COMPENSATION AND BENEFITS:

Standards and processes used to develop and communicate internal compensation policy and
plans; internal controls to ensure accuracy and consistency of pay and leave; policies on pay
adjustments; pay differentials and incentive awards; overtime pay; housing, leave tracking systems,
standards and processes for enrollment for new employees in benefit plans and compensation serveys,
minimum wages payment of wages and compensation and benefits under labour laws.
5. PERFORMANCE MANAGEMENT:
Most current performance pay programme is approved including methods of communication to
new and current staff and plan for mandatory supervisory training; completion rate of plans and
ratings including quality control and review for consistency of ratings; methods used to determine
distribution of awards; efficiency and communication of the internal dispute resolution process; and
compliance with requirements for performance appraisal system.
6. WORKFORCE DEVELOPMENT:
Orientation programme for new employees and supervisors; training programmes and delivery
methods including courses, training staff, and cost; workforce development policies including drug-
free workplace, workforce violence and sexual harassment prevention and diversity.
7. INDUSTRIAL RELATIONS:
Number, type, and outcome of appeals, grievances, reviews; internal grievance processes;
other forms of alternative dispute resolution used; communication methods and forms; number, type,
and outcome of corrective and disciplinary actions; any methods used to address work environment
issues and overall relationship with workman/employees and union and the status of labour court
cases.
8. RECORDS MANAGEMENT:
Content of employee, payroll, medical, and position files; internal controls to ensure accuracy
and control access and labour law provisions under labour law.
B. HUMAN RESOURCE AUDIT FORMS:
1. EMPLOYEE RELATIONS:
 Are the “Employer/Employee Guidelines for Wrongful Termination” followed?
 Is there a formal performance improvement programme policy?
 Are terminations handled in a manner that complies with applicable laws and association
policy?
 Is written performance documentation maintained?
 Are performance reviews done on a regular basis?
 Do employees clearly know upon what their appraisals will be based?
 Do you have an open door policy for employee complaints?
 Is the sexual harassment policy clearly communicated to all employees?
 Are employees provided with a comfortable work environment?
 Are personnel files retained in compliance with organisational rules and regulations?
2. RECRUITING:
 Is a standard application form used?
 Do job descriptions exist for open positions?
 Does the job description drive the writing of the employment advertisement?
 Does the job description drive the selection of behavioural interview questions?
 Are all qualified candidates interviewed?
 Is the selection decision-made in compliance with the applicable employment rules regulations?
 Have candidates given written permission to contact references?

 Are references madechecked before offers?
3. LEGAL:
 Are all required labour law abstract displayed appropriate places?
 Are you making employment decisions based on applicable employment laws and compliance
thresholds if any?
4. TRAINING:
 Is an orientation conducted for all new hires?
 Do all new hires receive job-specific training?
 Are current employees allowed to take skills-based training as needed?
5. COMPENSATION:
 Are employees appropriately classified (exempt non-exempt, employee payroll and contractual?
 Is there compliance with the labour laws in terms of minimum wage payment, overtime payment
and record keeping?
 Is there compliance with provident fund, bonus, ESI and workman compensation and Payment
of wages acts?
 Are employees paid a competitive rate?
 Is there internal equity among current employees?
 Is compensation linked to performance?
6. BENEFITS:
 Are the benefits offered sufficient to attract the desired level of talent?
 Are the benefits offered in compliance with the appropriate laws?
SIMPLY SPEAKING…
1. The basic reason why organisations prefer to conduct an human resource audit is to get
a clear judgment about the overall status of the organisation and also to find out whether
certain systems put in place are yielding any results. Human resource audit also helps
companies to figure out any gaps or lapses and the reason for the same. Since every
company plans certain systems and targets, a human resource audit compares the plans
to actual implementation.
2. An audit is a systematic process, which examines the important aspects of the function
and its management, and is a means to identify strengths, weaknesses and areas where
rectification may be warranted. An audit is done on sampling basis. And in sampling, not
every instance or situation can be examined. human resource audit serves as a means
through which an organisation can measure the health of its human resource function.
organisations undertake human resource audits for many reasons to:
A. Ensure effective utilization of human resources.
B. Review compliance with laws and regulations.
C. Build a sense of confidence in the human resource department that it is well-

managed and prepared to meet potential challenges and opportunities.
D. Maintain or enhance the organisation’s reputation in a community.
E. Identify and address human resource-related problems.
F. Seek out human resource-related opportunities.
G. Conduct due diligence for mergers and acquisitions.
H. Support initial public offerings.
THE AUDIT PROCESS:

The human resource audit process is conducted in different phases. Each phase is designed
to build upon the preceding phase so that the organization will have a very strong overview of the
health of the human resource function, at the conclusion of the audit. These phases include:
1. Pre-Audit Information: This phase involves the acquiring and review of relevant human
resource manuals, handbooks, forms, reports and other information. A pre-audit information request
is forwarded to the client who compiles the necessary information for review by auditors.
2. Pre-Audit Self-Assessment: In order to maximize the time spent during subsequent portions
of the audit, a pre-audit self-assessment form, is sent to the client. The self-administered yes/no
questionnaire asks a number of questions about current human resource policies and practices. The
completion of this self-administered questionnaire allows auditors to identify key areas for focus
during the human resource audit.
3. On-site Review: This phase involves an on-site visit at the client’s facility interviewing staff
regarding human resource policies and practices. A very in-depth human resource audit checklist is
completed.
4. Records Review: During the on-site visit, a separate review is conducted of human resource
records and postings. Employee personnel files are randomly examined as well as compensation,
employee claims, disciplinary actions; grievances and other relevant human resource related information
are checked.
5. Audit Report: The information gathered is used to develop an human resource audit report.
The audit report categorizes action needs into three separate areas. The areas that are urgent
and important (UI), not urgent needs but important (NUI), not urgent but not important needs
(NIN), and important opportunities needs (ION). As a result of this scheme of classification,
managements can prioritize their steps.
THE CRITICAL AREAS:

The comprehensive human resource audit covers all areas of human resource management like
recruitment practices, training and development, compensation and benefits, employee and union
relations, health, safety and security, miscellaneous human resource policies and practices-welfare,
strategic human resource issues, manpower planning/budgeting.
Besides classifying needs in each of the above areas, the human resource audit also cites
relevant laws, cases and research to support the recommendations.
PREPARATION FOR AN AUDIT:

1. Auditor engagement: If an external firm is carrying out the audit, it is preferable to set terms
in writing defining and agreeing on scope .If using internal resource it is better to appoint them formally
with clarity on scope and select persons who are non political or those who are not high on hierarchy.
Also, if internal persons are auditing there must be training in auditing. Auditor must have access to
documents, manuals, handbooks, forms and reports, relevant information contained in employee files
and other confidential documents of the organization. Auditors must be given unrestricted access to
records, once they sign agreement for confidentiality.
2. Data gathering: Completion of a self-assessment questionnaire significantly expedites the
audit process and allows for better audit planning.
3. On-site access: The on-site portion of the audit is the most critical.
SIMPLY SPEAKING....
How does an organization use Human Resource audit results? Since the human resource
audit results are classified, an important aspect is already taken care of. Critical needs should
be the first ones to be addressed. Organistions generally have three options for dealing with
audit results.
A. Use the human resource audit report as a blueprint or action plan for addressing Human
Resource needs.
B. Address as many needs as possible using the organisation’s internal expertise and
resources.
C. Contract out those need areas where internal expertise and resources are not available
or do not fit in the core competencies of the organisation.
D. Human resource audit is much like an annual health check. It can perform the same
function for the organisation. An audit is a means by which an organisation can measure
where it currently stands and determine what it has to accomplish to improve its human
resource functions. It involves systematically reviewing all aspects of human resources,
usually in a checklist fashion, ensuring that the government regulations and company
policies are being adhered to. The key to an audit is to remember that it is a tool to
discover and not to test. There will always be room for improvement in every organization.
LEVEL SIX
AUDIT OF BUSINESS STRATEGY
A. DEFINING BUSINESS STRATEGY:

Business strategy is the foundation of successful business. But there are, of course, different
types of business strategies. The best business strategy must steer a course between the inevitable
internal pressure for business continuity and the demands of a rapidly changing world for revolutionary
business strategies. Business strategy is the means by which a business works towards achieving
its stated aims.
1. JOHNSON AND SCHOLES IN “EXPLORING CORPORATE STRATEGY”:

“Business Strategy is the direction and scope of an organisation over the long-term which
achieves advantage for the organisation through its configuration of resources within a challenging
environment, to meet the needs of markets and to fulfill stakeholder expectations”.
2. ANDREW GROVE IN “MAKING BUSINESS STRATEGY SUCCESSFUL”:

Grove led Intel to greatness, makes a clear distinction between strategic action and strategic
plans. He believes that business strategy models should not, just be statements of intent; come
across like a political speech; have concrete meaning only to management; concern themselves with
events far in the future or have little relevance to today.
3. JOHN T. DREA: WESTERN ILLINOIS UNIVERSITY:

“Business strategy is a fit between the business strategy and the environment. The key element
of fit in business strategy revolves around providing superior value for customers”
4. JOHN SAM IN “BUSINESS STRATEGY (1997)”:

“Business strategy is a long term plan of action designed to achieve a particular goal or set of
goals or objectives. Strategy is management’s game plan for strengthening the performance of the
enterprise. It states how business should be conducted to achieve the desired goals. Without a
strategy management has no roadmap to guide them.
5. JACK WELCH IN “WINNING”:

Business strategy is less a function of grandiose predictions than it is a result of being able to
respond rapidly to real changes as they occur. That’s why strategy has to be dynamic and anticipatory.”
The figure above shows circle of business strategy implementation.
B. STRATEGY AT DIFFERENT LEVELS OF A BUSINESS:

Strategies exist at several levels in any organisation - ranging from the overall business (or
group of businesses) through to individuals working in it:
1. CORPORATE STRATEGY:
It is concerned with the overall purpose and scope of the business to meet stakeholder
expectations. This is a crucial level since it is heavily influenced by investors in the business and
acts to guide strategic decision-making throughout the business. Corporate strategy is often stated
explicitly in a “mission statement”.
2. BUSINESS UNIT STRATEGY:

This is concerned more with how a business competes successfully in a particular market. It
concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage
over competitors, exploiting or creating new opportunities,etc.
3. OPERATIONAL STRATEGY:
It is concerned with how each part of the business is organised to deliver the corporate and
business-unit level strategic direction. Operational strategy therefore focuses on issues of resources,
processes, people, etc.
Future
The figure above shows the components for implementing business strategy.
C. WHY CONDUCT A BUSINESS STRATEGY AUDIT?

Nearly all the major initiatives undertaken by corporate executives today are called “strategic”.
With everything having high strategic importance, it is becoming increasingly difficult to distinguish
between the many priorities and imperatives that are initiated in organisations. When everything is
clearly strategic, often nothing strategic is clear. When everything is designated as a high priority,
there are, in reality, no priorities at all. However, when the overall strategic direction is clearly
understood by everyone an organisation, the following benefits occur:
 Organisational capabilities will be aligned to support the achievement of strategy
 Resources will be allocated to different business processes in priority order - according to the
importance of that process and its contribution to competitive advantage
 Company can excel in the market place or in its business/commercial sector.
The purpose of a strategy audit is to arm managers with the tools, information, and commitment
to evaluate the degree of advantage and focus provided by their current strategies. An audit produces
the data needed to determine whether, a change in strategy is necessary and exactly what changes
should be made.
D. DEFINING A STRATEGY AUDIT:

A strategy audit involves assessing the actual direction of a business and comparing that course
to the direction required to succeed in a changing environment. A company’s actual direction is the
sum of what it does and does not do, how well the organisation is internally aligned to support the
strategy, and how viable the strategy is when compared to external market, competitor and financial
realities.
These two categories, the internal assessment and the external or environmental assessment,
make up the major elements of a strategy audit:
PART ONE: THE EXTERNAL ENVIRONMENTAL ASSESSMENT:
A. MISSION AND VISION PROVIDE LINK BETWEEN INTERNAL AND EXTERNAL

ASSESSMENT:
A conventional corporate mission is to provide distinct products and services to customers at
a value superior to that offered by competitors. Without a strategy, valuable resources will be diluted,
the work of employees will be unfocussed, and distinctiveness will not be achieved. The external
environment assessment provides any business with a critical external link between its competitors,
customers, and the products/services it offers.
The fundamental reason for examining an organisation’s environment in the process of clarifying
strategy can be summarised thus:
1. Ensure that the company is meeting the needs evident in the environment.
2. Prevent others from meeting those needs in a better way.
3. Create or identify ways to meet future or emerging needs.
B. CORPORATE ABILITY TO MONITOR CHANGES:
The success or failure of a company often depends on its ability to monitor changes in the
environment and meet the needs of its customers and prospective customers.
An organisation’s business environment is never static. What is viewed as uniqueness or
distinctiveness today will be viewed as commonplace tomorrow as new competitors enter the industry
or change the environment by modifying the rules by which companies compete.
Consequently, an effective strategy will do more than help a company to stay in the game. It will
help it to establish new rules for the game that favour that company. Successful companies do more
than simply understand their environments. They also influence and shape the circumstances around
them. Companies that fail to influence their environments automatically concede the opportunity to do
so to their competitors.
C. STEP IN CONDUCTING AN ENVIRONMENTAL ASSESSMENT:
STEP 1: UNDERSTAND THE EXTERNAL ENVIRONMENT AT MACRO LEVEL:

The first step in the environmental assessment is to develop a basic understanding of the trends
and issues that will significantly change, influence, and affect the industry.The overall industry
understanding comes from looking at the elements that influence the environment.These elements
include:
 Capital markets.
 Industry capacity.
 Technological factors.
 Pressure from substitutes.
 Threat of new entrants.
 Economic factors.
 Political factors.
 Regulatory factors.
 Geographic factors.
 Social factors.
Above Issues Become Clear by Answering Following Questions:
A useful framework to understand these issues comes from answering the following questions.
They should be posed directly when used in an interview, and indirectly when analysing data:
 What is the long-term viability of the industry as a whole, and how do capital markets react to
new developments?
 What trends could change the rules of the game?
 Who are the industry leaders? What are they doing? Why?
 What are the key success factors in the industry?
 What developments could allow a company to change the rules of the game?
 Five years from now, how will winners in the industry look and act?
 What is the reward (and/or cost) of being a winner/loser within the industry?
 Where has the industry come from?
STEP 2: UNDERSTAND THE INDUSTRY/SECTOR COMPONENTS IN DETAIL:

Industry/sector components are normally broken down as follows: competitors, customers and
stakeholders. Questions that should normally be asked of each key competitor include:
A. Business Review:
1. Strategy Issues:
 What is the strategy of each competitor? Where do they appear to be heading?
 What is their business emphasis?
 Do they compete on quality, cost, speed or service?
 Are they niche or global players?
2. Capabilities:
 What do they, do better than anyone else?
 Where are they, weaker than others?
 Where are they, the same as others?
3. Business Objectives:
 Who are their primary customers?
 What types of business do they not do or say no to?
 Who are their major partners? Why are they partnering? What do they gain from it?
 What are they doing that is new or interesting?
4. Financial Review:
A. Financial Strength-Internal:
 How much cash does each competitor generate annually?
 What are the drivers behind their financial success?
 How do they allocate resources?
 How fast are they growing and in what areas?
B. Strength Perceived by Capital Markets:
 Are competitors resource constrained or do they have strong financial backing?
 Is this perception consistent with the internal analysis? Why or why not?
 How has the company performed in the financial markets? Why?

 What constraints/opportunities do they have with respect to financial markets? Why?
5. Organisation Review:
A. Top Management:
 Has management kept the company at the forefront of the industry? Why or why not?
 Are the key players seen to be moving the company forward?
B. Organisation:
 Is the company centralised or decentralised?
 Does the corporate parent act as a holding company or as an active manager?
 Is the organisation perceived as being lean and able to get things done?
C. People:
 How many people are employed? Is the company over-or under-staffed?
 Are people managed to achieve mainly business objectives, human objectives or some of
both? How does this affect the company?
 What skills are emphasised during recruitment?
D. Culture:
 Is the culture results-oriented?
 Bureaucratic?
 Flexible?
STEP 3: INTEGRATE THE COMPONENTS INTO AN ENVIRONMENTAL PICTURE:

A. Integration of Data:
Once the findings of the stakeholder analysis, customer analysis and competitor analysis (above)
have been collected, audit team members should step back and integrate the data. Integrating the
different components will help the team to understand the overall environment in which the business
operates.
B. Integration should take at two Levels:
This integration should take place at two levels: assessing where the industry is heading and
the likely impact of that direction on the company, and combining the organisational assessment with
the environmental assessment.
1. Business Strategy Audit offers a detailed Framework for Analysing the Data:
The Business Strategy Audit offers a detailed framework for analysing this data. In brief, it
should highlight significant changes in the environment, and the impact of those changes on the
company’s competitive position within the industry. It should address the fundamental question of how
the company can influence its environment in the future, and what the business will need to look like
if it is to thrive in the future.
2. Analysis must highlight Capabilities needed Internally to meet External Demands:
In addition, the analysis should highlight the requirements and capabilities that are needed within
the company to meet external demands. These requirements and needs should then be matched up
with the current capabilities outlined in the organisation assessment. This will enable the team to
determine the overall alignment of the company’s strategy to its environment.
PART TWO: THE ORGANISATIONAL ASSESSMENT:
A. ASSESSMENT:
Once the company’s environment has been examined and analysed, managers should consider
the qualities and characteristics of the organisation itself that influence what can be accomplished in
terms of strategy. This section is about organisational assessment. The steps shown here will
provide insights into the effectiveness of the company’s current strategy, and provide guidelines for
increasing strategic effectiveness.
1. STRATEGY CLARIFICATION:
Strategy clarification helps the leadership team determine what business they are in, the direction
of the business, and framework or criteria for making strategic decisions in the future. If people at
any level of a business are unclear about any of these three areas, it is difficult for them to focus
their attention, cooperate with other teams, and organise their efforts to gain competitive advantage
in the marketplace.
2. VIABILITY AND ROBUSTENESS:

Measuring viability and robustness helps a leadership team test strategies and ideas against
future world scenarios to determine whether the strategies can be achieved and sustained. By
looking at both market and financial viability and robustness in different scenarios, a management
team can see what will create advantage in the future and what key measures need to be implemented
to monitor changes in business conditions.
3. BUSINESS PROCESSES:
The term business process refers to the overall work flow within a company and includes
elements such as product design, manufacturing, and delivery. A good process analysis will help a
leadership team to see what must be done given the company’s strategy, and how those processes
can be improved.
4. CAPABILITIES:
Capabilities are bundles of separate skills required to deliver the products or services that give
a business competitive advantage. There are two parts of a capability assessment. First, the capabilities
needed to execute the strategy must be determined. Second, the current level of ability in terms of
those capabilities must be assessed. Without knowing what capabilities should be focussed on and
improved, competitive advantage will be difficult to achieve.
5. ORGANISATION DESIGN AND STRUCTURE:

This part of the analysis looks at alignment issues between the environment, the strategy, and
the skills required to achieve that strategy, and the organisation structure. During this step, a
management team can design an organisation that aligns systems in a way that will allow them to
execute a strategy. Unless the systems within a business are aligned to improve effectiveness or
efficiency, strategy statements are merely plaques on the wall that are seldom realised.
6. CULTURE:
Culture refers to the set of shared values that influence behaviour and direction over time. The
style of management and the beliefs and assumptions commonly held by people in the organisation
must be determined in order to ensure alignment and execution of the strategy.
Having completed each of these assessments, they must be integrated by the audit team. In this
process, audit team members should attempt to answer one fundamental question: Is our strategy in
alignment with the external environment?
To answer this broad question, the following issues should be addressed:
 Do our capabilities match our customer requirements?
 Do we offer something required by our customers that is better than the offerings of our
competitors?
 How are customer demands changing?
 How are competitors changing?
 How are our internal capabilities evolving to keep pace with those changes?
B. IMPLEMENTATION:
Depending on the answers to these questions, the team can implement the changes dictated by
the audit. In making these changes, three issues should be considered:
1. Structure follows strategy - This means that current organisational boundaries and structures
should not be allowed to determine the selection of a competitive strategy.Rather, the environmental
and organisational assessments that you have just conducted should determine and drive
strategy selection.
2. Plans for change must be widely owned - Those people ultimately responsible for implementing
strategy (typically front-line employees) should be consulted for their ideas about what changes
should be made and how they should be made. Otherwise, very little change is likely to happen.
3. Implementation should start with what is core to gaining advantage - In other words, start with
core business processes, ‘pick the low hanging fruit’ first, make those changes that will make
the most visible difference.
C. ERRORS THAT MAY OCCUR WHILE CONDUCTING BUSINESS STRATEGY AUDIT:
It would be useful to know that the following are the most common errors made by teams
conducting business strategy audits:
 Expecting all data to be equally useful.
 Do nothing with the audit findings.
 Failing to link other support systems (rewards, administration, etc.) to strategy.
 Not thinking strategically about what processes and capabilities to keep in-house and what to
outsource.
 Failing to prioritise those core processes that must be world-class.
 Failing to match internal capabilities with customer requirements.

 Failing to communicate audit findings and strategy changes to people throughout the organisation
in a clear and simple language.
SIMPLY SPEAKING…
On one very unfortunate Monday morning, my boss called me to his office and gave me
a letter and a cheque for Rs. 30,000/- for the three years I worked, while telling me that my
services are terminated with immediate effect.
He escorted me outside the building with a warm handshake and goodbye.
To tell you the truth, at that moment in my life, I felt every possible negative emotion you
could ever imagine. I felt like banging him.
Despite all my smart and hard work, I was fired and thrown into the street like “....”
I felt sadness, shock, horror, fear, anger and of course, great disillusionment and frustration
with the whole system of getting rewarded every year and then getting pulled down suddenly.
Forget about business, success and strategy, food comes first.
After fifteen years of hard work and dedication, I found myself in the street in the middle
of major recession in the 2008 with a cheque not even enough to cover a month’s rental and
some saving in the bank.
I limped on, searched hard for a job in the following three months, and finally got a
reasonable job at the Spice Mall for half the salary I was earning at House of Dolls. I didn’t
have much of a choice
This “traumatic” experience during my career forced me to think differently about the
meaning of business strategy, success and the meaning of life itself.
I wish I would have learnt the art of doing audit of my boss’s business strategy.
I recalled having read Sun Tzu’s ‘Art of War’.
“People should learn the art of strategy, those who understand it will survive, and those
who do not understand it will perish”.
LEVEL SEVEN
AUDIT OF BUSINESS GOALS AND ASSUMPTIONS
1. DEFINING BUSINESS GOAL:
A. GOAL IS STATEMENT OF BUSINESS INTENT:

Goal is a statement of business intent. The overall goal of an organization in terms of its market
position in the medium or long-term. A strategic goal forms part of an organization’s corporate strategy,
and should act as a motivating force as well as a measure of performance and achievement for those
working in an organization.
B. GOAL IS AN OBJECTIVE OR A TARGET:

It is an objective or a target, usually driven by specific future financial needs. Some common
financial goals for an individual are: saving for a comfortable retirement, saving to send children to
college, managing finances to enable a home purchase, minimising taxes, maximising return on
investments given a certain risk tolerance, and estate or trust planning.
C. GOAL IS SOMETHING WE AIM FOR:

At its simplest, a goal is just something we aim for. But goals are powerful contributors to
successful business growth in several ways. To begin with, the process of setting goals forces us
to think through what we want from our business and how growth may–or may not–provide that. This
process helps suggest directions for pursuing that growth, which can greatly improve our chances
of achieving our goals in the first place.
D. GOAL IS TIMETABLE:
Goals also give us a framework within which to work. This tends to focus our efforts by helping
us rule out actions that won’t contribute to achieving the goals we’ve set. A very important part of
that framework is a timetable. Any good goal has a timeframe, and that will influence our actions
profoundly.
2. DEFINING BUSINESS ASSUMPTION:
A. IT IS A BUSINESS PREMISE:
It is a statement that is assumed to be true and from which a conclusion can be drawn; “on the
assumption that he has been injured we can infer ...
B. IT IS A BUSINESS HYPOTHESIS TAKEN FOR GRANTED:

It is a hypothesis that is taken for granted; “any society is built upon certain assumptions”
C. IT IS AN ASSUMPTION BASED PLANNING:

Assumption based planning in project management is a post-planning method, that helps
companies to deal with uncertainty. It is used to identify the most important assumptions in a company’s
business plans, test these assumptions and think of hedging actions and what-if scenarios.
D. IT IS AN ASSESSMENT OF AN UNCERTAIN EVENT WHICH MAY OR MAY NOT HAPPEN:

1. Customers will buy our product because we think it’s a good product.
2. Customers will buy our product because it’s technically superior.
3. Customers will agree with our perception that the product is “great”.
4. The product will sell itself.
5. Distributors are desperate to stock and service the product.
5. We can develop the product on time and on budget.
6. Competitors will respond rationally.
7. We will be able to hold down prices while gaining share rapidly.
8. Customers will run no risk in buying from us instead of continuing to buy from their past
suppliers.
9. We will have no problem attracting competitors’ staff
NEON SOFTWARE TECHNOLIGIES INDIA: SUMMARY OF GOALS AND SUSTAINABILITY:
CASE STUDY ONE
FOCUS AREA OBJECTIVES GOALS: FY 2009-10

1. Governance/ Create awareness among employees Define and implement training
commitment & about sustainability. module to create awareness about
engagement. sustainability.
2. Product responsibility. Enhance customer satisfaction levels. Sustain customer satisfaction levels
in the annual customer survey.
3. Environment. To be energy efficient. Monitor energy consumption and
identify methodologies to be energy
To be carbon neutral. efficient.
Reduce per capita energy
consumption by 5 %
Reduce per capita water

To be efficient in water utilisation.
consumption by 5 %.
To support bio-diversity practices. Plant a tree for every new employee.
4. Human rights. Align suppliers and vendors to our Train at least 25 major suppliers and
human rights approach. vendors on human rights.
Educating work-force on human rights. Training for security and other
employees in India.
5. Employee Track employee health related Define and measure satisfaction

engagement. activities. levels.
6. Society. 1 . Track impact of community Define and implement metrics for

programmes measurement
2 . Raise aspirations of students and Cover 10000 students from high
establish information technology as school, engineering and non-
a dream career. engineering colleges.
ABEDON (LPO) – LEGAL PROCESS OUTSOURCING, UAE:- BUSINESS ASSUMPTIONS

FY 2005-2006: CASE STUDY TWO:
A. WE HAVE NO COMPETITION:
Every business has competition. If we have no competition, then we may need to think more
broadly about what our company provides. Competing products and services may fill the same
customer need as yours, or they may come from another industry that fills a similar need.
Once we define our product market, we should do an analysis of competitors to identify the
companies we are competing against and what they offer the market, as well as how well they do
it. Listing their strengths and weaknesses and thinking about how we will respond to or exploit them
is an important part of this process. Knowing little or nothing about our competition is evidence
that we haven’t done our homework.
B. ALL WE NEED IS 2% OF THE MARKET:

Starting to plan a venture by saying this indicates sloppy thinking. First, it indicates that the
definition of the product is too broad. Second, it indicates the lack of a plan or any marketing strategy.
Making this type of a statement is a good way to think conceptually about the market, and it may be
a goal to strive for, but it will not be of use when it is time to start operating the business.
Successful new business managers have to be well-informed and skillful. And they have to work
very hard to achieve their goals. If the primary reason we think we’ll be successful is we just need
x% of the market, then we’re off to a poor start.
C. OUR PRODUCT WILL SELL ITSELF:

Just existing is not enough. We have to tell our target customer that we’ve got the best thing
for their needs. And we need to do it again and again. If our company regards marketing as a
nuisance or something unimportant or top management is not actively involved, then our chances of
failure increase.
In developing a plan to market ourselves and our product, we will need to determine specifically
how we will reach our target market.
D. OUR FINANCIAL PROJECTIONS ARE REALISTIC:

Our financial plan will be closely examined by people who want to know if and when we can
make money. There needs to be evidence that our financial projections, in the form of an income
statement, balance sheet, and statement of cash flows, are realistic and founded on sound information.
As we construct our projections, support our estimates with information about our sources and
procedures; outsiders will want to know how they were determined. Explain how we calculated the
numbers in our financial statements. For example: “We will sell 750 units per month at Rs. 250 per
unit. This is projected to increase by 2% every month for the first year. Fixed and variable costs will
total Rs. 120 per unit.”
E. WE CAN MANAGE THE BUSINESS OURSELVES:

Probably not. Any venture has to involve collaboration. A team can be developed internally from
individuals within your company, externally by advisors who are actively working on our project or
from connections to people who interact with your company. Whatever the method, a team will get
us further, with fewer mistakes, than we could go alone.
But our team needs a diversity of skills and resources to be effective, and someone must have
the final say. Analysing the jobs that must be done in our company and outlining the responsibilities
and authorities of the people we work with will help us form and manage a team
F. WE CAN SAVE MONEY IF WE DO IT OURSELVES:

A common mistake that often turns out to be costly is the assumption that doing something that
can save us money. For instance, many new business managers think they can save legal fees by
setting up the business organization without the help of an attorney. But the upfront costs of professional
advisors can prevent much greater fees later to unravel tangles that only an experienced lowyer can
help us to get through a problem.
G. OUR PATENTS WILL PROTECT OUR BUSINESS:

A well-conceived patent application can do an effective job of deterring some competitors.
However, other competitors will be able to create an imitation product just different enough to allow
them to be a direct competitor. Face it, if we have a good idea, someone will copy it. To create a
long-term competitive advantage, we must make sure that we deliver our idea better than anybody
else can.
H. THAT WEAKNESS WON’T MATTER LATER ON:

Ignoring a negative issue won’t help us. The problem isn’t likely to go away, nor will it get better
with time. Even seemingly small problems can mushroom and affect our chances of survival. To help
decide which problems and weaknesses to address, decide how large a difference between our
projected and actual performance will be acceptable.
For instance, if customer service response times in our company are twice as long as is typical
in our industry and repeat business is reduced because of this, then we should address this problem
immediately. Setting minimum performance standards will help to identify problems that must be
addressed. Create a detailed and well-thought-out action plan that addresses each problem.
I. WE CAN EASILY MAKE ENOUGH SALES TO MAKE A PROFIT:

If our planning says that to reach profitability we need to sell our product to nearly every single
customer in the market, then something is wrong. This is an extreme case, but in the strategic market
planning process we should demonstrate that the market size we can reach is achievable and at a
product volume we can profitably produce.
J. WE’LL HAVE PLENTY OF AVAILABLE CASH IF THE INCOME STATEMENT SHOWS A

PROFIT AT YEAR’S END:
Cash flow and profit are not the same. While our income statement may indicate that our
revenues have exceeded our expenses (a profit), it won’t tell us anything about the timing of cash
flows. A cash flow forecast tells us when we’ll have cash and when we’ll need it. The statement of
projected cash flows tracks expected cash received and paid. A reasonable cash flow projection can
help us plan for the eventuality of cash shortfalls, particularly in the early years.
SIMPLY SPEAKING…
1. As we plan, we will make assumptions about what will happen once the business gets
started. Many times we will assume something about our venture—whether it is about
our ability as a manager or about some part of the market— and we later forget that we
made the assumption. At this point it becomes a “truth” that we believed. Believing that
“truth” may hurt us as our venture develops. For instance, if we come to believe that we
would be a good personnel and human resource manager of 10 employees because we
could manage two employees, then our venture will suffer as we learn different.
2. Thus, it is important to objectively question how our business will succeed from time to
time.
3. If we thoroughly think through our venture, it is much more likely to succeed. Developing
a good plan is a major task that takes a lot of work, dedication, and skill. But it is well
worth the effort. As we plan, we may be able to avoid making the common assumptions
listed here and thus avoid disaster.
4. The method or the system to audit the business goals and the business assumptions is
common because many a times corporate goals are based on certain assumption but
empirically tested through data analysis and other methods.
3. METHOD OF AUDITING BUSINESS GOALS AND ASSUMPTIONS:
A. POLICY AND STRATEGIC DIRECTIONS ARE BASED ON PRESENT AND THE FUTURE
NEEDS AND EXPECTIONS OF STAKEHOLDERS:
Actions:
1. Gathering and understanding information to define the market and market segment the organization
will operate in both now and in the future.
2. Identifying, understanding and anticipating the needs and expectations of current and future
stakeholders including customers, employees, partners, society and shareholders.
3. Identifying, understanding and anticipating developments in the market place, including competitor
activity.
B. POLICY AND STRATEGY DIRECTIONS ARE BASED ON INFORMATION FROM PERFORMANCE

MEASUREMENT, RESEARCH, LEARNING AND EXTERNAL ACTIVITIES:
Actions:
1. Analysing output from internal performance indicators.
2. Analysing output from learning activities.
3. Analysing external images and brand awareness data.
4. Analysing the performance of competitors and best in class organization.
5. Analysing data regarding existing/potential partners core competencies;
6. Analysing data for both long and short term social, environmental, safety and legal issues;
7. Analysing data on the effects of products and services throughout their entire life-cycle;
8. Identifying and understanding economic and demographic indicators;
9. Analysing data to determine the impact of new technologies and business models on the
performance of the organization.
C. POLICY AND STRATEGY DIRECTIONS ARE DEVELOPED, REVIEWED AND UPDATED:

Actions:
1. Developing, reviewing and updating policy and strategy consistent with the organization’s
mission, vision and concepts of excellence;
2. Balancing both long and short-term needs and expectations of stakeholders;
3. Assessing risks and identifying ways of addressing these risks;
4. Identifying present and future competitive advantage;
5. Identifying core capabilities and needs for partnerships/alliances to deliver policy and strategy;
6. Reaffirming presence in established markets or requirement to change market approach;
7. Aligning strategy with those of partners and alliances;
8. Identifying critical success factors;
9. Aligning and continuously developing social and environmental standards with partners;
10. Evaluating the relevance and effectiveness of policy and strategy.
D. POLICY AND STRATEGY DIRECTIONS ARE COMMUNICATED AND DEPLOYED THROUGH

A FRAMEWORK OF KEY PROCESSES:
Actions:
1. Identifying and designing and communicating the framework of key processes needed to
deliver the organization’s policy and strategy;
2. Communicating policy and strategy to stakeholders and evaluating the awareness of it;
3. Aligning, prioritising, agreeing, cascading and communicating plans, objectives and targets as
well as following up achievements;
4. Establishing organization wide reporting mechanisms to track progress.
SIMPLY SPEAKING…
To audit business goals and assumptions, we need to take the following actions:
 Look at present and future needs of the business.
 Collect data and information from performance measurement and research based external
sources.
 Policies and strategies must be periodically reviewed and updated.
 Policy and strategic directions must be implemented through a frame work of key
processes.
LEVEL EIGHT
AUDIT OF EMPLOYEE TURNOVER
A. DEFINING EMPLOYEE TURNOVER:

Employee turnover is a ratio comparison of the number of employees a company must replace
in a given time period to the average number of total employees. A huge concern to most companies,
employee turnover is a costly expense especially in lower paying job roles, for which the employee
turnover rate is highest. Many factors play a role in the employee turnover rate of any company, and
these can stem from both the employer and the employees. Wages, company benefits, employee
attendance, and job performance are all factors that play a significant role in employee turnover.
Turnover is the attrition of employees through voluntary or involuntary terminations. Turnover
results in costs to the employer from lost productivity, job advertising costs, training new employees,
etc.
B. FACETS OF EMPLOYEE TURNOVER:
1. WHEN AN EMPLOYEE LEAVES A BUSINESS, IT COSTS THE COMPANY:

PRODUCTIVITY: When the employee leaves, productivity will usually take a downturn because
other workers may have to add the former employee’s duties to their own work-load, at least temporarily.
MONEY: In addition to the monetary costs associated with lower productivity, we may have to
pay employees overtime to get them to fill up the gap left by the former employee until a replacement
can be found. We may also have to face the cost of recruiting and hiring a replacement.
TIME: Not only may we be distracted from our regular duties to cover for a former employee,
but we will now have to spend time and money advertising, interviewing, and otherwise looking for
a replacement employee. And don’t forget the time that we spent training and hiring the former
employee. When we lose a lot of employees, we ‘re wasting time and money.
2. EMPLOYEE TURNOVER: A MAJOR CONCERN:

Companies take a deep interest in their employee turnover rate because it is a costly part of
doing business. When a company must replace a worker, the company incurs direct and indirect
expenses. These expenses include the cost of advertising, head-hunting fees, human resource
costs, loss of productivity, new hire training, and customer retention — all of which can add up to
anywhere from 30 to 200 percent of a single employee’s annual wages or salary, depending on the
industry and the job role being filled.
3. EMPLOYEE RETENTION: A MAJOR THURST:

While lower paying job roles experience an overall higher average of employee turnover, they
tend to cost companies less per replacement employee than do higher paying job roles. However,
they incur the cost more often. For these reasons, most companies focus on employee retention
strategies regardless of pay levels.
4. EMPLOYEE TURNOVER: IT TENDS TO REDUCE WHEN ORGANIZATIONAL MORALE IS HIGH:

Most companies find that employee turnover is reduced when they address issues that affect
overall company morale. By offering employees benefits such as reasonable flexibility with work and
family balance, performance reviews, and performance based incentives, along with traditional benefits
such as paid holidays or sick days, companies are better able to manage their employee turnover
rates.
5. RETENTION DEPENDS UPON COSTS AND COMPANY’S OVERALL PERFORMANCE:

The extent a company will go to retain employees depends not only on employee replacement
costs, but also on overall company performance. If a company is not getting the performance it is
paying for, replacement cost is a small price to pay in the long run. Audit depends upon employee
turnover cost, cost of retention, performance and other important factors.
C. AUDIT OF COST OF EMPLOYEE TURNOVER:

We work on a comprehensive checklist of items to include when calculating and auditing the
cost of turnover in any organization. To determine the costs, have the hourly and weekly cost of fully
loaded payroll costs (i.e., salary plus benefits) of the vacant position, the management staff, the
recruitment staff and others as outlined below.
It should be noted that the costs of time and lost productivity are no less important or real than
the costs associated with paying cash to vendors for services such as advertising or temporary staff.
These are all very real costs to the employer.
These calculations will easily reach 150% of the employees’ annual compensation figure. The
cost will be significantly higher (200% to 250% of annual compensation) for managerial and sales
positions.
To put this into perspective, let’s assume the average salary of employees in a given company
is Rs. 50,000 per year. Taking the cost of turnover at 150% of salary, the cost of turnover is then
Rs.75,000 per employee who leaves the company. For the mid-sized company of 1,000 employees
which has a 10% annual rate of turnover, the annual cost of turnover is Rs. 7.5 million!
Do we know any CEO who would not want to add Rs. 7.5 million to their revenue? And, by the
way, most of that figure would be carried over to the profit line as well. What about the company with
10,000 employees? The cost of turnover equals Rs.75 million!
D. CALCULATING THE COSTS:
A. COSTS DUE TO AN EMPLOYEE LEAVING

1. Calculate the cost of the person(s) who fills in while the position is vacant. This can be either
the cost of a temporary or the cost of existing employees performing the vacant job as well as
their own. Include the cost at overtime rates.
2. Calculate the cost of lost productivity at a minimum of 50% of the person’s compensation and
benefits cost for each week the position is vacant, even if there are people performing the work.
Calculate the lost productivity at 100% if the position is completely vacant for any period of time.
3. Calculate the cost of conducting an exit interview to include the time of the person conducting
the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit
deductions, benefit enrollments, etc.
4. Calculate the cost of the manager who has to understand what work remains, and how to cover
that work until a replacement is found. Calculate the cost of the manager who conducts their
own version of the employee exit interview.
5. Calculate the cost of training a company has invested in this employee who is leaving. Include
internal training, external programmes and external academic education.
6. Calculate the impact on departmental productivity because the person is leaving. Who will pick
up the work, whose work will suffer, what departmental deadlines will not be met or delivered
late. Calculate the cost of department staff discussing their reactions to the vacancy.
7. Calculate the cost of severance and benefits continuation provided to employees who are
leaving that are eligible for coverage under these programmes.
8. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is taking
with them out of our door. Use a formula of 50% of the person’s annual salary for one year of
service, increasing each year of service by 10%.
9. Calculate the cost of losing customers that the employee is going to take with him, or the
amount it will cost you to retain the customers of the sales person, or customer service
representative who leaves.
10. Subtract the cost of the person who is leaving for the amount of time the position is vacant.
B. RECRUITMENT COSTS:
1. The cost of advertisements (from a Rs. 30,000/- classified to Rs. 3,00,000 or more display
advertisement); agency costs at 20 - 30% of annual compensation; employee referral costs of
Rs.5,000 –Rs.20,000 or more; internet posting costs of Rs 35,000 – Rs 85,000 per listing.
2. The cost of the internal recruiter’s time to understand the position requirements, develop and
implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct
interviews, prepare candidate assessments, conduct reference checks, make the employment
offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over
200 hours per position.
3. Calculate the cost of a recruiter’s assistant who will spend 20 or more hours in basic level
review of resumes, developing candidate interview schedules and making any travel arrangements
for out of town candidates.
4. The cost of the hiring department (immediate supervisor, next level manager, peers and other
people on the selection list) time to review and explain position requirements, review candidates
background, conduct interviews, discuss their assessments and select a finalist. Also include
their time to do their own sourcing of candidates from networks, contacts and other referrals.
This can take upwards of 100 hours of total time.
5. Calculate the administrative cost of handling, processing and responding to the average
number of resumes considered for each opening at Rs. 50 per resumé.
6. Calculate the number of hours spend by the internal recruiter interviewing internal candidates
along with the cost of those internal candidates to be away from their jobs while interviewing.
7. Calculate the cost of educational and criminal background checks, police checks and other
reference checks, especially if these tasks are outsourced.
8. Calculate the number of times these are done per open position as some companies conduct
this process for the final 2 or 3 candidates.
9. Calculate the cost of the various candidates pre-employment tests to help assess a candidate’
skills, abilities, aptitude, attitude, values and behaviours.
C. TRAINING COSTS:
1. Calculate the cost of orientation in terms of the new person’s salary and the cost of the person
who conducts the orientation. Also include the cost of orientation materials.
2. Calculate the cost of departmental training as the actual development and delivery cost plus the
cost of the salary of the new employee. Note that the cost will be significantly higher for some
positions such as sales representatives and call centre agents who require 4 - 6 weeks or more
of classroom training.
3. Calculate the cost of the person(s) who conduct the training.
4. Calculate the cost of various training materials needed including company or product manuals,
computer or other technology equipment used in the delivery of training.
5. Calculate the cost of supervisory time spent in assigning, explaining and reviewing work
assignments and output. This represents lost productivity of the supervisor. Consider the
amount of time spent at 8 hours per week for at least 8 weeks.
D. LOST PRODUCTIVITY COSTS:
As the new employee is learning the new job, the company policies and practices, etc. they are
not fully productive. Use the following guidelines to calculate the cost of this lost productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a 25%
productivity level for the first 2 - 4 weeks. The cost therefore, is 75% of the new employees’
full salary during that period.
2. During weeks 5 - 12, the employee is contributing at a 50% productivity level. The cost is
therefore, 50% of full salary during that period.
3. During weeks 13 - 20, the employee is contributing at a 75% productivity level. The cost is
therefore, 25% of full salary during that period
4. Calculate the cost of co-workers and supervisory lost productivity due to their time spent on
bringing the new employee “up to speed.”
5. Calculate the cost of mistakes the new employee makes during this indoctrination period.
6. Calculate the cost of lost department productivity caused by a departing member who is no
longer available to guide and direct the remaining staff.
7. Calculate the impact cost on the completion or delivery of a critical project where the departing
employee is a key participant.
8. Calculate the cost of reduced productivity of a manager who loses a key staff member, such
as an assistant, who handled a great deal of routine, administrative tasks that the manager will
now have to handle.
E. NEW HIRE COSTS:
1. Calculate the cost of bring the new person on board including the cost to put the person on the
payroll, establish computer and security passwords and identification cards, business cards,
internal and external publicity announcements, telephone hookups, cost of establishing email
accounts, costs of establishing credit card accounts, or leasing other equipment such as cell
phones, automobiles, pagers, etc.
2. Calculate the cost of a manager’s time spent developing trust and building confidence in the
new employee’s work.
F. LOST SALES COSTS:
1. For sales staff, divide the budgeted revenue per sales territory into weekly amounts and
multiply that amount for each week the territory is vacant, including training time. Also use the
lost productivity calculations above to calculate the lost sales until the sales representative is
fully productive. It can also be used for tele-marketing and inside sales representatives.
2. For non-sales staff, calculate the revenue per employee by dividing total company revenue by
the average number of employees in a given year. Whether an employee contributes directly
or indirectly to the generation of revenue, their purpose is to provide some defined set of
responsibilities that are necessary to the generation of revenue. Calculate the lost revenue by
multiplying the number of weeks the position is vacant by the average weekly revenue per
employee.
3. Calculating and adding all these costs, given our original example of the Rs.50,000 person can
easily reach Rs.75,000 to replace them. As we can see, the costs and impact associated with
an employee who leaves the company can be quite significant. This is not to say that all
turnover should be eliminated. However, given the high cost and impact on running a business,
a well thought-out programme designed to retain employees may easily pay for itself in a very
short period of time.
G. AUDIT TOOLS:
1. AUDIT TOOLS: EMPLOYEE TURNOVER COST CALCULATOR:
Let us use this worksheet to calculate turnover costs. Included are direct costs, such as the
cost of background checks, as well as indirect costs, such as lost productivity. The chart below can
be used to show the “Green Money” or the actual costs of turnover, and the “Blue Money” or the
softer costs of turnover (appropriate salary/hour x time spent on each activity). Each organisation
builds its own module to conduct the audit of employee turnover. This one is a model and one can
add on or modify the entries in the Green Money or Blue Money perspectives.
NOTICE PERIOD
Green Money Costs
(1) Last paycheck, accrued vacation, separation pay. Rs.
(2) TDS and other taxes. Rs.
(3) Continued benefits. Rs.
Total Green Money Cost: Rs.
Blue Money Costs
(1) Administrative costs schedule exit interview; etc. Rs.
(2) Lower productivity: employee, peers, supervisor, subordinates. Rs.
(3) Exit interview, transition meetings. Rs.

Total Blue Money Cost: Rs.
VACANY PERIOD
Green Money Costs
(1) Advertising and recruiter fees. Rs.
(2) Interview expenses (meals, mileage, or other). Rs.
(3) Stationery. Rs.
(4) Assessments. Rs.
(5) Criminal, reference checks, credit checks, etc. Rs.
(6) Medical exams. Rs.
(7) Temporary/contract employee costs. Rs.
(8) Overtime costs. Rs.
(9) Relocation expenses and salary, if any. Rs.
Blue Money Costs
(1) Lost productivity: peers, supervisor, subordinates. Rs.
(2) Advertising creation and placement. Rs.
(3) Recruiter selection. Rs.
(4) Administrative costs: ordering forms and copies Rs.
of annual reports, scheduling and scoring assessments,
coordinating with hiring manager and others, etc.
(5) Resume screening. Rs.
(6) Interviews: first, second, third. Rs.
HIRING/ORIENTATION PERIOD
Green Money Costs
(1) Orientation materials (handbook, video, handouts, etc.). Rs.
(2) Formal training programmes (materials, course fees). Rs.
(3) Informal one-on-one training (materials, if any). Rs.

Blue Money Costs
(1) Orientation participants’ salaries. Rs.
(2) Lost productivity: peers, supervisor, subordinates. Rs.
(3) Administrative costs: orientation set-up, ordering materials, etc. Rs.
(4) Informal training and one-on-ones. Rs.

HIDDEN COSTS
(1) Missed deadlines. Rs.
(2) Loss of organization knowledge. Rs.
(3) Lower morale due to overwork. Rs.
(4) Learning curve. Rs.
(5) Client issues due to turnover. Rs.
(6) Loss of client relationships. Rs.
(7) Disrupted department operations. Rs.
(8) Chain reaction turnover. Rs.
Total Hidden Cost: Rs.

GRAND TOTAL REPLACEMENT COST: Rs.
2. EXIT INTERVIEW: AUDIT TOOL TWO:

A. When good talent leaves, companies incur significant replacement costs in recruiting, selecting,
and training replacements, in addition to lost opportunity costs by having key positions vacant.
Some turnover can’t be helped, such as when an employee gets an offer from another company
that your company can’t match, or if the employee moves from the area due to family or other
personal reasons. It’s the turnover of good talent that can be prevented that companies seek
to address.
B. When a good employee leaves because they’re dissatisfied with their job, they often don’t feel
comfortable candidly telling you the real reasons. And if you don’t know the real reasons, it’s
hard to correct them. We then conduct a serious minded Exit Interview to know from the
employee leaving the organization as to the reasons of his leaving and why he could not be
retained.
OBJECTIVES OF EXIT INTERVIEW:

A. Consistently capture statistically sound and relevant information from departing employees.
B. Develop a quantitative and qualitative database that will provide the information needed to
identify the predictive trends that cause undesirable turnover.
C. Provide a process for addressing issues that require immediate action.
D. Develop and implement with greater confidence initiatives designed to reduce undesirable
turnover.
3. STRATEGIC METHOD FOR ACCURATE TALENT MANAGEMENT DECISIONS:AUDIT
TOOL THREE:
A. Just as DNA is specific to a given individual, a Talent Audit can pinpoint the “job skill DNA” of
a given employee. It provides access to skill comparisons and overall success potentials with
a predictive accuracy similar to the way a DNA strand identifies genetic make-up of each
individual person.
B. In this manner, organizations are able to make a complete list of strengths and weaknesses for
all key employees across every important position.
C. It is instructive to differentiate between this approach and the typical employee assessment that
may generate impressive numbers but not meaningful data. The Talent Audit is very different
from “old school” employee assessments.
D. The Talent Audit results are typically used for a broad range of job functions and levels to guide
decision-making. Some common applications include:
1. Example One: Sales Leader Decision Making:
A. Identify incumbent sales-people most adept at developing new business (“hunters”) versus
those best suited to managing existing customer relationships (“farmers”) or handling Strategic
Accounts, or developing into a sales subject matter expert, or any of 10 other key sales roles
that World Class Sales Benchmarking Research has identified.
B. Determine which sales/people have the predictive skill strengths required to succeed in a sales
management role.
C. Identify sales/person skill gaps that can be remedied with training, coaching, or other strategies.
D. Discover which salespeople have the skills to transition to new roles (solutions sales versus
transaction sales).
E. Identify where sales talent might, most effectively, be deployed to support key account goals.
F. Determine which sales/people can play a new role to meet the demands of an evolving
customer.
G. Ascertain the most critical training and development needs by employee, team, and position.
2. Example Two: Human Resource Decision Making:
A. Access and evaluate all incumbents in any group, to understand what areas are most
appropriate for training across the entire group or the entire organization
B. Create a corporate-wide profile of strengths and weaknesses to prioritise effective development
initiatives, succession planning and high-potential identification.
3. Example Three: Executive Decision Making:
A. Apply accurate, predictive, “job skill DNA” insights to the consideration of strategic initiatives
that have top and bottom-line impact, such as increasing market share, penetrating new
markets, increasing productivity, launching new products, reorganizations, and mergers.
B. Strategically align human capital strengths to achieve organizational needs and objectives.
C. Increase the ability to make more objective decisions, with the confidence of knowing those
decisions are based on predictive criteria.
SIMPLY SPEAKING…
Mostly, it is said that employee turnover is not good for the organizations. But employers
should remember that turnover is not that bad either. What is required is an optimum mix of
turnover, not too high-not too low. An optimum mix of employee turnover can help in many
ways. A little rate of employee turnover may result into:
1. Bringing in new ideas and skills from new hires.
2. Better employee-job matches.
3. More staffing flexibility.
4. Facilitate change and innovation and high rate of turnover may lead to decrease In
1. Productivity
2. Service delivery
3. Spread of organizational knowledge
Causes of Employee Turnover
In order to know the cause of excessive employee turnover, the causes of dysfunctional
and avoidable turnover should be known. Few reasons for dysfunctional turnover may be:
1. Compensation package differences.
2. Job and employee skill mismatch: the job may be less or more satisfying and challenging
according to the employee.
3. Inferior facilities, tools, etc.
4. Less recognition.
5. Less or no appreciation for work done.
6. Less growth opportunities.
7. Poor training.
8. Poor supervision.
9. Less work and life balance practices
CASE STUDIES IN EMPLOYEE TURNOVER:
1. EMPLOYEE TURNOVER IN (ITEs) IT ENABLED SERVICES INDUSTRY IN INDIA:

A. The Indian IT-enabled services (ITEs) industry can surely boast of a lower employee turnover
rate of 30-35 per cent compared to the US, where the rates are as high as 90 per cent,
according to the National Association of Software and Service Companies (Nasscom). The
employee turnover rate in the United Kingdom is also high at over 50 per cent.
B. “The entire ITEs industry is facing a challenge in the form of attrition rates as high as 35 per
cent in India, even though, it is very low compared to the US industry (90 per cent),” Wipro
Spectramind Vice-President — Talent Engagement and Development, S. Vardarajan.
C. Industry experts discussed various solutions to arrest the high attrition levels. Some ITEs
players like HCL Technologies BPO Services and Wipro Spectramind have started hiring
retired officers and housewives (who are less prone to regularly swiching jobs).
D. Daksh eServices Private Limited vice president-Corporate Human Resource and training
Aniruddha Limaye pointed out, “One of the reasons for the employee turnover is the erratic night
shifts. People who are not used to this leave the industry.”
E. HCL Technologies has tried sorting this out by splitting shifts day and night among its agents.
“UK” is the most preferred shift for the agents (2 to 10 pm) but we try to balance this out for
everybody and give a combination of both US (night) and UK (day) shifts,” HCL Tech BPO
Services service delivery leader (HR) Sneh Sharma said.
F. According to Seth, some ITEs facilities in India have also adopted the concept of quiet rooms
and scream rooms. The attrition rates are highest in the initial 60 days after joining, BPO players
observed. Higher studies are yet another reason for agents to leave an ITESs organisation.
G. “In order to cope with this problem, we have tied up with BITS Pilani and Symbiosis for
management and higher studies to provide an in-house platform to agents,” Varadarajan said.
For Daksh, the attrition rate in the voice process is as high as 32 per cent while the employee
turnover in its data processes was lower at 20 per cent.
2. AUDIT AND RECOMMENDATIONS FOR REDUCING EMPLOYEES TURNOVER IN BPO

INDUSTRY:
A. Attrition Problem will remain a Hurdle for BPO Industry in foreseeable Future:
Owning to the nature of the industry we can predict that the attrition problem will remain a hurdle
for BPO industry in foreseeable future. The attrition in the BPO is consistent with what has been
witnessed in any industry during its growth phase.
B. A Win-Win Model is Essential:
A win-win model needs to be devised for this, satisfying the needs of both, the employer and
the employee. The Win-Win model is conceptualised on the supposition that the employees need to
be enclosed from the universe by strategies at each level such that the attrition and its impact can
be reduced to the minimum. Plans differentiate on the basis of tenure into short and long term as well
as on the basis of usage into mitigation and contingency.
C. Needs of the Employer:
To get maximum returns from each employee, recover training and development costs, minimise
cost in terms of time in training new workforce, ensure that adequate no of people are there to carry
on the process (proper manpower planning)
D. Needs of the Employee:
Enriched job profile, better career path, challenging work environment, future prospects of the job
are the concerns of an employee and his long term needs. These require attention and looking after
of an employer.
E. Plans
1. Short Term Mitigation Plan:
A. Breakeven Mitigation Plan:
One of the objectives at this level should be on retention for a specified period of time (break
even period) so as to recover the cost incurred on the employee. This should be formally
included as a process such that the organizations include this in consideration while recruiting
candidates.
B. Small Tenure Bonds:
Once this period is calculated, strict actions can be taken to ensure that employees do not
leave the organization before completion of this mini time-frame. One such measure is getting
a bond signed between the employee and the employer.
C. 80 - 20 :Rule:
The firms concentrate on 20 % of the roles/employees who contribute to 80 % of the productivity.
These identified employees/roles need to be retained by special attention from the management’s
side.
2. Short Term Contingency Plan:

This plan will focus on the work environment that enhances employee motivation for the job. It
includes work conducive and fun filled environment, informal work culture suiting to the needs of the
young employees. This is essential for compensating the affected social life owning to the nature of
the job. Certain measures that can be included -
A. Having crèche in workplace would also help for the same.
B. Flexible Salary Structure.
C. Variable pay package based on performance.
D. ‘Working from home’ when required for a short term.
E. Added benefits like sponsored vacations.
F. Provide job rotation amongst department such as Quality, operation, etc., on a periodic basis
such that employees get bored with the same monotonous work.
3. Long Term Mitigation Plan:
The long term mitigation plans are steps taken by the management to minimise the impact of
attrition such that the firm does not face losses on the long term basis.
A. Defining job roles would help in mitigating the effects of attrition.
B. Clear documentation of the process and the jobs performed so that the process is not
dependent upon an employee.
C. Succession planning for the critical positions in the organization for faster replacement.
D. An assessment and certification can also be helpful in creating an employable talent pool with
benchmarked-requisite skill for frontline management.
4. Long Term Contingency Plan:
The long term contingency plans are attempts by the industry to reduce the attrition as a whole.
A. To minimise the training costs, the industry needs to work with the government to introduce
courses at a school and college level, which are in line with the requirements of the ITES-BPO
industry.
B. To reduce poaching of employees within the industry bilateral agreements between companies
should being signed. Basic norms are being put in place and code of ethics is being stressed
upon by industry.
C. A Common Database should be maintained by all the players of the industry to ensure that they
are not cannibalising each others resources.
D. The industry should look at Tier II and Tier III cities, where it can move its operations. These
would increase the resource pool as well as would minimise the attrition. Awareness needs to
be spread in these cities about the industry through advertisements.
F. Focus should be on having education and ongoing learning for the workforce, sponsoring
employees on post-graduate programmes and treating applicants and employees in the same
way as one treats customers.
LEVEL NINE
AUDIT OF LABOUR LAWS COMPLIANCES
CASE OF DEVDAS KAMATH: CASE STUDY IN LABOUR LAWS COMPLIANCE:

Sanjay Narang joined, as Human Resource Manager, with Madhumati Prakashans, a company
in the business of publishing and printing of national daily newspapers and magazines of repute and
owned by a well-known and rich Parekh family of Surat. The head office “Parekh House” is located
at Mumbai and the printing facilities are spread over to Mumbai, Ahemdabad, Delhi, Chennai, Kolkata,
Pune, Chandigarh, Banglore, Goa, Patna, Lucknow and Vijaywada. Navnit Parekh is the Chairman
and Managing Director assisted by his son Mukesh Parekh as the Deputy Managing Director.
Madhumati Prakashans is a closely held company and is not listed on Bombay Stock Exchange. The
current sales turnover of the company is Rs. 4500/- Crores.
Sanjay Narang is a post-graduate in Human Resource Management from the Indian Institute of
Management, Indore. In his class, he was known as an intelligent student and a steady performer.
He had a keen interest in performance and competency management subjects. He did not have much
liking for labour laws and industrial relations though he scored eighty percent marks in these subjects.
He got his first break as Human Resource Executive with Larsen and Toubro where he spent
his first two years before joining Madhumati Prakashans. By the time he left Larsen and Toubro, he
had mastered his skills in competency and performance management systems.
Madhumati Prakashans is basically an industrial relations oriented company. It has four splintered
trade unions, each one affiliated to a federation supported by a political party such as Indian National
Trade Union Congress (INTUC) supported by Congress, the second one affiliated to Bhartiya Kamgar
Sena (BKS) supported by Shiv Sena, the third one affiliated to All India Trade Union Congress
(AITUC) supported by Communist Party Marxist (CPM) and the forth one affiliated to and supported
by Mumbai Mazdoor Sangh (BMS). The inter-union rivalries leading to major violent clashes among
them in and outside the company, causing disruption of work was an every day affair. The company,
however, has been dealing with Mumbai Mazdoor Sangh which is a majority union.
Most of the time Human Resource department has been busy in fire fighting, running around and
managing crises after crises. It is a hot and thorny seat for Sanjay Narang who took over from
Prakash Patil. Sanjay has neither any knowledge nor any expreince in industrial relations and
corresponding labour laws.
In about three months from the date of his joining, Sanjay received in inter-office memo from the
production manager, Ramakant Desai, stating that one worker, Devdas Kamath, has been remaining
absent from work, without permission of his immediate superior since last eighteen months and the
Human Resource department has failed to take any disciplinary action against him and remove him
from his job. And as a result of which the work of the department suffers because the company has
not allowed him to hire a substitute to perform his job. Ramakant Desai further alleged that due to
some unknown reasons, Human Resource department is taking a very lenient view of the whole
matter due to which indiscipline is likely to spread to other sections of his department and if Human
Resource department does not take any action against Devdas Kamath within next seven day, he
shall complaint against Sanjay and the other officers of Human Resource department and take up the
matter with the executive director.
Sanjay Narang called up Ramakant Desai and held an urgent meeting with him. Sanjay got the
entire brief and the history of Devdas Kamath, his record and the reasons of his absenteeism.
Ramakant told Sanjay that Devdas is a very efficient worker and had won several prizes and
rewards for his excellence in work in the past but got addicted to drinking. The entire production
department had a lot of sympathy for him and many of his friends tried to counsel him to get admitted
in de-addiction centre through Alcoholic Anonymous but every such effort failed. Ramakant told
Sanjay that it is impossible to improve Devdas Kamath and therefore he should be removed from
his job with immediate effect.
Sanjay felt deep down sympathy for Devdas Kamath. He placed himself in Devdas Kamath’s
shoes and tried to feel where the shoes are pinching him. “Let me not get emotionally involved with
him” he told himself “let me do my job and help out Ramakant Desai”.
For the next two days, he studied the entire case of Devdas Kamath and arrived at a conclusion.
He prepared the termination letter of Devdas Kamath and sent it to him by post and courier. The
termination letter reads as follow:
Dear Sir:
We have observed from our records that you have been remaining absent unauthorizedly from
your work for over eighteen months and precisely since 2nd January last year. You have neither sent
us any intimation about the reasons of your absence nor any medical certificate confirming your
sickness. Your continued unauthorized absence from work has adversely affected the work of your
department and irrecoverable financial loss to the company.
The company has taken a very serious view of your unauthorized absence from work till date.
Therefore, it has been decided to terminate your services with immediate effect. You are, hereby,
advised to collect your legal dues within next seven days from the receipt of this letter.
Wishing you a very bright future.
For Madhumati Prakashans
{Sanjay Narang}
Manager – Human Resources
Two days later, Devdas Kamath received the letter and handed it over to his union “Bhartiya
Kamgar Sena”. BKS was always in search of such opportunities to displace Mumbai Mazdoor
Sangh. The executive committee of the union sought a meeting with Sanjay Narang to discuss the
matter of termination of Devdas Kamath. They sent a letter to him alleging that he is playing in the
hands of MMS and has terminated the services of Devdas Kamath at the behest of MMS. The union
further alleged that he has not followed the due process of law while terminating the services of
Devdas which is mandatory under the provisions of the labour laws.
Sanjay Narang held a meeting with the union and listened to them. He refuted all the allegations
leveled against him by the union. The general secretary of the union requested Sanjay Narang to
withdraw the letter of termination issued to Devdas Kamath with immediate effect as the termination
was illegal because the company did not follow the due process of law. Sanjay Narang refused to
withdraw the letter and said that the decision of the management in regard to Devdas Kamath was
final and can not be changed.
Three days later BKS declared strike at Mumbai offices and the factory. The members of the
other two unions also supported the strike. The entire printing process came to a grinding halt.
Mukesh Parekh held an emergency meeting with Mumbai Mazdoor Sangh to review and assess the
situation. He was not happy with the way such a situation had developed. He was apprehensive of
the assurance given by MMS that after a few days, the strike would fail and workers shall start
returning to work. He called Sanjay Narang to get brief from him about termination of Devdas Kamath
and the developments thereafter. He was very upset with the way Sanjay handled the situation but
this was not the appropriate time to find faults with him.
Mukesh Parekh decided to hold a meeting with the representative committee of striking workmen.
During the meeting, the workers representative demanded that Devdas Kamath should be reinstated
with immediate effect as the termination was ordered without following the due process of law.
Mukesh Parekh told them that he is ready to reinstate Devdas Kamath provided he reports for work
with immediate effect. He assured them that the day he reports on duty, Devdas Kamath would be
reinstated. He asked Sanjay Narang to withdraw the termination letter and issue another conditional
letter to Devdas Kamath advising him that if he reports at work within next forty eight hours, he will
be reinstated in his position. Mukesh Parekh told workers to withdraw the strike and return to work.
The normalcy was restored the next day when workers started returning to work. Before the
expiry of the forty eight hours deadline, Devdas Kamath also reported on duty. Seven days later,
Mukesh Parekh got him admitted into a de-addiction centre.
Sanjay Narang was asked to resign and quit on the following grounds:
1. He did not keep his superiors informed about his decision to terminate the services of Devdas
Kamath.
2. He acted in haste. He did not consult company’s labour law advocates and solicitors before
finalizing and implementing the termination order. His letter to Devdas Kamath had errors and
did not protect the legal interests of the company.
3. He did not follow the due process of law, required to terminate the services of a workmen who
is protected by labour laws. In the past, the company had always followed the due process of
law while terminating, dismissing or discharging any workman. No workman can be summarily
discharged, dismissed or terminated as punishment unless he has been issued charge sheet
and a domestic enquiry is held against him by an independent enquiry officer and he is held
guilty of the charges proved against him during the course of enquiry.
4. He did not study the previous years human resource audit reports submitted by the external
auditors. The auditors had made several recommendations for compliance of labour law
provisions which were approved by the management.
5. His decision to issue termination order was emotional as he wanted prove himself that he is a
different human resource professional who takes decision, right or wrong. But he forgot that
industrial relations is a very sensitive subject within the human resource management and any
human resource issue can suddenly turn into a very delicate and a dicey industrial relations
issue which has happened in the case of Devdas Kamath. In such a situation, he should have
done his proper home work before taking the extreme decision of terminating the services of
Devdas Kamath.
6. He failed to handle the matter with a touch of class, diplomacy, smartness and maturity.
SIMPLY SPEAKING…
1. Sanjay Narang represents a class of human resource professionals who are in a hurry to
prove themselves not by sharpening their competencies and skills needed to manage
difficult and crises situations but by looking for readymade solutions and tools which
are subject specific or by emotionalizing the very basis of an issue. When they face
problems and issues which are slightly or totally out of the box, they find it extremely
difficult to innovate solutions.
2. The students of B-Schools and Management Institutes find the study of industrial
relations and labour laws boring and dry. Whatever they study, they do it to pass the
examination. Once they are out in the employments market, they opt out of industrial
relations and labour laws specific job offers. Sanjay Narang represents the class of
Human Resource professionals who consider industrial relations and labour laws as
outcastes. Such classes of human resource professionals never think beyond box that
any Human Resource issue may turn into dicey industrial relations problem and they
may find it extremely difficult to handle any such situation because they do not posses
those specific competencies and skills and even if they posses, they have never cared
to sharpen them because they refuse to accept that industrial relations and labour laws
are inseparable parts of human resource.
3. Compliances in labour laws are extremely important because they are mandatory.
Statutory compliances help in building a base for audit in labour laws. As human
resource professionals, we need to do a through audit of labour laws compliances
because ignorance of law is not an excuse. Sanjay Narang took the whole issue of labour
laws compliances very casually and got into the mess. If he was not sure of his
competency in drafting the termination letter, he should have consulted the legal advisors
of the company. He should have realized that any wrong move would cost him and the
company dearly.
Importance of Labour Laws Audit:
A labour law audit is a thorough check of the company’s policies and procedures with the goal
of preventing prosecutions or lawsuits. The legal audit provides a risk profile of the company from
a legal perspective to detect any potential liabilities in its daily affairs:
1. The Audit exhaustively covers the rules and legislations applicable to the respective industry
or business enterprise.
2. The audit identifies various legislations governing the functioning of the company with special
reference to the concerned business segment.
3. The audit reviews the prevailing system, practices and level of compliance governing the
business segment.
4. It evaluates, analyses and assesses the compliance programmes in an environment of continually
changing needs and emerging risks and moves towards a 100% legally compliant company.
5. The audit helps to generate a comprehensive audit and gap analysis report.
6. It helps in implementation of an effective compliance system - provide required guidance and
necessary facilities, provide options and recommendations to diminish or eliminate the risk
wherever possible in the areas of legal obligations.
7. It creates ways for monitoring, self-audits and reporting system as part of management
information system for corporate decision making especially in those legal issues and lawsuits
where high legal and financial stakes are involved.
8. Audit of labour laws compliance is a brief for companies on filing of returns, maintenance of
registers, records and abstracts. It helps in preparing the checklist of important provisions of
various labour laws as follows:
A. LABOUR LAWS AUDIT: LAWS APPLICABLE TO A FACTORY:

1. The Factories Act, 1948
2. The Industrial Disputes Act, 1947
3. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
4. The Employees State Insurance Act, 1948
5. The Workmen Compensation Act, 1923
6. The Minimum Wages Act, 1948
7. The Payment of Wages Act, 1936
8. The Payment of Bonus Act 1965
9. The Payment of Gratuity Act, 1972
10. The Maternity Benefit Act, 1961 (Not applicable to those female workers who are covered to
receive this benefit under The Employees State Insurance Act, 1948)
11. The Contract Labour (Regulation and Abolition) Act 1970
12. The Industrial Employment Standing Orders Act, 1946
13. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
A-1. If a factory is located in Maharashtra, the following Acts in addition to the
above are also applicable:
1. The Bombay Labour Welfare Fund Act, 1953
2. The Bombay Industrial Relations Act, 1946 (Applicable to notified industries such as Banking,
Textile, Sugar etc)
3. The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act,
1971
4. The Maharashtra Workmen’s Minimum House Rent Allowance Act, 1983 (If factory employs 50
or more workmen)
5. The Maharashtra Mathadi, Hamal and Manual workers (Regulation of Employment and Welfare)
Act, 1969 (If factory is engaged in the activity of employing labour for loading and/ or unloading
or certain other purposes as defined in the Act)
6. The Maharashtra Private Security Guards (Regulation of Employment) and Welfare Act, 1981
(If it employs security guards)
B. LABOUR LAWS AUDIT: LAWS APPLICABLE TO A COMMERCIAL ESTABLISHMENT:

1. State’s Shops and Establishment Act

13. The Sales Promotion Employees (Conditions of Service) Act, 1976
14. The inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979
15. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
B-1. If a commercial establishment is located in Maharashtra, the following Acts
in addition to the above are also applicable:
1. The Bombay Shops and Establishment Act, 1948
Textile, Sugar etc)
1971
or more workmen)
C. LABOUR LAWS AUDIT: LAWS APPLICABLE TO CONSTRUCTION INDUSTRY:

1. State’s Shops and Establishment Act

13. The inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979
14. The Building and other Construction Workers Welfare Cess Act, 1966
15. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959.
C-1 If a Construction company is located in Maharashtra, the following Acts in
addition to the above are also applicable:
1. The Bombay Shops and Establishment Act, 1948
Textile, Sugar etc)
1971
or more workmen)
2. LABOUR LAWS AUDIT: MOST IMPORTANT AND CRITICAL COMPLIANCES AT A
GLANCE:
Here are some handpicked critical compliances which are important for labour laws audit:
1. Fatal Accident: Has the company informed the factories inspector immediately through a
telegram or personally through a messenger? Has the concerned person in HR or in administration
filled the accident form and sent it to the office of the factories inspector within 48 hours from
the date of the accident with copy of the same to the concerned local office of the employees
state insurance if the injured workman is an insured person (IP) under the ESI Act, 1948?
2. Fire: Has the company installed and maintained the fire extinguishers in working condition as
provided under the Factories Act, 1948 and the State Establishment Act?
3. Dismissal, Discharge, Retrenchment or Termination of a workman’s services: Does the
company follow due process of law and the legal procedure in case of every dismissal,
discharge, retrenchment or the termination of the services of a workman as provided under the
provisions of the Industrial Disputes Act 1947 and the Industrial Employment Standing Orders
Act 1946? Has the company taken care not to terminate or dismiss or discharge or retrench
the services of a workman who is on ESI sick leave? (6 months incase of ordinary sick leave
and 2 years incase of extended or serious sickness)
4. Maintenance of register or an e-file containing deadlines for submission of returns: Does

the company maintain a manual register or an e-file from which one can find out the dates of
submission of various periodical returns, forms, monthly, quarterly, bi-yearly and yearly returns,
the dates for renewal of licenses and the dates of payments such as PF and ESI employees’
and employers’ contributions? (Late payments attract penal actions of fine and imprisonment
and levy of damages to the tune of 100 percent of the dues payable. In case of any default, the
managing directors/directors/chief executives are generally prosecuted)
5. Nomination: Has the concerned officer taken care to ensure to obtain the nominations from
all the employees, in the prescribed forms, under the provisions of the Employees Provident
Fund Act and the Payment of Gratuity Act as well as in the employment application form filled
in by an employee at the time of joining the company?
6. Date of Birth: Has the date of birth of every employee been clearly and accurately mentioned
in the records of the company? Have all the employees submitted their certificates of birth at
the time of joining the company?
7. Change in any Custom, Usage or Practice: Has the company taken a note that it cannot
effect any change in any customary practice or usage unless it has given 21 days notice to the
workmen under section 9-A of the Industrial Disputes Act 1947?
8. Old Records: Has the company ensured that the old records are kept in the safe custody for
eight years? Has it secured the relevant permission from respective legal authority in case it
wishes to destroy the records before the expiry of 7 years?
9. Documentation: Every issue or a problem is unique and requires absolute and perfect
documentation. Has the company deputed an officer in HR department to ensure perfect
documentation especially where the company is required to contest litigation in a Labour Court/
Industrial Tribunal/High Court or Supreme Court?
10. Factories Act: Has the company complied with the following provisions under the Factories
Act, 1948 and the rules made thereunder?
 Provision of Crèches if the company employs 30 or more female workers.
 Provision of canteen/s if the company employs 250 or more workmen.
 Shelters, rest rooms, lunch rooms to be provided if the company employs 150 or more
workmen.
 Appointment of qualified Welfare Officer if the company employs 500 or more workmen.
 Appointment of a qualified Safety Officer if the company employs 1000 or more workmen.
 Ambulance room with qualified staff must be provided if the company employs 500 or more
workmen.
11. Payment of Wages: The Payment of Wages Act 1936 provides that where an employer
employs 1000 or less persons, he shall pay wages on or before 7th of every month and where
the number of such persons is 1000 or more; he shall pay the wages on or before 10th of every
month. Has the company implemented this provision?
12. Payment of Minimum Wages: Minimum wages are fixed by the state government and are
revised once in period of six months. It is mandatory for an employer to pay minimum wages
to his workers who are employed by him to do any skilled, unskilled, semi skilled, manual or
clerical work under the Minimum Wages Act, 1948. Contract workers are also eligible to receive
minimum wages. Has it been implemented?
13. Employees’ State Insurance: An Indian multinational pharma company delayed the submission
of return of declaration forms (to be submitted within 10 days of furnishing the particulars) and
return of contribution cards (to be submitted within 42 days from the termination of contribution
period) by about 6 months. The employees’ state insurance corporation (ESIC) prosecuted the
chief executive of the company. The lesson is: no employer can afford to take it casually and
for granted. Have employers taken it seriously? Has an audit been done to find out what is the
frequency of late submission of these returns?
14. Provident Fund: Any employee whose monthly salary exceeds Rs. 6500/- is not covered
under the provisions of the Act. He is defined as an ‘excluded employee’. What happens if an
employee whose monthly salary exceeds Rs. 6500/- but his contribution to PF continues to be
deducted from his salary every month thereafter. Let us find out the answer from Tara
Deshpande. Tara joined Russell Pharma as a personal assistant to the Vice President-Human
Resource on 1st January 2002 on a salary of Rs 3500/- p.m. Three years later, she was
promoted as an officer on special duty in the office of the managing director of the company on
a salary of Rs. 7200/- p.m. Due to an oversight, the employees’ provident fund contribution
@12% of the basic salary was deducted from Tara’s Janauary salary payable in February 2006
despite Human Resource department having sent an advice to PF section of the accounts
department to not to deduct PF contribution from her January salary onwards as she is out of
the coverage of the Provident Fund Act. The matter was referred to the office of the commissioner
of provident fund for recovery of the contribution wrongly deducted. An officer from the
commissioner’s office visited the company for inspection of the records. He told the Human
Resource department “the error is genuine but once the deduction has been made, Tara would
continue to be covered under the provisions of the Act for life as a regular member of the fund
and not as an excluded employee”. This is a serious lapse and a critical issue for labour laws
audit.
15. Payment of Gratuity: Can an employer forfeit gratuity payment? The answer is ‘Yes’. The
grounds of forfeiture are:
A. Financial loss or damage caused by an employee to the extent of the loss so caused.
B. Termination of an employee’s services on account of his violent, riotous, disorderly behaviour
or conduct which has been proved during the course of an independent domestic or
departmental enquiry and he has been held guilty by the enquiry officer.
C. Termination of an employee’s services on account of an offence committed by him involving
moral turpitude. Moral turpitude needs to be defined in absolute terms and has to be proved
beyond doubt. In case of ‘Venu @ Venugopal and others vs. State of Karnataka’, the
Supreme Court held, while dismissing the appeal, that the “accused persons robbed
valuables threatening with knife on the highway at about 9. 00 p. m. Factum of recovery of
articles and material objects used in commission of offence clinchingly established the guilt.
There is no merit in appeal by the accused. No leniency should be shown in reduction of
sentence”. The Court further held “The social impact of the crimes, which, relates to
offences against women, dacoity, kidnapping, misappropriation of public money, treason
and other offences involving moral turpitude or moral delinquency which have great impact
and serious repercussions on the social order and public interest, cannot be lost sight of
and per se require exemplary treatment. Any liberal attitude by imposing meager sentences
or reduction of sentence on account of lapse of time or considerations personal to the
accused should not be shown” (2008 1 MLJ 1356 SC)
16. Employment of Contract Labour: Every establishment which employs 20 or more workmen
as ‘contract labour’ is required to register itself under the Act. Similarly, every contractor who
employs 20 or more workmen is required to obtain a ‘license’ under the Act to execute any work
through contract labour in any establishment. Has the company got itself registered under the
Act as stipulated? Has the company checked, verified and confirmed that every contractor it
has appointed has obtained the license (renewable every year) under the Act?
17. Maternity Benefit: Every woman entitled to maternity benefit under the Maternity Benefit
(Amendment) Act 2008 shall also be entitled to receive from her employer a medical bonus of
one thousand rupees, if no per-natal confinement and post-natal care is provided for by the
employer free of charge. The Central Government may before every three years, by notification
in the Official Gazzette, increase the amount of medical bonus subject to the maximum of
twenty thousand rupees. Has employer taken a notice of this amendment? Employees covered
by ESI Act are not eligible for the maternity benefits under this Act.
18. Misconduct: Sexual Harassment at work: In Vishakha vs. State of Rajasthan (AIR 1997
Supreme Court 3011), Supreme Court of India laid down the guidelines for instituting an anti-
sexual harassment policy at the workplace in public and private sector organizations. The
Industrial Employment Standing Orders Act was amended and ‘sexual harassment at work was
added as‘misconduct’ in the Model Standing Orders. According to the guidelines issued by the
apex court, each orgnaisation and an establishment is expected to frame and implement a
definite policy on ‘sexual harassment at work’ to address this sensitive issue. Those organizations
which have ‘certified standing orders’ must add ‘sexual harassment at work’ as misconduct by
an amendment to the standing orders. Are employers aware of this?
19. Misconduct, Disciplinary Proceedings and Domestic/ Departmental Enquiry: One of the
several reasons of Sanjay Narang losing his job was that he wrote a very vague letter to
Devdas Kamath while terminating his services. The cardinal principle of wring a termination
letter, show cause notice and charge sheet is that “it must not be vague.”
SIMPLY SPEAKING…
Labour laws audit provides a unique opportunity in all its transparency to find out whether
the human resources – organization and its professionals are capable and are having the
adequate resources to support the organization’s stipulated strategies in the proper perspective
and also in understanding whether the professionals entrusted with the management of human
resources are really discharging their duties and responsibilities within the ambit of policies
and programmes and the procedures.
A. Labour laws audit ensures profitable, efficient and optimum growth of the Company’s
operations, objectives, and achievements of its corporate goals within the ambit of the
laws of the Company as well as the laws of the land.
B. Labour laws audit helps in minimizing the legal risks and legal expenses on account of
avoidable and unnecessary litigations and be free from penalties and fines imposed by
legislation and Courts for non compliance of the laid down laws and rules in force.
C. It helps to remove the disability clauses and flaws in written agreements, undertakings
and covenants, bye laws and to avoid payment of damages, claim compensation and
other risk factors with perfection and accuracy in the documentation legally and otherwise
as well.
D. Labour laws audit enables organization to update the registration, records and licenses
in conformity with the laws of the land.
E. The audit of labour laws offer key solutions for potential employee problems like
discipline, unfair labour practices, workers’ claim compensation cases, retirement and
retiral benefits, disputes in wages and salaries and fixation in salaries, overtime payments
and so on.
AUDIT OF LABOUR LAWS COMPLIANCES FOR EMPLOYERS:
1. THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946:

A. Incase an employer decides to opt for ‘certified standing orders’ for his establishment, he has
to submit to the certifying officer ‘draft standing orders’ for certification within 6 months from the
date of applicability of this Act. ‘Draft Standing Orders’ are to be drafted in line with the Model
Standing Orders. It is important to note here that in the absence of certified standing orders,
model standing orders will be applicable to an establishment. (Section 3)
B. Employer has to file a copy of the certified standing orders to the registrar in form III. (Section
8)
C. Employer has to display Certified Standing Orders or Model Standing Orders along with all the
amendments finally certified prominently on the special notice board in English or in the
language understood by the majority of workmen. (Section 9)
D. Employer has to pay subsistence allowance if a workman is suspended pending domestic or
departmental enquiry into the charges leveled against him in a charge sheet @ 50% of wages
for first 90 days of suspension, 75% of wages during 91-180 days of suspension and 100%
wages for period exceeding 181 days suspension. (Section 10-A)
2. THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970:

A. Principal Employer shall register his establishment according to the procedure prescribed in the
Act. (Section 7 to be read with Rule 17)
B. Principal employer can engage only those contractors who have obtained license to employ
contract labour. (Section 12)
C. Principal employer is liable to pay wages and other amenities if a contractor fails to perform his
part of obligation. (Section 21)
D. It is mandatory for the principal employer to depute company’s representative when contractor
is scheduled to disburse wages to his contract workmen to ensure and certify that the
disbursement is in order. (Rule 73)
E. Principal employer is required to maintain the registers and submit returns as follow:
1. Register of contractors in Form XII. (Rule 74)
2. Return in Form VI-B to the inspector mentioning the actual dates of commencement or
completion of contract work, within 15 days of such commencement or completion. (Rule
81(3))
3. Annual return in Form XXV, in duplicate, to the registering authority, by 15th February,
following the end of the year to which it relates. (Rule 82(2))
3. THE INDUSTRIAL DISPUTES ACT, 1947:

A. Chapter V-B of the Act is applicable to an establishment where there are 100 or more
workmen are working. Accordingly, any employer who desires to layoff or retrench workmen or close
down his undertaking, is required to obtain permission to do so from the state government under
sections 25-L to 25-Q. This is a very important provision with reference to strategic planning in
industrial relations and labour laws audit because the state government generally does not give
permission close to down an undertaking for various reasons.
4. THE BOMBAY SHOPS AND ESTABLISHMENT ACT, 1948:

A. Registration of Establishment: Employer is required to register his establishment. (Section 7)
B. Change in Information: Employer is required to inform any change in information as stated in
Form-A by filling and sending Form-E within 30 days of the occurrence of such change.
(Section 8 read with rule 8)
C. Closure of Establishment: Employer is required to inform the inspector of the closure of
establishment within 10 days of the closing of the establishment. (Section 9)
D. Hours of Work, Rest Intervals, Weekly Off and Holidays: Employer is required to inform the
above to the inspector in the beginning of the year but within 30days from the start of the
calendar year. (Sections 14 to 18)
E. Opening and Closing Hours of Shops and Commercial Establishment and Residential Hotels
and Theatres: Employer is required to observe opening and closing hours of shops and
commercial establishments, residential hotels and theatres as prescribed by the authorities
under the Act. (Sections 10, 11, 13 and 19)
F. Employer to display the abstract of the Act: Every employer is required to display the abstract
of this Act and the rules made thereunder, on the notice board along with its translation in the
language which majority of employees understand. (Rule 20)
G. Maintenance of Registers: Under section 62 read with rule 20 of the Act, each employer is
required to furnish the following registers/returns in English/Marathi to the inspector for his
inspection.
1. Register of employment in Form H or J
2. Notice of weekly off in Form L
3. Register of Leave in Form M
4. Leave Book in Form N
5. Muster Roll.
6. Notice of abstract of the Act.
7. Visit Book as per specification.
8. Notice of Change in Form E.
5. THE FACTORIES ACT, 1948: MAJOR AUDIT ISSUES:

1. Register of Adult Workers: In Form 17. (Section 62 read with rules 98 and 99)
2. Register of Child Workers: In Form 19. (Section 75 read with rule 104.
3. Register of Leave with Wages: In Form 20. (Sections 80 (3) and 82 read with rule 104)
4. Leave Book: In Form 20 (Rule 106)
5. Register to record the dates of white washing: In Form 8 (Sections 11 and 19 (3))
6. List of persons employed in confidential position and positions of supervision: (Section 64 read
with rule 100)
7. Muster Roll: In Form 29. (Rule 112 read with rule 122)
8. Register of Accidents and Danger Occurrences: In Form 30 (Section 112 read with rule 123)
9. Health Register: In Form 7. (Section 10 read with rule 18(7a))
10. Inspection Book: In Form 31 (Section 112 read with rule 124)
11. Register to record examination of Hoists and Lifts: (Section 28 read with rule 62)
12. Register for examination of lifting of Machines, Ropes and Lifting Tackles: (Section 29 read with
rule 64)
13. Register of Pressure Plant/Vessels: In Form 13. (Sections 31 and 112 read with rule 65)
14. Annual Returns to be sent to the factories Inspector on or before 1st February every year in
respect of the following matters: In Form 27. (Section 110 read with rule 119)
A. Average number of workers employed daily and normal hours worked per week
B. Leave with wages.
C. Number of discharged and dismissed workmen
D. Wages in lieu of leave
E. Compensatory holidays.
E. Canteens in factories employing more than 250 workmen.
F. Crèches in factories employing 30 or more female employees.
G. Shelters, rest rooms, and lunch rooms in the case of factories 150 or more workmen.
H. Accidents and Statistics in Form 24. (Section 110 read with rule 119)
I. Annual return of Holidays. (Rule 120)
J. Information on closure (temporary closure) of the factories. (Rule 125)
6. THE MATERNITY BENEFIT ACT, 1961:

1. Dismissal or Discharge of Pregnant Woman: Employer cannot dismiss or discharge a women
employee during her absence/ leave due to pregnancy, delivery or miscarriage or illness or
medical termination of pregnancy. (Section 12)
2. Employer cannot deprive her of maternity benefit or medical bonus by such dismissal or
discharge. (Section 12)
3. Employer cannot alter any condition of service to her disadvantage her absence or leave on
any of the maternity grounds. (Section 12)
4. Employer is required to grant the following benefits:
A. Maternity Leave for 12 weeks.
B. Medical Bonus
C. Six weeks leave for miscarriage.
D. Two weeks leave for Tubectomy operation
E. One month leave for illness relating to illness on account of pregnancy.
F. Nursing breaks.
5. Employer cannot ask or force her to report work during the eighth month of her pregnancy.
6. Employer cannot force her to assign any heavy work. Incase she requests for lighter work,
employer is bound to assign her which she can do without any discomfort or harmful to her
health during pregnancy. (Section 4)
7. Employer cannot make any deduction from her salary on account of nursing breaks, ill health,
and maternity leave or leave account of miscarriage, Tubectomy operation or medical termination
of pregnancy. (Section 13)
8. Employer must display of the abstract of the Act: In Form 9. (Section 19 read with rule 11)
9. Employer must maintain the following registers/ records and submit returns. (Section 20):
A. Muster Roll
B. Maternity Benefits Register: in Form 10 (Rule 12 (1))
C. Annual Returns: In Form 11 by 15th January every year. (Rule 15) Records to be preserved
for three years. (Rule 16)
7. THE PAYMENT OF BONUS ACT, 1965:

1. Every Employer shall pay minimum bonus @ 8.33% to all eligible employees, which is equivalent
to one month salary/wages, irrespective whether he has earned profits or incurred the losses
during any financial year. (Section 10)
2. No employer shall pay more than maximum bonus @ 20% to any eligible employee. (Section
11)
3. Bonus is payable by every employer within eight months from the close of any accounting year
unless such period is extended by the central government. (Section 19)
4. Employer shall maintain the following records: Section 26 read with rule 4)
A. A register showing allocable surplus in Form A
B. A register showing the set on and set off of the allocable surplus in Form B. (Section 15)
C. A register showing the details of bonus disbursed with deduction in Form C. (Sections 17
and18)
D. Annual return in Form D within 30 days from the close of financial year. (Section 19)
E. Every employer shall make available all the records/ registers/returns to the inspectors for
inspection. (Section 27)
8. THE PAYMENT OF GRATUITY ACT, 1972:

1. The Act applies to
A. Every factory, mine, oilfield, plantation, port and railway company.
B. Every shop or establishment in which ten or more persons are employed, or were employed,
on any day of the preceding twelve months.
C. All other establishments or class of establishments, in which ten or more employees are
employed, or were employed, or, any day of the preceding twelve months.
D. A shop or establishment to which this Act has become applicable shall continue to be
governed by this Act even if the number of persons employed therein at any time after it has
become so applicable falls below ten.
E. An employee who is covered under the Act must complete five years of continuous service
to become entitled to receive gratuity under the Act. Completion of continuous service of five
years is not necessary where the termination of the employment of any employee is due
to death or disablement:
F. The gratuity is payable @ 15 days wages (last drawn wages) for every completed year of
service. A period of six months or more is taken as a year for the purpose of calculation
of gratuity. The amount of gratuity payable to an employee shall not exceed Rs. three lakh
and fifty thousand.
G. Gratuity is payable upon an employee’s superannuation, or on his retirement or resignation,
or on his death or disablement due to accident or disease.
H. Employer has to register its establishment with the controlling authority. (Section 4-A)
I. If an employer or establishment has its own gratuity fund scheme/policy, it has to obtain
insurance cover. (Section 4-A)
J. Incase of default in payment of gratuity, employer is required to pay simple interest.
J. Employer must display an abstract of the Act and the rules in Form ‘U’ in English and in the
language understood by the majority of the employees.
K. Employer shall not make any deduction from the gratuity which is not permissible under the
Act.
9. THE PAYMENT OF WAGES ACT, 1936:

1. Every employer is required to fix wage periods. (Section 4)
2. Every employer is required to ensure that wages are paid within the periods prescribed under
the Act. (Section 3)
3. Wages are to be paid in current coin or currency. (Section 6)
4. Wages are to be paid on a working day. (Section 5 (4))
5. An abstract of the Act must be displayed in English and in the language understood by the
majority of employees. (Section 25)
6. Every employer shall maintain records and registers in the prescribed forms containing particulars
of persons employed, work performed, wages paid, deductions made and the receipts given.
(Section 13-A)
7. The records must be preserved for three years. (Section 13-A)
8. Deductions from the wages shall be made as permissible under the Act and in such a manner
that an employee gets, in his hands, not less than 25% of his wages.
10. THE WORKMEN’S COMPENSATION ACT, 1923:

1. Employer is required to submit a report of accident resulting in death of workman in Form EE
to the commissioner within seven days of the accident. (Section 10 B)
2. Employer who receives information of an accident may present a memorandum along with an
affidavit, made by himself or any person having the knowledge of the accident, to the commissioner
incorporating the result of any enquiry or investigation, if any.
3. Employer is required to submit a statement in the prescribed form to the commissioner within
30 days of receiving notice, indicating the reasons of for death and his willingness to deposit
compensation for the same (Section 10 A)
4. Employer is required to deposit compensation payable to the legal heirs of the deceased ad
directed by the commissioner.
5. Employer is to maintain a notice book in the prescribed manner.
6. Employer is required to submit an annual return of compensation mentioning the number of
injuries for which compensation has been paid during the year and the amount of compensation
paid. (Section 16)
7. Employer is required to register agreements with the office of commissioner for commutation
of half monthly payments. (Sections 28 and 29)
11. THE EMPLOYEES’ STATE INSURANCE ACT, 1948:

1. Principal employer must register his establishment. (Section 2 A)
2. Principal employer must seek information from every workman about his family to be submitted
in Form 1.
3. Submit all declaration forms along with Form 3 duly filled in along with temporary identification
form, by registered post or through a representative of the company.
4. Submit family declaration form in Form 1-A or Form 2 submitted by the insured person (IP).
5. Submission of annual information to ESI regional office in Form 1-A
6. Pay/deposit employees’ and employer’s contribution. (Section 40)
7. Issue certificate of employment to an employee at his request.
8. Not to discharge or dismiss or punish a workman during the period of receipt of sickness
benefit, maternity benefit, and temporary disablement benefit or when he is under medical
treatment or his absence due to illness duly certified by an ESI medical officer. (Section 69)
9. Not to reduce wages of an insured person for payment of employer’s contribution. (Section 72)
10. Furnish information of abstention of insured person in respect of his sickness or temporary
disablement benefit in Form 10.
11. Submit report of accident, maintenance of accident book and furnish particulars of accident and
report of death.
12. The following registers must be maintained by an employer and preserved for a period of five
years.
A. Register of employees of the factory or establishment in Form 6.
B. Accident book in Form 11.
C. Bound inspection book.
12. THE EMPLOYEES’ PROVIDENT FUND AND MISC. PROVISIONS ACT, 1952:
1. Declaration of employees details in Form 11.
2. Payment of employer’s and employees’ contribution.
3. Preparation and submission of contribution cards and return of contribution cards.
4. Every employee must get a pass book on his becoming the member of the fund.
5. Furnish details of ownership.
6. Consolidated return of employees entitled to become members of the fund with details of wages
as prescribed by the commissioner.
7. Return of employees qualifying to become member for the first time in Form 5
8. Submission of declaration forms in Form 2.
9. Return of employees leaving service in Form 10
10. Return of ownership in Form 5-A.
11. Return of contribution cards in Form 6.
12. Statement of contributions in Form 12 and 12-A
13. Annual statement of contributions in Form 6-A
SIMPLY SPEAKING…
Most of our labour laws are archaic and over sixty years old. The business has changed;
the methods of doing business have undergone a tremendous change but our archaic labour
laws that impose myriad restrictions on manufacturers and service providers, have hamstrung
India’s ambition to be a low-cost centre to rival China and now threaten to spark greater
tensions as layoffs bite in a slowing economy.
India’s labour laws, rated by the World Bank as among the globe’s most rigid, place strict
limits on number of hires and conditions for retrenchment, forcing manufacturers to hire more
casual workers.
A World Bank report on ease of doing business ranked India a lowly 122 of 181 countries,
and suggested greater flexibility in labour laws would help create more jobs and reduce
poverty.
Do labour laws matter?
Yes. They set the direction, if not pace.
Are labour laws the problem?
No, they are ‘a’ problem, not ‘the’ problem.
Do we need labour laws reforms?
Yes. They are long over due. There are too many of them. They need simplification, speed,
accountability, etc. It is significant to observe that most of the provisions of various labour
laws have become fructuous and have lost the relevance as a result the audit of labour laws
becomes meaningless.
CHECKLIST AT A GLANCE: LABOUR LAWS COMPLIANCES:
STATUTORY COMPLIANCES BY EMPLOYERS FOR STATUTORY DEPOSITS, RETURNS AND

INFORMATION:
Month Status From Return/compliance To be sent to
January The Employment ER-1 (rule 6) Quarter ended 31st Dec. local employment
Exchanges exchange previous year Exchange
The factories act,1948 LMNO rule 16 Annual return and Details of competent authority
(1) payment Ending 31st Dec. under the act
the contact labour (R&A) XXIV Rule 82 Half-yearly return by concerned licensing
Act, 1970 & rules (1) Contractor officer
(in duplicate)
The employees’ state 01A ESI Annual information Regional office or sub
Insurance Act, 1948 Regulation about factory/ establ- regional office or
10C ishment covered under the divisional office
act
The Minimum Wages Act, III Rule 21 (4A) Annual Return Inspector under the
February
1948 area concerned
The Payment of Wages V Rule 18 Annual Return Concerned Labour

Act, 1936,& Related (related Mines Commissioner,
Mines Rules Rules) VII, VIII Concerned Regional
Rules 16 Commissioner
related Air
Transport
The Contract Labour XXV Rules 82 Annual returns by Concerned

(R&A) Act,1970, & Rules (2) Principal Employer Registering Officer
April The Apprenticeship Act, APP-2 Half-Yearly return March Concerned Regional
1961 ending Director/
Apprenticeship
Advisor
The Employment ER-1 Rule 6 Quarterly return for quarter Local Employment
Exchanges (CNV) Act, ended Exchange
1952 31st march
The Employees’ 3A/6A Annual Return Concerned Regional

Provident Funds & MP Office
Act, 1952
Employees State 6 Section 44, Quandruplicale along with Concerned local
May
Insurace Act, 1948, Regulation 26 Chalians Monthly return Office or any
Rules& Regulations along with cheque Scheduled Bank
The Employment ER-1 Rule 6 Quarterly return for quater Concerned

June
Exchanges (CNV) ended June Employment Officer
Act, 1959, & Rules
The Factories Act, 1948 Refer to State Half-yearly return Concerned Director/
Rules Inspector
The Contract Labour XXIV Half-yearly return by Concerned Inspector

(R&A) Act, 1970 Contractor
July The Employment ER-1 Rule 6 Quarterly return for quarter Concerned
Exchanges (CNV) ended June Employment Officer
Act, 1959, and Rules
The Factories Act, 1948 Refer to State Half-yearly return Concerned Director/
Rules Inspector
The Contract Labour XXIV Half-yearly return by Concerned Inspector

(R&A) Act, 1970 Contractor
October The Apprenticeship APP-2 Half-Yearly return September Dy. Apprenticeship

Act,1961 ending Advisor
The Employment ER-1 Rule 6 Quarterly return for the quarter Concerned
Exchanges (CNV) Act, ended September Employment Officer
1959, and Rules
The Contract Labour VII Rule 28 (2) Application for renewal of Concerned Inspector
(R&A) Act, 1970, and Refer to State Licence with Licence Renewal
Rules Rules Fee
November The Employees State Section44, Summary of contribution(Form Concerned local office
Insurance Act, 1948 Regulation26 5) in quadruplicate along with
Challans
Annual return - within 30 days

December The Payment of Bonus D Rule 5 after the expiry of 8 months Concerned Inspector
Act, 1965, and Rules from the close of the under the Act
accounting year
Every Month
Statute Form Return/Compiance To be sent to
The Employees’ Challans Remittance of Contributions Concerned Regional Office

Provident Funds and
MP Act, 1952
The Employees’ State Challans Remittance of Contributions Concerned Regional Office

Insurace Act, 1948
The Apprenticeship 4 Rule Bill for reimbursement with seven

Act,1961 14(3) days of joining
3 Rule 14 (7) Report for record of basic training

etc. for the period ending Mar.15th.
Apr. and ending Sep. 15th. Oct
The Employees’ 5,10 & 12 A Return of employees qualifying/ Concerned Regional Office
Provident leaving and monthly
Date Statute Form Return/Compliance To be sent to
Within 15 days The Contract Labour FormVI B Rule 81 Commencement Concerned

(R& A) Act, 1970, & (3) and/or completion Inspector under the
Rules of each contract Act
Imediately in The Employees’ State Form 16 Report of accident Nearest Local Office
case of death & Insurance Act, 1948 Regulation 68 and Insurace Medical
within 48 hours in Officer
ordinary cases
Forthwith in case The Factories’ Act, Section 88 of the Report/Notification Also to DM/SDM, O/I
of accident 1948 Act (in Delhi of accident to Nearest Police
resulting into Factories Rules, Inspecotr of Station & Relative of
death or injury Rule 96, Form 18) Factories by Injured or deceased
likely to result in telephone, special person
death messenger or
telegram & to
confirm within 12
hours
Within 30 days of Payment of Gratuity Form A Notice of opening Concerned

the applicability Act 1972 Controlling Authority
of the Act
No time Payment of Grauity No Form Intimation when Concerned

stipulated Act, 1972 Prescribed gratuity is paid to Controlling Authority
an employee
Within 7 days of The Workmen’s EE Section 1oB, Report of serious Concerned

accident Compensation Act, Rule 11 bodily injuries/fatal Commissioner of
1923 accidents Workmen’s
Compensation
Note: since the state Governments are also empowered to make Rules, it will be appropriate to consult the State Rules. The details, as
given, be treated as illustrative and not exhaustive. For further details, reference to be made to the particular Act and the Rules.
CASE STUDY ONE FOR PRACTICE
IN THE HIGH COURT OF JUDICATURE AT MUMBAI

MANAGEMENT OF DEEPAK FERTILIZERS LIMITED
(PETITIONERS)
vs.
PRESIDING OFFICER LABOUR COURT MUMBAI AND OTHERS
(RESPONDENTS)
COMPROMIS:
1. Workmen Raman Arora and Darshan Dole were dismissed from the services of the company
on 15.01 2001, after the enquiry officer found that the charges leveled against them were proved
beyond doubt, for misconduct such as using abusive language and preventing production by
stopping machines.
2. Aggrieved over the order of the management, the workers approached the Labour Court (matter
was referred for adjudication by the government) for seeking reinstatement with all back wages.
3. The case of the management before the Labour Court was that the activities of the workers
amounted to serious acts of misconducts under the standing orders of the company and
considering the gravity of the misconducts and the charges leveled against them, they were
dismissed from the services of the company and therefore their dismissal was proper and as
such they were not entitled for reinstatement with back wages.
4. The Labour Court, after analyzing the material and the witnesses produced before it, set aside
the punishment of dismissal and ordered the reinstatement of the workers, continuity of service
with all back wages and other benefits. The Labour Court arrived at this decision after
considering cardinal principle that the punishment should be proportionate to the gravity of the
misconduct.
5. Not satisfied with the above order of the Labour Court, the management of the company
approached the Hon’ble High Court Mumbai by way of writ petition under Article 226 of the
Constitution of India.
6. The Counsel/Advocate appearing on behalf of the workers contented before the court that the
management has victimized these two workers on pick and chose basis as there were 50 other
workmen who had stopped the machines and as such different action between them and other
workers was illegal and malafide.
7. The Counsel/Advocate appearing on behalf of the management contended that both abusing
the superiors and stopping production are serious misconducts and deserve extreme punishment
of dismissal, hence the punishment imposed by the disciplinary authority can not be interfered
with.
QUESTIONS:
1. Under which labour law and what sections, was this appeal filed by Deepak Fertilizers before
the Bombay High Court?
2. What are the major disputes/issues between the company and the workmen?
3. Which other Acts in labour laws are applicable in this dispute?
4. Draw a checklist, with reference to this case, for labour laws audit?
CASE STUDY TWO FOR PRACTICE

RELIANCE INDUSTRIES MUMBAI (APPELLANT)
vs.
SUDHIR KUMAR DHINGRA (RESPONDENT)
COMPROMIS:
1. Sudhir Kumar Dhingra was appointed as supervisor on 24th January 2002 by the appellant in
the oil testing and handling department. His duties were issuing delivery orders, maintaining
musters, handling cargo and shipping, customer relationship management, documentation and
billing. His salary was fixed at Rs. 3110/- p.m. His services were confirmed after 6 months. His
services could be terminated by giving one month notice from either side or one month salary
in lieu of notice.
2. The appellant alleged that the respondent had withdrawn an amount of Rs. 45000/- as expenses
against the jobs done but vouchers produced in this respect were fudged and falsified. The
management ordered departmental enquiry against him and the enquiry officer held him guilty
of the charges of misappropriation of company’s funds. Subsequently his services were
terminated by an order of dismissal on 5th March 2004. The dismissed workman approached
the Industrial Tribunal (after his case was referred for adjudication) for relief.
3. Management of Reliance Industries objected to the maintainability of the reference before the
Industrial Tribunal on the ground Shri Dhingra was appointed as a supervisor and as such he
was in the managerial cadre and was also sent abroad for higher education and international
oil testing procedures and immediately before his dismissal, he was drawing a salary of Rs.
5200/- p.m more than statutorily prescribe limit under the Act and thus he was not a workman
as defined under the Act.
4. The Industrial Tribunal decided against the Reliance Industries and upheld that Shri Dhingra
was a workman and the reference to the Industrial Tribunal was justified and was in order under
the provisions of the Industrial Disputes Act.
5. Aggrieved by the order of the Industrial Tribunal, the management of the Reliance Industries
opposed the view of the Industrial Tribunal and filed a petition in Hon’ble Mumbai High Court
contending that Shri Dhingra was not a workman under the provisions of the Industrial Disputes
Act and as such he out side the preview of the definition of workman under the Act.
QUESTIONS:
This appeal was filed by Reliance Industries before the Bombay High Court under the Industrial
Disputes Act. Find out the following:
1. What are the relevant sections of the Act in which the appeal was filed?
2. What are the other Acts of legislation which are applicable in this case?
3. What are the various issues/disputes mentioned in this case for which the company would need
to form policy guidelines which will become the basis of labour laws audit?
4. What is your checklist, based on this case, for labour laws audit?
5. If you are Sudhir Kumar Dhingra, how would you argue your case before the High Court?
CASE STUDY THREE FOR PRACTICE

ASHOK KUMAR JAIN (PETITIONER)
vs.
BOMBAY SMALL SCALE INDUSTRIES ASSOCIATION (RESPONDENT)
COMPROMIS:
1. Ashok Kumar Jain - a workman employed by the respondent raised an industrial dispute under
section 10 (4-A) of the Act alleging that he was appointed on 3rd March 2001 by the respondent
on a salary of Rs. 2500/- p.m plus other allowances. His services were confirmed after six
months. Thereafter, he was informed on 24th July 2003 that his services were not required from
24th August 2003 on the ground of financial difficulties. He challenged the refusal to work before
the 3rd Labour Court Mumbai. The main issue which was raised before the Labour Court was
“whether the workman is workman under section 2 (s) of the Act?”
2. The labour Court on consideration of the facts and the merits of the case held that the
respondent is not an industry and rejected the dispute.
3. The petitioner argued before the High Court that the Bombay Small Scale Industries Association,
as per their Memorandum of Association, is engaged in several professional, technical and
consultation services and also undertakes research work and thus it is an industry within the
meaning of section 2 (j) of the Act and the association which undertakes research work is also
an industry as per the Supreme Court Judgements in several cases quoted by it.
4. The respondent contented that the Association only promotes the development of Small Scale
Industries and the consultancy is done with the members of the Association and no research
work is under taken and therefore it is not an industry as claimed by the petitioner.
5. It was also submitted that the Industries are run by the individual member of the Association
and that the Association has no control over them and hence the reference of the dispute over
discontinuation of services of the petitioner to the Labour Court is not maintainable.
QUESTIONS:
1. Draw a checklist, for audit, in favour of Bombay Small Scale Industries Association that the
association is not Industry under section 2 (j) of the Industrial disputes Act, 1947.
2. Develop a checklist, for audit, in support of Ashok Kumar Jain that Bombay Small Scale
Industries Association is ‘Industry’ within the meaning of section 2 (j) of the Industrial Disputes
Act, 1947 and he is workman under section 2 (s) of the Act?

1. Why Sanjay Narang lost his job with Madhumati Prakashans? Explain in details.
2. Re-draft the letter of termination which Sanjay Narang sent to Devdas Kamath terminating his
services on account of his absenteeism.
3. Why labour laws audit is important?
4. What are the various critical issues in labour laws for labour laws audit?
5. Are labour laws important? Do we need reforms in labour laws so that the audit becomes
simpler as against the present complex system and too many compliances?
LEVEL TEN
WORKPLACE COMPLIANCE: AUDIT OF SAFETY PROVISIONS

UNDER THE FACTORIES ACT, 1948
1. GENERAL:
1. Do you have an active safety and health programme in operation that deals with general safety
and health programme elements as well as management of hazards specific to your worksite?
2. Is one person clearly responsible for the overall activities of the safety and health program?
3. Do you have a safety committee or group made up of management and labour representatives
that meets regularly and reports in writing on its activities?
4. Do you have a working procedure for handling in-house employee complaints regarding safety
Are you keeping your employees advised of the successful effort and accomplishments you
and/or your safety committee have made in assuring they will have a workplace that is safe and
healthful?
6. Have you considered incentives for employees or workgroups who have excelled in reducing
workplace injuries/illnesses?
7. Are all required training plans in place?
8. Are all standard operating procedures in place and available to employees?
2. PERSONAL PROTECTIVE EQUIPMENT:
9. Are employers assessing the workplace to determine if hazards that require the use of personal
protective equipment (for example, head, eye, face, hand, or foot protection) are present or are
likely to be present?
10. If hazards or the likelihood of hazards are found, are employers selecting and having affected
employees use properly fitted personal protective equipment suitable for protection from these
hazards?
11. Has the employee been trained on personal protection procedures that is, what (ppp is)
necessary for a job task, when they need it, and how to properly do it?
12. Are protective goggles or face shields provided and worn where there is any danger of flying
particles or corrosive materials?
3. TRANSIT INDUSTRIAL SAFETY MANAGEMENT:
13. Are approved safety glasses required to be worn at all times in areas where there is a risk of
eye injuries such as punctures, abrasions, contusions or burns?
14. Are employees who need corrective lenses (glasses or contacts) in working environments
having harmful exposures, required to wear only approved safety glasses, protective goggles,
or use other medically approved precautionary procedures?
15. Are protective gloves, aprons, shields, or other means provided and required where employees
could be cut or where there is reasonably anticipated exposure to corrosive liquids, chemicals,
blood, or other potentially infectious materials?
16. Are hard hats provided and worn where danger of falling objects exists?
17. Are hard hats inspected periodically for damage to the shell and suspension system?
18. Is appropriate foot protection required where there is the risk of foot injuries from hot, corrosive,
or poisonous substances, falling objects, crushing or penetrating actions?
19. Are approved respirators provided for regular or emergency use where needed?
20. Is all protective equipment maintained in a sanitary condition and ready for use?
21. Do you have eye wash facilities and a quick drench shower within the work area where
employees are exposed to injurious corrosive materials? Where special equipment is needed
for electrical workers, is it available?
22. Where food or beverages are consumed on the premises, are they consumed in areas where
there is no exposure to toxic material, blood, or other potentially infectious materials?
23. Is protection against the effects of occupational noise exposure provided when sound levels
exceed those of the standard noise standard?
24. Are adequate work procedures, protective clothing and equipment provided and used when
cleaning up spilled toxic or otherwise hazardous materials or liquids?
25. Are there appropriate procedures in place for disposing of or decontaminating personal protective
equipment contaminated with, or reasonably anticipated to be contaminated with, blood or other
potentially infectious materials?
4. FLAMMABLE AND COMBUSTIBLE MATERIALS:
26. Are combustible scrap, debris, and waste materials (oily rags, etc.) stored in covered metal
receptacles and removed from the worksite promptly?
27. Is proper storage practised to minimise the risk of fire including spontaneous combustion?
28. Are approved containers and tanks used for the storage and handling of flammable and
combustible liquids?
29. Are all connections on drums and combustible liquid piping, vapour and liquid tight?
30. Are all flammable liquids kept in closed containers when not in use (for example, parts cleaning
tanks, pans, etc.)?
31. Are bulk drums of flammable liquids grounded and bonded to containers during dispensing?
32. Do storage rooms for flammable and combustible liquids have explosion-proof lights?
33. Do storage rooms for flammable and combustible liquids have mechanical or gravity ventilation?
34. Is liquidefied petroleum gas stored, handled, and used in accordance with safe practices and
standards?
35. Are “NO SMOKING” signs posted on liquidfied petroleum gas tanks?
36. Are liquefied petroleum storage tanks guarded to prevent damage from vehicles?
37. Are all solvent wastes and flammable liquids kept in fire-resistant, covered containers until they
are removed from the worksite?
38. Is vacuuming used whenever, possible rather than blowing or sweeping combustible dust? Are
firm separators placed between containers of combustibles or flammables, when stacked one
upon another, to assure their support and stability?
39. Are fuel gas cylinders and oxygen cylinders separated by distance, and fire-resistant barriers,
while in storage?
40. Are fire extinguishers selected and provided for the types of materials in areas where they are
to be used?
a. Class A Ordinary combustible material fires.
b. Class B Flammable liquid, gas or grease fires.
c. Class C Energized-electrical equipment fires.
41. Are appropriate fire extinguishers mounted within 75 feet of outside areas containing flammable
liquids, and within 10 feet of any inside storage area for such materials?
42. Are extinguishers free from obstructions or blockage?
43. Are all extinguishers serviced, maintained and tagged at intervals not to exceed one year and
maintained monthly?
44. Are all extinguishers fully charged and in their designated places?
45. Where sprinkler systems are permanently installed, are the nozzle heads so directed or
arranged that water will not be sprayed into operating electrical switch boards and equipment?
46. Are “NO SMOKING” signs posted where appropriate in areas where flammable or combustible
materials are used or stored?
47. Are safety cans used for dispensing flammable or combustible liquids at a point of use?
48. Are all spills of flammable or combustible liquids cleaned up promptly?
49. Are storage tanks adequately vented to prevent the development of excessive vacuum or
pressure as a result of filling, emptying, or atmosphere temperature changes?
50. Are storage tanks equipped with emergency venting that will relieve excessive internal pressure
caused by fire exposure?
51. Are “NO SMOKING” rules enforced in areas involving storage and use of hazardous materials?
5. HAND AND PORABLE POWERED TOOLS:
52. Are all tools and equipment (Equipment) used by employees at their workplace in good
condition?
53. Are hand tools such as chisels and punches, which develop mushroomed heads during use,
reconditioned or replaced as necessary?
54. Are broken or fractured handles on hammers, axes and similar equipment replaced promptly?
55. Are worn or bent wrenches replaced regularly?
56. Are appropriate handles used on files and similar tools?
57. Are employees made aware of the hazards caused by faulty or improperly used hand tools?
58. Are appropriate safety glasses, face shields, etc. used while using hand tools or equipment
which might produce flying materials or be subject to breakage?
59. Are jacks checked periodically to ensure they are in good operating condition?
60. Are tool handles wedged tightly in the head of all tools?
61. Are tool cutting edges kept sharp so the tool will move smoothly without binding or skipping?
62. Are tools stored in dry, secure locations where they won’t be tampered with?
63. Is eye and face protection used when driving hardened or tempered spuds or nails?
6. PORTABLE (POWER OPERATED) TOOLS AND EQUIPMENT:
64. Are grinders, saws and similar equipment provided with appropriate safety guards?
65. Are power tools used with the correct shield, guard, or attachment, recommended by the
manufacturer?
66. Are portable circular saws equipped with guards above and below the base shoe? Are circular
saw guards checked to assure they are not wedged up, thus leaving the lower portion of the
blade unguarded?
67. Are rotating or moving parts of equipment guarded to prevent physical contact?
68. Are all cord-connected, electrically operated tools and equipment effectively grounded or of the
approved double insulated type?
69. Are effective guards in place over belts, pulleys, chains, sprockets, on equipment such as
concrete mixers, and air compressors?
70. Are portable fans provided with full guards or screens having openings ½ inch or less?
71. Is hoisting equipment available and used for lifting heavy objects, and are hoist ratings and
characteristics appropriate for the task?
72. Are ground-fault circuit interrupters provided on all temporary electrical 15 and 20 ampere
circuits, used during periods of construction?
73. Are pneumatic and hydraulic hoses on power operated tools checked regularly for deterioration
or damage?
7. LOCKOUT/TAGOUT PROCEDURES:
74. Is all machinery or equipment capable of movement, required to be de-energised or disengaged
and locked-out during cleaning, servicing, adjusting or setting up operations, whenever, required?
75. Where the power disconnecting means for equipment does not also disconnect the electrical
control circuit:
(a) Are the appropriate electrical enclosures identified?
(b) Is means provided to assure the control circuit can also be disconnected and locked-out?
76. Is the locking-out of control circuits in lieu of locking-out main power disconnects prohibited?
77. Are all equipment control valve handles provided with a means for locking-out?
78. Does the lockout procedure require that stored energy (mechanical, hydraulic, air, etc.) be
released or blocked before equipment is locked-out for repairs?
79. Are appropriate employees provided with individually keyed personal safety locks?
80. Are employees required to keep personal control of their key(s) while they have safety locks
in use?
81. Is it required that only the employee exposed to the hazard, place or remove the safety lock?
82. Is it required that employees check the safety of the lockout by attempting a start-up after
making sure no one is exposed?
83. Are employees instructed to always push the control circuit stop button immediately after
checking the safety of the lockout?
84. Is there a means provided to identify any or all employees who are working on locked-out
equipment by their locks or accompanying tags?
85. Are a sufficient number of accident preventive signs or tags and safety padlocks provided for
any reasonably foreseeable repair emergency?
86. When machine operations, configuration or size requires the operator to leave his or her control
station to install tools or perform other operations, and that part of the machine could move if
accidentally activated, is such element required to be separately locked or blocked out?
87. In the event that equipment or lines cannot be shut down, locked-out and tagged, is a safe job
procedure established and rigidly followed?
8. CONFINED SPACES:
88. Are confined spaces thoroughly emptied of any corrosive or hazardous substances, such as
acids or caustics, before entry?
89. Are all lines to a confined space, containing inert, toxic, flammable, or corrosive materials
valved off and blanked or disconnected and separated before entry?
90. Are all impellers, agitators, or other moving parts and equipment inside confined spaces locked-
out if they present a hazard?
91. Is either natural or mechanical ventilation provided prior to confined space entry?
92. Are appropriate atmospheric tests performed to check for oxygen deficiency, toxic substances
and explosive concentrations in the confined space before entry?
93. Is adequate illumination provided for the work to be performed in the confined space?
94. Is the atmosphere inside the confined space frequently tested or continuously monitored during
conduct of work? Is there an assigned safety stand by employee outside of the confined space.
When required, whose sole responsibility is to watch the work in progress, sound an alarm if
necessary, and render assistance?
95. Is the standby employee appropriately trained and equipped to handle an emergency?
96. Is the standby employee or other employees prohibited from entering the confined space
without lifelines and respiratory equipment if there is any question as to the cause of an
emergency?
97. Is approved respiratory equipment required if the atmosphere inside the confined space cannot
be made acceptable.
98. Is all portable electrical equipment used inside confined spaces either grounded and insulated,
or equipped with ground fault protection?
99. Before gas welding or burning is started in a confined space, are hoses checked for leaks,
compressed gas bottles forbidden inside of the confined space, torches lighted only outside of
the confined area and the confined area tested for an explosive atmosphere each time before
a lighted torch is to be taken into the confined space?
100. If employees will be using oxygen-consuming equipment such as salamanders, torches, and
furnaces in a confined space, is sufficient air provided to assure combustion without reducing
the oxygen concentration of the atmosphere below 19.5 percent by volume?
101. Whenever, combustion-type equipment is used in a confined space, are provisions made to
ensure the exhaust gases are vented outside of the enclosure?
102. Is each confined space checked for decaying vegetation or animal matter which may produce
methane?
103. Is the confined space checked for possible industrial waste which could contain toxic properties?
104. If the confined space is below the ground and near areas where motor vehicles will be
operating, is it possible for vehicle exhaust or carbonmonoxide to enter the space?
10. ELECTRICAL:
105. Do you specify compliance under the Factories Act for all contract electrical work?
106. Are all employees required to report as soon as practicable any obvious hazard to life or
property observed in connection with electrical equipment or lines?
107. Are employees instructed to make preliminary inspections and/or appropriate tests to determine
what conditions exist before starting work on electrical equipment or lines?
108. When electrical equipment or lines are to be serviced, maintained or adjusted, are necessary
switches opened, locked-out and tagged whenever possible?
109. Are portable electrical tools and equipment grounded or of the double insulated type?
110. Are electrical appliances such as vacuum cleaners, polishers, and vending machines grounded?
111. Do extension cords being used have a grounding conductor?
112. Are multiple plug adaptors prohibited?
113. Are ground-fault circuit interrupters installed on each temporary 15 or 20 ampere, 120 volt AC
circuit at locations where construction, demolition, modifications, alterations or excavations are
being performed?
114. Are all temporary circuits protected by suitable disconnecting switches or plug connectors at
the junction with permanent wiring?
115. Do you have electrical installations in hazardous dust or vapour areas? If so, do they meet the
standards under the Factories Act?
116. Is exposed wiring and cords with frayed or deteriorated insulation repaired or replaced promptly?
117. Are flexible cords and cables free of splices or taps?
118. Are clamps or other securing means provided on flexible cords or cables at plugs, receptacles,
tools, equipment, etc., and is the cord jacket securely held in place?
119. Are all cord, cable and raceway connections intact and secure?
120. In wet or damp locations, are electrical tools and equipment appropriate for the use or location
or otherwise protected?
121. Is the location of electrical power lines and cables (overhead, underground, under floor, other
side of walls) determined before digging, drilling or similar work is begun?
122. Are metal measuring tapes, ropes, hand lines or similar devices with metallic thread woven into
the fabric prohibited where they could come in contact with energised parts of equipment or
circuit conductors?
123. Is the use of metal ladders prohibited in areas where the ladder or the person using the ladder
could come in contact with energized parts of equipment, fixtures or circuit conductors?
124. Are all disconnecting switches and circuit breakers labeled to indicate their use or equipment
served?
125. Are disconnecting means always opened before fuses are replaced?
126. Do all interior wiring systems include provisions for grounding metal parts of electrical raceways,
equipment and enclosures?
127. Are all electrical raceways and enclosures securely fastened in place?
128. Are all energised parts of electrical circuits and equipment guarded against accidental contact
by approved cabinets or enclosures?
129. Is sufficient access and working space provided and maintained about all electrical equipment
to permit ready and safe operations and maintenance?
130. Are all unused openings (including conduit knockouts) in electrical enclosures and fittings
closed with appropriate covers, plugs or plates?
131. Are electrical enclosures such as switches, receptacles, and junction boxes provided with tight
fitting covers or plates?
132. Are disconnecting switches for electrical motors in excess of two horse-power, capable of
opening the circuit when the motor is in a stalled condition, without exploding? (Switches must
be horse-power rated equal to or in excess of the motor hp rating.) Is low voltage protection
provided in the control device of motors driving machines or equipment which could cause
probable injury from inadvertent starting?
133. Is each motor disconnecting switch or circuit breaker located within sight of the motor control
device?
12. WORKING SURFACES:
138. Is a documented, functioning house-keeping programme in place?
139. Are all worksites clean, sanitary, and orderly?
140. Are work surfaces kept dry or are appropriate means taken to assure the surfaces are slip-
resistant?
141. Are all spilled hazardous materials or liquids, including blood and other potentially infectious
materials, cleaned up immediately and according to proper procedures?
142. Is combustible scrap, debris and waste stored safely and removed from the worksite properly?
143. Are accumulations of combustible dust routinely removed from elevated surfaces including the
over-head structure of buildings, etc.?
144. Is combustible dust cleaned up with a vacuum system to prevent the dust from going into
suspension?
145. Is metallic or conductive dust prevented from entering or accumulating on or around electrical
enclosures or equipment?
146. Are covered metal waste cans used for oily and paint-soaked waste?
13. WALKWAYS:
147. Are aisles and passageways kept clear?
148. Are aisles and walkways marked as appropriate?
149. Are wet surfaces covered with non-slip materials?
150. Are holes in the floor, sidewalk or other walking surface repaired properly, covered or otherwise
made safe?
151. Is there safe clearance for walking in aisles where motorized or mechanical handling equipment
is operating?
152. Are materials or equipment stored in such a way that sharp projectives will not interfere with
the walkway?
153. Are spilled materials cleaned up immediately?
154. Are changes of direction or elevation readily identifiable?
155. Are aisles or walkways that pass near moving or operating machinery, welding operations or
Is adequate headroom provided for the entire length of any aisle or walkway?
157. Are standard guardrails provided wherever, aisle or walkway surfaces are elevated more than
30 inches above any adjacent floor or the ground?
159. Are bridges provided over conveyors and similar hazards?
14. STAIRS AND STAIRWAYS:
160. Are standard stair rails or handrails on all stairways having four or more risers?
161. Are all stairways at least 22 inches wide?
162. Do stairs have landing platforms not less than 30 inches in the direction of travel and extend
22 inches in width at every 12 feet or less of vertical rise?
163. Do stairs angle no more than 50 and no less than 30 degrees?
164. Are step risers on stairs uniform from top to bottom?
165. Are steps on stairs and stairways designed or provided with a surface that renders them slip
resistant?
166. Are stairway handrails located between 30 and 34 inches above the leading edge of stair
treads?
167. Do stairway handrails have at least 3 inches of clearance between the handrails and the wall
or surface they are mounted on?
168. Where doors or gates open directly on a stairway, is there a platform provided so the swing of
the door does not reduce the width of the platform to less than 21 inches?
169. Where stairs or stairways exit directly into any area where vehicles may be operated, are
adequate barriers and warnings provided to prevent employees stepping into the path of traffic?
170. Do stairway landings have a dimension measured in the direction of travel, at least equal to the
width of the stairway?
14.EMERGENCY MANAGEMENT PLAN:
171. Do employees know who to contact and what to do in an emergency?
15. ACCIDENT INVESTIGATION:
172. Have we complied with all the provisions of the Factories Act in relation to accidents and
accident prevention?
173. Have the unsafe acts or unsafe conditions leading directly to the accident been identified?
174. Have the indirect causes leading indirectly to the accident been identified (management
policies, management decisions, environmental factors personal)?
175. Have both the direct and indirect costs of the accident been identified?
176. Has the accident investigation team been adequately trained?

177. What training has the accident prevention team received?
178. Is an investigative procedure plan in place?
179. Within the investigative procedures plan is it clearly identified who will perform the on-site
investigation, secure the scene, photograph the scene, gather input (interviews) from witnesses,
as well as document environmental conditions?
180. Is all the fire fighting equipment in place?
181. Is fire fighting training taking place regularly? Have all the employees in the workplace have
received the fire fighting training?
16. MEANS OF EGRESS:
181. Are all passage ways clean, clear, in good repair and with no obstructions that could create a
hazard?
182. Are permanent aisles and passage ways properly marked?
183. Are all passage ways, storerooms and service rooms clean and orderly?
184. Are all workroom floors maintained in a clean and dry (as far as possible) condition?
185. Are covers and/or guardrails provided to protect personnel from open pits, tanks or vats?
186. Are permanent handrails installed on all fixed stairs?
187. Does the facility have an emergency egress plan?
188. Are all emergency exits properly marked?
17. MACHINE GUARDING:
189. Does the workplace have a machine-safeguarding programme?
190. Are all major moving parts on fixed machinery guarded?
191. Are machine guards easy to remove?
192. Do safeguards prevent worker’s hands, arms, and other body parts from making contact with
dangerous machinery?
193. Do safeguards ensure that no object will fall into the moving parts?
194. Have safeguards been tampered with in anyway?
195. Have all employees been properly trained on the use of the machinery?
196. Has the training been properly documented?
197. Has the emergency plan been reviewed with local emergency response authorities (police,
fire)?
198. Has the emergency plan been practised, corrected and updated?
199. When the emergency plan is activated, is there a clear chain of command for your facility’s
response teams?
200. Is communications equipment addressed in the emergency plan?
201. When having to evacuate a transit facility, are there designated gathering points for people to
meet? What measure have been planned and practised to avoid stampede
202. Has a workplace/facility hazard evaluation been performed and practised?

203. Has a resource/materials inventory (batteries, cots, radios, fuel, generators) been integrated in
the emergency plan?

1. Define Human Resource Audit. What are its characteristics?
2. Why Human Resource Audit is necessary? What is its scope? What are the benefits of Human Resource
Audit?
3. What are the purposes of Human Resource Audit? What are its advantages?
4. What is the conceptual framework of Human Resource Audit at Hide Technology? Support your answer
with examples.
5. Why Human Resource Audit is considered an important tool in human resource management? What is four
step approach in Human Resource Audit?
6. What is business strategy? Why audit of business strategy becomes necessary? What are the steps/
methods of conducting business strategy audit? What mistakes can occur while conducting the audit?
7. What is full and comprehensive Human Resource Audit? Write its characteristics and advantages?
8. What is business goal? How does one conduct the audit of business goals of a company?
9. Define business assumption? What is the method of conducting audit of business assumption?

Audit of Human Resource Competencies, Strategies, Systems, Structures........ 551
t er
ap
AUDIT OF HUMAN
h
11
C
RESOURCE
COMPETENCIES,
STRATEGIES, SYSTEMS,
STRUCTURES AND
FUNCTIONAL ROLES OF
HUMAN RESOURCE
HPH
topics:
 Definitions of Competency
 Communication Competency.
 Strategic Action Competency
 Global Awareness Competency
 Self Management Competency
 Change Management Competency
 Human Resource Management Competency
 Leadership and Team Management Competency
 Techniques of Audit of Competencies.
 Audit of Human Resource Strategies
 Audit of Human Resource Systems
 Audit of Human Resource Structures
 Audit of Functional Roles of Human Resources
CHAPTER ELEVEN
AUDIT OF HUMAN RESOURCE COMPETENCIES, STRATEGIES,

SYSTEMS, STRUCTURE AND FUNCTIONAL ROLES OF HUMAN
RESOURCE
LEVEL ONE: AUDIT OF HUMAN RESOURCE COMPETENCIES 553 - 556
LEVEL TWO: AUDIT OF HUMAN RESOURCE STRATEGIES 557 - 558
LEVEL THREE: AUDIT OF HUMAN RESOURCE SYSTEMS 559 - 562
LEVEL FOUR: AUDIT OF HUMAN RESOURCE STRUCTURES 563 - 568
LEVEL FIVE: INTERVIEW AREAS, DIMENSIONS AND QUESTIONS 569 - 576
FOR AUDIT OF HUMAN RESOURCE DEVELOPMENT
SYSTEMS
LEVEL SIX: AUDIT OF FUNCTIONAL ROLES OF HUMAN RESOURCE 577 - 586
LEVEL ONE
AUDIT OF HUMAN RESOURCE COMPETENCIES
A. COMPETENCY: TODAY’S BUZZWORD:

1. Human resource (HR) in any organization can be classified in to four categories using two
simple yet effective criteria, first, the ability to learn and the second is willingness to learn.
Individuals who are high on both counts are the stars of the workplace. They need to be
encouraged and rewarded. Individuals who are low on both dimensions often may need to be
retrenched in the interests of maintaining or improving organizational efficiency.
2. The in-betweens are those who are high on the ability to learn but low on willingness to learn,
who need to be re-trained; and those who are high on the willingness to learn but low on the
ability to learn, who need to be redeployed. Many organizations however, are unable to
effectively manage these four categories of employees, often because they are unable to match
employee with category reliably which means that such employees lack competencies and
skills set which are required to perform a given job.
B. DEFINING COMPETENCY:
Competency is a combination of skills, job attitudes and knowledge which is reflected in job
behaviour that can be observed, measured and evaluated. Competency is a determining factor for
performance. The focus of competency is behaviour which is an application of skills, job attitude and
knowledge. Competencies are a combination of several entities, motives, traits, self-concepts, attitudes
or values, skills and abilities all of which can differentiate superior performers from average performers.
C. COMPETENCIES TAKE A COMPOSITE VIEW OF AN EMPLOYEE’S ABILITY TO PERFORM:

Since competencies take a composite view of an employee’s ability to perform, they go beyond
mere job knowledge. This becomes particularly useful when the definition of jobs itself changes under
external competitive pressures. Consider the case of the automobile sector in India. In order to
survive, Indian vehicle manufacturers have had to up-grade products by replacing manually operated
product features with electronically controlled ones. An impact of this product change has been a
change in job specifications. An auto company today, may need maintenance and service engineers
who, in addition to being mechanical engineers, also have an understanding of electronics and
electrical engineering. In such situations, an audit of competencies possessed by company executives
helps the human resource department to take decisions for re-deployment and retraining of employees
according to business needs.
2. SEVEN HUMAN RESOURCE COMPTENCIES FOR HUMAN RESOURCE AUDIT:
A. Communication Competency: Communication competency is our ability to effectively transfer
and exchange information that leads to understanding between us and others. Because managing
involves getting work done through other people, communication competency is very essential to
effective human resource audit.
B. Strategic Action Competency:
1. Understanding the Business.
2. Understanding the organization.
3. Taking strategic action and decision-making.
C. Global Awarness Competency:

1. Cultural knowledge and understanding of global business.
2. Stay informed of political and social and economic trends and events around the world.
3. Understand the impact of global events on the organization.
4. Understand read and speak more than one international language.
5. Understanding the national, ethnic and cultural differences.
6. Adapting to novel and new situations quickly.
7. Appropriately adjusting own behaviour when interacting with people from various national,
ethnic and cultural backgrounds.
D. Self Management Competency:
1. Ethical and integrity conduct.
2. Personal drive and resilence.
3. Balancing work and life demands.
4. Self awareness and development.
E. Change Management Competency:
1. Innovation and creativity.
2. Transformation.
3. Problem-solving.
4. Relationship building.
F. Human Resource Competency:
1. Mastery over human resource policies and practices
G. Leadership and Team Management Competency:
1. Designing teams.
2. Creating a supportive environment.
3. Managing team dynamics.
METHODS OF AUDIT OF HUMAN RESOURCE COMPETENCIES AND STRATEGIES:
1. ASSESSMENT CENTRES:
This technique is used to assess individuals, or teams. This is a project for achieving a specific
purpose in a specified period of time in a planned manner. It is a method to evaluate employees on
specified competencies using multiple tools by multiple assessors. It focusses on assessing individuals
for their ability for performing roles.
2. DELPHI TECHNIQUE:
It is consensus decision-making technique where members do not meet face to face.
 Skills are identified and solutions are received from members through questionnaires, etc.
 Solutions of the problem are compiled and feedback is given.
 Based on feedback, members are again asked to come out with new ideas. Likewise, this
process is repeated until a consensus decision is arrived at.
3. 360 DEGREE FEEDBACK:

It is a development technique used for the confidential assessment of the employees by their
stakeholders. staff, team members, internal or external customers, family and friends. It is a systematic
feed back collection on performance of an individual or a group often co-coordinated by an external
agent with scientific tools like the questionnaire.
Feedbacks of the stakeholders are confidentially collated by the facilitator and anonymously
made available to the feedback seeker. In this technique the feedback providers judge what they
perceive as behaviour and not the intentions behind it. A mixture of strengths and areas for development,
expectations etc. are made known to the feedback seeker through this development process. Once
the feedback is received, the concerned person works on him for further improvement and development.
4. APPRECIATIVE INQUIRY:
An inquiry process affirms our symbolic capacities of imagination and mind as well as our social
capacities for conscious choice of cultural evolution. Its assumption is ‘solution to be embraced’.
 Discover and value those factors that give life to the organisation.
 Envision what might be the new possibilities.
 Engage in dialogue, discovering possibilities.
 Construct the future through innovation and action.
5. BRAIN WRITING POOL:

It is a technique for promoting the knowledge and creativity within a team when members of the
group find it difficult to get together at the same time. Idea sheets can be circulated, and ideas can
be added up over a period of time. A productive variant of this technique is one, made possible by
computer networking systems. They all have a record of the ongoing outcomes of the process.
6. ATTITUDE AND VALUES:

Attitudes and values can be audited through a questionnaire or interview schedule where the
internal locus of control can be measured and evaluated.
7. DEVIL’S ADVOCACY:
It is a technique, one of the best for assessment of competency, used for the development of
an individual in a group. Devils advocate is the individual within the team whose responsibility is to
raise arguments, challenge ideas and to point out weaknesses. It is important that this role rotates;
otherwise, the process becomes identified with one individual. The rotating Devil’s advocate has the
group opinions, ideas, suggestions and strategies that are carefully scrutinised by at least one team
member whose job is to promote controversy and conflict in order to ensure excellence in functioning.
8. FISH BOWL TECHNIQUE:

This is one of the popular methods to test and assess the knowledge competency. A fish bowl
is a discussion or format in which a portion of the group forms a discussion circle and remaining
participants form a listening circle around the discussion group. New groups form inner circle to
continue the discussion. Fish bowl discussion help to bring focus to large group discussions although,
time consuming. This is also the best method for continuing large and small group discussions. As
a variation to concentric circles, participants can remain seated at tables and we can invite different
tables or parts of the tables to discuss the topic as others listen.
9. INTERNAL CUSTOMER SATISFACTION SURVEY FOR ASSESSMENT OF EFFECTIVE

FUNCTIONING OF HUMAN RESOURCE FUNCTION:
It is one of the ways of getting information about employee satisfaction and experience of a
particular system or process in place. This can be done through different means like group meetings,
periodical interviews with employees of other departments for assessment of Human Resource
department.
SIMPLY SPEAKING…
In the words of T V Rao “Human Resource Development Audit is not a problem solving
exercise. It may not be able to provide any solutions to specific problems the organizations
are facing - for example Industrial Relations problem, or discipline problem, poor performance
problems etc. However, it may be able to throw insights into the sources for the problem. It
will not give feedback about specific individuals. It will however, give feedback about the
Human Resource Development department, its structure, competency levels, leadership,
processes, influence of the Human Resource Development on the other systems etc. Human
Resource Development audit is against the Human Resource Development framework. Human
Resource Development audit is comprehensive. However, it is possible to focus on one or
more systems thoroughly. Action on Human Resource Development audit is entirely in the
hands of the CEO and the auditor has no control over this”.
LEVEL TWO
AUDIT OF HUMAN RESOURCE STRATEGIES
1. DEFINING STRATEGY:
The process of determining and articulating the organisations: vision, mission, values, goals and
objectives, and its internal and external environments and then formulating plans to attain outcomes
consistent with the above; then implementing those plans (including evaluation). It is the pattern of
planned human resource deployments and activities intended to enable the organisation to achieve
its goals”
2. FOCUS:
The focus of strategy is to provide the organisation with sustained competitive advantage through
procurement, development and alignment of people, skills, human resource policies, etc.
3. COMPETITIVE ADVANTAGE:
Competitive advantage of a strategy might arise from having best people, but also from being
best at managing what we do have.
The best of human resource strategies may not enhance a company’s performance or achieve
its goals if the leadership and managerial styles of the top management and senior executive do not
align with human resource philosophy and practices surrounding it.
With strategies and styles in place, the structuring of the human resource function becomes
significant dimension of human resource audit that can facilitate the development and the implementation
of human resource systems and processes that can help achieve business goals.
4. EACH MANAGER SHOULD BE 50% HUMAN RESOURCE MANAGER:

If Human Resource function is appropriately structured its primary task is to identify human
resource systems and achieve short term business goals and long term business strategies. For
effectively implementing human resource systems and processes, human resource skills and
competencies are required not only by human resource managers but also by all managers and staff
other than those in human resource function that is why we always maintain a very important one
liner concept “each manager should be 50% human resource manager” This is equally true for human
resource managers also.
5. SEVEN HUMAN RESOURCE STRATEGIES AND AUDIT:
A. COMMUNICATION STRATEGY:
1. Regular and continuous communication with employees, their families and children is a critical factor.
2. Employees must be made understand the need for organizational change for growth through
information sharing on global changes.
3. Employees must be briefed and educated on different issue effecting the organization on
regular basis.
4. Educating and briefing the employees can be done through regular departmental meetings,
conferences, workers education classes, news letters, company’ magazine, open house
meetings, cultural and social events etc.
B: COMMITMENT, OWNERSHIP, ACCOUNTABILITY:

1. Generally, employees do take the responsibility to perform any task but they get upset when
some one tries to make them accountable for the result or the consequences. They do take
credit but when things go wrong, they refused to be accountable.
2. Commitment is another area where employees generally don’t feel committed to the work or to
the organization for different reasons.
3. Employees never think that they own the company nor they have any loyalty.
C. QUALITY:
1. Employees generally have wrong notions about quality.
2. They think quality is external – out of the product or service. Quality is an inter-woven part of
any product or service and is very much internal.
3. Human resource audit examines the existence of quality concerns, its need and then Human
Resource practices as to how well they are contributing to enhance quality always and the
ways to improve it.
D. CUSTOMER SATISFACTION:
1. Satisfied employees tend to create satisfied customers.
2. Human Resource strategies to link employees’ satisfaction with customer satisfaction need
examination.
3. Customers’ satisfaction may help to get this feedback
4. Human resource audit examines the adequacies and inadequacies of these strategies.
E. COST REDUCTION:
The human resource audit can suggest ways of cost reduction through total employee involvement.
F. DEVELOPING ENTREPRENEURIAL SPIRIT:

1. The effort should be aimed at all levels to take charge of their task with full autonomy,
accountability, cost effectiveness and the service orientation.
2. This may require continuous training and modifying appraisal system and other interventions.
G. CULTURE BUILDING EXERCISES

1. Cultural change starts from the top.
2. Overnight change is neither possible nor is advised.
3. It is the most difficult thing to achieve because people resist any change.
4. Openness, collaborative attitude, trust, authenticity, proactive attitude, autonomy, addressing
issues and experimentation are some issue for Human Resource Audit.
LEVEL THREE
AUDIT OF HUMAN RESOURCE SYSTEMS
1. HUMAN RESOURCE MAKES SENSE:

Human resource is based on the two assumptions: Human resource makes sense only when
it contributes towards business improvement and business excellence. Human resource also strongly
believes that good people and good culture make good organizations.
Human Resource means building:
1. Competency in people.
2. Commitment in people.
3. Culture in the organization.
Human resource means building competencies. The most important human resource function is
to build competencies in each and every individual working in an organization. Competencies are to
be built and multiplied in roles and individuals.
Human resource means building commitment in people. Competencies will not make sense
without commitment. Think of an organization where all the employees are competent but not willing
to put into use their competencies. Hence, competencies without commitment will not contribute
towards effectiveness.
Human resource is all about building a development culture in an organization. Human resource
ensures that culture-building practices are adopted from time to time to create a learning environment
in the organization. It builds such a culture that the built-in culture in turn will build competencies and
commitment in the people who work with the organization.
Human Resource can be defined as the branch of human resources management function that
endeavors to build competencies, commitment and a learning culture in organizations with the purpose
of bringing in competitive advantages to achieve business excellence in all its operations.
A. HUMAN RESOURCE SYSTEMS:

Human resource functions are carried out through its systems and sub systems. Human Resource
has five major systems and each of the systems has sub systems as elaborated – the first three
systems viz., career system, work system and development system, are individual and team oriented
while the fourth and the fifth systems viz., self renewal system and culture systems are organization
based.
1. Career System:
As an Human resource system, career system ensures attraction and retention of human
resources through the following sub-systems.
A. Manpower planning.
B. Recruitment.
C. Career planning.
D. Succession planning.
E. Retention.
2. Work System:
Work-planning system ensures that the attracted and retained human resources are utilized in
the best possible way to obtain organizational objectives. Following are the sub-systems of the work
planning system.
A. Role analysis.
B. Role efficacy.
C. Performance plan.
D. Performance feedback and guidance.
E. Performance appraisal.
F. Promotion.
G. Job rotation.
H. Reward.
3. Development System:
The environmental situation and the business scenario is fast changing. The human resources
within the organization have to raise up to the occasion and change accordingly if the organization
wants to be in business. The development system ensures that the retained (career system) and
utilised (work system) human resources are also continuously developed so that they are in a
position to meet the emerging needs of the hour. Following are some of the developmental sub -
systems of human resource that make sure that human resources in the organization are continuously
developed.
A. Induction.
B. Training.
C. Job enrichment.
D. Self-learning mechanisms.
E. Potential appraisal.
F. Succession development.
G. Counselling.
H. Mentor system.
4. Self-Renewal System:
It is not enough to develop individuals and teams in the organizations but occasionally there is
a need to renew and re-juvenate the organization itself. Following are some of the sub systems that,
can be utilised to renew the organization.
A. Survey.
B. Action research.
C. Organizational development interventions.
D. Organizational retreats.
5. Culture System:
Building a desired culture is of paramount importance in today’s changed business scenario. It
is the culture that will give a sense of direction, purpose, togetherness, and teamwork. It is to be
noted that whether, an organization wants it or not along with the time common ways of doing things
(culture) will emerge. If not planned carefully and built systematically such common traits may not
help the business but may become a stumbling block. Hence, it is very important to have cultural
practices that facilitate business. Some of the culture building subsystems are given below:
A. Vision, Mission and Goal.
B. Values.
C. Communication.
D. Get-togethers and celebrations.
E. Task forces.
F. Small groups.
B. HUMAN RESOURCE PROCESSES:

Human resource is a process-oriented function. Human resource functions in many organizations
fail because the processes involving the systems are not adequately addressed. The concept of
process essentially concerns the question of “how” and to a great extent the question of “why “. It
emphasises the behavioural and interactional dimensions. All the human resource processes are
centred around four constituents of an organization viz, the employee, role, teams and the organization
itself. Each of the unit has its own behavioural patterns and framework, which, if not addressed
adequately may not bring in the desired outcomes. It is through these processes that the human
resource systems are effectively implemented. Implementations of the human resource systems are,
in turn indented to bring in right processes in organizations. Hence, human resource systems and
Human Resource processes are closely linked. Their relationships are well explained by Rao (1990).
1. Individual:
Individual is the basic constituent of an organization. All the behavioural pattern and dynamisms
emerge from individuals. Hence, individual based human resource process explained below is vital
for human resource function and for implementation of the human resource systems.
A. Efficacy.
B. Effectiveness.
C. Styles.
D. Leadership
2. Role:
Role is a dynamic entity which involves the expectations of significant others and self from the
position of the role holder. A large number of behavioural patterns and dynamism in organizations are
centred around the roles. The role occupier and all others who have some linkage or relationship to
that role form a constituent. Following are some of the role related, human resource processes in
organizations.
A. Competencies for job performance.
B. Commitment.
C. Motivation.
D. Frustration.
E. Stress and burnout.
3. Teams:
Work in organizations is performed through teams or groups. When individuals begin to work in
team, behavioural patterns and dynamisms emerge. Following human resource processes are to be
addressed if team work should bring in the desired results.
A. Communication.
B. Feedback.
C. Conflict resolution.
D. Collaboration.
4. Organization:
A large number of human resource processes are organization related. Unless and until these
processes are in place, human resource cannot take off. However, in a number of organizations as
a result of implementation of human resource systems, these processes were set right. Human
resource systems can contribute towards the development and maturity of these processes.
A. Organizational climate.
B. Communication.
C. Learning Organization.
D. Organizational Change.
E. Organizational Development.
LEVEL FOUR
AUDIT OF HUMAN RESOURCE STRUCTURES
1. DEFINING STRUCTURE:
A structure provides a convenient way of organizing several related variables as a single unit.
A structure is defined outside of any existing hub or function
2. DEFINING HUMAN RESOURCE STRUCTURE:

Human resource structure may assume many shapes and forms such as:
1. A full fledged human resource department.
2. A corporate human resource department with human resource sections or division in different
office or manufacturing units.
3. A profile human resource chief.
4. A CEO handing human resource function
5. An administration manager handling human resource department.
6. A training manager handling human resource function.
7. A personnel manager handling human resource department.
Human resource structure is the framework within a human resources department that divides
the decision making functions within human resource into specific groups with common job functions.
Examples of the internal structure may be payroll, recruiting, compensation and benefits, time and
staffing, records, documentation, etc.
The human resource structure allows groups to work together within their functional description
to manage tasks within the human resource organization. Each division may have a manager or team
leader depending on the size of the organisation to coordinate efforts and perform reporting tasks. In
smaller companies, there may only be a few employees in human resource handling multiple tasks.
This is a simple question with a very difficult answer. The human resource organizational structure
has to fit the needs of the organization, the business strategy and the human resource Strategy. The
human resource structure has to support the human resource management function and all the new
human resource management trends.
The human resource structure has to support the business strategy and the cost of the human
resource management Function has to be accepted by the business. Many times, the human resource
management Function offers a lot of human resource management Services to the organization, but
the cost is not accepted.
When a Human Resource Director has to set up a new human resource organizational structure,
the questions to be answered are the following:
1. What are the real needs of the internal customers?
2. What are the costs the organization wants to carry?
3. What kind of the human resource management intervention does the organization want?
4. What future development can be expected?
HR Director
Team Assistant
Compensation Training and

HR Front Office HR Back Office
and Benefits Development
Compensation
Benefits
Benefits
Administration
The Human Resource Director has to know the answers to these questions as they set the
boundaries for the set up of the human resource organizational structure. The human resource
structure has to meet the requests of the top management, as they can feel comfortable in their
discussions with the direct managers.
3. HUMAN RESOURCE STRUCTURE TO BE FLEXIBLE TO FIT NEW CHALLENGES:

The human resource structure has to fit to new challenges born in the external environment. All
the important and influencing people speak about the changes in the business world, as the current
recession seems to be one of the worst recessions ever. The way the business was done will be
discontinued and new business ethics and new business rules will be born.
The managers take usually the organizational structure as the basis of the organizational unit,
which should not be flexible. As the organizational structure defines their own kingdom, they have no
interest to bring changes as their importance could decrease.
The human resource organizational Structure has to be flexible, as the initiatives of the
organizational change will demand different kind of the service provided by human resources. The
human resource organizational structure should fit the needs of the internal and external clients and
the managers should manage the processes, not the individual employees.
The managers have to think about the upcoming agendas, the enormous pressure for the cost
efficiency and almost real time human resource reporting. They have to adjust the human resource
organizational structure and have to re-evaluate the importance of the individual employees and
agendas, even the importance of the individual managers in the team.
The organizations will push for the efficiency and risk management. The compensation and
benefits will be more important and the talent management will be one of the strongest tools in the
area of the risk management. The organization with not so strong human resources function will be
very vulnerable and the competitors will have a better position against it.
The Human Resource Organizational Structure will change, as some function will get bigger
with more responsibilities. The leadership development and compensation and benefits will be the
most important parts of the human resource organizational structure and other functions will support
them.
4. HUMAN RESOURCE STRUCTURES ARE IMPORTANT FOR HUMAN RESOURCE AUDIT

PROGRAMME:
The human resource organizational structure must be fit with the imperatives defined by the need
to keep costs, provide operational excellence and to help to further develop the potential of the human
capital inside the organization. The human resource Management Team must focus on enabling the
power of the team co-operation and human resource management team must focus on the optimal
processes and communication flows inside the team.
5. TOOLS FOR AUDIT OF HUMAN RESOURCE STRUCTURE:

 Smooth co-operation among the employees;
 Smooth communication among employees;
 Clear definition of roles and responsibilities among the team members;
 Clear and easy-to-understand definition of processes;
 Understandable structure for the managers in the organization;
 Potential for the future development of new initiatives and potential to improve the current
human resource processes;
As we can see, the conditions to be met by the human resource structure are not easy to meet.
The human resource structure was generally developing over a long period of time till it reached the
current status of being audited for performance management.
The human resource management functions started to be organized as the complete organizations
- with its sales force unit, unit responsible for processing the known requests and units, which are
responsible for product management and product development. This organizational structure seems
very easy to implement, but to solve all the issues on the way of the implementation needs a lot of
the power and effort.
6. COMPONENTS OF HUMAN RESOURCE STRUCTURES ARE IMPORTANT TOOLS

FOR HUMAN RESOURCE AUDIT:
Almost no organisation can exist without the internal rules for the organisational structure design.
The creators of the organization have to design the basic principles and components of the organisation
structure.
The founders of the organisation have to set the basic rules for the organisation and its future
organisational development. The rules are very important for the growth of the organization as the
rules set the main logics behind the growth of the organization.
1. Span of Control:
The creators have to decide about the span of control in the organisation. It is very connected
with the responsibilities of the individual members of the organisation. When the span of control
is wide, the responsibilities have to be wide as well and vice versa.
2. Authority and Power Structure:

The authority of the individual members is the next rule to be decided just in the beginning. The
creators can leave all their authority at their level and every decision about the growth and
organisational development of the organisation has to be made at the top level of the organization
or they can delegate the authority and responsibilities to the lower levels of the organization.
When the authority is not delegated, the people in the organisation are just asked to make the
orders, when the responsibility is fully delegated, the people can be fully responsible for the
results.
3. Accountability:
The accountability is one the most important components of the organisation structure. The
accountability allows to people to feel their full involvement in the life and growth of the
organisation. The top level of the organisation is focused just on the strategic issues and
strategic decisions of the organisation, all the rest is in the full responsibility of the individual
members using the help of the management.
7. HUMAN RESOURCE AUDIT MAY SHOW ERRORS IN RESULTS IF STRUCTURE DESIGN
IS FAULTY:
For instance, a recent audit for a large global service organisation surfaced a number of important
findings:
1. Human resource strategy is not aligned with corporate strategy (e.g., recruiting practices are
not focused on acquiring skills that are most critical to the business or found in locations where
business growth is planned).
2. Compensation strategy is not aligned with the market realities of attracting talent or business
demand for certain skill sets, which makes it difficult to attract and/or retain key talent.
3. Roles and responsibilities in the human resource organisation are not clearly defined. It’s
unclear who is accountable for decisions. There is duplication of roles among corporate,
business and geographic units, leading to multiple points of contact and inconsistent decisions.
4. The average cost of delivering certain human resource services appears to be much higher
than at comparable organizations.
5. Excessive reliance on temporary/contracted workforce meets the need for flexible staffing, but
negatively impacts the talent pipeline.
6. Human Resource processes are not clearly documented. The result is inconsistent policy
application and risk associated with knowledgeable individuals leaving the organisation. The
use of technology to streamline human resource processes is limited. This results in too many
manual processes and multiple handoffs with negative impacts on cost and quality.
7. Human resource is not seen as strategic. Based on an activity analysis, most activities being
performed by human resource staff are transactional in nature and not seen as adding value.
8. Human resource does not track or maintain key pieces of employee data needed for planning
and decision making.
SIMPLY SPEAKING…
A well-defined structure enables an organisation to ensure, among others

1. Organizational Planning,
1. Strategic planning.
2. Organizational structure.
3. Systems/processes.
4. Recruitment succession strategies.
5. Change management.
2. Organizational Effectiveness
1. Team building.
2. Workplace assessments.
3. Labour relations.
4. Individual Effectiveness.
5. Performance management.
6. Development Issues.
7. Discipline.
CASE OF RYANAIR vs. VIRGIN ATLANTIC: CASE STUDY FOR PRACTICE IN AUDIT OF
HUMAN RESOURCE STRUCTURES:
A. RYANAIR:
Blaming the decision on Manchester Airport’s refusal to lower its charges, Ryanair is either
closing or switching nine of the 10 routes that currently operate from Manchester, with a loss of up
to 600 jobs in the area. This news once again brings controversial Chief Executive Michael O’Leary
into the limelight, and provides an opportunity to compare the organisational structures of Ryanair with
that of Virgin Airlines:
1. Michael O’Leary appointed as Chief Executive in 1985.
2. Concentrates on the short haul, mainly European market.
3. No frills approach.
4. O’Leary (Mr. Grumpy?) becoming infamous for his “earthy” language, controversial advertising
and unusual practices including suggesting that passengers may have to carry their own bags”
and pay to use the toilet (!)
5. Ryanair operates in only one market.
6. Ryanair makes it clear that price is its main reason for gaining repeat business.
7. Ryanair cabin crew are employed by a third party.
B. VIRGIN ATLANTIC:
1. Founded by Richard Branson in 1984.
2. Mainly concentrate on long haul flights.
3. Positioned at the quality end of the market.
4. Branson (Mr. Happy?) often appears personally in publicity to indicate closeness to employees
and customers.
5. Airline is part of a major brand including trains and financial services.
6. Virgin works hard at customer loyalty.
7. Virgin cabin crew (frequently glamorous blondes!) are employed by Virgin and are selected
through a lengthy recruitment process.
Questions for Practice:
1. What are the different human resource challenges in both of these organisations? In what way
is their structures are different?
2. What are the structures related issues in both the organisations?
3. How successful would these two organisations be if they had to switch the markets in which
they operate?
4. How well do you believe each organisation is placed to survive the current economic downturn?
5. What are the advantages and disadvantages of outsourcing (or subcontracting) such a key
element of the workforce as cabin crew?
6. Could either organisation be successful without its dynamic, charismatic and controversial
chief executives?
7. What strategies would you follow for conducting human resource audit in both the organisations?
LEVEL FIVE
INTERVIEW AREAS, DIMENSIONS AND QUESTIONS FOR AUDIT

OF HUMAN RESOURCE DEVELOPMENT SYSTEMS
A. CAREER SYSTEM:
A1 Manpower Planning and Recruitment:
 What is the process of manpower planning and recruitment?
 How do the line managers participate in it?
 What has it resulted in?
 Are there differences in the workload of different departments? How is manpower being
rationalised?
 Is the manpower planning being done scientifically?
 Are there adequate mechanisms to ensure the availability of the right competencies?
 Is the competency listing appropriate and give adequate attention?
 What are the strengths, weaknesses and suggestions for improvement?
A2 Potential Appraisals and Promotions:
 Is there a system of potential appraisal?
 How is it being implemented?
 Is it scientific?
 Is there a promotion policy?
 Is it widely shared with all employees?
 Are the promotions based on competency assessment?
 What are the subjectively levels of assessment?
 What is the thinking on assessment centres?
A3 Career Planning and Development:
 How is the system of career planning and development operating?
 What is the process of succession planning?
 Are there well-laid-out career paths?
 If the organization has made structural changes in the recent past, have the complications
for careers been explained? Have they been thought out?
 Are people aware of the implications of flat structures? Do they see the advantages and link
it with careers?
 What are the strengths, weaknesses and suggestions for improvement in career planning
and development?
B. WORK PLANNING:
B1 Role Analysis (Goal setting):
 What is being done to clarify roles on a continuous basis?
 Is role clarity an objective of the performance management system?
 Are there mechanisms for periodic dialogue between the seniors and juniors to give
direction?
 Are there mechanisms of sharing performance expectations between senior managers and
their juniors?
 Is the goal setting and performance planning process in place?
 What are the strengths, weaknesses and suggestions for improvement in work planning
systems (Key Performance Areas (KPAs), Key Result Areas (KRAs), etc?
B2 Contextual Analysis:
 Are there mechanism to inform employees about the performance of the company?
 Are there mechanism of formulating and communicating annual or periodic performance
plans and thrust areas to all employees?
 Do these communications help employees in planning their work and give them a sense of
direction?
 Do heads of departments and other senior managers take pains to communicate organizational
plans and ensure that they are translated into work plans at the individual level?
B3 Performance Appraisal:
 What is the current system of performance appraisal?
 What are the components?
 What are the objectives?
 What is it currently being used for?
 How is it linked to other systems?
 Are the line managers taking it seriously?
 What are the roles being played by the system?
 Are the line managers adequately trained by it? Are there efforts made to constantly keep
educating the line managers? Are the objectives clear to all?
 Are there too many perceived biases if it linked to rewards?
C. DEVELOPMENT SYSTEM:
C1 Training and Learning:
 What are the suggestions for improvement in the training?
 What is the training budget?
 Do line managers take the training seriously?
 What is the process of sponsoring employees for training?
 What are the other learning mechanisms being used for competency building?
 What are the view learning mechanisms that can be used?
 What are the attitudes of the line managers and the top management for training?
 What are the strengths and weaknesses of the training as it is being managed?
C2 Performance Coaching/Counselling:
 What is the system of giving performance feedback and counselling?
 Are the feedback and counseling sessions conducted seriously?
 Do line managers take it seriously and give it the importance that is due?
 Are there adequate time, infrastructure (e.g. meeting rooms) and other facilities provided for
the feedback and review sessions?
 Is research done and the data utilized for bringing about improvement?
 What are the strengths, weaknesses and suggestions for improvement of the system?
360 degree performance feedback:
 Is there a 360 degree feedback system in operation in the company? For how long?
 What has been the experience of managers with the system?
 What are the strengths, weaknesses and suggestions for improvement of the system?
C3 Others like Job Rotation, Mentoring:
 What are the other noticeable mechanism being used for competence building and commitment
building in the company?
 How is job rotation being used?
 How is mentoring being used? Are people trained adequately?
 Is the success experienced communicated to others to enhance the effectiveness of the
system?
 What are the strengths, weaknesses and suggestions for improvement in job rotation and
the mentoring system?
C4 Staff Development:
 What is the seriousness attached to worker and staff development?
 Is there a separate person in-charge? What are the competency levels of the persons
dealing with worker and staff development?
 What is the range and appropriateness of the training and other development activities
undertaken for the workers and staff?
 Do they go beyond the statutory requirements?
 How seriously are the statutory requirements of training taken up by the company?
 Is there a special training budget for the workers and the staff?
 What are the strengths, weaknesses and suggestions for improvement in the systems of
training and worker development?
D. SELF-RENEWAL SYSTEM:
D1 Role Efficacy:
 Are there mechanisms of periodically examining the effectiveness with which employees
are performing their roles?
 Are there any role efficacy programmes conducted in the company? What is the level of role
efficacy? Is the adequate decentralization and delegation?
 Are there periodic review of roles and efforts made to improve the scope for role effectiveness?
 What are the strengths, weaknesses and suggestions for improvement of role efficacy
mechanisms?
D2 Organisation Development:
 What organisation design exercise have been undertaken in the past? What have been the
results?
 Is the diagnosis shared widely?
 What are the interventions used in the past and how did they work?
 What are some of the top management attitudes to organisation design interventions?
 What is the scope for organisation design exercises?
 What should be the focus in future?
 What are the priority areas for organisation design work?
 What are the strengths, weaknesses and suggestions for improvement in relation to
organisation design activities?
D3 Action-oriented Research:
 Is there a research orientation?
 Have there been any research in the past? What is the scope for action research in the
company?
 What is the level of human resource research orientation in the company? What are the
competency levels of employees in the company to conduct such research?
 What are the strengths, weaknesses and suggestions for improvement in action research
and research-based interventions?
E. CULTURE SYSTEMS:
E1 HRD Climate:
 What are the main characteristics of the Human Resource Development climate?
 How do the line managers characterise the learning environment in the company? What are
the salient features?
 What is the level of OCTAPACE in the company?
 How free, frank and open are people with each other?
 What is the level of trust? Are people generally reliable and counted upon to say what they
feel and do what they say?
 Is there a lot of chasing and monitoring to be done of each other? Is there a collaborative
spirit and ‘we’ feeling?
 What are the strengths, weaknesses and suggestion for improvement of the human resource
development climate?
E2 Values:
 Are there some stated values? What are these values?
 How are these communicated? Monitored and practised?
 How related are these values to the organizational goals or to larger level community or
country related goals?
 What are the strengths, weaknesses and suggestions for improvement in the process of
articulation and practice of values?
E3 Quality Orientation:
 What efforts have been made in the past to improve the quality of products and services?
 How extensive is the quality related efforts? Have all employees become quality conscious?
 Is ISO 9000 or such other systems followed only for certification purposes or also for
genuine improvement of quality?
 What is the level of tolerance of poor quality of internal customer services?
 What are the various quality-related systems in use?§ How are they being taken? What are
the attitudes of line managers to these?
 Have these systems been focussing on continuous competence building of the employees?
 Are these enhancing the commitment of employees to quality and other dimensions?
 What are the strengths, weaknesses and suggestions for improvement for each of these
system?
E4 Reward and Recognition:
 What are the various reward systems in use?
 What impact have they made in the past?
 Are people happy with these?
 Are the negative effects or side effects of these systems and mechanisms small enough
and to the positive effects outweigh these?
 What do people feel about these?
 What aspects often go unrecognized unrewarded?
 Are the reward systems adequate and appropriate?
E5a Information:
 What are the informational needs of employees at the various levels given the nature of
business or business plans of the company?
 Is the information given up to the desired level?
 What more information needs should be taken care of?
 What are the strengths, weakness and suggestions for improvement in the information
needs of employees and the way they are being met?
E5b Communication:
 What are the communication needs of people?
 Do they get regular communication about the company, groups, etc. and their performance?
 Are the communication needs being met effectively?
 Are there efforts made to use information as a developmental, context-providing and
commitment building tool?
E6 Empowerment:
 What is the level of empowerment?
 Are the line managers and particularly the seniors tuned in terms of their attitudes to
empowering their subordinates?
 What are some of the practices or efforts made in the past of empower employees? (e.g.
delegation of powers, use of committees and task forces, etc.)
HRD SYSTEM SECONDARY DATA:
A. CAREER SYSTEM:
A1: Manpower Planning and Recruitment: Analyse recruitment data (number of applicants in
relation to those recruited and whether it is worth the effort and if there are other mechanisms
available), exit data, retirement data, age profile, etc., and assess the extent to which these are used
for manpower planning.
A2: Potential Appraisals and Promotions: Analyse the rate of promotions department-wise
grade-wise, location-wise, etc., to ascertain if there are any visible biases and to assess the pattern
of promotions.
A3: Career Planning and Development study: the past internal promotion patterns and career
patterns of employees in the organization. How have the roles, salary structures etc. of those with
the company changed over time and what do they reveal about the company? The proportion of
internal versus external promotions in the organization can be studied to assess the trends.
B. WORK PLANNING:
B1: Role Analysis (Goal setting): Study the performance appraisal forms and examine the
extent to which the KPAs and KRAs, tasks, targets, etc., differentiate the roles and responsibilities
and the extent to which duplication exists in the roles and responsibilities. Examine if there are any
role directories, competency directories and skill inventories and examine the extent to which they
differentiate the roles provide role clarity. Also examine the data available from any role analysis
exercises in the past.
B2: Contextual Analysis: Examine the extent to which data is provided to employees about the
changing context of the business. Is it adequate to set priorities of individual role-holders? What is
the nature of information shared or made available to different departments and functions in the
beginning of the performance year to ensure that the departmental and individual work plans are
made with full and detailed contextual understanding? Is it adequate? Are the technological changes,
management practice changes, market changes, etc. properly communicated to individuals to enhance
role clarity and set the priorities right? Examine documents circulars, performance appraisal forms
and departmental plans, if any, for this purpose.
B3: Performance Appraisal: Study the pattern of rating for leniency, rater-wise trends and
department-wise trends to ascertain the leniency and conservativeness in assessment. Study
interdepartmental variations in ratings and rewards to ascertain the possible biases, etc. investigate
this only if necessary.
C. DEVELOPMENT SYSTEM:
C1: Training and Learning: Assess the expenditure on training level-wise department-wise and
location-wise. Assess if the training programmes sponsored are in line with the training needs stated
in the appraisal formats. Analyse the training budget to assess if the budgets are prepared appropriately
and if the full expenditure is taken into consideration in the assessment.
C2: Performance Coaching/Counseling: Find out the time spent by each appraiser in
performance counseling for each of his direct reports. Analyse the facilitating factors and difficulties
mentioned by each of the appraises or in each of the counseling sessions. Tabulate them department-
wise and find out what has been done in relation to them.
C3: Others like Job Rotation Mentoring: Analyse the job rotation data of the past to see if job
rotation is being carried out according to the stated norms or policies. Anlalyse the trends in job
rotation.
C4: Staff Development: Calculate the per employee training hours per year and the per employee
expenditure per year. Study the distribution of these stastics for various departments and categories
of workers. Focus attention on the staff. Examine the adequacy or inadequacy of the training. Examine
the training inputs and sessions from the available documents and data.
D. SELF-RENEWAL SYSTEM:
D1: Role Efficacy: Examine if any role efficacy seminars or workshops have been conducted.
If any surveys have been done on role efficacy in the past. If yes, then what do the results indicate?
Have there been action plans drawn to improve role efficacy? Have they been followed up
systematically? If not, what is being done to examine role efficacy and delegation? Any secondary
data dealing with this can be examined.
D2: Organisation Development: Study any documents available from the OD exercises.
D3 Action Oriented Research: Study the research reports and any circulars, communications
etc., using these.
E. CULTURE SYSTEMS:
E1: HRD climate: Examine the earlier climate survey data and compare with current survey,
if available.
E2: Values: Examine the values, statements and any comments, notifications and critiques in
relation to values. Examine the extent to which these are being followed.
E3: Quality Orientation: Examine data on TQM and ISO9000 certification minutes of QC
meetings, Kaizen, etc., to ascertain improvements.
E4: Rewards and Recognition: Study from the available documents the patterns, variations,
coverage, etc. of rewards. Examine the exact circulars, announcements and their wording etc., to
examine the appropriateness of language and their motivational potential.
E5a: Information: Examine if there are any secondary data mainteained for these.
E5b: Communication: Observe meetings, memos, notice boards, circulars and celebrations for
communication content.
E6: Empowerment: Observe the level of confidence with which the staff speak / decisions are
taken.
E7: Human Resource Systems: HRS related documents and facilities to be observed.
LEVEL SIX
AUDIT OF FUNCTIONAL ROLES OF HUMAN RESOURCE
1. PURPOSE OF A HUMAN RESOURCE AUDIT:

This document presents an audit procedure to assess whether the Human Resource (HR)
Function at Business Unit (BU) level is delivering its mandate and roles.
The methodology that drives this audit is based on four key principles advocated by a leading
HR consultant and teacher, Dave Ulrich.
The cutting edge research and consulting work has shown that:
1. Line manager friendly systems, and procedures are available to help management execute their
people management role (i.e. the technical-professional and service role of HR);
2. Line management are equipped to work within the various labour relations laws and codes of
conduct that govern the relationship between labour and management in the workplace (the
compliance role of HR);
3. Each Business Unit has an overall people management (HR) strategy in place that increases
the value of employees to the business (the strategic role of human resource);
4. HR systems and procedures are run at optimal cost (financial management role of human
resource).
These assumptions can be translated into four critical roles that professional Human Resource
professionals must play if they wish to be seen to make a real contribution to a business’ success.
2. SCOPE OF THE AUDIT:

The audit will take stock of the degree to which Human Resource delivers its four key roles. The
following information indicates the aspects to be audited for each role. The sequence in which this
information is presented also approximates the sequence in which the audit needs to be conducted.
Each step in the process will produce information and conclusions about Human Resource that is
used as input to guide each succeeding phase of the stock take.
3. AUDIT OF THE FUNCTIONAL ROLES OF HR:

The model shown in figure 1 below was formulated for the American Society for Training and
Development by a task team headed by Patricia Mclagan in 1990. This model was used to develop
an audit questionnaire to assess the following 4 functional areas defined below:
A. HUMAN RESOURCE SYSTEMS AND PROCEDURES:

Audit whether there is the integrated use of training and development, organisation development,
and career development to improve individual, group, and organisational effectiveness. These three
areas use development as their primary process:
1. Training and Development: identifying, assuring, and-through planned learning-helping develop
the key competencies that enable individuals to perform current or future jobs;
2. Organisatlon Development: assuring healthy inter-and, intra-unit relationships and helping
groups initiate and manage change;
3. Career Development: assuring an alignment of individual career planning and organisation

career-management processes to achieve an optimal match of individual and organisational
needs.
B. HUMAN RESOURCE MANAGEMENT:

Audit whether the human resource systems and procedures are aligned with the Human Resource
Management systems and procedures to promote staff competence, confidence, and performance
standards. These areas are closely related to the four primary human resource areas. In them,
development is important, but it is not the primary orientation or process:
1. Organistion/Job Design: defining how tasks, authority, and systems will be organised and
integrated across organisational units and in individual jobs.
2. Human Resource Planning: determining the organisation’s major human resource needs
strategies and philosophies.
3. Performance Management Systems: assuring individual and organisation goals are linked
and that what individuals do every day supports the organisational goals.
4. Selection and Staffing: matching people and their career needs and capabilities with jobs and
career paths.
C. HUMAN RESOURCE INFO SYSTEMS:

Audit whether these areas support the achievement of results in the area of Human Resource
Development and Human Resource Management; audit whether human resource maintains
performance indicators that help management keep track of human resource costs and benefits:
1. Compensation And Benefits: assuring compensation and benefits fairness and consistency.
2. Employee Assistance: providing personal problem solving and counseling to individual
employees.
3. Union/Labor Relations: assuring healthy union I organisation relationships.
4. Human Resource Research and information Systems: assuring an human resource information
base is in place that provides timely management information; assuring human resource
functional performance indicators are in place.
4. FRAMEWORK FOR AUDIT OF FUNCTIONAL ROLE OF HUMAN RESOURCE:
1. AUDIT OF THE SERVICE ROLE OF HUMAN RESOURCE:

Human resource functions have traditionally played a service role to compliment their functional
activities. Therefore, any audit, to be complete needs to examine the service responsiveness of
human resource. An adaptation of the Parasuraman Service Quality (1990) model is used to measure
service quality gaps, where human resource is the service provider, and line and employees are the
customers. The dimensions that are measured are summarised in table 1 below. The purpose of
auditing these dimensions (service behaviours) is to identify the critical service delivery gaps. These
gaps are shown in Figure 2 below. Only gaps 3 and 4 are measured in this type of audit.
Table 1
Service Quality Dimensions
Framework for Audit of the Service Role of Human Resource
SERVQUAL DIMENSIONS
Tangibles/Appearance The appearance of physical facilities, equipment, personnel, and communication

materials the human resource function uses/supplies
Reliability Ability to perform human resource functions and service dependably and accurately
Responsiveness Willingness to help line/employees and provide prompt service.
Assurance Knowledge and courtesy of human resource staff and their ability to inspire
trust and confidence.
Empathy Caring individualised attention the human resource function provides its
customers (line and employees)
2. AUDIT OF THE COMPLIANCE ROLE OF HUMAN RESOURCE:

Since 1994 a vast array of labour legislation has been promulgated that have placed a great deal
of pressure on employers to improve the standard of their people management policies, practices,
and procedures. The advent of the era the CCMA and Labour Courts make it a business imperative
for business to periodically audit this aspect of human resource, both from a risk assessment, or best
practice perspective.
The audit will assess to what degree management and human resource have instituted the four
main codes of best practice as prescribed in the following acts:
1. Labour Relations Act
2. Basic Conditions of Employment Act
3. Employment Equity Act
4. Skills Levy and Skills Development Acts
5. Occupational Safety and Health Act
The main thrust of this part of the audit will be to assess whether the required policies, practices,
and procedures exist, and to what extent management and labour have been trained to enact these
codes of best practice.
3. AUDIT OF THE STRATEGIC ROLE OF HUMAN RESOURCE:

Each Business Unit has an (implicit or explicit) overall people management strategy that needs
to increases the value of employees to the business. This strategy is to a large degree implemented
through the major human resource functional levers available to management and human resource.
The choice of workforce strategy may also be tempered by the leadership and management skills
within each business Unit.
The factors that will impact almost any workforce strategy are outlined in Table 2 below (Factors
impacting the choice of workforce strategy). These factors correspond with all the major functions
that human resource performs in partnership with line management. The initial stock take of these
functions will allows one to conclude whether the (implicit or explicit) workforce strategy is appropriate
for each particular hotel’s circumstances, and whether the human resource policies, systems, and
procedures are aligned to achieve business plan results, and workforce strategy.
Management needs to decide upfront on a particular workforce strategy, and to mandate human
resource to work with line towards aligning their management, leadership, and human resource practices/
workforce strategy to support the achievement of the business plan mission, goals, and values.
Table 2
Framework for Strategic People Management – Dimensions of Human Resource
Human Resource Industrial Age Strategy Transition Strategy Information Age/

Functions Commitment Strategy
1. Job design Individual attention Scope of individual Individual responsibility
limited to performing responsibility extended to extended to upgrading
individual job. upgrading system system performance by
performance via re-engineering
participative problem- processes.
solving groups and quality
circle programmes.
Job design deskills and No change in traditional Process redesign

fragments work and job design or enhances content of
separates doing and accountability. work, emphasizes whole
thinking. task, and combines
doing and thinking.
Accountability focused Frequent use of teams

on individual as basic accountable
unit.
Fixed job definition Flexible definition of

duties, contingent on
changing marketplace
conditions.
2. Performance Measured standards Emphasis placed on

(management) define minimum higher “stretch
expectations performance. Stability objectives”, which tend
seen as desirable. to be dynamic and
oriented to the
marketplace.
3. Management Structure tends to be No basic changes in Flattened/organisation
organisation: layered, with top-down approaches to strategy structure with mutual
structure, systems controls. structure, control, or influence systems.
and style authority.

Co-ordination and control Co-ordination and
rely on rules and control based more on
procedures (reinforced by shared goals, values,
outdated job grading and traditions.
system).
More emphasis on Management emphasis

prerogatives and on problem solving and
positional authority. exchanging relevant
information and
expertise
Status symbols A few visible symbols Minimum status

distributed to reinforce change. differentials to de-
hierarchy. emphasise inherent
hierarchy.
4. Compensation Variable pay where Typically, no basic Variable rewards to create

policies feasible to provide changes in compensation equity and to reinforce
individual incentive concepts. achievements: gain
sharing, profit sharing.
Individual pay geared to Individual pay linked to

job evaluation skills and mastery
In downturn, cuts Equality of sacrifice Equality of sacrifice

concentrated on hourly among employee groups.
payroll.
5. Employment Employees regarded as Assurances that Assurances that

assurances variable costs. participation will not result participation will not result
in loss of job. in loss of job.

Extra effort to avoid High commitment to avoid
layoffs. or assist in re-
employment.
Priority for training and

retaining existing work
force.
6. Employee voice Employee input allowed Addition of limited, ad Employee participation

policies on relatively narrow hoc consultation encouraged on wide range
agenda. Attendant risks mechanisms. No change of issues. Attendant
emphasised. Methods in corporate governance. benefits emphasised. New
include open-door-policy, concepts of corporate
attitude surveys, governance.
grievance procedures, and NB: New LRA
collective bargaining in
some organisations.
7. Business/HR Business/HR information Additional sharing of Business/HR data shared
information distributed on strictly information widely. Re-engineering
defined “need to know” forces the shape of
basis. decision-making practices.
8. Labour-management Adversarial labour Thawing of adversarial Mutuality in labour
relations relations; emphasis on attitudes; joint sponsorship relations; joint planning
interest conflict of QWL or EI; emphasis and problem solving on
on common fate. expanded agenda.
Workforce forums.
9. Line-HR relations HR introduces people Joint HR-line forums Union, management, and
system changes for line. initiated.Line facilitated by workers redefine their
Line does not own these. staff respective roles.
Line initiates needed

systems changes
HR monitors process
improvements.
Note: Industrial age: control strategy:
At the heart of a traditional industrial age-control focused strategy for workforce management is
the wish to establish order, exercise control over the decision-making process in order to achieve
efficiency in the application of the workforce. This model assumes low employee commitment to the
organisation. However, changed employee expectations and environmental pressure that is fast
opening up to competitors who can provide the same services, has rendered this “protected” way of
life obsolete in most organisations. Management will increasingly be under pressure to change
management and human resource systems to accommodate or even embrace employee expectations
to fully participate in running the business of local government organisation.
Information age: service quality strategy:
At the heart of commitment-based strategy is the belief that individuals and teams can be taught
to exercise control over their own areas of responsibility. Early attempts at establishing this type of
business strategy is reflected in the emergence of Quality of Work Life (QWL) programmes, Quality
Circles (QC), and Employee Involvement schemes (EI). Most of these programme-driven change
initiatives have come and gone due to the fact that organisations were unresponsive to the kind of
organisational changes required to sustain these initiatives.
4. AUDIT OF THE FINANCIAL MANAGEMENT ROLE OF HUMAN RESOURCE:

A comprehensive audit of human resource systems and procedures needs to go beyond the
‘check and tick/inspection’ level. Basic financial ratios/scorecard measures appropriate for a staff
function like human resource need to be put in place to audit the efficiency of the various functions
outlined in figure 1 above
The many and varied functions of human resource act as a system of levers for optimising
employee, team and organisational performance results over time. The red flag here is not to fall into
the trap of measuring loose-standing human resource functions as administrative management tools.
Many human resource outputs also need to be considered from the standpoint of which is ‘better’,
i.e., to make or to buy. These are (financial) management decisions that need to be made about how
HR will be judged to have produced results.
Each SBU can select from the following list of Customer, Financial, Business Process, and
Growth and Learning measures that will be calculated to round off the audit.
Measures:
1. Planning and staffing
 Interviewing costs
 Special event analysis (Rush assignments)
 Response time analysis (Speed)
 Time to fill analysis (Quality)
 Job posting response rate (Internal)
 Job Posting Hire Rate
Internal Cost Per Hire/Make
 Internal Hire Rat
 Interviewing time
External Cost Per Hire/Buy

 Source Cost
 Staff Time
 Management Time
 Processing Cost
 Travel and Relocation
2. Recruitment efficiency
1. Interview time (internal and external appointments
2. Recruitment agency costs
3. Recruitment effectiveness:
Staff Requisitions
1. Requisitions Opened
2. Requisitions filled
Optimising staff levels
1. Actual versus projected staff levels (by function/department)
4. Compensation measures
1. Cost Control
2. Distribution Patterns relative to evaluation of performance
3. Employee Pay Attitudes
5. Benefits
Total Cost
6. Orientation cost per employee:
Departmental Orientation Cost (Personal walk through by mentor)
7. Counseling/disciplinary costs:
1. Departmental counseling factor
2. Counseling topic factor
3. Counseling topic time
8. Lost time costs:
1. Absence rate
2. Absenteeism cost
3. Negotiation time cost factor
4. Strike/downtime cost factor
9. Turnover rates:
1. Length of Service
2. Transfer Cost (internally across departments/functions)
3. Termination by department or job category I reason for leaving
10. Training and development costs/measures:

1. Cost per learner (classroom)
2. Cost per learner (on-job-training)
3. Knowledge change benefit
4. Skill change benefit
5. Performance change benefit
11. Organisation development measures:
1. Satisfaction
2. Adaptive ness
3. Development
4. Risk taking
5. Creativity/learning
6. Job Stress
7. Job Flexibility/multiskilling
8. Leader behaviours
9. Commitment Measures
5. AUDIT METHODOLOGY, INSTRUMENTS, AND DELIVERABLES:

1. AUDIT OF THE FUNCTIONAL ROLE OF HUMAN RESOURCE:
This aspect of the audit uses the traditional check and tick method of conducting desktop
‘research’. A comprehensive list of all the functions and sub-functions to be audited are agreed with
line management and human resource. All relevant manual and electronic documentation and systems
are inspected. A highly structured checklist for each area is used to assess the degree to which
policies, systems, and procedures are in place.
Deliverable: An exception report that details (a) which systems are in place and up to scratch
in terms of Standards of human resource Practices (b) gaps, and deficiencies with recommended for
change.
2. AUDIT OF THE SERVICE ROLE OF HUMAN RESOURCE:
A 21-item questionnaire is used to gather information from employees, line management, and
human resource to determine service level gaps as outlined in table 1 above. The purpose of the
exercise is to establish what are the perception gaps between how human resource views itself, and
how human resource customers perceive the quality and quantity of service, they receive.
Deliverable: The report will provide line and human resource with a structured report about
service quality gaps that exist for human resource. The analysis highlights service quality strengths
and weaknesses, and provides a basis to negotiate and agree service quality needs.
3. AUDIT OF THE COMPLIANCE ROLE OF HUMAN RESOURCE:
The codes of good practice are there to ensure that business conducts itself within a framework
of good people practice. This requires that (a) appropriate human resource systems and policies are
in place, and (b) that management plays its role according to good industrial relations practice. The
systems aspect is audited using the methods described in 3.1a above, and by means of a brief 30-
item questionnaire completed by all employees (including management). The questionnaire assesses
the perception gaps between how management and employees view the importance of good people
management practices in the SBU.
The management practice aspect is assessed using focus groups (using mixed groups from
different functions and levels) to determine what management does well, does not do well on, and
where management can improve in terms of the codes of good practice.
Deliverables: Two reports provide management and human resource with qualitative and
quantitative feedback about whether management and human resource ensure that the codes of good
practice are used. The quantitative report provides specific pointers about the practices, and
competencies that affect the morale, and climate of the SBU.
4. AUDIT OF THE STRATEGIC ROLE OF HUMAN RESOURCE:
The purpose of this part of the audit is to assist line management, and human resource to
formulate a specific people management strategy. An outside facilitator facilitates a half-day strategy
discussion between line management and human resource to assess the current/implicit people
management strategy, and the desired/explicit strategy the organisation requires managing its business
situation/context. The items in table 2 above (factors impacting choice of workforce strategy) are
placed into a 30-item discussion framework that allows for a structured decision-making meeting
about the desired people management strategy for the SBU. The facilitator provides data/proof/
information for each part of the discussion using the results of the systems, service quality, and
compliance audits. The current strengths and weaknesses of the human resource function are
discussed in relation to achieving the desired people management strategy.
Deliverables: A consolidated report that summarises the results of the systems, service quality,
and compliance audits is distributed prior to the strategy discussion; the desired people management
strategy and a high level action plan for upgrading systems, procedures and polices to achieve this
strategy are produced at this meeting.
5. AUDIT OF THE FINANCIAL MANAGEMENT ROLE OF HUMAN RESOURCE:
The generic list of measures for assessing human resource functioning is agreed at a three-hour
orientation meeting with human resource and line management. At this meeting line and human
resource agree what (balanced scorecard) measures need to be in place for human resource and
line to successfully deliver their respective people management roles. The purpose and scope of the
audit is also clarified. All role players are informed about their roles, and responsibilities to supply
information for a complete audit. A communication plan is agreed to inform all employees about the
audit, and to gain their support for the project.
Deliverables: A set of measures is agreed to start the audit and measurement process; an audit
plan, communication plan, and timetable is agreed.
4. Resources
4.1 The audit requires the support of all trade unions and key role players in the SBU.
4.2 One administrative support person is required to supervise the distribution of questionnaires,
and to ensure their return.
4.3 One boardroom is required for the orientation, focus group, and strategy meetings.
4.4 One audit room for inspection/discussion of policies, systems, and procedures.
4.5 Audio visual equipment for meetings, presentations, briefings, discussions.
6. IMPLEMENTATION PLAN:
The audit is conducted in three phases.
1. PHASE 1: AUDIT SET-UP:
1 The set-up meeting is a half day meeting to agree the scope, methods, resources, timing,
and communication plan for the audit. Performance measures are agreed by line and human
resource for assessing the financial aspects of human resource’s role.
2. Finalise communication plan with human resource/line/unions
3. Finalise questionnaires for service quality audit, and people management practices
questionnaire.
4. Finalise balanced scorecard measures to be used in the audit.
5. Implement communication plan and brief departmental management about their roles/
requirements for staff time and information.
2. PHASE 2: CONDUCT AUDIT:
1. Conduct combined surveys.
2. Assemble and audit policies, procedure, systems. information
3. Conduct focus groups.
4. Finalise quantitative and qualitative reports.
3. PHASE 3: CONDUCT FEEDBACK AND STRATEGY MEETING:
1. Periodical feedback.
2. Corresponding strategy meeting.
3. Path corrections and modification if necessary.

1. Define competency. What are the various types of competencies required for Human Resource Audit?
2. What are the various methods by which we can conduct audit of Human Resource competencies?
3. Define Strategy. What are various Human Resource Strategies? What is the method adopted for
conducting the audit of strategies?
4. Define structure? How does one conduct audit of structures?
5. What is Human Resource system? Prepare a checklist for auditing a Human Resource System.
6. What are the methods for auditing functional and other roles of human resource?

er
Writing Human Resource Audit Report 587
pt
a
h
12
C WRITING HUMAN
RESOURCE AUDIT
RESOURCE
REPORT
topics:
• Writing Human Resource Audit Report.
• Benefits of Human Resource Audit Report.
• Methodology of Writing Human Resource Audit Report.
• Human Resource Audit and Audit Report of Bharat Heavy
Electrical Limited.
• Human Resource Audit and Audit Report of Bharat Sanchar
Nigam Limited.
• HR Audit Questionnaire.
• HR Audit Checklist.
CHAPTER TWELVE
WRITING HUMAN RESOURCE AUDIT REPORT
LEVEL ONE: ESSENTIALS OF HUMAN RESOURCE 589 – 618

AUDIT REPORT
LEVEL TWO: HUMAN RESOURCE AUDIT CHECKLIST 619 – 620
LEVEL THREE: HUMAN RESOURCE AUDIT QUESTIONNAIRE 621 – 627
LEVEL ONE
ESSENTIALS OF HUMAN RESOURCE AUDIT REPORT
THE BEGINNING:
Samurai Software Technologies based in Banglore, India, decided to position itself for growth.
The company was in the dire need to attract and retain some highly specialized talent to continue their
business success without which the organization was not in a position to maintain its past achievements
and certainly could not expand its operations in the emerging markets. It was an appropriate opportunity
and the right time to focus on the workforce needs and address the manpower planning and recruitment
issues while trying to create not only a brand but also the best place to work with in the software
industry and the southern region of India.
THE CHALLENGE:
Balgovind Khurana, Manager - Human Resources, called up Trigaya Consultants to help the
company to respond to the challenge as to where and how to start work on its people issues.
Sushmita Gaonkar, Head of Trigaya and a good friend of Khurana, recommended an audit which
would review all current human resource policies and practices to determine:
• Which best practices should be implemented to better position the organization to achieve its
goals?
• Which practices, or lack of practices, might place the organization at risk for compliance or
regulatory violations?
• Which process improvements that will support human resources in providing the highest quality
service to employees?
THE AUDIT:
Sushmita confirmed with Khurana that she will take a very special and personal interest in
ensuring that the human resource audit would be effectively concluded in about a fortnight and the
audit report would be submitted a week later.
Audit began with a data and documentation request that required the company to gather many
of their policy manuals, benefit descriptions, and other employee communications. The audit team
organised a series of meetings with the human resource and the Finance staff to gain a better
understanding of the current practices as well as to identify other important issues in the organisation.
THE AUDIT REPORT:

The Audit Report, presented three weeks later, identified and prioritized recommendations in
seven key areas:
• General human resource structure.
• Policies, practices and procedures.
• Legal and regulatory compliances.
• Employee life cycle (attraction, recruitment, hiring, orientation, termination).
• Performance evaluation and training.
• Compensation and benefits administration.

• Employee communication.
THE OUTCOME:
The Human resource audit report was delivered to Khurana as a detailed report and then
presented to the executives in a summary format. It included a number of recommendations to
improve their ability to attract and retain talent. For example, one recommendation was to develop a
compensation and benefits philosophy and policy.
THE QUESTIONNAIRE:
To support the above initiative, Sushmita provided the organisation with some key questions for
the management team to discuss. The questionnaire allowed stakeholders to examine their current
pay and benefits practices and set a strategy to align those practices with the future business
directions.
THE IMPLEMENTATION:
Balgovind Khurana dropped in at Trigaya’s office to thank Sushmita. He told her that his company
has drawn out a detailed roadmap for implementing and incorporating some of the recommendations,
as the most important priorities, into their business initiatives over the next couple of years. One of
their most immediate tasks will be to revise the employee handbook to include most of the
recommended best practices.
HUMAN RESOURCE AUDIT REPORT IS A BASIC IMPROVEMENT TOOL:

Sushmita also thanked Khurana. She said “Human Resource Audit Report is a basic tool for the
management of Samurai Software Technologies. Its objective is not only the control and quantifying
of results, but also the adoption of a wider perspective that will aid in defining future lines of action
in the human resource management.
First, the audit report acts as a management information system whose feedback provides
information about the situation in order to facilitate the development of managing processes or the
development of human resource. On the other hand, it is a way of controlling and evaluating the
policies that are being applied, as well as the established processes.”
Back to office, Khurana got busy with internet search on the nitty-gritty of human resource audit
and audit report. He found that human resource audit is cost-effective and can give many insights
into a company’s affairs. The auditors come for one to two weeks, camp at the organization and give
a report in a month’s time. They normally make a preliminary presentation at the end of their visit.
Human resource audit report, prepared by the auditors, has many advantages such as:
1. The report talks about long term strategic business goals improvements.
2. It helps to clarify the role of human resource functions in the corporate organisational structure.
3. The audit report mentions the streamlining of management and human resource policies,
practices and procedures.
4. The audit report mentions the improvements sought in the styles of the top management.
5. Khurana came to realise that audit report helps to find the impact and the cost effectiveness of
training and development programmes.
6. Audit report also focuses on the effectiveness of human resource competencies.

7. The audit report, based on human resource audit, discovers accountabilities thorough appraisal
system and other such mechanisms.
8. The audit reports talk about quality improvements and establishing TQM systems which require
a high degree of employee involvement. In a number of cases the human resource audit report
has pointed out to the linkages between TQM and other developmental programmes and helped
in strengthening the same.
9. The human resource audit report mentions about the observations made during the human
resource audit. There are number of things that can be observed by an evaluator. These may
be classified under the following categories.
• Physical facilities and living conditions.
• Meetings, discussions and other transactions.
• Celebrations and other events related to organizational life and culture.
• Training and other Human Resource Development facilities, including the classrooms,
library, training center, etc.
• Forms and formats reports, manuals, etc.
10. Khurana learnt that preparing human resource audit report is based on the findings of the audit
team and evaluation of problems faced during the audit time.
11. He also learnt that we must not use value judgments but simply report on the facts such as we
recognize them; this will help us to ascertain if and where there is breakdown in established
human resources procedures and policies.
1. WRITING HUMAN RESOURCE AUDIT REPORT: HUMAN RESOURCE AUDIT AT
BHARAT SANCHAR NIGAM LIMITED (BSNL):
1. THE BEGINNING:
A human resources audit is a tool for evaluating the personnel activities of an industry or a
company. This audit is an overall quality control check on all human resources activities in an
industry and an evaluation of how these activities support the strategies of industries.
The human resources audit must evaluate the personnel functions, the use of procedures by the
managers and the impact of these activities on the employees. A human resources audit covers the
following areas:
1. Audit of various functions of human resources.
2. Audit of managerial compliance.
3. Audit of environment culture in the industry.
4. Audit of corporate or industrial strategy.
2. ABOUT BSNL:
A. As a precursor to corporatisation of the service providing functions of the Department of
Telecommunications (DoT), the Government of India decided to separate the policy and licensing
functions of DoT from the service providing functions in pursuance of the New Telecom Policy (NTP)
– 1999. Consequently, the Department of Telecom Services (DTS) was carved out of DoT in October
1999, as a part of the continuing process of opening up the telecom sector.
B. Subsequently, DTS was bifurcated (July 2000) and a new department, known as the Department
of Telecom Operations (DTO), was created. DTS and DTO were finally corporatized into a wholly
owned Government Company named Bharat Sanchar Nigam Limited in September 2000 and the
business of providing telecom services in the country was transferred to the Company with effect
from October 2000.
C. The Company was formed with a paid up capital of Rs 5,000 crore. The authorized capital
as of March 2005 was Rs 10,000 crore and the preference share capital was Rs 7,500 crore. It had
nationwide licences for providing basic, long distance, mobile and Internet services, barring Delhi and
Mumbai. At the time of its formation, the Company had a base of 2.38 crore telephone lines which
increased to 3.75 crore as on 31 March 2005. Besides, 94.47 lakh cellular mobile telephone connections
were also operational as of March 2005.
MAIN OBJECTIVES OF CORPORATISATION:
• To accelerate business development in line with recent global trends
• To introduce appropriate autonomy and flexibility in decision making
• To introduce a commercial culture with a focus on service to customers
• To build infrastructure and accelerate network expansion through increased internal resources
and tapping of capital markets
• To meet Universal Service Obligations (USO)
D. As would be seen from the above, each of the objectives of corporatisation had major
implications for human resource (HR) management. The envisaged advantages could only be
achieved if the HR policies and procedures in the company were transformed from the
departmental setup to that which suited a corporate entity.
E. Consequent upon corporatisation in October 2000, all officers and employees of DTS and
DTO, other than those retained in DoT, were transferred on deemed deputation to the Company on
‘as is where is basis’ along with their posts, on the existing terms and conditions. The Company
decided to continue with the human resource policies and procedures of DoT till it framed its
own policies and procedures.
F. The employees of the Company were divided into four groups, viz., ‘A’, ‘B’, ‘C’ and ‘D’. The
Company categorized the Group ‘A’ and ‘B’ cadres as executive class and the Group ‘C’ and ‘D’
cadres as non-executive class. While employees in Groups ‘B’, ‘C’ and ‘D’ had been absorbed in the
Company, Group ‘A’ officers were still to be absorbed as of January 2006. As of March 2005, the
Company had staff strength of 3.40 lakh.
3. SCOPE OF HUMAN RESOURCE AUDIT:

Performance audit of human resource management in the Company covered the period April
2001 to March 2005. Besides the Corporate Office, 35 circles i.e. 20 territorial circles, two metro
districts of Chennai and Kolkata and 13 non-territorial circles such as Telecom Stores, Quality
Assurance etc. were taken up for performance audit out of a total of 45 circles. In the case of
territorial circles, 25 per cent of Secondary Switching Areas (SSAs) were selected at random.
4. AUDIT OBJECTIVES:
The objectives of audit were to examine whether:
• The manpower planning done by the Company was adequate to meet its objectives;
• The Company ensured optimum deployment of manpower;
• The Company introduced new recruitment policies and practices and whether they were
adequate;
• Well defined, fair and transparent career progression policies and practices were in place;
• Well defined, fair and transparent transfer policies and practices were in place;
• An effective performance management system was in place;
• The training imparted by the company was effective;
• Clearly defined and effective conduct and disciplinary rules were in place;
• Incentive and welfare policies and practices were effective.
• An adequate exit policy had been formulated and implemented by the company.
5. AUDIT CRITERIA:
The main criteria used for audit were as follows:
• Adequate planning for meeting the requirement of manpower for accelerating business growth
in the scenario of frequent technological advancements, a changing business environment and
competition from private operators;
• Optimum deployment of manpower based on proper planning;
• Responsive and prompt recruitment procedures;
• Well defined, fair and transparent career progression policies and practices that attract new
talents and retain the existing ones;
• Well defined, fair and transparent transfer policies and practices;
• Effective performance management indices that promote the company’s goals;
• Well planned and effective training to help the company achieve its goals;
• Clearly defined and effective conduct and disciplinary rules;
• Adequate incentive and welfare policies and practices, commensurate with industry standards;
• A comprehensive and effective exit policy;
• Performance indicators fixed by the company in respect of the above issues; and
• Performance indicators suggested by M/s KPMG, the consultant appointed (April 2002) by the
company to strengthen its HR functions.
6. AUDIT METHODOLOGY:
The audit methodology involved examination of documents and discussions with the Management
to evaluate the performance of human resources management in the company based on the audit
criteria broadly outlined earlier.
7. AUDIT REPORT and FINDINGS:

A. Realizing the need for streamlining and strengthening the human resource functions in the
organization to achieve the goals for which it was formed, the company appointed (April 2002) M/s
KPMG, a global management consultant firm, at a cost of Rs 64.20 lakh, to advise it on strengthening
of its functions. The company indicated that human resource functions should be aligned to the
business strategy of the organization and should be on par with industry norms.
B. The consultant was required to submit two sets of reports on five human resource deliverables,
viz., personnel policy, manpower planning, norms for staffing, incentives/performance appraisal and
conduct and disciplinary rules by July 2002 and January 2003. KPMG submitted its first report in July
2002 and the second report in February 2003. Audit observed that the Company had not constituted
any specific task force or committee to study the recommendations of KPMG and recommend their
feasibility for implementation. The Management stated that the management committee had decided
(February 2005) to consider acceptance of KPMG’s final report on human resource strengthening
only after the absorption of Group ‘A’ officers. The Management further replied (January 2006) that
a steering committee chaired by CMD and Directors had been formed to over see the implementation
of the final report of KPMG in the company.
C. Audit observed that although the Company recognized the need for strengthening its human
resource functions and appointed a consultant for the purpose, prompt and adequate steps in this
regard were not taken. The deficiencies observed with regard to manpower planning, deployment of
personnel, recruitment, career progression, transfers, performance management, training, conduct
and disciplinary rules, welfare and exit policy, are discussed in the succeeding paragraphs.
8. POST - AUDIT RECOMMENDATIONS BY KPMG:

1. Manpower Planning:
• The company should ensure timely preparation of annual manpower plans. The corporate office
should specify time periods for each stage, including receipt of inputs from the circles, and
ensure that these dates are adhered to.
• The company should ensure that once the Board approves the manpower plan, there is no
delay on the part of the circles in implementing the approved plan.
• The company should invariably include aspects relating to cost of manpower in the plans.
• The company should issue guidelines for outsourcing of jobs. The company should also identify
outsourceable jobs.
• The company should urgently revise the staffing norms for fixed lines as per the changes in the
business environment and technology.
• The company should urgently implement fresh staffing norms for Group ‘A’ and ‘B’ officers for
the fixed line service, as suggested by the consultant.
• The company should either appoint a consultant or an internal committee to work out fresh
norms for Group ‘C’ and ‘D’ employees, or implement the same.
2. Manpower Deployment:
• The company should identify staff rendered surplus in the fixed line service and in other areas
in a scientific manner for their redeployment or exit.
• The company should ensure that the merger of employees of the Telecom Stores organization
with the territorial circles is completed.
• The company should immediately stop the practice of operating temporary posts without
retention sanction.
• The workload in Electrical Wings of the circles should be reviewed and surplus staff redeployed
for their optimal utilization.
3. Inadequate Human Relations System:
• The Department of Telecommunications (DoT) and the Company should resolve the issue of
absorption of Group ‘A’ officers urgently as many vital human resources initiatives including
several recommendations of the consultant had been kept pending citing this fact.
• The company should urgently complete the integration of human resources functions pertaining
to all the disciplines under the overall charge of Director (HRD).
• The company should prepare a human resources manual.
• The company should develop an effective manpower information system to facilitate proper
planning and deployment of manpower.
4. Recruitment:
• The company should formulate a recruitment policy to give a definite direction to the process
of recruitment to its different cadres.
• The company should clearly spell out the procedures for identifying anticipated vacancies and
skill gaps and fixing of qualifications and standards for recruitment of personnel, especially for
new services and marketing.
• The entire process of recruitment for all the cadres should be integrated and processed through
an exclusive recruitment cell for speedy completion and uniformity.
• The time to be taken to complete each stage of the process of recruitment should be fixed for
timely availability of manpower.
5. Career Progression and Transfers:
• The company should ensure equitable opportunities of work and growth for employees of
different disciplines.
• The company should ensure that all promotions are given in time.
• The company should formulate a well defined, fair and transparent transfer policy based on the
consultant’s recommendations such as:
1. Transfers should not be permitted more than twice in the complete span of service of an
employee.
2. Employees should be required to serve a fixed minimum period at the post of transfer before
requesting for a transfer.
3. Minimum and maximum tenures for being eligible for transfer should be fixed.
4. Benefits should be fixed for hard tenure transfers to encourage employees to go in for them.
5. Disciplinary action should be taken if an employee did not relocate to a newly assigned post
within the time frame specified in the transfer order.
6. Adequate measures should be taken to ensure that transfers were not used as disciplinary
or retaliatory measures.
6. Human Resources Development:

• The company should fix performance targets for each individual employee.
• The company should consider switching over to the ‘open review system’ of performance
management as recommended by the consultant.
7. Training:
• The company should select its trainees in a scientific manner. For this purpose, it should
maintain a database of employee profiles.
• Administrative measures should be put in place to ensure that training slots do not go unutilized
because of lack of nominations and cancellation of nominations.
• In-house training should be imparted to cover shortfalls in training through the training institutes.
• Feedback should be obtained and made use of in respect of improvements made in the
performance of employees as a result of training. The company should ensure that the cells
created in the training institutes for the purpose perform effectively.
8. Discipline and Conduct Rules:
• The company should expedite the framing of its conduct and disciplinary rules based on rules
generally adopted by Public Sector Undertakings, the guidelines of the Central Vigilance
Commission and the Department of Public Enterprises.
• The company should adopt proper measures to minimize delays in settlement of disciplinary
cases.
9. Welfare Measures:
• Welfare measures are an integral part of healthy industrial relations. Hence the company’s’,
Welfare Board should be proactive and promote various welfare measures in the Company.
• Management should expedite setting of staff cell in the remaining four circles.
10. Exit Policy:
• The company should revise the norms in respect of Group ‘C’ and ‘D’ employees, especially
in the fixed line business, in order to identify surplus manpower.
• The company should conduct a feasibility study to identify their noncore business and plan to
exit from the same.
• The company should devise a selective VRS for cadres whose functions have been phased
out, after exhausting the possibility of their redeployment.
SIMPLY SPEAKING…
1. At the time of formation of BSNL in September 2000, the company was faced with a
business scenario, which was highly competitive and subject to rapid technological
changes.
2. The company needed to address the challenges with the help of well-qualified and
skilled personnel. Recognizing this need, BSNL appointed KPMG for strengthening its
human resources management.
3. However, as brought out in the report, the company till November 2005 had not considered
most of the recommendations of the consultant.
4. Although the company was relatively new and was facing a unique situation of transit
from a bureaucratic governmental setup to a market driven corporate culture, it was yet
to gear up to this new challenge by carrying out the necessary reforms in its human
resources management.
5. BSNL spent a huge amount on human resource audit but many recommendations by
KPMG were not implemented. Why human resource audit fail? We have two cases to cite
for an answer to this question:
A. The human resource manager was very enthusiastic in getting the human resource
audited. The audit report indicated a very poor state of human resource in the
company. The staff competencies were rated as poor, the practices questioned and
improvements suggested. The benchmarking data also indicated this company to be
one of the poor performers in terms of human resource though in terms of the profits
etc. the company was in the forefront and was facing competition. Though the audit
started with an interview with the CEO, no opportunity was provided to the auditors
to make a presentation to the CEO. As a result the audit report did not receive any
attention and the auditors considered the effort a waste.
B. In another company, the top management commissioned the audit but got busy with
reorganization of one of their critical marketing functions. In the process and due to
market competition, all the energies of the top management and their human resource
staff got diverted to the new organizational structure and they did not even have an
opportunity to know the findings of the audit. The auditors felt that some of the audit
findings directly relate to business improvements in terms of the very reorganization
they were planning. But the auditors were not in a position to draw the attention of
the top management. The effort did not result in any thing material.
6. These two events make it clear that the following processes in the human resource
audit have potential in initiating and managing change:
• Initial interviews with the top management.
• Bench marking data on human resource audit questionnaire supplied to the company.
• Presentation by the auditors at the end of the audit.
• The report itself and the way the report is handled.
2. WRITING HUMAN RESOURCE AUDIT REPORT: HUMAN RESOURCE AUDIT AT
BHARAT HEAVY ELECTRICALS LIMITED- (BHEL) HARIDWAR UNIT:
1. THE BEGINNING:
A. BHEL is the largest engineering and manufacturing enterprise in India in the energy related/
infrastructure sector, BHEL was established more than 40 years ago, ushering in the indigenous
Heavy Electrical Equipment industry in India - a dream that has been more than realized with a well-
recognized track record of performance. The company has been earning profits continuously since
1971- 72 and paying dividends since 1976-77.
B. BHEL manufactures over 180 products under 30 major product groups and caters to core
sectors of the Indian Economy viz., Power Generation and Transmission Industry Transportation,
Telecommunication, Renewable Energy, etc. The wide network of BHEL’s 14 manufacturing divisions,
four Power Sector regional centres, over 100 project sites, eight service centers and 18 regional
offices, enables the Company to promptly serve its customers and provide them with suitable products,
systems and services – efficiently and at competitive prices. The high level of quality and reliability
of its products is due to the emphasis on design, engineering and manufacturing to international
standards by acquiring and adapting some of the best technologies from leading companies in the
world, together with technologies developed in its own R&D centers.
C. BHEL’s operations are organized around three businesses sectors, namely Power, Industry
- including Transmission, Transportation, and Telecommunication and Renewable Energy - and
Overseas Business. This enables BHEL to have a strong customer orientation, to be sensitive to his
needs and respond quickly to the changes in the market.
D. The greatest strength of BHEL is its highly skilled and committed 43,300 employees. Every
employee is given an equal opportunity to develop himself and grow in his career. Continuous training
and retraining, career planning, a positive work culture and participative style of management – all
these have engendered development of a committed and motivated workforce setting new benchmarks
in term of productivity, quality and responsiveness.
HUMAN RESOURCE DEVELOPMENT AUDIT:

A. To identify appropriate interventions for sustaining and improving the utilization and effectiveness
of human resources, it was essential for BHEL to have an assessment of the existing situations. The
need to develop comprehensive system was strongly felt and a multi-disciplinary approach has been
made to identify the quantitative and qualitative aspect of human resource utilization and effectiveness.
HUMAN RESOURCE AUDIT PROCCESS AT BHEL – HARIDWAR UNIT
HR AUDIT By recording the components of all the

An audit (review) of systems relating to manpower in the
various systems in the organization and see that all imp. activities
areas of manpower/ have been covered by the systems
personnel to highlight
the strengths weak-
nesses ultimately By examining the structure and content
affecting the manpower of the systems to see if the activities
strength, utilisation are contributing to the fulfillment of
and effectiveness. objective
By examining if the system are being

followed and identifying the bottlenecks.
HRD AUDIT
BY ANALYSIS OF STATISTICS
HR UTILIZATION • financial Indicators
Develop
AUDIT • capacity utilisation
Suitable
(QUANTITATIVE) • idle time statistics
model for Make an
To know the status of • extra-time statistics
the ACTION
manpower utilisation and • Rejection data
division Plan
identification of • Cost data
depts./sections/groups/ • Absenteeism data
individuals with poor • Backlog/slippage data
utilization.
To identify and
quantify reasons By SPECIAL STUDIES IMPLEME-
NTATION
of poor utilisation. • Industrial Engg.
& REVIEW
• By opinion surveys
• Interviews,workshops
• Brain storming
Identify misfits in the organization
HR EFFECTIVENESS AUDIT Assessment of the status of effectiveness

To evaluate the status of and identification of barriers to
qualitative aspects of effectiveness
Manpower utilisation and
to identify the barriers in Analysis of performance and
the way of effectiveness. potential appraisal data
Diagnosis of organizational environment/

organizational norms
Studies in specific
behavioural aspects
SIMPLY SPEAKING…
1. The perceptions held by various people regarding the coverage of manpower audit are
widely varying but in BHEL, it has been considered as the process of identifying and
evaluating the utilization and effectiveness of manpower (both qualitative and quantitative
aspect) for planning suitable interventions for improving the individual and organizational
effectiveness.
2. BHEL developed a three tier approach in human resources Audit:

1. Human resource audit.
2. Human resource utilization audit.
3. Human resource effectiveness audit.
METHODOLOGY OF HUMAN RESOURCE AUDIT:
Any human resource audit that is conducted should be comprehensive, i.e., it should be able to
assess all the positive aspects, while focusing on the critical ones. Comprehensiveness also requires
the involvement of all those who matter in human resource including the suppliers, disseminators and
users of human resource. Because of its comprehensive nature human resource audit has to depend
upon multiple methods. These include interviews, observations, questionnaires, and analysis of records,
reports and other secondary data, where each method is suitable for studying certain aspects.
A. INTERVIEWS:
Interviewing the various stakeholders can give considerable data about the current areas and
directions for improvement. The main advantage of the improvement method is its capacity to capture
the primary concern of the stakeholders. Interviews make the assessment dynamic and also provide
an opportunity for the auditor to contextualize the audit. The context is provided by the stakeholders.
The following are the major types of interviews:
1. Individual.
2. Group.
3. Structured.
4. Non-structured.
5. Spontaneous.
6. Stress.
7. Open ended.
8. Close ended.
The interviews can be conducted individually, where different individual can cover different
aspects. The categories of stakeholders who can be interviewed for human resource audit: CEO’s
and the top management, the human resource chief and human resource staff, line managers, workmen,
operators, field staff, and their representatives.
While individual interviews give a lot of personalized inputs and reveal a number of things, group
interviews ensure the coverage of a wide variety of areas. They also enhance a wider participation
of employees in human resource audit. It is always a useful strategy to interview senior managers,
leaders and opinion makers individually and the others in teams. Group interviews on human resource
audit have the following advantages:
1. Wider coverage of issues and therefore, the possibility of not missing out any significant one.
2. Larger involvement of employees.
3. Verification of data and significant points.
4. Assessment of the intensity of feelings associated with any issues and problems or satisfiers
and dissatisfiers.
5. Education of employees about their own roles and responsibilities as line managers.
B. OBSERVATIONS:
Observation is a way to look at the things as they exist. It involves the use of various senses
and drawing meanings to the things we see or hear. There are number of things that can be observed
by an evaluator. These may be classified under the following categories.
• Physical facilities and living conditions.
• Meetings, discussions and other transactions.
• Celebrations and other events related to organizational life and culture.
• Training and other human resource development facilities, including the classrooms, library,
training center, etc.
• Forms and formats reports, manuals, etc.
C. QUESTIONNAIRES:
There are number of questionnaires used for human resource audit. These questionnaires measure
various aspects of human resource and provide inputs more appropriately for the human resource
scorecard. These are questionnaires to measure: human resource systems and their effectiveness
comprehensively as well as individually, effective performance of various activities by the human
resource department, human resource competencies of human resource staff, human resource styles
or empowering styles of line managers and human resource staff, and human resource culture.
D. HUMAN RESOURCE DEVELOPMENT AUDIT QUESTIONNAIRES:

This is the most comprehensive questionnaire available for human resource audit. This is to be
administered to line managers and the human resource staff. The questionnaire discussed here is
meant for supervisory and English speaking categories. The questionnaire may be administered to
all the employees or on a sample depending on the exhaustiveness intended by the organization.
SAMPLE: A
HUMAN RESOURCE AUDIT QUESTIONNAIRE:
HUMAN RESOURCE AUDIT
Contents:-
1. Conducting an Human Resources Audit:
1.1 Preliminary Steps.
1.2 Goals of the Audit.

1.3 Areas to Audit.
2. Sample Audit Questions:
A. Employment Practices.
B. Hiring: Non-Discrimination.
C. Hiring: Medical Testing.
D. Hiring: Psychological testing and other similar assessments.

E. Hiring: Written Particulars of Employment.
F. Informing Employees of their Rights.

G. Keeping of Records.
H. Payment of RemunerationI. Information about Remuneration.

J. Job Descriptions.
K. Application Forms.
L. Employment Contracts.
M. References.
N. Employee Evaluations: Performance Appraisals.
O. Employee Evaluations: Promotions.

P. Employee Discipline: Rule Infractions (Misconduct).
Q. Employee Discipline: Poor Performance.
R. Employee Discipline: Suspension.

S. Employee Discipline: Termination.
T. Post-Termination.
U. Affirmative Action Measures.

V. Duty to Inform.
W. Income Differentials.
X. Organizational Development Audit.

• Culture.
• Organization.
• People.
• Systems.
Y. Internal Human Resource Audit (example).
1. CONDUCTING A HUMAN RESOURCE AUDIT:

Employment law is an ever-changing field. Your policies and procedures must change with the laws if
you hope to avoid litigation. Employers are aware that one of the best ways to avoid employee lawsuits is to
have a comprehensive policy manual. That’s good advice, but it’s not enough. You must regularly conduct an
employment law/human resources audit to make sure that your policies reflect changes in employment laws.
1.1 Preliminary Steps:

There are two issues that must be considered before implementing an employment law audit:
When should the audit take place? and
By whom should it be conducted?
Since your organization already utilizes a variety of employment-related practices and procedures, the
audit should be conducted as soon as possible, if you have never audited such procedures before. After the
initial audit, follow-up audits should be conducted yearly. When putting together an audit team, include either
in-house or outside legal counsel, a representative from Human Resources, and any other individuals needed
to represent a cross-section of staff functions. All team members should be warned ahead of time regarding
the handling of confidential information.
1.2 Goals Of The Audit
The review process should provide answers to several important questions regarding the application of
your company’s policies. The audit’s goals are to determine whether your policies are being applied consistently,
whether they are the norm for your industry and geographic location, and whether they are consistently
communicated to all employees. The audit should also provide insight as to which individuals are responsible
for the implementation and enforcement of policies. Finally, it should distinguish between policies that are
applicable to nonunion employees, and the terms and conditions of employment for employees who are
represented by a labour organization.
1.3 Areas To Audit
Most lawsuits can be traced to four distinct stages of the employment relationship: hiring, employee
evaluation, employee discipline or termination, and post-employment. Therefore, your self-audit should target
these areas. Sample audit questions from each of these four areas appear on the following pages. In addition
to these four areas, your employment audit should also target state regulations. Here are a few examples.
1. Review all your labour contract provisions for their impact on employees with disabilities.
2. Review all job specifications for hiring and placement of employees.
3. Review all employment applications for illegal questions dealing with employees.
4. Review and prepare all current job descriptions setting forth essential job elements.
5. Review current facilities to ensure accessibility for individuals with disabilities.
6. Review all pre-employment tests.
2. SAMPLE AUDIT QUESTIONS

Note: The questions provided here represent a sample of what should be included in an human resources
audit. This list is not all-inclusive, and should be adapted to meet your specific needs.
A. Employment Practices
In conducting your human resources audit, an employment policy or practice includes, but is not limited
to-
• recruitment procedures, advertising and selection criteria;
• appointments and the appointment process;
• job classification and grading;
• remuneration, employment benefits and terms and conditions of employment;
• job assignments;
• the working environment and facilities;
• training and development;
• performance evaluation systems;
• promotion;
• transfer;
• demotion;
• disciplinary measures other than dismissal; and
• dismissal.
B. Hiring: Non-Discrimination:
Does your Company unfairly discriminate, directly or indirectly, against an employee, in any employment
policy or practice, on one or more grounds, including :-
• race, • colour,
• gender, • sexual orientation,
• sex, • age,
• pregnancy, • disability,
• marital status, • religion,
• family responsibility, • HIV status,
• ethnic or social origin, • culture,
• conscience, • Trade Union membership
• belief, • language and
• political opinion, • birth
• Does your Company employment practices prohibit the harassment of an employee on any of the grounds
mentioned above?
• Do your employment policies distinguish, exclude or prefer any person on the basis of an inherent
requirement of a job. If so, are such inherent requirements legitimate, objective and easily ascertainable
to a third party, such as a Commissioner or Arbitrator?
C. Hiring: Medical testing:

Does your Company have requirements for medical testing of employees, and if so,
• Is it permitted in terms of any legislation; or

• Is it justifiable in the light of medical facts, employment conditions, social policy, the fair distribution of
employee benefits or the inherent requirements of a job?
D. Hiring: Psychological testing and other similar assessments:

• does your Company implement psychological testing and other similar assessments of an employee, and
if so, have such tests or assessments being used-
• shown to be scientifically valid and reliable;
• applied fairly to all employees; and
• not biased against any employee or group?
E. Hiring: Written particulars of employment:

• do or have you supplied your employee, when the employee commences employment, with the following
particulars in writing-
• your full name and address;
• the name and occupation of the employee, or a brief description of the work for which the employee is
employed;
• the place of work, and, where the employee is required or permitted to work at various places, an
indication of this;
• the date on which the employment began;
• the employee’s ordinary hours of work and days of work;
• the employee’s wage or the rate and method of calculating wages;
• the rate of pay for overtime work;
• any other cash payments that the employee is entitled to;
• any payment in kind that the employee is entitled to and the value of the payment in kind;
• how frequently remuneration will be paid;
• any deductions to be made from the employee’s remuneration;
• the leave to which the employee is entitled;
• the period of notice required to terminate employment, or if employment is for a specified period, the date
when employment is to terminate;
• a description of any council or sectoral determination (Wage Determination) which covers the employer’s
business;
• any period of employment with a previous employer that counts towards the employee’s period of
employment;
• a list of any other documents that form part of the contract of employment, indicating a place that is
reasonably accessible to the employee where a copy of each may be obtained.
• When any term or condition of employment of an employee changes do you change the written particulars
to reflect the change; and supply the employee with a copy of the document reflecting the change.
• If an employee is not able to understand the written particulars, do you ensure that they are explained
to the employee in a language and in a manner that the employee understands.
• Have you made provision for keeping written particulars of employment of your employees for a period
of three years after the termination of employment.
F. Informing employees of their rights:

• Do you display at the workplace where it can be read by employees a summary in the prescribed form
of the employee’s rights in terms of the Labour Relations Act, Basic Conditions of Employment Act,
Occupational Health and Safety Act, etc in the official languages which are spoken in the workplace.
G. Keeping of records:
• do you keep a record of your employees (personnel files) containing at least the following information-
• your employees name and occupation;
• the time worked by each employee;

• the remuneration paid to each employee;
• the date of birth of any employee under 18 years of age.
• are such records kept for a period of three years from the date of the last entry in the record.
H. Payment of remuneration:
Do you pay your employees any remuneration that is paid in money
• in South African currency; daily, weekly, fortnightly or monthly; and in cash, by cheque or by direct
deposit into an account designated by the employee.
• at the workplace or at a place agreed to by the employee; during the employee’s working hours or within
15 minutes of the commencement or conclusion of those hours; and in a sealed envelope which becomes the
property of the employee.
• no later than seven days after the completion of the period for which the remuneration is payable; or the
termination of the contract of employment?
I. Information about remuneration:

Do you provide your employees with the following information in writing on each day the employee is
paid
• your name and address;

• your employees name and occupation;
• the period for which the payment is made;
• your employees remuneration in money;
• the amount and purpose of any deduction made from the remuneration;
• the actual amount paid to your employees; and
• if relevant to the calculation of any employee’s remuneration-
• the employee’s rate of remuneration and overtime rate;
• the number of ordinary and overtime hours worked by the employee during the period for which the
payment is made;
• the number of hours worked by the employee on a Sunday or public holiday during that period; and
• if an agreement to average working time has been concluded in terms of section 12 of the Basic
Conditions of Employment Act, the total number of ordinary and overtime hours worked by the employee
in the period of averaging.
• is such written information given to each employee at the workplace or at a place agreed to by the
employee; and during the employee’s ordinary working hours or within 15 minutes of the commencement
or conclusion of those hours.
J. Job Descriptions:
• Do they avoid generalities, vague terms, and professional jargon?
• Are there physical requirements that don’t have a direct correlation to the job you’re describing?
• Is there any language that could be considered sexist?

• Do they consolidate job responsibilities and list the most important ones first?
• Is there any language that discriminates against older employees?
• Are unessential requirements listed that could block the hiring of a person with a disability?
• Do they describe what is to be accomplished, rather than the method for performing the job?
• Are undesirable working conditions, such as worksite temperatures, noise levels, gases, fumes, or
hazardous materials, and space restrictions listed?
• Are required interpersonal skills explained?
K. Application Forms:
• Do you have a written policy explaining how long applications will be considered active, and when and
how applicants can update them?
• Do you purge your files on a regular basis in accordance with your policy?
• Does your application have the following disclaimers?
• Falsification or omission of information can lead to refusal to hire or to discharge.
• Applicant gives employer consent to check references, verify information, and obtain reports from
consumer reporting agencies.
• Does your application ask for any of the following information that may be considered discriminatory?
• Applicant’s sex, or sexual preference, practices, or orientation.
• Applicant’s weight or height, unless a bona fide occupational qualification exists.
• Whether the applicant is single, married, or divorced.
• Whether the applicant is pregnant, has children, or must make arrangements for child care.
• Applicant’s age, other than to determine that the applicant meets minimum state requirements.
• Dates applicant attended high school.
• Applicant’s military status, unless military status is related to his/her ability to perform the work.
• Applicant’s memberships.
• General questions about arrest records.
• Applicant’s religious affiliation.
• Applicant’s general state of health.
• If the applicant is a citizen of another country.
• Applicant’s attitude about trade union organizations.
L. Employment Contracts:
• Does your employee handbook contain a general disclaimer?
• Does your handbook contain a statement indicating that it is intended to provide information only, is not
a contract, and can be modified at any time?
• Do you have employees sign acknowledgement forms recognizing that they have received the handbook
and understand it?
• Are your disclaimers printed in large type and placed in prominent positions?
• Does your handbook indicate that serious offenses can circumvent your progressive discipline policy and
result in immediate termination?
• Does your handbook contain statements promising a promotion-from-within policy?
M. References:
• Does your application state that references will be checked carefully and will influence the hiring
decision?
• Do you avoid recording discriminatory information even if it is given in a reference check?
• Does the person who is conducting the reference check understand the job requirements?
• Do you keep written documentation on every reference check?
• Do you ask applicants to sign a release absolving previous employers from liability for the information
they provide?
• Do you understand the restrictions on gathering medical information on applicants?
• Do you apply the results of your reference checks consistently to all applicants?
• Do you ask employees who are resigning or being terminated to sign a reference request form?
• Do you authorize only a few individuals to respond to reference requests?
• Do you refuse to give oral references?
• Do you require prospective employers to furnish consent forms before giving out references?
• Do you screen prospective employers by taking a telephone number and calling back?
• Are your references based on both positive and negative factors?
N. Employee Evaluations: Performance Appraisals:

• Do all evaluations follow the written schedule described in your employee handbook and company policy
manual?
• Do your evaluators have a clear idea of what are considered subjective terms in a performance
evaluation?
• Are your evaluators aware of the danger of using the performance appraisal form as a retaliatory weapon?
• Do appraisers understand how a lowered performance rating could trigger an age discrimination lawsuit?
• Do you require managers to explain sudden drops in performance appraisal ratings?
• Do you have an appeals process for employees who are not satisfied with their ratings?
• Are evaluators aware of the type of statements made in a performance appraisal that might be considered
defamatory?
• Do appraisers understand why the results of performance appraisals should be given only to those with
a need to know?
O. Employee Evaluations: Promotions:

• Do you have objective guidelines on which to base promotion decisions?
• Do you consider all promotion candidates equally, without regard to sex, race, age, or disability?
• Are all aspects of your promotion process completely up to date?

• Do you regularly review job requirements to see if requiring less experience or offering more training would
increase your promotion pool?
• Do you keep records of all interview notes which enter into promotion decisions?
• Do you publicize requirements necessary for promotion?
• Do you check out all complaints from employees who claim they are being passed over for promotion
for discriminatory reasons?
• Do you question managers who never seem to recommend women or minorities for promotion?
• Is there any evidence that a manager may be passing over employees for promotion for retaliatory
reasons?
P. Employee Discipline: Rule Infractions (Misconduct):

• Are you familiar with and does your codes of conduct procedures comply with the Code of Good Practice
on Unfair Dismissals
• Is the rule which was violated a reasonable one?
• Was the employee aware of the rule?
• Was the employee aware of the consequences for violating the rule?
• Does the discipline follow your progressive discipline system?
• Could the discipline be considered retaliation against an employee who has filed a discrimination
complaint?
• Did the employee offer an excuse for the rule violation?
• Could the employee have been harmed by obeying the rule?
• Does the rule violate safety or state regulations?
• Does the rule serve a useful purpose, or is it frivolous?
• Could the employee have been trapped into a rule violation?
• Is there sufficient proof to show that the employee broke the rule?
• Are there extenuating circumstances that should be taken into account?
• Have you considered the employee’s past disciplinary record in selecting the penalty?
Q. Employee Discipline: Poor Performance:

• Are you familiar with and does your performance management procedures comply with the Code of Good
Practice on Unfair Dismissals?
• Has the employee been properly warned about his/her performance?
• Was the employee given adequate training and reasonable improvement goals?
• Have you carefully reviewed the employee’s prior disciplinary history?
• How have you handled similar performance problems in the past?
• Have you considered any new information that may be related to the problem?
• Have you checked company policy to ensure consistency and fairness?
• How do you plan to involve the employee in helping to set improvement goals?
• Does the employee understand what can happen if improvement goals are not met?
• Could a basic review or additional training improve performance?
R. Employee Discipline: Suspension:

• Does the suspension follow the progressive discipline policy spelled out in your handbook or policy
manual?
• Is the suspension decision the result of a fair, proper procedure?
• Was the employee properly warned about the possibility of a suspension?
• Does the documentation provide a factual basis that justifies the suspension?
• Could the suspension be seen as a form of retaliation?
• Is the employee being suspended a member of a protected class or has he/she filed a discrimination
complaint?
S. Employee Discipline: Termination:

• Are you familiar with and does your termination procedures comply with the Code of Good Practices on
unfair dismissals?
• Has the termination decision been compared to other penalties imposed on other employees for similar
infractions?
• Is the termination consistent with the employee’s discipline record?
• Are there any potential legal problems, such as age, race, or sex discrimination; wrongful termination;
or sexual harassment?
• Has the employee been properly warned and given sufficient time to improve performance or behavior?
• Is the offense for which the employee is being terminated spelled out in the handbook or company policy
manual as an offense warranting discharge?
• Was the terminated employee given the right to use the company’s complaint or review procedure?
• Do you have the documentation to show that the employee was given a sufficient amount of time and
help to remedy the problem?
• Have you given full consideration to the employee’s length of service and past contributions to the
company?
• Have you considered all possible alternatives to discharge, including reassignment, early retirement, or
voluntary resignation?
• Does the employee have any pending litigation against the company? If so, could the termination be
considered a form of retaliation?
T. Post-Termination:
• Do you conduct an exit interview with employees who quit or who are terminated?
• Does your documentation support your termination decision?
• Were you able to reduce tension and resentment by showing the employee that he/she had been given
proper warning and time to improve performance or behavior?
• What reasons were given by an employee who felt he/she was being treated unfairly?
• How did you respond to questions about providing future references?

• Did the employee request that he/she be allowed to resign in lieu of being terminated?
• Did you agree to allow the employee to give his/her own reasons for the “resignation”?
• Did the employee accept the termination or did he/she raise the possibility of a discrimination claim or
a lawsuit?
• Did you obtain all keys, badges, uniforms, and other security items?
• Do you have a clearly-written, published policy explaining that the company will provide honest and
accurate references to those with a legitimate need to know?
• Do you understand how the laws of defamation apply to employer references?
• Do you remind employees who are terminating, either voluntarily or involuntarily, about your reference
policy during the exit interview?
U. Affirmative action measures:

• In terms of the, are you required by law to implement an affirmative action plan?
• Have you implemented affirmative action measures designed to ensure that suitably qualified people
from designated groups have equal employment opportunities and are equitably represented in all
occupational categories and levels in the workforce? Does such a plan include:
1. measures to identify and eliminate employment barriers, including unfair discrimination, which
adversely affect people from designated groups;
2. measures designed to further diversity in the workplace based on equal dignity and respect of all
people;
3. making reasonable accommodation for people from designated groups in order to ensure that they
enjoy equal opportunities and are equitably represented in the workforce of a designated employer;
4. preferential treatment and numerical goals for employees from designated groups?
Have you.
• assigned one or more senior managers to take responsibility for monitoring and implementing an equal
opportunity plan.
• provided the managers with the authority and means to perform their functions; and
• taken reasonable steps to ensure that the managers perform their functions?
V. Duty to inform:
• do you display at the workplace where it can be read by employees a notice in the prescribed form,
informing them about
1. the provisions of various Labour Laws.
2. the most recent equal opportunity plan prepared by your company?
W. Income differentials:
• Are you able to compile a statement on the remuneration and benefits received in each occupational
category and level of your workforce?
• Where disproportionate income differentials are reflected in that statement, have you taken measures
to progressively reduce such differentials?
• Does your recruitment or promotion policies and procedures take into account a job applicant or
employees
• formal qualifications;
• prior learning:
• relevant experience; or
• capacity to acquire, within a reasonable time, the ability to do the job.
• when determining whether the employee or applicant may be suitably qualified for a job?
X. Organizational Development Audit:

The following check-lists present some questions which may prove helpful for you to think about when
planning your development programs for the people in your organization. Use them to provoke thought and
to stimulate discussion. Consult with others in your organization. They will help you to identify the critical
human resource issues facing your organization. The aim is to begin to explore how a considered and
planned approach to people management can improve business performance, to the benefit of all.
General Considerations:-Your organization is more than likely in trouble if any of the following holds true:
• chronic industrial relations problems.
• no means of resolving employee grievances.
• increasing /erratic employee turnover.
• increasing number of customer complaints.
• no pride in the organization.
• inter—group conflicts.
• no career paths for ambitious talented employees.
• dissatisfaction with pay and conditions.
• unclear job roles.
• no clear performance measures.
• quality is unimportant.
• bad product service/delivery records.
• poor recruitment standards/practices.
• no management development programs.
• no induction training for new employees.
• critical skill shortages.
• inter-departmental warfare.
• you do not know if any of the above are applicable.
• you ignore any of the above.
Culture:
• Do your staff identify with the organization and ‘the success of the organization’ as being of direct benefit
to themselves?
• Do your staff see themselves as having common interests with their work colleagues and group? Is there
a strong team spirit?
• Is work allocated on the basis of individual expertise rather than position in the organization?
• Are there sufficient skills/ power bases in the organization?
• Are there appropriate leadership skills within the organization?
• Are your staff encouraged to say what they think about the organization?
• Does your organization encourage innovation and creativity amongst staff?
• Do your staff feel a sense of personal responsibility for their work?
• Is quality emphasized in all aspects of the organization?
Organization:
• Does the structure of your organization encourage effective performance?
• Is the organization structure flexible in the face of changing demands?
• Is the structure too complex? If so in what areas?
• Do your staff have clear roles and responsibilities?
• Does your organization structure tend to push problems up rather than resolve them at the point where
they occur?
• Do your procedures and management practices facilitate the accomplishment of tasks?
• Do you constantly seek to challenge your organization structure?
People:
• Do your staff have the necessary skills and knowledge to perform their jobs in the most effective manner?
• Do your staff understand their jobs and how they contribute to overall business performance i.e. have
clear goals and objectives?
• Do your staff have a customer service orientation? Are people with potential spotted and developed for
the future?
• Are your staff encouraged to perform well through the giving of recognition, feedback, etc?
• Do your people know what their expected performance standards are?
Systems:
• Do your organization’s systems (e.g. recruitment, promotion, planning, management, information and
control) encourage effective performance among your staff?
• Are these systems consistent across the organization?
• Are there clear rewards for effective performance within your work group?
• Does the organization review its systems frequently and ensure they mutually support each other?
Now consider and write down:

(1) What are the three critical people issues facing your business?
(2) What plans/actions are you taking to address them?
Y. Internal Human Resource Audit

Example of an internal Human Resources Audit. Please amend using questions from the
comprehensive HR Audit to determine the content of your Human Resources Audit.
(Send a copy of this report to the various departments within your Company or Companies within your
Group)
Please complete the following questionnaire as accurately and thoroughly as possible, attaching relevant
documentation where necessary, and return to …………………. By no later than ………………….
Contact Details
Company Name: Registered As………………………………………………..
Trading As…………………………………………………..
Contact Person: Name : ……………………………………………………
Title:…………………………………………………………
Contact Numbers: Tel #:………………………………………………………...

Fax #:………………………………………………………..
Cel #…08……………………………………………………
E Mail ….………………@………………………………
Physical Address : ………………………………………………………………
………………………………………………………………
………………………………………………………………
Postal Address : ………………………………………………………………
………………………………………………………………
Company Details
Does the company have a formal Organogram?: Yes No
(If yes, please attach. If no, please attach a list of all positions within the company).
Does the company have comprehensive job descriptions for all said positions?
Yes No (If yes, please attach).
Employee Headcount : Permanent Employees : …..………
Permanent Part-Time Employees : …..………

Contract Employees : …………..
Casual Staff : ………….
Does the Company have a formal HR Manual? Yes No

Does the Company have a formal HR Filing System? Yes No

Does the Company have a computerised HR/Payroll System?
HR : Yes No
Brand Name: ………………..

Payroll : Yes/No
Brand Name:………………
What Records and Control Measures are in place?

…………………………………………………………………………………………………
…………………………………………………………………………………………………
Employment Details
(For each category, please indicate if applicable to all employees. If not, please supply details. Further,
please indicate whether a policy in regard to that specific category is in place or not and attach same to this
document).
Working Hours : Hours per day:………….. Days per week:………………….

Working Hours Policy: Yes/No
Overtime : Hours per day:………….. Days per week:………………….
Overtime Policy in Place: Yes No

Annual Leave : …………… working days leave per annum
Sick Leave : …………… days per year/36 month cycle
Maternity Leave : …………… months per occasion

Family Responsibility Leave : …………… per occasion
Study Leave : …………… per examination
Unpaid Leave : …………………………………………………………..

Leave Policy in Place : Annual Yes No
Sick Yes No
Maternity Yes No
Family Responsibility Yes No
Study Yes No
Unpaid Yes No
Remuneration and Benefit Details

(Please indicate whether a policy in regard to each specific category is in place or not and attach same
to this document).
If available, please supply a copy of the following:

Letter of Employment or Contract

Payslip
Induction Programme
Employee Handbook
Certificate of Service
Medical Aid : Name of Fund: ……………………………………………..
Company Contribution Details: ……………………………

………………………………………………………………
Pension/Provident Fund: Fund Type: ….Pension/Provident………………………….
Name of Fund: ……………………………………………..

Company Contribution Details: ……………………………
………………………………………………………………
Employment Policy : Yes No

How are employees’ salary
packages structured? : …………………………………………………………
…………………………………………………………
…………………………………………………………
Company Vehicle Policy : Yes No
Transfer and Relocation Policy : Yes No

Retrenchment Policy : Yes No
What is the Official Retirement Age of the Company? Male ……….. years
Female ………years
Early Retirement Policy : Yes No
Does the Company offer Educational Assistance? Yes No
If yes, to whom:
Employees Only
Employees and Employees Immediate children
Other (please specify)……………………………………………….

Does the Company offer any Loan Facilities: Yes No
If yes, please indicate:
To whom …………………………………………………….
What Category:..(e.g. welfare, home)………………………..
……………………………………………………………….
Other
(Please indicate whether a policy in regard to each specific category is in place or not and attach same
to this document).
Aids and Life Threatening Diseases Policy : Yes No

Disciplinary and Grievance Procedures : Yes No
Harassment and Non-Discrimination Policies : Yes No
Smoking Policy : Yes No

What are the Company’s ratios of employees?
Company White Black Male Female

Total
Senior Management
Middle Management
Supervisory
General Staff
No. of Disabled Employees: ……………….
Employment Equity Policy : Yes No

Information Systems
What computer software programmes do you use: …………………………………….
………………………………….. …………………………………………………….
Do your employees have their own email addresses: Yes No
Do you have a Corporate Website: Yes No
If yes, please specify URL: http://www……………………………………….

How many employees have access to e-mail facilities within your
Company /department? ……………………………………….
Do any employees work on a contract basis: Yes No

Do any employees work from home: Yes No
Restructuring
Is it likely that your organisation or the terms and conditions of employees may be restructured?
Yes No
Are you familiar with the requirements of:
The new Basic Conditions of Employment Act: Yes No

Employment Equity Act: Yes No
Code of Good Practice on Sexual Harassment in the Workplace: Yes No

Labour Relations Act 66 of 1995 (as amended): Yes No
Skills Development Act: Yes No
Code of Good Practice on the Regulation of Working Hours: Yes No

Code of Good Practice on Maternity Leave: Yes No
Do you participate in any Corporate Social Investment schemes: Yes No
If yes, please specify which organization: …………………………………………………..

LEVEL TWO
HUMAN RESOURCE AUDIT CHECKLIST
1. WHAT IS THE PURPOSE OF THE AUDIT?

• To look for potentially serious problems (land mines)?
• To find areas needing improvement?
• To document processes for use in merger or reorganization?
• To address compliance issues?
2. SOURCES OF DATA:
1. What do the written policies and procedures say?
2. What do the Human Resource managers say?
3. What do the line managers say?
3. BASICS OF HR FUNCTION:
• How many staff is there in Human Resource (and related departments e.g. training)?
• What is the organization chart for the Human Resource department?
• What is the Human Resource budget?
4. RECRUITMENT:
• How are candidates sourced?
• How are candidates selected?
• Are legal requirements met?
• Are the same processes used for all jobs, all locations?
• Are processes followed consistently?
5. COMPENSATION AND BENEFITS:
• What are the different policy groups (e.g. management, clerical, union)?
• How is base pay policy set?
• What grading/job evaluation systems are used?
• Are there up-to-date job descriptions?
• What variable pay practices are in place?
• How are pay increments decided?
• What is the benefits plan?
6. WORKFORCE REVIEW:
• Are there any critical skills shortages?
• Are there any critical succession issues?
• Is there anything unusual in the distribution of worker age, gender etc.?

• What workforce planning processes are used?
• What succession planning processes are used?
7. TRAINING AND DEVELOPMENT:
• How much training is given?
• How is the training program managed?
• Are there any staff development programs?
8. INDUSTRIAL RELATIONS:
• What unions exist and what jobs are covered?
• What collective agreements are in place, when do they expire?
• How many grievances are there per year?
• Are there any outstanding grievances?
9. LEGAL:
• Are processes in place to manage compliance issues for all relevant jurisdictions?
• Is there any outstanding litigation?
10. HUMAN RESOURCETECHNOLOGY:
• What technology is installed?
• How up-to-date is the technology?
• Is the data clean?
• Are there any important technology projects in progress?
11. STRATEGIC HUMAN RESOURCE:
• Where does the most senior Human Resource person report in to?
• How much interest does top management have in Human Resource issues?
SOME OTHER AUDIT TECHNIQUES TO CONSIDER:
• Audit of corporate culture.
• Competency audit of Human Resource staff.
• Metrics based audit using metrics such as those proposed by the Saratoga Institute.
• Audit of customer satisfaction with Human Resource.
LEVEL THREE
SAMPLE: B
HUMAN RESOURCE AUDIT QUESTIONNAIRE:

Company information
Company name:
Business unit name (if applicable):
Address:
Street
City
State/Province Zip/Postal code
Country
Telephone number:
Facsimile number:
Fiscal year-end (month/day):

Company contacts:
Name Name
Position Position
Phone Phone
Industry information
Industry classification:
1. What was total revenue for the business unit for the most recently
completed fiscal year? Section 1.
2. What were total assets for the business unit for the most recently
completed fiscal year? Business and Human
Resources Strategy
3. How many locations exist within the business unit? (Include all
operating and administrative locations which perform Human
Resource activities.)
4. Is the business unit a publicly-held or a privately-held entity?
5. What was the pre-tax income for the business unit for the last fiscal year-end?
6. What is the company business strategy?
7. Does the company business strategy link to Human Resources (Human Resource)? Please describe.
8. What is your company’s Human Resource Strategy? Is the Human Resource strategy aligned with the
company’s strategy?
9. Who develop the Human Resource Strategy? Do you assemble a cross-functional team to develop the
Human Resource strategy?
10. What does Human Resource do in supporting the implementation of organization’s strategy?
11. Determine how the human resources department will support strategic goal and impact organization
performance?
12. Do you perform a gap analysis of current versus desired organizational behavior and performance, and
develop strategy to close the gap?
13. Outline the Human Resource department’s present role, list its function and evaluate its effectiveness?
Section 2. 1. Please describe the Human Resources Policies of the company. If

possible, please specify the policies for each HR function (recruitment
Human Resource & placement, training & development, performance appraisal, etc)
Policies 2. How and to what extent do the policies support the Human Resource
department in executing the strategy?
3. Please describe the Human Resources Program of your company.

4. Do these programs align with your Human Resources Policies?
Are your workforce formation fits the company’s business objectives?
1. Does the company have manpower plan? Section 3.

2. How do you create a manpower plan?
3. Do you develop a competency-based approach to staffing?
Manpower Planning
4. Does every position have competency/requirement?
5. Does every employee understand competency/requirement needed
to perform a job/position?
6. Does this company have a clear job description for each job/position?
And does each have clear competency ‘map’?
7. What is the total number of all employees (headcount) at the business unit?
• managerial level :
• supervisory level :
• staff/operator level :
• total :
8. What is the total number of employees (headcount)for the human resources department?
Number
• managerial
• supervisory
• staff
• total
1. Answer the following in relation to the job offer cycle:

Section 4.
a. What was the total number of offers made in most recent? Complete
Recruitment fiscal year?
b. What was the total number of offers accepted in Most recent
and complete fiscal year?
Selection c. What was the average time (in days) from Job requisition to extension
of job offer?
2. Please complete the following question with the number of entry and non-entry level positions filled
internally and externally during the most recent complete fiscal year:
internal external
a. Entry
b. Non-entry
3. What were your total recruiting costs for external internal

the previous year?
4. How many positions (job titles) exist across the organization?
5. How is the recruitment process?
6. Does it eliminate unsuitable applicants early and focus on promising candidates?
7. How is the recruitment methodology? Does it attract desirable workers? Does it match capabilities of
candidates with competency requirement for positions?
8. Do you use executive search services to help you in the recruitment area?
9. How do you describe the qualification requirements for the vacant positions?
10. Who makes the hiring decision?
1. What kind of programs does exist for employee retention?

Are they sufficient?
Section 5.
2. Does the company develop attractive benefit program that
can retain employees? Employee Rentention
3. Do you track your staff turnover? What is your turn over rate
this fiscal year?
1. Does the company have a clear development or training plan/strategy?

2. What is the current training and development system for employees?
3. What was the total number of training hours in the previous year for
Section 6. employees?
Manageria :
Training and
Development Supervisory :
Staff :
4. Of the total amount of training hours offered, what percentage was:
Percentage
a. Formal classroom
b. Computer-based
c. On-the-job
d. Self-study
e. Off-site
5. What was the total cost for training in the previous year?
6. How do you conduct Training Need Analysis (TNA)?
7. How do you translate the TNA into a Training Program?
8. What kind of training programs offered to employees?
9. Do managers and employees find the training program relevant to their needs?
10. How do you evaluate training effectiveness?
11. Does each employees have Individual Development Plan (IDP)? How are individual development plans and
needs identified?
12. Does IDP work effectively? If it doesn’t work effectively, what is the cause of it?
1. What types of performance management systems do you use?

Please describe.
Section 7.
2. Does it work effectively? If not, why?
3. Do you give constructive feedback to increase employee’s Performance
performance?
Management
4. Do you include a customer satisfaction element in performance
evaluations?
1. What is the current compensation system in your company? Please

describe
Section 8.
2. Do you offer compensation plans that provide a stable base with
variables linked to performance?
Compensation and
3. Do you develop compensation plan that support strategic goals?
Rewards
4. Who design the current compensation system? Does the BOD/
Human Resource Department involve in formulating pay strategy?
5. Is the compensation system reviewed periodically? How do you evaluate your pay structure and
compensation policy at least annually and adjust it when needed?
6. Do you compare the company’s compensation programs with the market rates? Does the current
compensation system competitive?
7. Do you set up procedures that ensure company compliance with all applicable payroll laws needed?
8. Please describe the current benefit and allowance system of your company? (describe in detail if there
is differences among upper/middle/lower level of management/staff?)
9. For all employees in the organization (include both part-time and full-time employees in all departments),
what is the:
a. Total base pay

b. Total overtime pay
c. Total variable pay
d. Total payroll cost
10. What is the total benefits cost (not including benefits administrations costs) for all employees in the
organization? (Include both part- and full-time employees in all departments)?
1. What is the current system for career development in your company?

Please describe.
Section 9.
2. Does it work based on meritocracy and fairness?
3. How does this current system apply to the employee individually? Career Development
4. What is the current system of succession planning? and Succession
5. Do succession plan exist for all critical positions? Plannning
6. What percentage of management positions at the following levels
has succession plans in place?
Percent
a. Executives
b. Senior mgt.
c. Middle mgt.
7. What are the criteria for the successors?
8. Does the succession planning system work effectively? If not, why?
1. Do you build a culture of inclusion that promotes labor and

Section 10. management as partner in business success? How?
2. What problems does the company encounter in labor relation
Industrial Relations issues? Do you have labor union? Does the labor union represent
the employees well?
3. How do you solve labor relation (LR) issues?
4. Do employees give feedback to solve IR issues? Do you design grievance procedure for resolving
employees’ problem?
5. Does the company actively communicate LR/IR procedure to all employees?
6. Do you encourage employees to play a proactive role in improving the labor-management relationship?
1. What IT systems and infrastructure do you use to support your

Section 11.
HRIS? Does it work effectively?
2. How can the IT system be used to support the Human Resource
Strategy?
Human Resource
3. How many human resource information databases your company
have?
1. What is the current retirement policy?

Section 12.
2. Does your company have Pre-Retirement Preparation Program for their
employees?
Retirement
3. Please indicate the number of employees participating in retirement plans.
Managerial :
Supervisory :
Staff :
4. Please indicate the total contribution (in terms of percentage of total compensation) into retirement plans
as outlined below:
Managerial supervisory staff
a. By employee
b. By the organization
1. Do you create an environment of open communication between employees

and management?
Section 13.
2. How do managers and employees perceive the effectiveness and
integrity of current communication culture?
Employee
3. Do you capture the creative insight of employees by soliciting their Communication
ideas for improvement?
4. Do you create environment to delegate decision making to the lowest
level possible?
5. What kind of media your organization uses to communicate to the entire workforce on a regular basis?
6. What mechanisms do you have for obtaining employee feedback on a regular basis?
1. How much the cost for the following items:

Section 14. • Human resources department direct labor cost (Wages, overtime,
and benefits.)
Human Resource • Human resources department operating expenses (Supplies, training,

and other locally controllable expenses not including rent,
Costs depreciation, or allocated overhead expenses.)
• Outsourcing fees, if any (Contract fees including annual fees and
monthly operating charges.)
• Contracted services cost (Temporary and contract labor).
• Data processing equipment and facilities to support the human resources department (Include the
cost of providing computer processing, software, hardware, )
• Total human resources department cost (Total of questions 1 through 5)

1. What are the methods and systems which were followed in BHEL and BSNL in conducting Human
Resource Audit? What were the recommendations made by the external human resource audit agencies?
2. What are the essential elements of Human Resource Audit? What are the component systems of human
resource for audit?
3. Prepare a checklist for conducting an internal Human Resource Audit by Human Resource department.
4. What are the essential characteristics for writing Human Resource Audit report?
5. Prepare a questionnaire/check list for conducting and preparing Human Resource Audit Report by an
external audit agency.
FEFE
APPENDIX
HPH
Appendix 629
APPENDIX
CONCEPTS IN HUMAN RESOURCE PLANNING AND AUDIT 630 – 654
A WORD ABOUT MANAGEMENT GURUS 655 – 667
APPENDIX
CONCEPTS IN HUMAN RESOURCE PLANNING AND AUDIT
AUDIT AND HUMAN RESOURCE AUDIT:

Audit is to examine and verify an account or accounts by reference to vouchers’ audit is an
alternative term for analysis. It consists of Manpower Planning and Recruitment, Potential Appraisals
and Promotions, Career Planning and Development
In Work Planning: Role Analysis (Goal Setting) Contextual Analysis - Performance Appraisal
In Development System: Training and Learning, Performance Coaching/Counseling, Others like
job rotation, mentoring, Staff (Worker) Development
In Self Renewal System: Role Efficacy, Organization Development and Action Oriented
Research.
CARRER PLANNING:
Career planning is the key process in career management. It uses all the information provided
by the organization’s assessments of requirements, the assessments of performance and potential
and the management succession plans, and translates it in the form of individual career development
programs and general arrangements for management development, career counseling, mentoring and
management training.
A career has been defined as the involving sequence of a person’s experiences over time. It is
viewed as fundamentally a relationship between one or more organisations and the individual. To
some a career is a carefully worked out plan for self advancement to others it is a calling- a life role
to others it is a voyage to self discovery and to still others it is life itself. The principal objective of
career planning are:
1. secure the right man at the right job and at the right time.
2. maintain a contended team of employees.
Career planning procedures are always based on what the organization needs. Organizational
needs will not be met if individual needs are neglected. Career planning has to be concerned with the
management of diversity.
COUNSELING:
The first step in any effort to improve employee performance is counseling or coaching. Counseling
or work coaching is part of the day-to-day interaction between a supervisor and an individual who
works in his or her work area, or a Human Resources professional and line organization staff
members. Counseling often provides positive feedback about employee contributions. At the same
time, regular counseling brings performance issues to an employee’s attention when they are small,
and assists the employee to correct them.
The goal of performance counseling /coaching is not to make the employee feel bad, or to show
how much the Human Resource professional or knows. The goal of counseling is to work with the
employee to solve performance problems and improve the work of the employee, the team, and the
department.”
Appendix 631
Counseling is a process by which the structure of the self is relaxed in the safety of the
client’s relationship with the therapist, and previously denied experiences are perceived and then
integrated into an altered self”
CHANGE:
The most general conception of change is simply difference or non identity.
COMPETENCY:
Competence is shown in action in a situation in a context that might be different the next time
you have to act. In emergency contexts, competent people will react to the situation following behaviours
they have previously found to succeed, hopefully to good effect. Competence is a standardized
requirement for an individual to properly perform a specific job. It encompasses a combination of
knowledge, skills and behaviour utilized to improve performance. More generally, competence is the
state or quality of being adequately or well qualified, having the ability to perform a specific role.
CRISIS INDUCTION:
Improving recruitment and selection procedures to ensure that job requirements are specified
accurately and that are the people who are selected fit the specifications ; ensure that candidates are
given realistic picture of the job, pay and working conditions, developing induction and initial training
programmes.
CULTURAL CHANGE:
‘Cultural change’ is often seen as a huge, long process that is fraught with challenges. By
focusing on behaviours, The Chalfont Project is able to generate culture change fast and effectively
without even calling it ‘culture change’. The principle is that culture is something that is difficult to
grasp, define and manage, but behaviours can be easily influenced, reinforced, introduced and
changed. If you change specific targeted behaviours the culture will change automatically.
8.360 DEGREE PERFORMANCE FEEDBACK:

In human resources or industrial/organizational psychology, 360-degree feedback, also known
as ‘multi-rater feedback’, ‘multisource feedback’, or ‘multisource assessment’, is employee development
feedback that comes from all around the employee. “360” refers to the 360 degrees in a circle. The
feedback would come from subordinates, peers, and managers in the organizational hierarchy, as
well as self-assessment, and in some cases external sources such as customers and suppliers or
other interested stakeholders. It may be contrasted with upward feedback, where managers are
given feedback by their direct reports, or a traditional performance appraisal, where the employees
are most often reviewed only by their manager.
The results from 360-degree feedback are often used by the person receiving the feedback to
plan their training and development. The results are also used by some organizations for making
promotional or pay decisions, which is called “360-degree review.”
DEMAND:
Simply speaking, demand means to ask for urgently or peremptorily.
Demand is the want or desire to possess a good or service with the necessary goods, services,
or financial instruments necessary to make a legal transaction for those goods or services.
Demand is defined as the quantity of a good or service that consumers will be both willing and
able to purchase at any given price during a specific period of time, holding all other factors constant.
Demand is, therefore, a relationship between price and quantity demanded. Many factors other than
price affect the amount consumers choose to purchase, and these factors are what is being held
constant within the concept of demand.
DEMAND FORECASTING:
Demand Forecasting is the activity of estimating the quantity of a product or service that
consumers will purchase. Demand forecasting involves techniques including both informal methods,
such as educated guesses, and quantitative methods, such as the use of historical sales data or
current data from test markets. Demand forecasting may be used in making pricing decisions, in
assessing future capacity requirements, or in making decisions on whether to enter a new market.
DEMAND-SUPPLY GAP ANALYSIS:

Demand-supply Gap Analysis is a proactive approach to meet identified market demand. It
focuses on using a systematic research approach to discover and uncover sales opportunities where
market demand is greater than supply. It is used extensively in the business to consumer market
space, it can help an organisation identify, quantify and select business market segments that are
currently under-serviced.
DESIGN AND ORGANIZATIONAL DESIGN:

An effective design allows your organization to develop and leverage its strategic capabilities. It
is a source of competitive advantage and is shaped by your organization’s strategy. It is the work
arrangement (or rearrangement) aimed at reducing or overcoming job dissatisfaction and employee
alienation arising from repetitive and mechanistic tasks through job design, organizations try to raise
productivity levels by offering non-monetary rewards such as greater satisfaction from a sense of
personal achievement in meeting the increased challenge and responsibility of one’s work. Job
enlargement, job enrichment, job rotation, and job simplification are the various techniques used in a
job design exercise. Organization Design is the continuing cycle of adapting goals, strategies, and
changes in technology with the organizational framework by effecting suitable modifications in the
organizational structure.
Organizational design can further be defined as the manner in which a management achieves
the right combination of differentiation and integration of the organization’s operations, in response to
the level of uncertainty in its external environment. Differentiation refers to the sub-division of functional
or departmental units, each concentrating on a particular aspect of the organization’s operations.
Integration refers to the linking of differentiated units to achieve unity of effort in working toward
organization’s goals. In times of high uncertainty, greater organizational effectiveness is achieved
through high differentiation coupled with high integration.
Organization design is not about charts and job descriptions. Organization design is not a single
event, but a continuous management process
EMPLOYEE RELATIONS:
Employee relations’ is a common title for the industrial relations function within personnel
management and human resource management and is also sometimes used as an alternative label
for the academic field of industrial relations. The term underlines the fact that industrial relations is
Appendix 633
not confined to the study of trade unions but embraces the broad pattern of employee management,
including systems of direct communication and employee involvement that target the individual worker.
Employee Relations involve the body of work concerned with maintaining employer-employee
relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, Employee
Relations is concerned with preventing and resolving problems involving individuals who arise out of
or affect work situations.
The maintenance of employee/employer relationships that contribute to satisfactory productivity,
motivate employees and ensure healthy employee morale. Among many ways to successfully manage
employee relations, performance management and open communication are keys.
EMPOWERMENT:
Employee empowerment is a strategy and philosophy that enables employees to make decisions
about their jobs. Employee empowerment helps employees own their work and take responsibility for
their results. Employee empowerment helps employees serve customers at the level of the organization
where the customer interface exists. Empowerment is the process of enabling or authorizing an
individual to think, behave, and take action and control work and decision-making in autonomous
ways. It is the state of feeling self-empowered to take control of one’s own destiny. Empowerment
rules as a development strategy. Learn more about what empowerment is – and is not. Ten most
important principles for managing people in a way that reinforces employee empowerment,
accomplishment, and contribution are as follows:
1. Demonstrate You Value People.
2. Share Leadership Vision.
3. Share Goals and Direction.
4. Trust People.
5. Provide Information for Decision Making.
6. Delegate Authority and Impact Opportunities, Not Just More Work.
7. Provide Frequent Feedback.
8. Solve Problems: Don’t Pinpoint Problem People.
9. Listen to Learn and Ask Questions to Provide Guidance.
10. Help Employees Feel Rewarded and Recognized for Empowered Behavior.
FORECASTING:
Forecasting is the process by which companies ponder and prepare for the future. It involves
predicting the future outcome of various business decisions. This includes the future of the business
as a whole
GOAL SETTING:
A goal or objective is roughly similar to purpose or aim, the anticipated result which guides
action, or an end, which is an object, either a physical object or an abstract object, that has intrinsic
value. It is a projected state of affairs that a person or a system plans or intends to achieve—a
personal or organizational desired end-point in some sort of assumed development. Many people
endeavor to reach goals within a finite time by setting deadlines.
A desire or an intention becomes a goal if and only if it activates an action for achieving.
Goal management in organizations consists of the process of recognizing or inferring goals of
individual team-members, abandoning no longer relevant goals, identifying and resolving conflicts
among goals, and prioritizing goals consistently for optimal team-collaboration and effective operations.
Goal setting involves establishing specific, measurable and time targeted objectives. Work on the
theory of goal-setting suggests that it’s an effective tool for making progress by ensuring that participants
in a group with a common goal are clearly aware of what is expected from them if an objective is to
be achieved. On a personal level, setting goals is a process that allows people to specify then work
towards their own objectives - most commonly with financial or career-based goals. Goal setting is
a major component of personal development literature.
In business, goal setting has the advantages of encouraging participants to put in substantial
effort; and, because every member has defined expectations set upon him or her (high role perception),
little room is left for inadequate effort going unnoticed.
To be most effective goals should be tangible, specific, and realistic and have a time targeted
for completion. There must be realistic plans to achieve the intended goal. For example, setting a goal
to go to Moon on a shoe string budget is not a realistic goal, while setting a goal to go abroad as
a tourist is a possible goal with possible, realistic plans.
Goal setting also requires motivation. Simply setting a target may lead to progress in the desired
direction, but understanding why the target is desired encourages personal investment into the
achievement of the goal. The business technique of management by objectives uses the principle
of goal setting.
GOOD HUMAN RESOURCE PRACTICES (GHRP):

Human Resource Management is linked to the department’s strategic direction in a systematic
way. Such an approach is often reflected in the following practices -
 Clarifying a department’s strategic direction by way of articulating its Vision, Mission and
Values statement;
 Establishing the strategic linkage and integrating Human Resource programmes through a
Human Resource Management Plan; and
 Projecting its short to long term human resource needs through a Manpower Plan.
At the same time, all managers must adopt a more open, flexible and caring style in managing
their staff. Such an approach is reflected in a number of ways. The two most common practices are-
 Managing people effectively for performance through an open Performance Management
System (PMS) that will call for individual objectives tied to departmental objectives, regular
coaching, and developing staff on the job;
 Enhancing staff’s competencies to perform better through effectively training people to achieve
departmental objectives and results; and delivering quality service through training and engaging
staff in developing a service culture in addition to business process re-engineering and work
streamlining.
GOOD MANUFACTURING PRACTICES (GMP):
Good Manufacturing Practice or GMP is a term that is recognized worldwide for the control and
management of manufacturing and quality control testing of foods, pharmaceutical products, and
medical devices.
Appendix 635
Since sampling product will statistically only ensure that the samples themselves (and perhaps
the areas adjacent to where the samples were taken) are suitable for use, and end-point testing relies
on sampling, GMP takes the holistic approach of regulating the manufacturing and laboratory testing
environment itself.
HRD CLIMATE:
If we need to find a way to develop employees in order to become effective contributors to the
goals of an organization, we need to have a clear view of what an effective contribution would look
like. The use of personal capacities can be very helpful in describing the way in which an effective
employee should operate and behave, but there can be no general prescription of an effective
employee. Effectiveness will differ with organizational context, and on whose perspective we are
adopting. The matter of what, finally, makes an effective employee is a combination of personality,
natural capabilities, developed skills, experience and learning. The process of enhancing an employee’s
present and future effectiveness is called development.
MEANING OF HUMAN RESOURCE+D+CLIMATE:

HR means employees in organisation, who work to increase the profit for organisation.
Development, it is acquisition of capabilities that are needed to do the present job, or the future
expected job.
After analyzing Human Resource and Development we can simply state that, Human Resource
Development is the process of helping people to acquire competencies. Climate an overall feeling
that is conveyed by the physical layout, the way employees interact and the way members of the
organisation conduct themselves with outsiders. Organisational climate is a set of characteristics
of an organisation which are referred in the descriptions employees make of the policies,
practices and conditions which exist in the working environment.
HUMAN CAPITAL MANAGEMENT:

The term human capital is recognition that people in organizations and businesses are an important
and essential asset who contributes to development and growth, in a similar way as physical assets
such as machines and money.
Human Capital Management is the term which is used to describe an organization’s multi-
disciplined and integrated approach to optimize the capabilities and performance of its management
and employees.
HUMAN RESOURCE:
Human resource is a term with which many organizations describe the combination of traditionally
administrative personnel functions with performance, employee relations and resource planning. The
objective of human resources is to maximize the return on investment from the organization’s human
capital and minimize financial risk.
Human Resource is also the organizational function that deals with the people and issues related
to people such as compensation, hiring, performance management, and training.
In simple words, Human Resource can be defined as “The people that staff and operate an
organization”. A Human Resource is a single person or employee within an organization. Thus, the
people within an organization are its human resource.
HUMAN RESOURCE DEVELOPMENT:

Human Resource Development is the framework for helping employees develops their personal
and organizational skills, knowledge, and abilities. Human Resource Development includes such
opportunities as employee training, employee career development, performance management and
development, coaching, succession planning, key employee identification, tuition assistance, and
organization development. The focus of Human Resource Development is on developing the most
superior workforce so that the organization and individual employees can accomplish their work goals
in service to customers.
Human Resource Development is a framework for the expansion of human capital within an
organization. Human Resources Development is a combination of training and education that ensures
the continual improvement and growth of both the individual and the organisation.
Human Resource Development is the framework that focuses on the organisations competencies
at the first stage, training, and then developing the employee, through education, to satisfy the
organisations long-term needs and the individuals’ career goals and employee value to their present
and future employers.
Human Resource Development is the structure that allows for individual development, potentially
satisfying the organisation’s goals. The development of the individual will benefit both the individual
and the organisation.
Human Resource Development can be defined simply as developing the most important section
of any business, its human resource by, “attaining or upgrading the skills and attitudes of employees
at all levels in order to maximise the effectiveness of the enterprise”. It is an “organized learning
activities arranged within an organization in order to improve performance and personal growth for the
purpose of improving the job, the individual, and the organization” The goal of Human Resource
Development is to improve the performance of our organizations by maximizing the efficiency and
performance of our people.
HUMAN RESOURCE FORECASTING:

Realistic forecasting of human resources involves estimating both demand and supply. Questions
to be answered include:
 How many staff will be required to achieve the strategic goals of the organization?
 What jobs will need to be filled?
 What skill sets will people need?
When forecasting demands for human resource, you must also assess the challenges that you
will have in meeting your staffing need based on the external environment.
How will the external environment impact on our human resource needs?
The next step is to determine the gap between where your organization wants to be in the future
and where you are now. The gap analysis includes identifying the number of staff and the skills and
abilities required in the future in comparison to the current situation. Questions to be answered
include:
 What new jobs will we need?
 What new skills will be required?
Appendix 637
 Do our present employees have the required skills?

 Are employees currently in positions that use their strengths?
 Do we have enough managers/supervisors?
 Are current human resource management practices adequate for future needs?
HUMAN RESOURCE MANAGEMENT:
Human Resource Management (HRM) is the strategic and coherent approach to the management
of an organisation’s most valued assets - the people working there who individually and collectively
contribute to the achievement of the objectives of the business.
Human resource management (HRM) is the understanding and application of the policy and
procedures that directly affect the people working within the project team and working group. These
policies include recruitment, retention, reward, personal development, training and career development.
In simple sense, Human Resource Management (HRM) is the effective use of human resources
in order to enhance organizational performance. It means employing people, developing their resources,
utilizing maintaining and compensating their services in tune with the job and organizational requirement.
HUMAN RESOURCE PLANNING:

Human Resource Planning is the process by which an organization ensures that it has the right
number and kind of people, at the right places, at the right time, capable of effectively and efficiently
completing those tasks that will help the organization achieve its overall objectives.
Human Resource planning is the process of acquiring and utilizing human resources in the
organization. It ensures that the organization has the right number of employees in the right place at
the right time
Human Resource planning is the process by which the guiding members of an organization
manages and leads the people who will be responsible for implementing the strategies necessary to
fulfill its mission and reach its vision.
In simple words, Human Resource planning is the processes by which management ensures
that it has the right personnel, who are capable of completing those tasks that help the organization,
reach its objectives.
HUMAN RESOURCE PLANNING AND BUSINESS DRIVEN PLANNING:

A business-driven approach is any process of identifying the data needed to support business
activities, acquiring or capturing those data, and maintaining them in the data resource.
Enterprise resource planning (ERP) supports end-to-end core business processes including the
areas of human resource, finance, and administration and operations management.
It provides human resource planning and budgeting, manpower recruitment, manpower retention,
human resource intelligence and support.
HUMAN RESOURCE MANAGEMENT PRACTICES:

Human Resource Management is a planned approach to managing people effectively for
performance. It aims to establish a more open, flexible and caring management style so that staff will
be motivated, developed and managed in a way that they can give of their best to support departments*
missions. Human Resources Management Practices are instrumental in helping achieve
departmental objectives and enhance productivity.
HRD SCORECARD:
The “Human Resource Development Scorecard” is a measure of the human resource
development maturity level of an organization. The scorecard is based on the following assumptions
and takes into consideration the research based understanding gained in the last few decades
regarding human resource development.
The maturity level of human resource cevelopment in an organization is indicated by the following
factors:
 Human Resource Development Systems Maturity: Competencies and commitment can be
developed through appropriate Human Resource Development mechanisms (tools and systems).
In a Human Resource Development Mature organization there will be well-developed Human
Resource Development systems and Human Resource Development systems Maturity can be
measured through Human Resource Development audit.
 Human Resource Development Competencies of the Employees: Human Resource
Development Competencies of the Human Resource Development department and the line
managers play a significant role in implementing the systems and processes in ways that could
ensure employee satisfaction, competence building and customer satisfaction linkages. The
competencies of the staff and the other employees can be measured in terms of an index.
 Human Resource Development Culture of the Organization: values and processes created
by the Human Resource Development tools, staff and their styles also play a crucial role in
building sustainable competencies in the organization. These need to be measured and monitored.
It is possible in some corporations (for example small corporations) to have very little of Human
Resource systems and yet have a high level of Human Resource competencies and Human
Resource culture.
 Business Linkages of Human Resource Development: Business linkages of Human Resource
Development are very crucial component of Human Resource Development effectiveness.
Human Resource Development systems, competencies and the culture must be aligned with
the business goals of the corporation. The alignment could be ensured through the direct
linkages with customer satisfaction and employee motivation indices.
HUMAN RESOURCE DEVELOPMENT STRUCTURES:
At the organizational level, a specialized Human Resource Development function may exist to
design, develop, implement, and monitor Human Resource systems and ensure alignment of Human
Resource processes with the organization’s goals. The Human Resource Development function can
take on many forms, depending on the needs, requirements, and resources of the specific organization.
Examples of functional forms include a dedicated and fully manned Human Resource Development
department; a corporate Human Resource Development department with Human Resource
Development cells in individual units or locations; a high profile Human Resource Development chief
with a limited staff; and so on. Likewise, at the national level, the Human Resource Development
function may take many different forms. Human Resource Development may be handled by a separate
department or ministry; the Prime Minister; a specialized task force; or other groups or individuals.
Principles to keep in mind when structuring an Human Resource Development department:
1. Ensure that the structure is needs-based and business-driven.
2. Ensure that each of the Human Resource Development activities and subsystems adds value
to the organization.
Appendix 639
3. Ensure that Human Resource Development professionals have the necessary competencies
to carry out Human Resource Development activities and monitor Human Resource Development
processes.
4. Ensure that the Human Resource Development department is appropriately positioned within
the organization.
5. Ensure that the Human Resource Development leader has the experience, power, positioning
and competence to make the function effective and have an impact.
6. Define and clarify all the roles in the department
INDUSTRIAL RELATIONS:
These are the relations between the management of an industrial enterprise and its employees.
These are the employer-employee relationships covered specifically under collective bargaining and
industrial relations and labour laws.
INDUCTION:
Induction is the first step in building a two-way relationship between the organisation and the
employee.
Commencing a new position with a new organisation can be a daunting process. There are
colleagues, supervisors and managers to meet, new processes to become familiar with, new offices
and buildings to navigate, new software to master, employment conditions to understand and a job
to learn.
The transition to the new workplace is made easier and more effective for both the new employee
and the employer if there is an effective induction process.
INTERVIEW:
Conversation or questioning for the purpose of eliciting information for publication, the public
statement so elicited is an interview.
A structured interview form is used to record the information to be included and it’s degree of
importance. The interview method is time consuming method. Professional and managerial jobs are
more complicated to analyse and usually require longer interview. Then there is problem of bias.
The interview method has one positive feature, for example, it involves talking to the jobholders
who are in good position to describe what they do, as well as qualifications are needed to perform
their duties in competent manner.
The effectiveness of the interview methods depends on the interviewer and on the ability of job
holder to make meaningful responses.
JOB ANALYSIS:
“Job analysis” is the systematic analysis of an existing or proposed position or group of
positions within an organization. It is study to understand the technical involvement and the responsibility
of a person to understand qualifications and knowledge level for the position.
Understanding and being able to perform, good job analysis is an essential human resource
function. It is specifically done to get the information about duties being done by a position.
The first step in selection process is analyzing the job. Job analysis consists of two parts:
 Job description: It includes probable functions of a job.
 Job specification : it is a statement of employee characteristics and qualifications required for
satisfactory performance of defined duties and tasks comprising a specific job or function.
Proper job analysis helps to analyze, helps to advertise the job properly. Accordingly, the right
candidates may apply for the job, thus saving a lot of time and efforts of the selectors.
JOB CLASSIFICATION:
“Job classification” is a method of categorizing jobs into ranks or classes for the purposes of
work comparison and wage comparability. The classification of a position is decided by comparing
the whole job with the appropriate job-grading standard.
The job classification guidelines identify the different levels of work within a series. Compensation
experts consider these important factors when classifying a position:
 Nature or type of work performed.
 Level of responsibility.
 Impact of position on the unit, department, or campus.
 Reporting relationships.
 Scope of duties.
 Complexity of work.
 Creativity/innovation.
 Supervision received.
 Supervision exercised.
 Knowledge and skills required to perform the duties.
JOB DESCRIPTION:
A “job description” is usually developed by conducting a job analysis, which includes examining
the tasks and sequences of tasks necessary to perform the job.
A job description is a list of the general tasks, or functions, and responsibilities of a position.
Typically, it also includes to whom the position reports, specifications such as the qualifications
needed by the person in the job, salary range for the position, etc.
JOB ROTATION:
“Job rotation” is an approach to management development where an individual is moved
through a schedule of assignments designed to give him or her breadth of exposure to the entire
operation. Job rotation is also practiced to allow qualified employees to gain more insights into the
processes of a company, and to reduce boredom and increase job satisfaction through job variation.
Job rotation involves the movement of employees through a range of jobs in order to increase
interest and motivation. Job rotation can improve “multi-skilling” but also involves the need for greater
training. Job rotation is the surest way of keeping the employee away from complacency and boredom
of routine. It is difficult for an employee to sustain his interest in a given job for any substantial
length of time as humans have the tendency of outgrowing their jobs through the learning and
experience that they gain over a period of time.
Appendix 641
Job rotation involves the transfer of employees from one job to another and sometimes from one
branch to another. Job assignment under a rotation system may last for a period of 3 months to 2
years. They is given full duties and responsibilities of the rotated position. It is more suitable for lower
level executives though it is also pracheded among seniro level executus.
JOB PROFILE/ ROLE PROFILE:

“Job Profile” is destination for choosing a career path. Personality and qualifications play an
essential role in fulfilling a job profile.
Role profile is a document that specifies what role exactly you expect the new hire to fill on your
team and/or in your company. What qualifications are you seeking and in what measure? What job
duties will the new hire carry out? Job profile consists of four parts:
 Strategy.
 Accountabilities.
 Critical requirements.
 Expected outcomes.
JOB SATISFACTION:
“Job satisfaction” has been defined as a pleasurable emotional state resulting from the appraisal
of one’s job an affective reaction to one’s job; and an attitude towards one’s job.
Job satisfaction describes how content an individual is with his or her job. The happier people
within their job, the more satisfied they are said to be. Job satisfaction is not the same as motivation,
although it is clearly linked. Job satisfaction is a very important attribute which is frequently measured
by organizations.
KAIZEN:
Kaizen (Japanese word for “improvement”) is a Japanese philosophy that focuses on continuous
improvement throughout all aspects of life. “Kai” means “change” or “the action to correct” and “zen”
means “good”. When applied to the workplace, Kaizen activities continually improve all functions of
a business, from manufacturing to management and from the CEO to the assembly line workers. By
improving standardized activities and processes, Kaizen aims to eliminate waste. Kaizen was first
implemented in several Japanese businesses during the country’s recovery after World War II,
including Toyota, and has since spread to businesses throughout the world.
Kaizen is a daily activity, the purpose of which goes beyond simple productivity improvement.
It is also a process that, when done correctly, humanizes the workplace, eliminates overly hard work
(“muri”), and teaches people how to perform experiments on their work using the scientific method
and how to learn to spot and eliminate waste in business processes.
People at all levels of an organization can participate in kaizen, from the CEO down, as well as
external stakeholders when applicable. The format for kaizen can be individual, suggestion system,
small group, or large group. At Toyota, it is usually a local improvement within a workstation or local
area and involves a small group in improving their own work environment and productivity. This group
is often guided through the kaizen process by a line supervisor; sometimes this is the line supervisor’s
key role.
The foundation of the Kaizen method consists of 5 founding elements:

1. Teamwork,
2. Personal discipline,
3. Improved morale,
4. Quality circles, and
5. Suggestions for improvement.
LEARNING:
Learning is a tool, which the organization uses for re-aligning itself according to the change.
Learning enables the organizational systems to refrain from committing past mistakes. It helps in
charting out new avenues for problem negotiations. The same helps the organization in managing the
change. An organization with a learning orientation is called a Learning Organization (LO).
LEARNING ORGANIZATION:
Modern business environment witnesses a perennial change. To survive and grow in such
environment organizations need to adopt a learning culture. A learning organization is one, which
analyzes and evaluates its past mistakes and acts appropriately towards ensuring that those mistakes
are not repeated in future.
The concept of the learning organization was proposed by Chris Argyris and Donald SchÃin as
part of their work on organizational learning, but was brought back to public attention in the 1990s
by Peter Senge. For Senge, a learning organization is one with the capacity to shift away from views
inherent in a traditional hierarchical organization, toward the ability of all employees to challenge
prevailing thinking and gain a balanced perspective. Senge believes the five major elements of a
learning organization are mental models, personal mastery, systems thinking, shared vision, and
team learning.
LEADERSHIP:
Leadership is one of the most salient aspects of the organizational context. However, defining
leadership has been challenging. The following sections discuss several important aspects of leadership
including a description of what leadership is and a description of several popular theories and styles
of leadership. This page also dives into topics such as the role of emotions and vision, as well
leadership effectiveness and performance. Finally, this page discusses leadership in different contexts,
how it may differ from related concepts (i.e., management), and some critiques that have been raised
about leadership.
Leadership involves catalyzing performance. The leader is a important source of knowledge
about task, the organizational and the Human Resource Management policies program and policies,
programs and goals. A leader chooses right people and motivates them to consistently strive towards
making them over each itself.
MANAGEMENT BY OBJECTIVES:
Management by objectives or MBO is a systematic and organized approach that allows
management to focus on achievable goals and to attain the best possible results from available
resources. Management by Objectives (MBO) is a process of agreeing upon objectives within an
organization so that management and employees agree to the objectives and understand what they
are in the organization.
Appendix 643
It aims to increase organizational performance by aligning goals and subordinate objectives

throughout the organization. Ideally, employees get strong input to identify their objectives, time lines
for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.
It was first outlined by Peter Drucker in 1954 in his book ‘The Practice of Management’. The
principle behind Management by Objectives (MBO) is to make sure that everybody within the
organization has a clear understanding of the aims, or objectives, of that organization, as well as
awareness of their own roles and responsibilities in achieving those aims. The complete MBO system
is to get managers and empowered employees acting to implement and achieve their plans, which
automatically achieve those of the organization.
So, where can MBO be used?
The MBO style is appropriate for knowledge-based enterprises when the staff is competent. It
is appropriate in situations where you wish to build employees’ management and self-leadership skills
and tap their creativity, tacit knowledge and initiative. Management by Objectives (MBO) is also used
by chief executives of multinational corporations (MNCs) for their country managers abroad.
It also introduced the SMART method for checking the validity of the objectives. SMART stands
for specific, measurable, achievable, relevant and time-based goals. In recent years the term SMART
as well as DUMB (doable, understandable, manageable and beneficial) have been used beyond the
original confines of management by objectives (MBO) and project management.
MANPOWER PLANNING:
Manpower Planning involves steps to replace any employees who are either promoted or who
leave the firm. An example is management succession planning which seeks to ensure that there is
at least one qualified manager to replace any higher level manager in the organization. Planning is
concerned with coordinating, motivating and controlling of the various activities within the organization.
Time required for acquiring the material, capital and machinery should be taken into account.
Planning is making a decision in advance what is to be done. It is the willpower of course of
action to achieve the desired results. It is a kind of future picture where events are sketched. It can
be defined as a mental process requiring the use of intellectual faculty, imagination, foresight and
sound judgment. It involves problem solving and decision making. Management has to prepare for
short term strategy and measure the achievements, while the long term plans are prepared to develop
the better and new products, services, expansion to keep the interest of the owners.
MAPPING HUMAN RESOURCE DEVELOPMENT PRACTICES PROFILE:

Competency mapping is a process of identifying key competencies for a particular position in an
organization, and then using it for job-evaluation, recruitment, training and development, performance
management, succession planning, etc.
It gives a more accurate analysis of the job requirements, the candidate’s capability, of the
difference between the two, and the development and training needs to bridge the gaps.
Systemic thinking and accompanying systemic-based competencies profoundly help Human
Resource professionals contribute strategically to business performance, They are used for mapping
the Human Resource Value Proposition, and when integrated with critical corporate perspectives
such as the Balanced Scorecard, form a Human Resource strategy map that provides a shared
understanding of Human Resource strategic intent and initiatives and makes visible the value-added
and financial contribution of Human Resource professionals.
Mapping professionals develop organizational knowledge maps to identify critical business decision
points and the associated decision making knowledge and skill. They also apply causal mapping
techniques to identify essential performance measures used for monitoring the impact of Human
Resource initiatives on business performance.
MATRIX:
Matrix is a management based on two or more reporting systems that are linked to the vertical
organization hierarchy, and to horizontal relationships based on geographic, product, or project
requirements
MENTORING:
A sense of purpose and the ability to be purposeful are key to personal and organizational
success. Mentoring can be a highly effective means of evoking purposefulness, and so generate high
levels of motivation and corporate intent.
This article explores how mentoring can be used to uncover purpose, what the impact on the
individual of increased purposefulness can be, and how individual and organizational purpose can be
aligned to the benefit of both.
ORGANISATIONAL BUSINESS GOALS:

Every organization must have specific and realistic goals. The overall organizational goals are
set by the top management. The middle level managers frame departmental objectives. The lower
level management list out targets for day-to-day operations.
Business analysts want to achieve the following outcomes:
 Reduce waste
 Create solutions
 Complete projects on time
 Improve efficiency
 Document the right requirements
One way to assess these goals is to measure the return on investment (ROI) for all projects.
Keeping score is part of human nature as we are always comparing ourselves or our performance
to others, no matter what we are doing. The goals/objectives give a clear idea as to what activities
are required. Accordingly right decisions and actions taken at all levels.
ORGANISATIONAL CHANGE:
An organization is subjected to constant changes in its external and internal environment. To
stay afloat in the market, it is imperative for the organization to adapt itself to these changes. Change
management is the concrete methodology followed by an organization in adapting to an environmental
or otherwise change.
ORGANISATIONAL DEVELOPMENT:
At the core of OD is the concept of organization, defined as two or more people working together
toward one or more shared goals. Development in this context is the notion that an organization may
become more effective over time at achieving its goals.
Appendix 645
OD is a long range effort to improve organization’s problem solving and renewal processes,
particularly through more effective and collaborative management of organizational culture, often with
the assistance of a change agent or catalyst and the use of the theory and technology of applied
behavioral science.
Organisation development is a contractual relationship between a change agent and a sponsoring
organization entered into for the purpose of using applied behavioral science in a systems context
to improve organizational performance and the capacity of the organization to improve itself.
Organisational development is an ongoing, systematic process to implement effective change in
an organization. Organizational development is known as both a field of applied behavioral science
focused on understanding and managing organizational change and as a field of scientific study and
inquiry. It is interdisciplinary in nature and draws on sociology, psychology, and theories of motivation,
learning, and personality.
ORGANISATIONAL EFFECTIVENESS:
Organizational effectiveness is the concept of how effective an organization is in achieving the
outcomes the organization intends to produce. The idea of organizational effectiveness is especially
important for non-profit organizations as most people who donate money to non-profit organizations
and charities are interested in knowing whether the organization is effective in accomplishing its
goals.
Organizational effectiveness as the ability to maximize results in the competitive external
environment, an organizations ability to serve its customers successfully and compete with its
competitors is critical if it is to prosper over time.
To be effective and achieve its goals, an organization must successfully respond to environmental
factors. How can the effectiveness of an organization be measured? Various models of determining
organizational effectiveness exist because organizations face different environments, they produce
different products, their organizational members are made up of different kinds of people, and the
organizations are at different stages of development. Each model is most useful to an organization
having a particular combination of these environmental and organizational attributes.
ORGANIZATIONAL STRATEGIC PLANNING:

It is a process for developing a strategic plan and establishing the discipline for its implementation
Strategic planning is one of the most important responsibilities of the senior management of an
organization. It is the vehicle that senior management should use to set the organizational vision,
determine the strategies required to achieve that vision, make the resource deployment decisions to
achieve the selected strategies, and build alignment to the vision and strategic direction throughout
all levels of the organization.
Strategic planning may be a tool for effectively plotting the direction of a company; however,
strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface
in the coming days in order to plan your organizational strategy. Therefore, strategic innovation and
tinkering with the ‘strategic plan’ have to be a cornerstone strategy for an organization to survive the
turbulent business climate.
ORGANISATIONAL STRUCTURE:
Organizational structure is an apportionment of responsibility and authority among the members
of an organization. Functional organization, matrix organization, and line organization are three common
types of organizational structure.
It is a formal and informal framework of policies and rules, within which an organization arranges
its lines of authority and communications, and allocates rights and duties.
Organizational structure determines the manner and extent to which roles, power, and
responsibilities are delegated, controlled, and coordinated, and how information flows between levels
of management. This structure depends entirely on the organization’s objectives and the strategy
chosen to achieve them. In a centralized structure, the decision making power is concentrated in the
top layer of the management and tight control is exercised over departments and divisions. In a
decentralized structure, the decision making power is distributed and the departments and divisions
have varying degrees of autonomy. An organization chart illustrates the organization.
ORGANISATIONAL PLANNING:
It is a process of identifying an organization’s immediate and long-term objectives, and formulating
and monitoring specific strategies to achieve them. It also entails staffing and resource allocation, and
is one of the most important responsibilities of a management team.
An organizational plan is basically a “to do” list for an organization. It lists out the plan of work,
programme, and organizational growth over a period of time - six months, a year, a five years. They
can be pretty simple to create and use. Writing a plan can just mean getting a clear list of the types
of work that need to be done, the tasks involved, who is responsible for them, and when will these
be achieved.
PERFORMANCE MANAGEMENT:
Performance management is the process of creating a work environment or setting in which
people are enabled to perform to the best of their abilities. Performance management is a whole work
system that begins when a job is defined as needed. It ends when an employee leaves the organization.
An assessment of an employee, process, equipment or other factor to gauge progress toward
predetermined goals.
Performance management involves enabling people to perform their work to the best of their
ability, meeting and perhaps exceeding targets and standards. Performance management can be
coordinated by an interrelated framework between manager and employee. Key areas of the framework
to be agreed are objectives, human resource management, standards and performance indicators,
and means of reward. For successful performance management, a culture of collective and individual
responsibility for the continuing improvement of business processes needs to be established, and
individual skills and contributions need to be encouraged and nurtured. One tool for monitoring
performance management is performance appraisal. For organizations, performance management is
usually known as company performance and is monitored through business appraisal.
PLANNING:
It is a conscious as well as sub-conscious activity. It is “an anticipatory decision making process”
that helps in coping with complexities. It is deciding future course of action from amongst alternatives.
It is a process that involves making and evaluating each set of interrelated decisions. It is selection
of missions, objectives and “transformation of knowledge into action.”
Appendix 647
Planning is the organizational process of creating and maintaining a plan; and the psychological
process of thinking about the activities required to create a desired goal on some scale.
Planning is also a management function, concerned with defining goals for future organizational
performance and deciding on the tasks and resources to be used in order to attain those goals.
Planning always has a purpose. The purpose may be achievement of certain goals or targets. The
planning helps to achieve these goals or target by using the available time and resources. To
minimize the timing and resources also require proper planning.
PRODUCTION AND PRODUCTIVITY:

Production is the process of creating, growing, manufacturing, or improving goods and services.
It also refers to the quantity produced. Productivity is used to measure the efficiency or rate of
production. It is the amount of output (e.g. number of goods produced) per unit of input (e.g. labor,
equipment, and capital). Productivity is to do more with less exertion in less time.
These are the measurements of the efficiency of production, taking the form of a ratio of the
output of goods and services to the input of factors of production. Labour productivity takes account
of inputs of employee hours worked; capital productivity takes account of inputs of machines or land;
and marginal productivity measures the additional output gained from an additional unit of input.
Techniques to improve productivity include greater use of new technology, altered working practices,
and improved training of the workforce.
PROFIT AND PROFITABILITY:

Profit is the amount made whereas profitability is the potential there to be made.
Profitability is expressed in terms of several popular numbers that measure one of two generic
types of performance: “how much they make with what they’ve got” and “how much they make from
what they take in”. It is the efficiency of a company or industry at generating earnings.
QUANTITATIVE HUMAN RESOURCE PLANNING:
Quantitative Human resource planning is the development of strategies for matching the size and
skills of the workforce to organizational needs. Human resource planning assists organizations to
recruit, retain, and optimize the deployment of the personnel needed to meet business objectives and
to respond to changes in the external environment. The process involves carrying out a skills analysis
of the existing workforce, carrying out manpower forecasting, and taking action to ensure that supply
meets demand. This may include the development of training and retraining strategies. It is also
known as manpower planning. Quantitative Human Resource Planning is done in two ways:
Forecasting internal demand for human resource and Forecasting external demand for human resource:
(1) Quantitative method for internal demand:
1. Trend projection
2. Econometric modeling
(2) Quantitative method for external demand:
1. Turnover analysis
2. Markov analysis
RECRUITMENT:
Recruitment refers to the process of screening, and selecting qualified people for a job in an
organization.
SKILL AND SKILL SETS:

Skill can be defined as the ability to do something well, gained through training and experience.
Skill set can be defined as the skills needed to accomplish a specified task or perform a given
function. A combination of the knowledge, talent, and abilities that are needed to perform a specific
job.
TRAINING AND DEVELOPMENT:

Human Resource Management is a management function that helps an organization select,
recruit, train and develops human resource.
In the field of human resource management, training and development is the field concerned with
organizational activity aimed at bettering the performance of individuals and groups in organizational
settings. It has been known by several names, including employee development, human resource
development, and learning and development.
PROFICIENCY/EFFICIENCY/EFFECTIVENESS:
Proficiency Effectiveness Efficiency
Focuses on the desired result Focuses on the desired result Focuses on doing one’s work
in the correct manner
May or may not seek Seeks successes Seeks to avoid failure

successes but is willing to do
work
End of task is most important End of task is most important Means or resource to do a task
most important
Oriented toward strategy and Oriented toward strategy and Oriented toward keeping the
setting and keeping priorities setting and keeping priorities present system going
Uses a job description to Uses job profile to define the Performs each of the stated
define the work to be done work to be done and to set duties of a job description in
and to set goals based on goals based on priorities the correct manner.
priorities
Attempts to find new ways to Attempts to find new ways to Concerned with keeping the
perform the task better perform the task better status quo (things the way
they are)
Anticipates change Anticipates change Reacts to change
Flexible when change requires Flexible when change requires Inflexible — determined to
it. it. carry out plans regardless of
change.
Motivated toward growth Motivated toward growth Comfortable with keeping

things as they are.
Constantly giving critical Constantly giving critical Prone to keeping record of

evaluation of a task evaluation of a task what is going on.
Appendix 649
QUALITY:
The common element of the business definitions is that the quality of a product or service refers
to the perception of the degree to which the product or service meets the customer’s expectations.
Quality has no specific meaning unless related to a specific function and/or object. Quality in business,
engineering and manufacturing has a pragmatic interpretation as the non-inferiority or superiority of
something. Quality is a perceptual, conditional and somewhat subjective attribute and may be
understood differently by different people.
Consumers may focus on the specification quality of a product/service, or how it compares to
competitors in the marketplace. Producers might measure the conformance quality, or degree to
which the product/service was produced correctly. Many different techniques and concepts have
evolved to improve product or service quality.
There are two common quality-related functions within a business. One is quality assurance
which is the prevention of defects, such as by the deployment of a quality management system and
preventative activities. The other is quality control which is the detection of defects, most commonly
associated with testing which takes place within a quality management system typically referred to
as verification and validation.
The business meanings of quality have developed over time. Various interpretations are given
below:
1. ISO 9000: “Degree to which a set of inherent characteristics fulfills requirements.” The standard
defines requirement as need or expectation.
2. Six Sigma: “Number of defects per million opportunities.”
3. Philip B. Crosby: “Conformance to requirement”. The requirements may not fully represent
customer expectations.
4. Joseph M. Juran: “Fitness for use.” Fitness is defined by the customer.
5. Noriaki Kano and others, present a two-dimensional model of quality: “must-be quality” and
“attractive quality.” The former is near to “fitness for use” and the latter is what the customer
would love, but has not yet thought about. Supporters characterize this model more succinctly
as: “Products and services that meet or exceed customers’ expectations.”
6. Robert Pirsig: “The result of care.”
7. Genichi Taguchi, with two definitions:
a. “Uniformity around a target value.” The idea is to lower the standard deviation in outcomes,
and to keep the range of outcomes to a certain number of standard deviations, with rare
exceptions.
b. “The loss a product imposes on society after it is shipped.” This definition of quality is based
on a more comprehensive view of the production system.
8. American Society for Quality: “A subjective term for which each person has his or her own
definition. In technical usage, quality can have two meanings:
a. The characteristics of a product or service that bear on its ability to satisfy stated or implied
needs;
b. A product or service free of deficiencies.”
9. Peter Drucker: “Quality in a product or service is not what the supplier puts in. It is what the
customer gets out and is willing to pay for.”
10. W. Edwards Deming: Concentrating on “the efficient production of the quality that the market
expects,” and he linked quality and management: “Costs go down and productivity goes up as
improvement of quality is accomplished by better management of design, engineering, testing
and by improvement of processes.” Deming is known for his 14 principles of quality.
REWARDS:
A reward means something of value given in return for an act or result of an action. Employee
motivation, positive employee morale, rewards and recognition are explored in these resources.
Every person has different reasons for working. The reasons for working are as individual as the
person. But, we all work because we obtain something that we need from work. The something
obtained from work impacts morale, employee motivation, and the quality of life. To create positive
employee motivation, treat employees as if they matter - because employees matter. These ideas will
help you fulfill what people want from work and create employee motivation. Some ways of rewarding
the employees are engraved articles for excellence and teamwork, thank you gifts to please individual
tastes, gift baskets for rewards, etc.
SELECTION:
Selection is the process of picking individuals with requisite qualifications and competence to fill
job in the organization. Selection is the process of differentiating in applicants in order to identify those
with greater likelihood of sources in job.
While recruitment refers to the process of identifying and encouraging prospective employees to
apply for jobs, selection is concerned with picking the write candidates from pool of applicants.
Recruitment is said to be positive in it’s approach as it’s seeks to attract as many candidate as
possible. Selection on the other hand in negative in it’s application in as much as it seeks to eliminate
as many unqualified applicants as possible in order to identify the right candidates. Selection is
generally done by the Human Resource department often in consultation with the other heads of the
department.
STANDARD OPERATING PROCEDURE (SOP):

 Standard operating procedure is the established procedure to be followed in carrying out a
given operation or in a given situation.
 A method of functioning that has been established over time in order to execute a specific task
or react to a specific set of circumstances.
 A Standard Operating Procedure is a document which describes the regularly recurring
operations relevant to the quality of the investigation. The purpose of a Standard Operating
Procedure is to carry out the operations correctly and always in the same manner. A Standard
Operating Procedure should be available at the place where the work is done.
SWOT ANALYSIS:
Perception about strength according to organization’s point of view are employee strength, over
confidence of product and services against competitors, market conditions, distribution channels,
entry of competition.
Perceptions about weakness are a weak brand name, lack of access to distribution channel,
lack of patent, high cost structure.
Appendix 651
Perceptions about opportunities are emerging market arrival of new technology, consumer
behaviour, government rules and regulations
Perceptions about threat are competitions, technology, shift consumer preferences, government
policies.
STRATEGY:
Strategy is the direction and scope of an organization over the long-term: which achieves
advantage for the organization through its configuration of resources within a challenging environment,
to meet the needs of markets and to fulfill stakeholder expectations”.
A strategy is a plan of action designed to achieve a particular goal. Strategy is different from
tactics.
In other words, strategy is about:
1. Where is the business trying to get to in the long-term?
2. Which markets should a business compete in and what kind of activities are involved in such
markets?
3. How can the business perform better than the competition in those markets?
4. What resources (skills, assets, finance, relationships, technical competence, and facilities) are
required in order to be able to compete?
5. What external, environmental factors affect the businesses’ ability to compete?
6. What are the values and expectations of those who have power in and around the business?
STRATEGIC PLANNING:
Strategic planning is an organization’s process of defining its strategy, or direction, and making
decisions on allocating its resources to pursue this strategy, including its capital and people. Strategic
planning is the formal consideration of an organization’s future course.
Simply speaking, strategic planning determines where an organization is going over the next
year or more, how it’s going to get there and how it’ll know if it got there or not.
Strategic planning is a management tool. As with any management tool, it is used for one
purpose only: to help an organization do a better job - to focus its energy, to ensure that members
of the organization are working toward the same goals, to assess and adjust the organization’s
direction in response to a changing environment.
In short, strategic planning is a disciplined effort to produce fundamental decisions and actions
that shape and guide what an organization is, what it does, and why it does it, with a focus on the
future.
STRATEGIC HUMAN RESOURCE PLANNING:

Strategic Human Resource planning is defined as: Integrating human resource planning strategies
and systems to achieve the overall mission, strategies, and success of the firm while meeting the
needs of employees and other stakeholders.
According to experts, there is no single approach to developing a Human Resources Strategy.
This will vary from organization to organization. In essence, Human Resource strategy should aim
to capture “the people element” of what an organisation is hoping to achieve in the medium to long
term, ensuring that:-
 It has the right people in place.

 It has the right mix of skills.
 Employees display the right attitudes and behaviours, and
 Employees are developed in the right way.
Strategic Human Resource planning predicts the future human resource management needs
of the organization after analyzing the organization’s current human resources, the external
labour market and the future human resource environment that the organization will be operating
in. The analysis of human resource management issues external to the organization and
developing scenarios about the future are what distinguishes strategic planning from operational
planning. The basic questions to be answered for strategic planning are:
 Where are we going?
 How will we develop human resource strategies to successfully get there, given the
circumstances?
 What skill sets do we need?
 Human resource strategy will add value to the organization if it articulates more clearly some
of the common themes which lie behind the achievement of other plans and strategies, which
have not been fully identified before; and identifies fundamental underlying issues which must
be addressed by any organization orbusiness if its people are to be motivated, committed and
operate effectively.
STRATEGIC HUMAN RESOURCE FORECASTING:
Developing Human Resource strategies to support organizational strategies some of the Human
Resource strategies for meeting an organization’s needs in the future are:
1. Restructuring strategies.
2. Training and development strategies.
3. Recruitment strategies.
4. Outsourcing strategies.
5. Collaboration strategies.
SUPPLY:
In simple words, one can describe supply as the total amount of goods or services available
along with or to satisfy demand.
Supply can be defined as the relationship between the price of a good or service and the quantity
producers are willing and able to make available for sale in a given period of time, holding other things
constant.
Supply is about managing uncertainty and variability. This same uncertainty exists inside
companies with regard to talent development. Companies rarely know what they will be building five
years out and what skills they will need to make that happen; they also don’t know if the people they
have in their pipelines are going to be around. Hence, they try keeping a constant supply of the
resources in case a need arises.
Appendix 653
SUPPLY FORECASTING:
Forecasting a company’s future demand in human resources is a necessary procedure in light
of organizational objectives and strategies.
Forecasting is based on information from the past and the present to identify expected future
conditions. Such information may come from external environmental scanning and/or the assessment
of internal strengths and weaknesses. Forecasting leads to projections for the future. The forecast
of the availability of human resources is considering both internal and external supplies. Internally,
succession plans developed to identify potential personnel changes, due to promotion, retirement,
resignation, etc for each department in an organization are examined. By the end of this analysis, the
organization is able to know if there are employees to cover future demand from within its resources.
Externally, there are many factors, such as the labour-force population estimates, trends in the
industry and technological developments.
TIME AND MOTION STUDY:

The measurement and analysis of the motions or steps involved in particular task and the time
taken to complete each one. Time and motion study can break down into two distinct techniques:
method study, the analysis how people work and how jobs are performed and work measurement,
the time taken to complete each job. It can be use to set job standards, simplify work and check and
improve the efficiency of workers. Time and motion are similar to the broader concept of work
study:
MOTION STUDY: Motion study is designed to determined the best way to complete a repetitive
job.
TIME STUDY: Time study measures how long it takes an average worker to complete a task
at normal pace.
CONCEPT: Method to reduce costs and increase productivity.
WORKFORCE PLANNING:
Workforce planning is a systematic process for identifying the human capital required to meet
agency goals and developing the strategies to meet these requirements. An effective workforce plan
is an essential tool to identify appropriate workload staffing levels and justify budget allocations so
that organizations can meet their objectives.
Workforce planning is the business process for ensuring that an organization has suitable
access to talent to ensure future business success. Access to talent includes considering all potential
access sources (employment, contracting out, partnerships, changing business activities to modify
the types of talent required, etc.) By talent is meant the skills, knowledge, predisposition and ability
to undertake required activities including decisions making.
Workforce planning involves analyzing and forecasting the talent that companies need to execute
their business strategy, proactively. Workforce planning is looking at what an organization needs to
accomplish in a given period of time.
Workforce planning can be simply defined as having the right number of people with the right
skills, experiences, and competencies, in the right jobs, at the right time.
WORK STUDY:
“Work study” or method study is a scientific technique of observing, recording and critically
examining the present method of performing a task or job or operation with the aim of improving the
present method and developing a new and cheaper method. It is also known as method improvement
or work improvement.
It encompasses the study of the work processes, working conditions and equipments and tools
used to carry out the job. Time study is one of the important factors of work study. The tree
techniques of time study are:
 Stopwatch time study: the person is made to perform the job in the conditions already
specified is observed along with stopwatch.
 Synthesized standards: it facilitates quick/cheap estimating of overall times for new operations.
This is re-usable data.
 Statistical standards: data obtained from considerable number of people performing task over
the considerable period of time are used on some arbitrary basis.
Appendix 655
A WORD ABOUT MANAGEMENT GURUS
IGOR ANSOFF:
Igor Ansoff (1918-July 14, 2002) was an applied mathematician and business manager. He is
known as the father of Strategic Management.
He was a distinguished professor at United States International University (now Alliant International
University) for 17 years, where several institutes continue his work in strategic management research.
Igor was recognized worldwide as the Pioneer and Father of Strategic Management. He was the
first management strategy guru to recognize the need for strategic planning for firms operating in the
increasingly complex and turbulent environment.
CHRIS ARGYRIS:
Chris Argyris (born July 16, 1923) in Newark, New Jersey, USA, a Professor Emeritus at
Harvard Business School, is more commonly known for seminal work in the area of Learning
Organizations which was later developed in the best selling The Fifth Discipline by Peter M. Senge.
The work of Chris Argyris has influenced our thinking about the relationship of people and
organizations, organizational learning and action research.
Other key concepts developed by Argyris include Ladder of Inference, Double-Loop Learning,
Theory of Action/Espoused Theory/Theory-in-use, High Advocacy/High Inquiry dialogue, Actionable
Knowledge.
CHRISTOPHER BARTLETT AND SAMANTHA GHOSHAL:

Christopher Bartlett is the Thomas D. Casserly, Jr. Professor of Business Administration at
Harvard Graduate School of Business Administration.
Sumantra Ghoshal (1948-2004) was the founding Dean of the Indian School of Business in
Hyderabad, which is jointly sponsored by the Kellogg School at North-western University and the
London Business School. Ghoshal co-authored Managing Across Borders:
Sumantra Ghoshal and Christopher Bartlett wrote the Transnational Solution, which has been
listed in the Financial Times as one of the 50 most influential management books and has been
translated into nine languages.
GARY S BECKER:
Gary Becker’s most noteworthy contribution is perhaps to be found in the area of human
capital, i.e., human competence, and the consequences of investments in human competence. The
theory of human capital is considerably older than Becker’s work in this field.
His foremost achievement is to have formulated and formalized the microeconomic foundations
of the theory. In doing so, he has developed the human-capital approach into a general theory for
determining the distribution of labour income.
G BENNETT-STEWART:
In his bestselling classic of financial management, G. Bennett Stewart, III, raises and answers
these provocative questions:
 Do dividends matter?
 Are earnings per share really accurate measures of corporate performance?
 What is the engine that really drives share prices?
More than that, Stewart lays the foundation for EVar, the financial management and incentive
system now in place at nearly 300 companies around the world, and which is rapidly becoming the
global standard for corporate governance.
CHESTER BARNARD:
Chester Irving Barnard (1886–1961) was a telecommunications executive and author of Functions
of the Executive, an influential 20th century management book, in which Barnard presented a theory
of organization and the functions of executives in organizations.
He looked at organizations as systems of cooperation of human activity, and was worried about
the fact that they are typically rather short-lived.
Firms that last more than a century are rather few, and the only organization that can claim a
substantial age is the Catholic Church.
According to Barnard, this happens because organizations do not meet the two criteria necessary
for survival: effectiveness and efficiency.
WARREN BENNIS:
Warren Gameliel Bennis (born March 8, 1925) is an American scholar, organizational consultant
and author who is widely regarded as a pioneer of the contemporary field of leadership studies.
“His work at MIT in the 1960s on group behaviour foreshadowed — and helped bring about — today’s
headlong plunge into less hierarchical, more democratic and adaptive institutions, private and public,”
management expert Tom Peters wrote in 1993 in the foreword to Bennis’ An Invented Life: Reflections
on Leadership and Change.
KEN BLANCHARD:
Prior to publishing The One Minute Manager, Ken Blanchard was already an emerging thought
leader due to his years of research and development on the theory of Situational Leadership with
Paul Hersey. Their work was published as early as 1969 as an academic textbook Management of
Organizational Behaviour.
By 1981, Ken and co-author Spencer Johnson had self-published The One Minute Manager®
and it was on its way to becoming one of the best-selling business books of all time, continuing today
to hit the monthly business best seller lists over 25 years later.
W. CHAN KIM AND RENÉE MAUBORGNE:

Blue Ocean Strategy is a corporate strategy and bestselling business book written by Professors
W. Chan Kim and Renée Mauborgne, of INSEAD.
Blue Ocean Strategy provides a systematic approach to making the competition irrelevant. In
this frame-changing book, Kim and Mauborgne present a proven analytical framework and the tools
for successfully creating and capturing blue oceans.
Appendix 657
ADAM BRANDENBURGER:
Adam Brandenburger is a professor at the Harvard Business School. He is the author of a
number of Harvard’s strategy cases and, with Barry Nalebuff, author of the book CO-OPETITION.
His articles about game theory and business strategy have appeared in such publications as
Harvard Business Review, Journal of Economics & Management Strategy, Econometrica, and Journal
of Economic Theory.
JOHN SEELY BROWN:

John Seely Brown is currently a visiting scholar at USC and prior to that he was the Chief
Scientist of Xerox Corporation and the director of its Palo Alto Research Center (PARC)-a position
he held for nearly two decades. While head of PARC, Brown expanded the role of corporate
research to include such topics as organizational learning, knowledge management, complex
adaptive systems, ethnographic studies of the workspace and nano technology.
CLIFF BOWMAN:
Cliff Bowman is a Professor of Strategic Management. After graduating, Cliff joined Shell UK in
marketing and sales. He then moved to the UK Civil Aviation Authority as an economist, where he
worked in airport planning and airline economics.
He teaches Strategy across Cranfield MBA and Executive Programmes. His research has
addressed issues of strategy process, top team commitment, competitive strategy and corporate
advantage.
RICHARD BRANSON:
Sir Richard Charles Nicholas Branson born in Shamley Green, Surrey, England, is a British
entrepreneur, best known for his Virgin brand of over 360 companies.
Branson is a master strategist. His first successful business venture was at age 16, when he
published a magazine called Student. He then set up a record mail-order business in 1970. In 1971,
he opened a chain of record stores, now known as Virgin Megastores.
With his flamboyant and competitive style, Branson’s Virgin brand grew rapidly during the 1980s
- as he set up Virgin Atlantic Airways and expanded the Virgin Records music label.
Today, his net worth is estimated at over £4 billion (US$7.8 billion) according to The Sunday
Times Rich List 2006, or US$3.8 billion according to Forbes magazine.
ANDREW CARNEGIE:
Andrew Carnegie (November 25, 1835 – August 11, 1919) was a Scottish industrialist,
businessman, a major philanthropist, and the founder of Pittsburgh’s Carnegie Steel Company
which later became U.S. Steel.
Carnegie the Master Strategist, is known for having built one of the most powerful and influential
corporations in United States history, and, later in his life, giving away most of his riches to fund the
establishment of many libraries, schools, and universities in America, Scotland and other countries
throughout the world.
Carnegie is known to have sponsored Napoleon Hill and coached him in writing the legendary
“think and Grow Rich” Book. The number of copies sold is second only to the Bible.
CLAYTON CHRISTENSEN:
Clayton M. Christensen is The World’s Leading Expert On Disruptive Innovation strategies.
He is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business
School, with a joint appointment in the Technology & Operations Management and General Management
faculty groups.
His research and teaching interests centre on the management issues related to the development
and commercialization of technological and business model innovation.
ALFRED CHANDLER:
Alfred DuPont Chandler, Jr. (September 15, 1918 –May 9, 2007) was a professor of business
history at Harvard Business School, who wrote extensively about the scale and the management
structures of modern corporations.
Chandler graduated from Harvard College in 1940. After wartime service in navy, he returned
to Harvard to get his Ph.D. in History. He taught at M.I.T. and Johns Hopkins University before
arriving at Harvard Business School in 1970.
RONALD COASE:
Received the Alfred Nobel Memorial Prize in Economic Sciences in 1991 for his discovery and
clarification of the significance of transaction costs and property rights for the institutional structure
and functioning of the economy.
Currently Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law
School.
STPHEN R COVEY:
An internationally respected leadership authority, family expert, teacher, organizational consultant,
and author, Dr. Covey dedicates his life to teaching principle-centered living and leadership to individuals,
families, and organizations.
Holder of an MBA from Harvard and a doctorate degree from Brigham Young University, Dr.
Covey is author of the international bestseller, The 7 Habits of Highly Effective People, named the
#1 Most Influential Business Book of the Twentieth Century, and other best sellers that include First
Things First , Principle-Centered Leadership, and The 7 Habits of Highly Effective Families.
EDWARD DE BONO:
Edward de Bono was born in Malta in 1933. He attended St Edward’s College, Malta, during
World War II and then the University of Malta where he qualified in medicine.
He holds a PhD from Cambridge and an MD from the University of Malta. He has held appointments
at the universities of Oxford, London, Cambridge and Harvard.
Dr Edward de Bono is one of the very few people in history who can be said to have had a major
impact on the way we think. In many ways he could be said to be the best known thinker internationally
and the creator of the concept of Lateral thinking.
MICHAEL DELL:
Michael Dell, born in February 1965, is the chairman of the Board of Directors and chief executive
officer of Dell, the company he founded in 1984 with $1,000 and an unprecedented idea - to build
Appendix 659
relationships directly with customers. In 1992, Mr. Dell became the youngest CEO ever to earn a
ranking on the Fortune 500.
Mr. Dell (Master Strategist) is the author of Direct From Dell: Strategies That Revolutionized an
Industry, his story of the rise of the company and the strategies he has refined that apply to all
businesses.
Forbes estimates Michael Dell’s net worth at $15.8 billion, making him the 30th richest person
in the world and the ninth richest American.
W. EDWARDS DEMING:
William Edwards Deming (October 14, 1900–December 20, 1993) was an American statistician,
college professor, author, lecturer, and consultant. Deming is widely credited with improving production
in the United States during World War II, although he is perhaps best known for his work in Japan.
He is well-known for his 14 Principles of Total Quality Management.
Deming made a significant contribution to Japan becoming renowned for producing innovative
high-quality products and becoming an economic power. Deming is regarded as having had more
impact upon Japanese manufacturing and business than any other individual not of Japanese heritage.
A DE GEUS:
Arie de Geus spent 38 years on three continents as a line manager at Royal Dutch Shell, and
finished his career as the Corporate Planning Director in charge of business and scenario planning.
His 1988 Harvard Business Review article, “Planning as Learning”, established him as a leading
expert in organisational learning. Arie de Geus has been a Visiting Fellow at London Business
School and adviser to many governments and private institutions.
In 1997 he published a book entitled “The Living Company: Habits for Survival in a Turbulent
Business Environment”, which has been translated into more than twenty languages, has been widely
praised and has received a number of awards.
In his book, Arie explains why so many companies die early, and provides the key to corporate
longevity. When the usual lifespan of a company is 12.5 years, and of a multinational, 40 years, how
have some companies survived for centuries. As the former head of strategic planning for Royal
Dutch Shell, de Geus knows that the answer is people more than financial assets
PETER DRUCKER:
Peter Ferdinand Drucker: born November 19, 1909, Vienna, Austria died November 11, 2005,
Claremont, California. The founding father of the study of management.
Peter Drucker made famous the term knowledge worker and is thought to have unknowingly
ushered in the knowledge economy, which effectively challenges Karl Marx’s world-view of the
political economy. George Orwell credits Peter Drucker as one of the only writers to predict the
German-Soviet Pact of 1939.
LARRY ELLISON:
Lawrence Joseph Ellison (born August 17, 1944) is the co-founder and CEO of Oracle
Corporation, a major database software company.
During the 1970s, Ellison worked for the Ampex Corporation. One of his projects was a database
for the CIA, which he named “Oracle,” the abstract idea that was dismissed by a University of
Chicago professor.
He founded Oracle in 1977, putting up a mere $2000 of his own money, under the name
Software Development Laboratories (SDL).
Ellison does not hide the fact that he is a practitioner of Sun Tzu the Art of War Strategy in his
business dealings.
HENRY FORD:
Henry Ford (July 30, 1863 – April 7, 1947) was the founder of the Ford Motor Company and
father of modern assembly lines used in mass production.
His introduction of the Model T automobile revolutionized transportation and American industry.
He was a prolific inventor and was awarded 161 U.S. patents.
As sole owner of the Ford Company, he became one of the richest and best-known people in
the world. He is credited with “Fordism”, that is, the mass production of large numbers of inexpensive
automobiles using the assembly line, which could finish a car in 98 minutes, coupled with high wages
for his workers—notably the $5.00 per day pay scale adopted in 1914.
Ford (a master strategist) left most of his vast wealth to the Ford Foundation but arranged for
his family to control the company permanently.
BILL GATES:
William Henry Gates III (born October 28, 1955) is an American entrepreneur, philanthropist and
chairman of Microsoft, the software company he founded with Paul Allen.
Gates is one of the best-known strategists and entrepreneurs of the personal computer revolution.
Although he is widely admired, his business tactics have been criticized as anti-competitive and in
some instances ruled as such in court.
The annual Forbes magazine’s list of The World’s Billionaires has ranked Gates as the richest
person in the world from 1995 to 2007, with recent estimates putting his net worth near $59 billion.
ELIYAHU GOLDRATT:
Eliyahu M. Goldratt (1948 - ) is an Israeli physicist turned business consultant, the originator of
the Theory of Constraints (abbreviation: TOC). He claims that he applied the scientific method to
resolving some permanent problems of organizations.
He obtained his Bachelor of Science degree from Tel Aviv University and his Masters of Science,
and Doctorate of Philosophy from Bar-Ilan University.
DANIEL GOLEMAN:
Daniel Goleman is an internationally known psychologist who lectures frequently to professional
groups, business audiences, and on college campuses.
Working as a science journalist, Goleman reported on the brain and behavioural sciences for
The New York Times for many years. His 1995 book, Emotional Intelligence was on The New York
Times bestseller list for a year-and-a-half; with more than 5,000,000 copies in print worldwide in 30
languages, and has been a best seller in many countries.
Appendix 661
ROBERT GRANT:
Robert M. Grant is Professor of Management at Georgetown University and City University,
London. He is on the editorial boards of Strategic Management Journal and Strategy and Leadership.
His business experience ranges from producing pork pies (Kraft Foods) and retreading tires
(Firestone), to strategy consulting with American Express, ENI and other companies. He is also the
editor of Cases in Contemporary Strategy Analysis (Second Edition, Blackwell Publishers, 1999).
MICHAEL HAMMER AND JAMES CHAMPY:

Michael Martin Hammer and James Champy are founders of the management theory of Business
process reengineering (BPR)
No business concept was more important to America’s economic revival in the 1990s than
reengineering. Already a classic, this international bestseller pioneered the most important topic in
business circles today: reengineering — the radical redesign of a company’s processes, organization,
and culture to achieve a quantum leap in performance.
GARY HAMEL AND C K PRAHALAD:

In 1996, Hamel and Prahalad caution that complacent managers who get too comfortable in
doing things the way they have always done will see their companies fall behind.
Gary Hamel and Prahalad write about Core Competency - Those things that define what is
special about an organization, what sets it apart from other organizations. Competencies are those
things the company or organization does well.
Core competencies are those things that are fundamental to the organisation. Without those core
competencies, the organisation would not be the same organisation.
CHARLES HANDY:
Charles Handy (born 1932) is an Irish author/philosopher specialising in organisational behaviour
and management.
Among the ideas he has advanced are the “portfolio worker” and the “Shamrock Organisation”
(in which professional core workers, freelance workers and part-time/temporary routine workers each
form one leaf of the “Shamrock”).
Born the son of an archdeacon in Kildare, Ireland, Handy was educated at Oriel College, Oxford.
In July 2006, he was conferred with an honorary Doctor of Laws by Trinity College, Dublin. He
has been rated among the Thinkers 50, the most influential living management thinkers. In 2001, he
was second on this list, behind Peter Drucker, and in 2005, he was tenth. Handy’s business career
started in marketing at Shell International.
He was a co-founder of the London Business School in 1967 and left Shell to teach there in
1972. When the Harvard Business Review had a special issue to mark their 50th Anniversary, they
asked Handy, Peter Drucker and Henry Mintzberg to write special articles.
P HASPESLAGH AND D JEMISON:

Philippe Haspeslagh is Associate Professor of Business Policy at INSEAD in Fontainebleau,
France, and Director of its Strategic Issues in Mergers and Acquisitions Executive Program.
David Jemison is Associate Professor of Management and Joseph Paschal Dreibelbis Faculty
Fellow at the University of Texas at Austin.
This book is based on the authors’ research on acquisitions in ten countries as well as their
experience as educators and advisors in the area of acquisition management and corporate development
in international firms Jemison and Haspeslagh are the high priests of M&A strategy.
NAPOLEON HILL:
Napoleon Hill (October 26, 1883–November 8, 1970) was an American author who was one of
the earliest producers of the modern genre of personal-success literature.
His most famous work, Think and Grow Rich, is one of the best-selling books of all time. In
America, Hill stated in his writings, people are free to believe what they want to believe, and this is
what sets the United States apart from all other countries in the world.
Hill’s works examined the power of personal beliefs, and the role they play in personal success.
“What the mind of man can conceive and believe, it can achieve” is one of Hill’s hallmark
expressions. How achievement actually occurs, and a formula for it that puts success in reach for
the average person, were the promise of Hill’s books.
Hill called his success teachings “The Philosophy of Achievement” and he considered freedom,
democracy, capitalism, and harmony to be important contributing elements. For without these, Hill
demonstrated throughout his writings, personal beliefs are not possible.
He contrasted his philosophy with others, and thought Achievement was superior and responsible
for the success Americans enjoyed for the better part of two centuries. Fear and selfishness had no
part to play in his philosophy, and Hill considered them to be the source of failure for unsuccessful
people.
GERRY JOHNSON AND KEVIN SCHOLES:

Johnson and Scholes book ‘Exploring Corporate Strategy’ gives a comprehensive overview
of strategic management concepts, techniques and approaches, right through from the analysis,
choice and to the implementation phase.
The book also contains extensive case material (which is continually being updated).
ROSEBETH MOSS KANTER:

Rosabeth Moss Kanter holds the Ernest L. Arbuckle Professorship at Harvard Business School,
where she specializes in strategy, innovation, and leadership for change.
Her strategic and practical insights have guided leaders of large and small organizations worldwide
for over 25 years, through teaching, writing, and direct consultation to major corporations and
governments.
The former Editor of Harvard Business Review (1989-1992), Professor Kanter has been named
to lists of the “50 most powerful women in the world” (Times of London), and the “50 most influential
business thinkers in the world” (Accenture and Thinkers 50 research).
In 2001, she received the Academy of Management’s Distinguished Career Award for her scholarly
contributions to management knowledge, and in 2002 was named “Intelligent Community Visionary of
the Year” by the World Teleport Association.
Appendix 663
John’s main current interest is in writing and his most important recent book was published in
Europe in 2003 as The Truth about Markets and in the US in 2004 as Culture and Prosperity.
KAPLAN AND NORTON:

In the realm of business, the concept of Strategy Maps and Scorecard was introduced by
Robert S. Kaplan and David P. Norton. The standard reference is the book Strategy Maps by Robert
S. Kaplan and David P. Norton.
Kaplan and Norton are credited with developing the Balanced Scorecard in 1992. This appeared
in a paper in the Harvard Business Review. The focus of the Balanced Scorecard is to provide
organizations with metrics against which to measure their success. The underlying principle was that
you couldn’t manage what you cannot measure.
KEVIN KELLY:
Kevin Kelly helped launch Wired magazine in 1993, and served as its Executive Editor until
January 1999. He is now Editor-At-Large for Wired.
From 1984 to 1990 Kelly was publisher and editor of the Whole Earth Review, a journal of
unorthodox technical news. Whole Earth was the first consumer magazine to report on virtual reality,
ecological restoration, the global teenager, Internet culture and artificial life (to name just a few early
trends). He is the author of “Out of Control: The New Biology of Machines, Economic and Social
Systems and New Rules for the New Economy .
PHILIP KOTLER:
S.C. Johnson & Son distinguished Professor of International Marketing at the Northwestern
University Kellogg Graduate School of Management in Chicago. Dr. Kotler has authored what is
widely recognized as the best selling textbook on marketing: Marketing Management, now in its 12th
edition. He has also authored, or co-authored a number of other books, including Kotler on Marketing;
Lateral Marketing; Strategic Marketing for Non-Profits; Marketing for Healthcare Organizations;
Marketing Professional Services; Marketing From A to Z; The 10 Deadly Marketing Sins; Marketing
Moves; Marketing places; the Marketing of Nations; and Social Marketing.
JOHN KOTTER:
Harvard Business School Professor John Kotter is widely regarded as the world’s foremost
authority on leadership and change. His has been the premier voice on how the best organizations
actually “do” change.
John Kotter’s international bestseller Leading Change—that outlined an actionable, 8-step process
for implementing successful transformations—became the change bible for managers around the
world. In October 2001, Business Week magazine rated Kotter the #1 “leadership guru” in America
based on a survey they conducted of 504 enterprises.
His newest work released September 2006, Our Iceberg Is Melting, puts the 8-step process
within an allegory, making it accessible to the broad range of people needed to effect major
organizational transformations.
John Kotter’s articles in The Harvard Business Review over the past twenty years have sold
more reprints than any of the hundreds of distinguished authors who have written for that publication
during the same time period. His books are in the top 1% of sales from Amazon.com.
He is a graduate of MIT and Harvard. He joined the Harvard Business School faculty in 1972.
In 1980, at the age of 33, he was given tenure and a full professorship.
HENRY MINTZBERG:
Professor Henry Mintzberg, (born September 2, 1939) is an internationally renowned academic
and author on business and strategic management. Henry Mintzberg writes prolifically on the topics
of strategic management and business strategy, with more than 140 articles and 13 books to his
name.
His seminal book, The Rise and Fall of Strategic Planning, criticizes some of the practices of
strategic planning today and is considered required reading for anyone who seriously wants to
consider taking on a strategy-making role within their organization.
He recently published a book entitled Managers Not MBAs, which outlines what he believes to
be wrong with management education today.
KJELL A. NORDSTROM:
Amid the madness and hyperbole surrounding the new economy, Dr. Nordstrom is a guru of the
new world of business.
The 2001 Thinkers 50, the world’s first ranking of management thinkers, ranked Nordstrom and
his partner Dr. Jonas Ridderstrale at number 17 (one place below Nicholas Negroponte and one
ahead of Stephen Covey).
KENICHI OHMAE:
Kenichi Ohmae (born February 21, 1943) is one of the world’s leading business and corporate
strategists. He is known as Mr. Strategy and has developed the 3C’s Model.
Kenichi Ohmae made his mark twenty years ago with his book on corporate strategy. It is still
a collection of good sense and clear advice, even though some of the examples may now seem a
bit dated.
Successful business strategies, he says in “The Mind of the Strategist”, do not come from
rigorous analysis but from a thought process, which is basically creative and intuitive rather than
rational.
DAVE PACKARD AND BILL HEWLETT:

In the early days of Hewlett-Packard (HP), Dave Packard and Bill Hewlett devised an active
management style that they called Management By Walking Around (MBWA).
Senior HP managers were seldom at their desks. They spent most of their days visiting employees,
customers, and suppliers. This direct contact with key people provided them with a solid grounding
from which viable strategies could be crafted.
These two smart fellows five years out of Stanford, established Hewlett-Packard Corporation
and won the bid for an audio oscillator to test the sound equipment for Walt Disney’s “Fantasia”, and
their fantasia became historia.
Their company’s 1968 Hewlett-Packard 9100A was the first personal computer, but they marketed
it as a “desktop calculator” so as not to evoke images of IBM. They developed the laser printer, the
single unit printer/copier/scanner/FAXer, and a bunch of other stuff.
Appendix 665
RICHARD PASCALE AND ANTHONY ATHOS:

Richard Pascale and Anthony Athos In The Art of Japanese Management claimed that the main
reason for Japanese success was their superior management techniques.
They divided management into 7 aspects (which are also known as McKinsey 7S Framework):
Strategy, Structure, Systems, Skills, Staff, Style, and Subordinate goals (which we would now call
shared values). In Japan, the task of management was seen as managing the whole complex of
human needs, economic, social, psychological, and spiritual.
The first three of the 7 S’s were called hard factors and this is where American companies
excelled. The remaining four factors (skills, staff, style, and shared values) were called soft factors
and were not well understood by American businesses of the time.
MICHAEL E PORTER:
Michael Porter is an American academic focused on strategic management and economics.
Professor Michael Porter’s ideas on strategy are the foundation for modern strategy courses,
and his work is taught at the Harvard Business School and at virtually every business school in the
world.
Professor Porter’s current course at Harvard is a University-wide graduate course,
Microeconomics of Competitiveness, which is also taught in partnership with more than 65 other
universities from every continent using curriculum, video content and instructor support developed at
the Institute.
TOM PETERS:
Tom Peters (born November 7, 1942) is an American writer and expert on business, leadership
and strategic management practices, best-known for co-writing the classic book, In Search of
Excellence, with Robert H. Waterman, Jr.
His first book, In Search of Excellence, co-written with Bob Waterman, launched a management
revolution and was ranked in a recent poll carried out by Bloomsbury Press as the “greatest business
book of all time”.
Since then, he has remained at the forefront of the movement to radically change organisations
and how they are led in the face of new consumer, global and technological realities.
Tom, meanwhile, describes himself as “a prince of disorder, champion of bold failures, maestro
of zest, professional loudmouth, corporate cheerleader, lover of markets and... capitalist pig.”
J B QUINN:
Quinn is a major thinker within the process school of strategy. He is well known for explaining
how strategic decisions typically evolve in a part random, or erratic, and part logical. He coined the
expression “logical incrementalism”.
Quinn explained how strategic decisions typically evolve in a part random or erratic and part
logical way. Quinn coined the term logical incrementalism to capture this idea. Clearly strategic
decisions had some logic to them, otherwise strategic action would be foolish.
Whilst being influenced significantly by Bray Brooke and Lindblom, Quinn incorporated within his
theory of strategic decisions both random and logical elements.
Quinn’s view was that managers tended to make strategic decisions according to perceptions
of incremental opportunities that appeared to add to what they already had. Partly driven by their
business legacy and pertly by the change and incremental profit top managers were attracted to
piecemeal strategies.
AL RIES AND JACK TROUT:

Although the theory of Positioning originated with Jack Trout in 1969, it didn’t gain wide
acceptance until Al Ries and Jack Trout wrote their classic book “Positioning: The Battle For Your
Mind” (1979).
A product’s position is how potential buyers see the product. Positioning is expressed relative
to the position of competitors. The term was coined in 1969 by Al Ries and Jack Trout in the paper
“Positioning” is a game people play in today’s me-too market place” in the publication Industrial
Marketing. It was then expanded into their ground-breaking first book, “Positioning: The Battle for
Your Mind”.
They wrote fourteen books including Organizational Psychology (3d edit., 1980), Career Dynamics
(1978), Organizational Culture and Leadership (1985, 1992, 2004), and Process Consultation Vol. 1
and Vol. 2 (1969, 1987, 1988), Process Consultation Revisited (1999), and The Corporate Culture
Survival Guide (1999).
PHILIP SELZNICK:
Philip Selznick (1919) is professor emeritus of law and society at the University of California,
Berkeley. A noted author in organizational theory, law and society and public administration, Selznick
also introduced the idea of matching the organization’s internal factors with external environmental
circumstances.
This core idea was developed into what we now call SWOT analysis by Learned, Andrews, and
others at the Harvard Business School General Management Group. Strengths and weaknesses of
the firm are assessed in light of the opportunities and threats from the business environment.
PETER SENGE:
Peter Michael Senge (1947) is an American scientist and director of the Center for Organizational
Learning at the MIT Sloan School of Management. He is known as author of the book The Fifth
Discipline: The art and practice of the learning organization from 1990.
An engineer by training, Peter was a protégé’ of Jay Wright Forrester and has followed closely
the works of Chris Argyris and Robert Fritz and based his books on pioneering works with the five
disciplines in Ford, Chrysler, Shell, AT&T, Hannover Insurance, Harley-Davidson since the 70s and
80s through today.
Senge emerged in the 1990s as a major figure in organizational development with his book
The Fifth Discipline where he developed the notion of a learning organization. This views organizations
as dynamical systems (as defined in Systemics) in a state of continuous adaptation and improvement.
ALVIN TOFFLER:
Alvin Toffler (born October 3, 1928) is an American writer and futurist, known for his works
discussing the digital revolution, communications revolution, corporate revolution and technological
singularity. A former associate editor of Fortune magazine, his early work focused on technology
and its impact (through effects like information overload).
Appendix 667
In 1970, Alvin Toffler in Future Shock described a trend towards accelerating rates of change.
He illustrated how social and technological norms had shorter lifespan with each generation, and
he questioned society’s ability to cope with the resulting turmoil and anxiety.
DAVID ULRICH:
Dave Ulrich is a Partner and co-founder of The RBL Group and a professor of business at the
Ross School of Business, University of Michigan.
Professionally, he studies how organizations build capabilities of speed, learning, collaboration,
accountability, talent, and leadership through leveraging human capital.
He has helped generate multiple award winning data bases that assess alignment between
strategies, human resource practices and audit and HR competencies.
SAM WALTON:
Samuel Moore Walton (March 29, 1918 – April 6, 1992), born in Kingfisher, Oklahoma was the
founder of two American retailers Wal-Mart and Sam’s Club. He was the patriarch of the Walton
family, one of the richest families in the world.
The first true Wal-Mart opened in 1962 in Bentonville, Arkansas. Wal-Mart eventually became the
world’s largest retailer.
Walton stated, “Each Wal-Mart store should reflect the values of its customers and support the
vision they hold for their community.”
Wal-Mart has outreach programmes led by local associates who grew up in the area and
understand its needs. Wal-Mart becomes involved in local communities by allowing local charities to
hold bake sales on store property, and by offering scholarships to graduating seniors from local high
schools.
THOMAS JOHN WATSON:

Thomas John Watson, Jr. (January 14, 1914 – December 31, 1993) was the president of IBM
from 1952 to 1971 and the eldest son of Thomas J. Watson, IBM’s first president. He was listed as
one of TIME Magazine’s 100 most influential people of the 20th century.
JACK WELCH:
Jack Welch, Jr. (born November 19, 1935) was Chairman and CEO of General Electric between
1981 and 2001. Welch gained a solid reputation for uncanny business acumen and unique leadership
strategies at GE. During his tenure, GE increased its market capitalization by over $400 billion.
He remains a highly-regarded figure in business circles due to his innovative management
strategies and leadership style.
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INDEX
A Cleff G,384
Abel, 89,90 Clemens, 207
Abrahams Jeffrey,103 Colman Peterson, 11,47
Alice Mann, 129 Couture & Young, 208
Alan Greenspan,484
D
Allen Flanders, 384,386
Amartya Sen, 26,29 Dale S Beach, 46
Anderson, 227 Dale Yoder, 384
Andrew Grove, 496 David Ulrich, 22
Anita Rodick, 158, 159 David Weiss, 22
Antona, 480 David F, 100,105
Ashwin Thacker, 280 David Norton,486
Asma Velani, 337-377 David W Jamieson, 102
Davies, 102
B De Geus, 100
Baba Kalyani,11 Diane Lustenader,478
Bain & Co, 100 Dilbert, 224
Bart C K, 102 Donkin, 206
Bartholomew, 227 Dabbawalas, 273-275
Bartkus, 102
E
Barry Posner, 128
Batez M C, 102 Eden, 206
Berglund, 187 Edward Bernsky, 47
Bill Hewlett, 158 Edward E Lawler III, 9,19
Bob Proctor, 97 Edwin B Flippo, 282
Bohlander, 47 Elizabeth Cohn-Stuntz, 403
Boudreau, 19 Elton Mayo,389
Brian O Neil, 47 F
Bruch, 42,44
Fitzenz, 481
Burack & Mathys, 205
Flamholtz, Forbes, 227
Burt Nanus, 156
Freada Klein, 403
C
G
CJI K. G. Balakrishnan, 420
Gaimon, 227
Carroll, 29
Galagher, 188
Campbell A, 106
Gandhi M K, 28,389
Cass Wheeler, 183
Gehlauf, 424
Ceis Zook, 484
Gil Rendle, 129,132
Christopher Bart, 99,100,104
Glassman, 102
Index 675
Glaister, 102 Johnson & Scholes, 496

Giovanni Grossi, 72 Jolton, 424
Godin, 424 Juan D K, 105
Gordon McBeath, 48 Justice B.N. Srikrishna, 420
Gradons, Grinold, 227
K
Grossman, 481
Gutek, 424 Kandola, 48
Karen Sauvigne, 403
H Karl Marx, 387
Hammond, 89,90 Kates Brandon, 115
Head, 481 Kishore Biyani, 167
Heinemann, 47 Ken Blanchard, 132
Henry Ford, 159 Kerr, 388
Henry Sanders, 387 Kentucky, 241-243
Higgins, 480 Kevin Lim, 114
Hilmer, 206 Konard & Gutek, 424
Hill, 101 Konosuke Matsushita, 158
Homans, 389 Kumar Mangalam, 12
Hudson, 481 KPMG, 33,
K.V Kamath, 447-448
I
Kwan Jzu, 93
Ireland, 101
L
J
Lee Iacocca, 11
Jack Phillips, 61,478 Leege, 187
Jack Welch, 97,101,317,435,496 Leo Lingham, 219
Jacobs, 481 Lewis Carroll, 253
James Collins, 130,132 Little Hart, 90
James Kouzes, 128 Linda Gravett, 61
Jamrog, 19 Lin Farley, 403
Jarrell D W, 48 Lucas, 103
Jawahar Lal Nehru, 28 Lynn Wehril, 403
Jerry Porras, 130,132
Jeffery Immelt, 435 M
John Bane, 227 Mabey, 187
John Bryson, 129 Mahbub-ul-Haq, 26
John Jackson, 48 Mallen Baker, 29
John Gardener, 4 Mann, 132
John Sam, 496 Maria Stacy Lidstone, 47
John Sullivan, 243 Margerison, 386
John T Drea, 496 Markov, 226,244
John P Kotter,122,128,322 Marchington, 208
John T Dunlop,386 Martin Luther King, 156
Mathew, 403 R
Mary Rowe, 403
Raghunath Medge, 273-275
Max DePree, 121
Ramalinga Raju, 84
Max Weber,388
Ramesh Jhangiani,19
Mazer & Percival, 424
Ramstad, 19
McBeath,188
Ray Crock, 159
McLean, 206
Riger, 424
Mcaffe, 102
Richard B Robinson, 102
Mckinsey,13,110
Rick Warren, 97
Michael Beer, 74,160,161
Robert Kaplan, 486
Michael W Mercer, 478
Robert Kiyosaki, 97
Miller, 103
Robert H Miles, 156
Milton Friedman, 28
Robert Mathis, 48
Mosher, 207Mosier, 481
Roethlisberger, 389
N
S
Nancy Lee, 29
Sam Walton, 11,97,157,159
Nepoleon Hill, 97
Salaman, 187
Nevado, 480
Sanjay Jog, 170
Nirmalya Kumar, 10,12
Sark H M, 118
N R Narayana Murthy, 10,418
Schievebein, 206
O Semler, 208
Sleezer, 481
O P Bhatt, 81
Shalini Tiwari, 378-382
Overholt,19
Snell, 47
P Somers, 424
Patel, 403 Stainer G, 47
Paul Turner,47 State of Texas, 231
Parkinson, 224 Stickland, 103
Pearce J, 100, 102,105 Stephon Covey, 94,156
Perm, 48 Stone R, 103
Prifrel, 481 Storey, 187,188
Peter Drucker, 43,97,104,187,308 Sumantra Ghoshal, 42,44
Peter L, 223 Susan A Mohrman, 9
Peter Senge, 129,308 Susan Brownmiller,403
Philip Kotter, 29 Susan Meyer, 403
Popovich, 424 Swanson, 403,481
Q T
Quigley, 156 Tabone, 100
Quinn J B, 102,206 Tead & Metcalfe, 384
Theodore Levit, 89
Index 677
Thomas Kuhn, 14 Wren, 187

Thompson, 103,227 Warren Bennis, 156
Tom Bartridge, 434 Watson, 159
Tony Miller, 219
Y
T V Mohandas Pai, 291
Yogi, 206
V
Z
Velter Eric, 48
Von Clausewitz, 90 Zalezink A, 102
Zhu, 100
W Zig Ziglar, 97
Whitehead,389 Zohar, 156
Whyte, 389

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Human Resource

Planning and Audit

ISO 9001:2008 CERTIFIED

First Edition : 2010

Human Resource in Search of Excellence

“I am,” she replied, “How did you know?”

1. THE GREAT HUMAN RESOURCE TURNAROUND 1 – 39

2. BASICS OF HUMAN RESOURCE PLANNING 40 – 57

3. RETURN ON INVESTMENT (ROI) IN HR PLANNING 58 – 75

4. CORPORATE MISSION AND VISION STATEMENTS 76 – 184

5. STRATEGIC HUMAN RESOURCE PLANNING 185 – 215

6. STRATEGIC MANPOWER PLANNING 216 – 250

7. STRATEGIC PLANNING 251 – 276

8. STRATEGIC PLANNING IN CORE AREAS OF HUMAN RESOURCE 277 – 427

9. STRATEGIC SUCCESSION PLANNING 428 – 456

10. HUMAN RESOURCE AUDIT 457 – 550

11. AUDIT OF HUMAN RESOURCE COMPETENCIES, STRATEGIES, SYSTEMS, 551 – 586

12. WRITING HUMAN RESOURCE AUDIT REPORT 587 – 627

APPENDIX 628 – 667

 CONCEPTS AND DEFINITIONS

BIBLIOGRAPHY AND REFERENCES 668 – 673

AUTHOR INDEX 674 – 677

THE GREAT HUMAN RESOURCE TURNAROUND:

LEVEL ONE: HOLISTIC APPROACH TO HUMAN RESOURCE

HOLISTIC APPROACH TO HUMAN RESOURCE HELP ASHOK

THE NEWS WE CAN USE:

EARLY WARNING SIGNALS OF DECLINE:

5. Pride and Arrogance getting in the Way:

HUMAN RESOURCE COMPETENCIES NEED TO BE BUSINESS

CASE STUDY: GEETA KAPUR & MANISH PURI:

MAKING HUMAN RESOURCE BUSINESS SAVVY

HUMAN RESOURCE NEEDS TO LOOK AT ITSELF MORE AS A BUSINESS:

PARADIGM SHIFT: EMERGING TRENDS FOR HUMAN

DABUR INDIA : CASE STUDY IN PARADIGM SHIFT:

DABUR HIRED MCKINSEY:

HUMAN RESOURCE TAKES DRIVER’S SEAT TO RESTRUCTURE:

PARADIGM SHIFT AND TRANSFORMATION - DRIVEN BY AGENTS OF CHANGE: THOMAS

PARADIGM SHIFT FOR HUMAN RESOURCE:

APPROACH OF RITU SANAYAL:

SURAJ KAUL: CASE OF TALENT MIS-MANGEMENT:

2. Can Human Resource be a Profit Centre? Answer is “Yes”

6. Steps to Convert Human Resource to a Profit Centre/SBU:

WHERE TO GO FROM HERE?

1. Organizational funding by monetary and physical resource which is popularly known as

3. Corporate social responsibility is a way to manage business: Corporate social responsibility

WHY CORPORATE SOCIAL RESPONSIBILITY (CSR) CANNOT SUBSTITUTE HUMAN

4. Human Development Resourcing (HDR) as a means for Participatory Development:

2. APOLLO TYRES LIMITED:

 To improve community participation.

EXERCISE FOR PRACTICE

BASICS OF HUMAN RESOURCE PLANNING:

LEVEL ONE PHILOSOPHY OF HUMAN RESOURCE PLANNING 42 – 45

PHILOSOPHY OF HUMAN RESOURCE PLANNING

1. HUMAN RESOURCE PERCEPTIONS ARE IMPORTANT BUT IT IS NECESSARY TO

3. ONLY TEN PERCENT MANAGERS ARE COMMITTED: BRUCH AND SUMANTRA

4. REVENUE, COST & QUALITY: ONE SONG ONE DESTINATION:

5. POWER OF CHALLENGE AND CHOICE: THE CASE OF LUFTHANSA AIRLINES

6. CONGRUENCE OF STATED & ACTUAL VALUES: