Wednesday, September 26, 2007

Human Resource Audit

HUMAN RESOURCE AUDIT , An HR "Early Warning System" that works!
Your tool to assess the present. Your blueprint for the future. Your commitment to excellence.
A human resource audit reviews an organization's policies, procedures, and practices. Its purpose is to examine the technical and practical dimensions of the HR function and to create a comprehensive system that adds value to the organization.
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 resources 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 – (Flamholtz, 1987)

Top Management saw solutions to their problems, issues and challenges in HRD to face business competition and to achieve organizational goals.

1. to examine and pinpoint strength and weaknesses related to H.R. areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals.
2. To increase the effectiveness of the design and implementation of human resource policies, planning and programs.
3. To help human resource planners develop and update employment and program plans.
4. To insure the effective utilization of an organization’s human resources.
5. To review compliance with a myriad of administrative regulations.
6. To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges.
7. To maintain or enhance the organization’s and the department’s reputation in the community.
8. To perform a "due diligence" review for shareholders or potential investors/owners.

Whenever the H.R. Audit it taken up, the scope is decided. Audit need not be exhaustive, but should be focused on particular function of H.R.M. such as Training and Development, Performance Appraisal, Compensation, etc.. However, the objective and approach of H.R. Audit, more or less, remains the same, regardless of scope.
What does a full HR Audit entail:
1)Legal compliance
2)Compensation/Salary Administration
6)Training and Development
7)Employee Relations
9)Files/Record Maintenance/Technology
10)Policies and procedures (including employee handbook)

The following lists the core HR functional areas and summarizes 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.

Organization of HR office, 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 internal controls; administration of retention rights, including notices, matrix, use of separation incentives, and outplacement practices; how staff remain current and up to date with the HR field and the state personnel system; and techniques for communicating with employees and appointing authorities in department.

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.

Standards, processes, and internal and quality control methods for reviewing and updating PDQs including essential functions, FLSA notification, 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; communication process for official system maintenance studies; and standards, internal controls, and processes for reviewing and exempting positions from the state personnel system.

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; premium pay awards including hazardous duty pay, housing premium pay, documentation on approval of requests to pay shift and on-call premiums to individuals in classes not designated by the state personnel director. Leave management standards, internal controls, and practices; confidentiality policies and agreements with those handling health-related information; leave tracking systems; FLMA compliance including designation and notification; leave sharing plans; and maintenance of annual SES performance contracts, including filing with state personnel director. Standards and processes for enrollment for new employees in benefit plans; communication methods for open enrollment; worker’s compensation reporting; process for reporting employment claims; and compliance with COBRA and STD benefits requirements.

Most current Performance Pay Program is approved and on file with the state personnel director, 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 sanctions.

Orientation program for new employees and supervisors; training programs and delivery methods including courses, training staff, and cost; workforce development policies including drug-free workplace, workforce violence and sexual harassment prevention, diversity, FMLA and FLSA responsibilities.

Number, type, and outcome of appeals, grievances, and director’s 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.

Content of employee, payroll, medical, and position files; internal controls to ensure accuracy and control access; compliance with IRCA (I-9); process for purging records; FLSA designations; a review of employee timesheets; posting of required notices; and methods to ensure timely and accurate reporting of information to the state personnel director.


• Are the "Employer/Employee Guidelines for Wrongful Termination" followed?
• Is there a formal Performance Improvement Program 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 applicable laws?
• Are I-9 forms complete for all employees?
• Have all employees received a copy of the employee handbook? Have they signed a statement that they have received, read and understand its contents?
• Does the handbook have the appropriate “Employment At Will” disclaimer?

• Is a standard application form used?
• Do job descriptions exist for open positions?
• Does the job description drive the writing of the employment ad?
• Does the job description drive the selection of behavioral interview questions?
• Are all qualified candidates interviewed?
• Is the selection decision made in compliance with the applicable employment laws?
• Have candidates given written permission to contact references?
• Are references checked before offers are made?

• Are all employee decisions based on Bona Fide Occupational Qualifications?
• Are required employment law posters displayed in an appropriate place?
• Are you making employment decisions based on applicable employment laws and compliance thresholds?

• 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?

• Are employees appropriately classified (exempt vs. nonexempt, employee vs. independent contractor)?
• Is there compliance with the Fair Labor Standards Act in terms of minimum wage, overtime pay and record keeping?
• Is there compliance with other applicable employment laws?
• Are employees paid a competitive rate?
• Is there internal equity among current employees?
• Is compensation tied to performance?

• Are the benefits offered sufficient to attract the desired level of talent?
• Are the benefits offered in compliance with the appropriate laws?


Marketing Techniques For HR

For years, Human Resources professionals have been applying the fundamental business concept of customer service to their functional area. They have found that, just like buyers of their company’s products and services, HR’s customers (employees, supervisors, and management) respond favorably to good customer-service approaches. What human resources still needs to learn is that marketing and sales principles can be equally useful in improving HR effectiveness.

What ‘Power Marketing’ Can Do?
Many HR professionals consider sales and marketing inconsistent with their customer-service responsibilities. But if you take a moment to think about it; if your internal customers don’t understand and enthusiastically buy into the services you’re providing, you’re wasting a lot of valuable time and resources, and your credibility is compromised. The fundamental tools HR uses to “market” its services are memos, meetings, newsletters, and brochures. Since there’s a captive audience, so to speak, it’s easy to think these tools are satisfactory. Yet one of the most common complaints HR hears year in and year out is that communication is poor. The reason is that HR simply doesn’t leverage the power of proven marketing techniques in day-to-day communication and business practices.

Here are just a few examples of how human resources can apply the power of marketing principles to realize amazing results:

#1 — Referrals
It is important to remember that referrals truly represent the most inexpensive, predictable, and profitable single source of growing and expanding your business. Translated to the HR arena, an obvious way to get reluctant managers on your team is to leverage your base of satisfied supervisor/manager customers by developing a referral strategy. Next, establish an expectation agreement to be sure you and your “new customers” are on the same page. Then, deliver … what you promised … on time … on budget.

#2—Unique Selling Propositions
Believe it or not, you have competitors. Identifying your company’s unique selling propositions can give you a distinct advantage in recruitment over your competitors. Attracting and retaining talent is key to the success of your organization. Learning to identify and communicate your most powerful advantages over competitors is vital.

#3—Education and Follow-Up
Your external customers want to know only three things:
What is it?
What will it do for me?
How much does it cost (in time, effort, and money)?

HR professionals often overlook this fundamental marketing principle. The typical HR approach is to develop and distribute an information tool and conclude that the job is done until it has to be revised on account of business strategy and/or federal, state, or local law changes. If your employees aren’t satisfied, they won’t be cooperative. HR needs satisfied internal customers to successfully introduce and implement new initiatives. Providing employees with consistent, frequent, and useful information is essential to lower attrition and increase retention. In other words, you can increase your chances for staffing success by improving your marketing knowledge and skills.

#4—Strategic Alliances
You undoubtedly are aware that your company has probably established strategic alliances with other organizations to maximize competitive advantages in the marketplace. You can use the same marketing principles internally to expand and enhance your own visibility, credibility, and career opportunities. The technique is simple, yet often overlooked: Develop a personal strategy to host or promote others’ ideas and get others to host or promote yours. This approach is particularly effective in organizations with multiple business operating units. HR can help facilitate strategic alliances that cut across the organization, offer win-win solutions for everyone, and make all your HR customers happy.

The Bottom Line
Clearly, introducing a marketing approach could be a very valuable way to enhance your human resources and staff development programs. The potential bonus is that it could also be customized to increase the effectiveness of your HR business practices.


The changing Environment of HR management

The HR department’s responsibilities have gradually become broader and more strategic since the days when business people began including “personal departments” in their organization charts. In the earliest firms, “personnel” first took over hiring and firing from supervisors ran the payroll department, and administered benefit plans. As technology in areas like testing and interviewing began to emerge, the personnel department began to play an expanded role in employee selection, training, and promotion. The emergence of union legislation in the 1930s added ‘protecting the firm in its interaction with unions’ to the personnel department’s responsibilities. Then, as new equal employment created legislation created the potential for discrimination related lawsuits and penalties, personnel advice and oversight became even more indispensable.

Today, the globalization of the world economy and several other trends are again triggering changes in how companies organize, manage, and use their personnel /HR departments. In this article we plan to discuss these trends and changes next.

Globalization refers to the tendency of firms to extend their sales, ownership, and/or manufacturing to new markets abroad. Examples are all around us. Toyota produces the Camry in Kentucky, while Dell produces and sells PCs in China. Free trade areas – agreements that reduce tariffs and barriers among trading partners – further encourage international trade. NAFTA (the North American Free trade Area) and the EU (European Union) are examples. Doing business internationally is big business today. For example, the total value of US imports rose from $799 million in 1994 to $135 billion in 2003; exports rose from $702 million to $88 billion in the same period.

Globalization means more competition, and more competition means more pressure to be “world class” – to lower costs, to make employees more productive, and to do things better and less expensively. As one expert puts it, “the bottom line is that the growing integration of the world economy into a single, huge marketplace is increasing the intensity of competition in a wide range of manufacturing and service industries.. From helping firm like Dell cut global HR communication costs, to formulating selection, training, and compensation policies for expatriate employees, managing globalization in the world class firms is a major HR challenge.

Many of the improvements that make firms world class involve technology. For example, Carrier Corporation is the world’s largest manufacturer of the air conditioners, and saves an estimated $100 million per year by using the Internet. In Brazil, Carrier handles all its transactions with its channel partners (its 550 dealers, retailers, and installers) over the Web. The time required to get an order entered and confirmed by the channel partners has gone from six days to six minutes. Today, HR faces the challenge of quickly applying technology to the task of improving its own operations.

Competitive pressures and the search for greater efficiencies are also prompting more employers to export jobs abroad. For example, Merrill Lynch said it was planning on having some of its security analysis work done in India; IBM shifted several hundred systems analysis jobs abroad; and one hospital in Boston even began a program in which radiologists abroad read digital x-rays for the hospital’s Patients. Between 2005 and 2015 about three million US jobs, ranging from office support and computer jobs to management, sales, and even legal jobs, will likely move offshore. Technology facilitates this shift, as companies like Dell find it easier to set up call centers abroad, for instance.

Technology is also changing the nature of work. Even factory jobs are more technologically demanding. For example, “Knowledge intensive high tech manufacturing in such industries as aerospace, computers, telecommunications, home electronics, pharmaceuticals, and medical instruments” are replacing factory jobs in steel, rubber and textiles.


Life Insurance – some facts

The fact is, term plans are still not sold by insurance agents. That leaves it up to each one of us to seek protection. There are several commonly held misconceptions and myths about life insurance. Unfortunately, some get mistaken for facts. Let’s see which is which. Most people believe life insurance is good savings vehicle.

That is true only if an insured’s idea of good returns is 4% to 7%. Most people expect higher returns, then insurance may not be a right choice. A better option would be the Public Provident Fund (PPF), which gives 8% returns, tax free.

And that rate is fixed (unless, of course, the government decides to change it). If an investor’s priority is safety then he can consider alternatives like RBI bonds, National Savings Certificates (NSC), Kisan Vikas Patra, bank fixed deposits, all of which guarantee returns. Even post-tax (depending on the tax slab you fall into), they will still yield higher returns. Yet, for many people, insurance is the main saving. What makes this choice even more baffling is the myth of safety.
There is nothing safe or guaranteed about returns on an insurance plan—it depends on the performance of the funds invested. The bonus declared varies from year to year, and the post-tax return is less than the other options mentioned above.

That brings us to another reason why people buy life insurance—to save tax. For tax savings, insurance is a very good option but not the only one. There are several other ways to save tax. One could invest in PPF, NSC and ELSS (equity-linked savings scheme) mutual funds too. ELSS mutual funds have shown a mind boggling 44.88% compounded annual growth rate (CAGR) over five-year period.

The best performing fund, the Magnum Taxgain scheme, has fared even better: 63% CAGR over five years. PPF gives a clear 8% returns year on year, compounded.

The rebuttal would be that the insurance corpus goes into debt and that cannot be compared with mutual fund or equity returns. The insurance doyens would probably point to Unit-linked insurance plans for realistic comparison. To be sure, there’s some truth in the claim that unit linked insurance products ULIPs) can give good returns, like mutual funds. But insurance companies eat the premium in the first year and the following few years, leaving a reduced corpus for the actual investment.

The policy holder starts life with a disadvantage. ULIPs can make up in one situation. The mortality charges in a ULIP plan tend to be low. Hence, if you take a high insurance cover (like, say, Rs 50 lakh), the ULIP plan becomes comparable to a combination of mutual funds and term insurance, after about 12 years. This comparison is for some plans with low-charges.
That is, assuming that MFs and ULIPs are going to perform at the same return-levels. There is a concentration risk in ULIPs, as all the money goes to the fund of the insurance company, whereas a mutual fund corpus can be diversified across funds and schemes. Assuming that mutual funds and ULIPs will give the same returns. To date, mutual funds have been winning hands down. As of last week, six large-cap funds have given a five-year CAGR return of more than 50%, while the Sensex has returned 38.15%. The average five-year CAGR for the large-cap category is 44.6%.

ULIP returns are reported on the invested amount, after deducting all the charges, which are substantial. The actual returns are thus far less. The last reason for buying insurance is that it provides protection. At last, the real reason but unfortunately, agents don’t talk about it. No client wants to talk about it, either, since it involves their death (“eventuality”, in insurance lingo). When insurance agents seldom talk about protection and family security, but keep harping on tax breaks, tax free returns, and safety, it’s no wonder that they don’t help customers see the real need for life insurance.

The fact is that term plans are still not sold by insurance agents. The reasons are premiums and commissions are low. Secondly, many medical tests are required, which is a lot of work. And thirdly, policies may be declined, or may be issued at an extra premium. Extra work, lost commissions and that is why agents don’t talk about term insurance. That leaves it up to each potential insured seek protection, which is really the main purpose of insurance.


BPO Policies: 5 Tips To Tackle Attrition

Most Indian BPO voice operators facing a very high level of attrition (more than 30%) are those who have relatively smaller operations (less than 1000-seaters) and handle processes requiring low knowledge levels. This article focuses on how these operators can tackle high levels of attrition.
The typical Indian BPO voice operator can be characterised by the following:

  • Operating at low end of market and only skill required by agents is English speaking ability
  • Most agents have little discrimination and have to stick to prepared script
  • The typical agent is in the age group 18-26 and certainly below 30
  • The typical agent is a graduate, about 20% are high school pass and there is no one with post graduation or higher level education
  • Two thirds of the churn can be attributed to people moving from one call center to another implying that they are staying within the industry and not quitting it to join some other industry – that means stressful nature of the job alone is not a good explanatory factor and merely taking steps only to reduce stress will not help stem attrition.

Indian BPO companies which have been somewhat successful in tackling attrition have identified five major reasons behind the problem. These reasons and the typical response to tackle them are outlined below by way of providing what may prove to be helpful tips.

  • Reason 1: Demand is more than supply: there is no dearth of graduates and plus two pass but the supply of people with English speaking ability in this category is not adequate.
  • Strategy: Constantly identify talent, recruit and train either in-house if scale of operations permit that or through an outsourced training agency in case of smaller operations.
  • Reason 2: People are joining with a short-term view and as a stepping stone to something else.
  • Strategy: Create a culture and work environment that encourages people to think of a call center job as a long-term career option. Use counselling by HR and line management. This has to be backed up by demonstrated and perceived efforts by the management to move up the value chain so that employees can clearly see that the management is making efforts to create opportunities for upward mobility among employees.
  • Reason 3: A lot of young people are taking up call center jobs just to earn some money on the side – not as a serious and long-term career option.
  • Strategy: Create a culture and work environment that encourages people to think of a call center job as a long-term career option. Use counselling by HR and line management. Again this has to be backed up management efforts to move up the knowledge continuum in terms of the processes handled.
  • Reason 4: Long-term or intangible or contingency benefits such as PF or medical coverage do not have much attraction for call center employees – they want everything in cash – here and now.
  • Strategy: Redesign the compensation package for call center employees and try to pay as much as possible in hard cash. Work out if necessary a new pay structure highly skewed towards cash benefits. Typically the new pay structurer is along following lines: Basic (54%), HRA (26%), Medical Reimbursement (8%), Management Supplement (12%), PF Contribution (actuals), Tiffin Allowance (Rs 25-30 per day of attendance), Attendance Bonus (Rs 500-1000 per month), Loyalty Bonus (1 month’s salary after completion of each year in the company), Performance Incentives (linked to specific performance criteria), Referral Allowance (Rs 2000-3000 per candidate referred and recruited).
  • Reason 5: Call center employees have an average age profile of 20-24 years, so they are highly emotional, impulsive and immature when taking career decisions.
  • Strategy: Constant counselling.

Most managements somewhat successful in tackling attrition believe that although stressful nature of the job is not a reason for high attrition per se since much of the churn is within the industry, methods to relieve stress or to manage stress is important from the point of view of retention and productivity. Consequently, most such companies organise “fun” events such as picnics, dance parties, get-togethers, cultural evenings, quizzes and games and outdoor sports and games. Some even appoint professional agencies to organize regular stints of aerobic exercises and dancing sessions for employees as part of stress management.
Do not expect these tips to bring about a dramatic reduction in attrition rates – they can only help you to better manage attrition. Call centers which do not have to tackle attrition probably do not exist – not in India, not anywhere else in the world! So, just learn to live with it!


Creativity Techniques

Here is a sampling of techniques for stimulating creativity in individuals and groups.

Attribute listing: List the attributes of an object, such as a screwdriver. Then modify each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on.

Forced relationships: Lists several ideas and consider each one in relation to each other one. In designing new office furniture for example, consider a desk, bookcase, and filling cabinet as separate ideas. One can then imagine a desk with a built in bookcase or a desk with built in files or a, bookcase with built in files.

Morphological analysis: Start with a problem such as “getting something from one place to another via a powered vehicle.” Now think of dimensions, such as the type of platform (cart, chair, sling, bed), the medium (air, water, oil, rails), and the power source (compressed air, electric motor, magnetic fields). By listing every possible combination, one can generate many new solutions.

Reverse assumption analysis: List all the normal assumptions about an entity and then reverse them. Instead of assuming that a restaurant has menus, charges for food, and serves food, reverse each assumption. The new restaurant may decide to serve only what the chef bought that morning and cooked; may provide some food and charge only for how long the persons sits at the table; and may design an exotic atmosphere ad rent out the space to people who bring their own food and beverages.

New contexts: Take familiar processes, such as people helping services, and put them into a new context. Imagine helping dogs and cats instead of people with day care service, stress reduction, psychotherapy, animal funerals, and so on. As another example, instead of hotel guests going to the front desk to check in, greet them at curbside and use wireless device to register them.

Mind mapping: Start with a thought such as a car, write it on a piece of paper, then think of the next though that comes up (say Mercedes), link it to car, then think of the next association (Germany) and do this with all associations that comes up with each new word. Perhaps a whole new idea will materialize.

Here are some successful examples:

  • Gas station stores = gas stations + food
  • Cyber cafes = cafeteria + Internet
  • Cereal bars = cereal + snacking
  • Kinder Surprise= candy + toy
  • Sony Walkman = audio + portable.

Increasingly, new product ideas arise from lateral marketing that combines two products concepts or ideas to create a new offering.


Idea screening

A company should motivate its employees to submit new ideas to an idea manager whose name and phone number are widely circulated. Ideas should be written down and reviewed each week by an idea committee. The company then sorts the proposed ideas into three groups: promising ideas, marginal ideas, and rejects. Each promising idea is researched by a committee member, who reports back to the committee. The surviving ideas then move into a full scale screening process. In screening ideas, the company must avoid two types of errors.

A DROP is an error when a company dismisses otherwise a good idea. It is extremely easy to find fault with other people’s ideas. Some companies shudder when they look back at ideas they dismissed or breathe sighs of relief when they realize how close they came to dropping what eventually became a huge success. This was the case with the television show Friends.

The NBC situation comedy Friends enjoyed a 10 year run from 1994 to 2004 as a perennial ratings power house. But the show almost didn’t see the light of the day. According to an internal NBC research report, the pilot episode was described as “Not very entertaining, clever or original” and was given a failing grade, scoring 41 out of 100. Ironically, the pilot for an earlier hit sit-com, Seinfeld, also was rated as “weak,” although the pilot for the medical drama ER scored a healthy 91. Courtney cox’s Monica was the Friends character that scored best with test audiences, but characters portrayed by were deemed to have marginal appeal, and the Rachel, Ross, and Joey characters scored even lower. Adults 35 over in the sample found the characters as a whole, “smug, superficial, and self absorbed.”

A GO error occurs when the company permits a poor idea to move into development and commercialization. An absolute product failure loses money; its sales do not cover variable costs. A partial product failure loses money, but its sales cover all its variable costs and some of its fixed costs. A relative product failure yields a profit that is less than the company’s target rate of return.

The purpose of screening is to drop poor ideas as early as possible. The rationale is that product development costs rise substantially with each successive development stage. Most companies require new product ideas to be described on a standard form that can be reviewed by a new product committee. The description states the product idea, the target market, and the competition, and roughly estimates market size, product price, development time and costs, manufacturing costs, and rate of return.

High tech covers a wide range of industries- telecommunications, computers, consumer electronics, biotech, software. Radical innovations carry a high level of risk and typically hurt the company’s bottom line, at least in the short run. The good news is that success can create a greater sustainable competitive advantage than that which might come from more ordinary products.

One way to define the scope of high tech by its common characteristics:

High technological uncertainty: scientists working on high-tech products are never sure they will function as promised and be delivered on time.

High market uncertainty: marketers are not sure what needs the new technology will meet. Some of the ideas under debate were buyers’ use of interactive TV, DVD format uses after Toshiba’s introduction of HD DVD etc.,

High competitive volatility: Will the strongest competition come from within the industry or from outside? Will competitors rewrite the rules? What products will this new technology replace?

High investment cost, low variable cost:

Many high tech products require a large up front investments to develop the first unit, but the costs fall rapidly on additional units. The cost of developing a new piece of software is very high, but the cost of distributing it in a CD-ROM is relatively low.
Short life: Most high-tech products must be constantly upgraded. Competitors will often force the innovator to produce a second generation before recouping its investment on the first generation.

Finding funding sources for such risky projects is not easy: Companies must create a strong R&D marketing partnership to pull it off. Few reliable techniques exist for estimating demand for radical innovations.

Lastly, Focus groups will provide some perspectives on customer interest and need, but high-tech marketers will have to use a probe and learn approach based on observation of early users and collection of feedback on their experiences.


BPO Policies: Elements of An Anti-Attrition Package

Many voice and no-voice BPO operators, especially those handling processes that require employees to not only have domain knowledge and training but also good knowledge of the specific requirements of major clients, have to willy nilly depend on talent retention for survival. The cost of constantly recruiting new talent, training them and making them knowledgeable about the specific needs of major clients can be prove fatal to some of these units. What can they do to retain talent? This article discusses a few time-tested measures.

  • Group Mediclaim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months
  • Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for hospitalization expenses arising out of injuries sustained in an accident. It is applicable to all the employees and covers total/partial disablement/death due to accidents.
  • Subsidized Food and Transportation: The organizations provides transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized.
  • Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. The company also has a well equipped gym, personal trainers and showers at facilities.
  • Corporate Credit Card: The main purpose of the corporate credit card is to enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like hotel bills, air tickets etc.
  • Cellular Phone/Laptop: Cellular phone and / or Laptop is provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset.
  • Personal Health Care (Regular medical check-ups): The company provides facilities for extensive health check-up of employees.
  • Educational Benefits: The company has this policy to develop the personality and knowledge level of its employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books for pursuing MBA, and/or other management qualification at India’s top most Business Schools.
  • Performance based incentives: The company has a performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 20-25% of the salary.
  • Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable to all the employees of the organization. The salary typically consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan typically consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance, Loyalty bonus and referral allowance.
  • Regular get-togethers and other cultural programs: The company organizes cultural programmes as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the company also conducts various sports programmes such as cricket, football, etc and regularly plays matches with teams of other organizations and colleges.
  • Wedding Day Gift: Employees are given a gift voucher of Rs 2000-7000 based on their level in the organization.
  • Employee Referral Scheme: The company has an employee referral scheme to encourage employees to refer friends and relatives for employment in the organization.
  • Paid Days Off
  • Maternity Leave.

Some of the other strategic initiatives are: (a) holding of monthly meetings of all employees where all are encouraged to speak out their minds without fear or favor, (b) production of a monthly in-house magazine where all employees contribute, (c) access of all employees to a well-stocked in-house library, and last but not the least (d) the top management including the MD and HR chief make a conscious effort to personally interact with all employees, maintain a warm and human relationship with them and provide effective career guidance and counseling on a continuous basis.


Need to Know the Employment Law

A growing web of HR related laws effects virtually every HR decision the HR or line manager makes. Equal employment laws set guidelines regarding how the company writes its recruiting ads, what questions its job interviewers ask, and how it selects candidates for training programs or evaluates its managers. Occupational safety and health laws mandate strict guidelines regarding safety practices at work. Labor laws lay out among other things, what the supervisor can and cannot say and do when the union intervention calling to organize the company’s employees. As one employment lawyer sums up, “the use of such terms as probationary period, permanent employee, merit increases. White collar annual salary in a job offer and personality problems on the termination form now causes serious exposure to a lawsuit.

Consider some examples. You discharge a worker for excessive absenteeism, but her excessive absenteeism was caused by a work related injury. The employee sues the company, saying that she was actually fired her for filing a Workers’ Compensation claim.

The company may have to show in court that they did not fire the employee in retaliation for filing the claim, but for absenteeism. As another example, a company’s vice president of marketing dated one of his female marketing managers for several months. He subsequently tells her that if she doesn’t start dating him again, she won’t get a promotion. She refuses, but he promotes her anyway. However, she still sues for sexual harassment. The law says she has a legitimate case, even though she got her promotion. The vice president created a sexually hostile environment by suggesting she may have to return the favor if he promoted her.

Because legal issues are so central to all HR activities, the HR and other managers must specially know Employment Law (of the country or place) text sections that will address crucial legal aspects of relevant topics.

Headlines regarding ethical lapses at companies ranging from Enron and MCI to Arthur Andersen and Italy’s Parmalat underscore the need for ethical corporate behavior. Given that many of these firms, such as the accounting firm Arthur Andersen, were literally put out of business because of ethical lapses, it is clear that ethics needs to play a bigger role in managers’ decisions.

Congress passed the Sarbanes Oxley Act in 2003. To help ensure that managers take their ethics responsibilities seriously Sarbanes-Oxley is intended to curb erroneous corporate financial reporting. Among other things, Sarbanes-Oxley requires CEOs and CFOs to certify their companies’ periodic financial reports, prohibits personal loans to executive officers and directors, and requires CEOs and CFOs to reimburse their firms for bonuses and stock option profits if corporate financial statements subsequently require restating.

HR managers need to be heavily involved in implementing ethics laws like these. For example, every employer now needs a new code of ethics for CFOs probably promulgated by HR which will also have to modify various company policies to include reference to Sarbanes-Oxley. The new policies must make it clear that managers may not retaliate against employees for exercising their responsibilities under the new act.

The HR manager’s responsibilities for implementing an act are just the tip of the iceberg when it comes to how HR can influence ethical practices. One survey found that six of the ten most serious ethical issues – workplace safety, security of employee records, employee theft, affirmative action, comparable work, and employee privacy rights were HR related.

The HR manager’s tasks are growing more complex; human resources management is becoming more professionalized. Over 60,000 HR professionals have already passed one or both of the Society for Human Resource Management’s (SHRM) HR professional certification exams. SHRM’s Human Resource Certification Institute offers these exams. Two levels of exams test the professional’s knowledge of all aspects of HR, including management practices, staffing, HR development, compensation, labor relations, and health and safety. Those who successfully complete all requirements earn the SPHR (senior professional in HR), or PHR (professional in HR) certificate.


Why do we need succession planning?

Why do organizations need succession planning?

Some of the more important reasons are:

(a) survival,

(b) nature of business,

(c) cost savings,

(d) aligning HR policies and function with strategic long-term business goals and functions,

(e) better retention,

(f) better change/transition management,

(g) creating future leaders, and (h) improved corporate image.

Both family run organizations as well as professionally run companies need succession planning although they may do so for different sets of reasons. For family run businesses, survival or change management is usually the predominant factor requiring a well thought out succession plan. For professionally run corporates, the single most important reason for having a sound succession plan in place is usually cost savings on account of

(a) potential loss of business due to unfilled vacancies in key positions and

(b) costs of external hiring and training. All the other reasons may be applicable to both types of organizations.

Family run businesses – whether large, medium or small and irrespective of other characteristics of the business – always require a sound succession plan because it is a matter of survival for them. Instances of family run businesses failing to survive after the death of the founder are far too many. Even large corporate houses such as those created by the Birlas, Tatas, Ambanis or Bajaj have all been in the news and for the wrong reasons after the death/retirement of leading group patriarchs apparently because they did not have an effective and already in place succession plan.

On the other hand, there are examples of family run businesses which have put careful thought into the question. The rapidly growing Rs 2000 crore GMR Group is a case in point. The Group’s patriarch, 56 year old founder chairman, Mr G.M. Rao has already put in place a very detailed succession plan so that after his retirement and eventually death, the family business can continue to grow smoothly. He has, in fact, got all his family members to agree to adhere to a written down family Constitution to help guide the whole process of change management and achieving balance between family interests and business interests on a long term basis.

Heads of family run businesses and HR managers working in such organisations can find it profitable to run a quick check on how ready they are to manage change, especially when the present CEO or head of the family business retires or dies and exits the business. There is a handy practical tool for doing this developed by management Guru Dr Randel Carlock called a Family Business Succession Readyness Assessment. This simple test and accompanying procedures are handy practical tools for getting a very good insight into whether a succession plan is needed for a particular business, if so how soon is it needed and what areas to focus on while developing a succession plan for that particular business.

Apart from the separate issues related to succession in family run businesses, most other organisations too need a sound succession plan. Knowledge intensive businesses need a succession plan not only because they are almost entirely human resource or “talent” dependent and, therefore, must have institutional mechanisms for talent recruitment, training and mentoring but also because most such organizations are global operators and need to specifically develop leaders with global perspectives. While IT majors such as Wipro, Infosys and many others have specific Talent Management programmes, a survey conducted in March this year by DNL Global and Human Capital Institute among talent management executives across organizations in Singapore, India, Sri Lanka and South Korea found that while most organizations had good project management capability they had poor ranks when it came to having people with global skills and perspectives, a finding that confirms an earlier survey that in the coming days organizations are going to face an acute shortage of people with global skills and perspectives. In such organisations, succession planning is needed to keep strategic business goals and functions properly aligned with HR goals and functions since the business itself is entirely talent or HR driven.

Global operators and service providers, remote management agencies, continuous production/service organizations such as chemical plants or newspaper production houses, national security and essential service organizations, and similar agencies operating 24/7 require an institutionalized succession plan since any sudden vacancy in a key functional area can bring about a major disruption in the entire business process chain. Hence, the entire chain of command is so constructed that most vacancies can be filled in-house. Consequently success for such organizations depend a great deal on how well they recruit talent, train, mentor and keep ready in-house talent who can succeed on to the next higher rank in the chain of command in case there arises such a vacancy. For them, success comes form successful succession planning.

While there is a seven step model for developing a succession plan, some of the best practices followed by global leaders in various countries can also be consulted by those interested in developing a succession plan for their own organizations. A word of caution, however, before we end this article. Most organizations also need a lot of fresh blood at regular intervals to not only bring in new perspectives and contemporary cultures and techniques but sometimes also to put a check on unhealthy in-house power politics. So, if and when necessary, don’t let an overemphasis on succession plans and in-house talent come in the way of external hiring even in key positions and despite there being an incumbent successor already in place!


Research on leadership

The primary emphasis of early research on leadership was psychological in nature and focused on the traits or personality characteristics typically found among successful leaders. Such researchers began a long task of “laundry listing” all conceivable personal characteristics of so called “great” leaders. Such complications included the following kinds of characteristics:

  • Age extroversion
  • Maturity verbal skills
  • Intelligence prestige
  • Physical bearing attractiveness
  • Height charisma
  • Education popularity
  • Decisiveness aggressiveness

The problem with three early efforts was that they left too many questions about leadership unanswered. For example, is there any optimal combination of trait that is most critical in determining one’s success as a leader? In what ways do such characteristics that one can learn, or must one be born with them? Although such qualities might have fit popular stereotypes characterizing popular leaders or great personalities, their citation did little to expand our knowledge about the process of leadership.

It was not until a sociological view of the problem was combined with the psychological approach that headway was made in understanding leadership. Characteristics of these efforts were work carried out by researchers at Ohio State University in the 1950s. They recognized that leadership involves an interpersonal relationship between in this relationship is the behavior of the leader toward the subordinates.

This realization led them to focus their research efforts on the set of behaviors or actions that constituted leader behavior. Their basic approach was to isolate and measure the dimensions underlying leader behavior that could be used to define leadership; it was an empirical approach. A questionnaire was designed, with over 100 specific kinds of acts or behaviors a manager might engage in while supervising the work of others. The leader’s subordinates were asked to use the questionnaire to describe the leader’s behavior. The following is an illustration of the kinds of questions contained in the instrument that has come to be known as the leader behavior description questionnaire.

The subordinate indicates the degree to which each of the following statements describes the actions of the supervisors:

  • Refuses to give in when people disagree with him
  • Is easy to understand
  • Refuses to explain his action
  • Encourages overtime work
  • Tries out his new ideas
  • Assigns people under him to specific tasks

Subsequent analysis of several thousand subordinates’ responses to such questions consistently yielded two dimensions or factors that underlie subordinates’ descriptions of their leaders: consideration and initiating structure. In other words, the actions a leader takes regarding subordinates tend to cluster in one of these two major kinds of leader activities. Consideration is the extent to which the leader’s behavior toward subordinates is characterized by mutual trust, mutual respect, support for subordinate’s ideas, a climate of rapport, and two-way communication. A low score on consideration reflects an impersonal way of dealing with subordinates.

As so often happens with attractive models, the work of the Ohio State researchers was prematurely applied by others as a set of normative prescriptions for leaders to follow, rather than being used as a model to be tested further in order to enhance understanding of leadership. Many entrepreneurs traveled the country assessing supervisors on their measures of initiating structure and consideration. For some reason, they presumed that the ideal leader is one who is high on both leadership dimensions.

For a fee, they would then provide two kinds of services: (1) diagnose a particular leader’s style, using this two dimensional frame work; and (2) propose changes in leadership style that should lead to improved leader effectiveness.

In all this entrepreneurial flurry two major questions went unanswered: (1) How do we know when a leader is effective? (2)What factors determine whether or not a given style of leadership behavior will be effective? Reliable answers to the first question remain the subject of continuing research. The problem is that the goals of a leader are many, and each constitutes valid dimensions of leader effectiveness. At the very least, we can say that the following are elements of leader effectiveness (a) individual effectiveness of subordinates in accomplishing their tasks, (b) the morale or satisfaction of subordinates, (c) the productivity or efficiency of groups of subordinates in accomplishing their tasks,(d) the quality of products or services generated by subordinates groups.

Fortunately, research on what constitutes the most effective leadership style became the topic of serious research efforts during leadership style became the topic of serious research efforts during the 1970’s. Two such efforts deserve our particular attention: (1) the work of Fred Fiedler and (2) the path goal theory of leadership.

Building upon the results of the Ohio State studies, Fiedler reasoned, that there was probably no single best leader style to fit all work situations. His research has identified three major situational factors that determine the appropriateness of a given style of leadership.


Line Managers’ HRM Responsibilities

The direct handling of people has always been an integral part of every line manager’s responsibility, from president down to the lowest level supervisor. For example, one major company outlines its line supervisors’ responsibilities for effective human management under the following general headings:

1.Placing the right person on the right job.
2.Starting new employees in the organization (orientation)
3.Training employees for jobs that are new to them.
4.Improving the job performance of each person.
5.Gaining creative cooperative and developing smooth working relationships.
6. Interpreting the company’s policies and procedures
7.Controlling labor costs.
8.Developing the abilities of each person
9.Creating and maintaining department morale.
10.Protecting employee’s health and physical condition

In small organizations, line managers may carry out all these personnel duties unassisted. But as the organization grows, they need the assistance, specialized knowledge, and advice of a separate human resource staff. The human resources department provides this specialized assistance. In doing so, the HR manager carries out with three distinct functions:

A line function: The HR manager directs the activities of the people in his or her own department and in related service areas (Like the plant cafeteria). In other words, he or she exerts line authority within the HR department. While they generally can’t wield line authority outside HR, they are likely to exert implied authority. This is because line managers know HR has top management’s ear in area like testing and affirmative action.

A coordinative function: HR managers also coordinate personnel activities, a duty often referred to as functional control. Here the HR manager and department act as the “right arm of the top executive” to ensure that line managers are implementing the firm’s HR objectives, policies, and procedures (for example, adhering to its sexual harassment policies)

Staff (assist and advise) functions: Assisting and advising line managers is the heart of the HR manger’s job. The HR manager assists in strategy design and execution by helping the CEO to better understand the personnel aspects of the company’s strategic options. HR assists in hiring, training, evaluating, rewarding, counseling, promoting, and firing employee. It administers the various benefit programs
(Health and accident insurance, retirement, vacation, and so on). It helps line managers comply with equal employment and occupational safety laws, and plays an important role in handling grievances and labor relations. It carries out an innovator role by providing “up-to-date information on current trends and new methods of solving problems”—such as today’s interest in instituting systems for measuring human resources management’s strategic impact. It plays an employee advocacy role: It helps define how management should be treating employees, makes sure employees can contest unfair practices, and represents the employees’ interest within the framework of its main obligation to senior management.

The size of the HR group and the number of HR specialists reflects the size of the company. For a very large company an organization chart can be drawn for the HR department alone. At other extreme, the HR organizational chart for a small manufacturer may contain a total of only five or six staff.

Examples of HR Job duties includes,

Recruiters: Search for qualified job applicants.

Equal employment opportunity (EEO) coordinators: Investigate and resolve EEO grievances, examine organizational practices for potential violations, and compile and submit EEO reports.

Job analysts: Collect and examine information about jobs to prepare job descriptions.

Compensation managers: Develop compensation plans and handle the employee benefits program.

Training specialists: Plan, organize, and direct training activities.

Labor relations specialists: Advise management in all aspects of union management relation.


What is reverse mortgage?

and Reverse mortgage is one of several financial instruments that convert home equity into cash. There is already a fairly developed market for such products in the United States and other developed countries, but, so far, it has been introduced in India by only two entities – the country’s second largest home finance company, Dewan Housing Finance Corporation LimitedPunjab National Bank. A host of other banks are also planning to introduce similar products. In the US, these products are a big rage among the elderly and those nearing retirement. But then, what is reverse mortgage? This article provides an overview.
Home equity conversion products are useful to all those who are “house-rich but cash-poor” and they need not necessarily be only the elderly. There are many types of such products and where the market has attained some maturity, as in the United States, standard reverse mortgage products often incorporate one or more of these variations as options. Some of these options are:

  • Reverse Mortgage: discussed in detail in later paragraphs
  • Home Reversion / Sale and Lease Back: The homeowner sells his house outright now, but retains the right to live in it for life for a nominal/reduced rent. The sale proceeds may be paid in a lump sum or as an annuity. This could very well be an intra-family transaction.
  • Interest-only Mortgage: This could be useful to those who are in need of an immediate lump sum, but still have only limited loan-servicing capacity. During the tenure of the loan, the borrower is required to make only interest payments. The principal is due only on maturity or death or a permanent move or sale.
  • Mortgage Annuity/ Home Income: This is suitable for the very old for whom life annuity rates are more attractive. The loan amount is used to buy a life annuity. The mortgage interest is deducted from the annuity and the balance is paid as periodic income. The principal is repaid on death or sale of the house. The attraction is that the annuity will continue even if the borrower sells the house or moves out permanently
  • Shared Appreciation Mortgage: This provides loans at a below market interest rate. The loan is repaid at death or moving or sale. In return, the lender gets a pre-agreed share in any appreciation in the property value over the accumulated value of the loan.

As must be obvious from the above, the basic idea of home equity conversion products is to enable those having a house property but not enough cash to get cash against the property without having to bear the burden of repayment of the cash received. The idea is that after the death of the home owner, the house property is owned by the lending institution which sells it off to recover the loan amount and the interest where the interest rate is similar to housing loan interest rates.
Reverse mortgage, specifically, works like this: in a conventional mortgage loan, the borrower starts with a large loan and low equity in his/her house and as he/she repays the loan through monthly instalments, the borrower reduces his/her outstanding loan amount and increases his/her house equity.
In reverse mortgage, on the other hand, the borrower starts with a very high equity in his house. The lender extends a non-recourse loan secured by the house property. The borrower may choose to receive the proceeds through:

  • A lump sum at the beginning
  • Monthly payments till a fixed term or a life-long annuity
  • Establishing a credit-line with or without accrual of interest on credit balance
  • A combination of the above

The borrower need not move out of the house or make any payment to the lender, as long he is alive and continues to live in the house or does not sell it. Therefore the loan and interest accumulates till maturity. There is no credit or income requirement to be satisfied. Even if the accumulated loan and interest goes above the realizable value of the house at disposal, the repayment is capped at that value only. Hence RM is a case of ‘raising debt, falling equity’.

Usually, the amount of loan is determined by:

  • Age of the borrower and any co-applicant (life expectancy/ mortality risks)
  • The current value of the property and expected property appreciation rate (real estate market risk)
  • The current interest rate and interest rate volatility (interest rate risk)
  • Closure and servicing costs
  • Specific features chosen: fixed or floating interest; shared appreciation; interest earning credit-line; and mortgage insurance, if any

There is conceptually nothing in the reverse mortgage idea to restrict it only to the elderly. But the product is particularly suited for old people in fact, the older a person is, the more attractive reverse mortgage (RM) is. The reasons are:

  • RM requires near total equity ownership of the house – more likely for ages above 50 (unless the property is inherited)
  • It is attractive only to people with insufficient current income and little financial savings – by implication, retired persons
  • For a given property value, the lower the life expectancy (older the person is), higher is the additional income through an RM.
  • Public policy support including tax incentives is more likely if the borrowers are the elderly.
  • The elderly are particularly likely to attach significant psychological/ emotional/ sentimental value to ‘ageing in place’ without moving out. In fact, the longer they have stayed in their current home, the more valuable this is likely to be, considering the benefits of a familiar neighbourhood.

With more and more instances of elderly people being thrown out of their homes by their children being reported in the newspapers, perhaps the time has come for introducing RM in India in a big way!


HR & Technology

Technological applications play an increasingly important role in HR. Technology improves HR functioning in four main ways: self-service, call centers, productivity improvement, and outsourcing. For example, using Dell’s HR intranet, the firm’s employees can self-service many of their HR transactions, such as updating personal information and changing benefits allocations. And, Dell’s HR intranet and “data warehouse” provide its managers with desktop access to HR related information, such as “How does turnover in my department compare to that of the other departments at Dell? Technology also enabled Dell to create a centralized call center. HR specialists answer questions from all Dell’s far-flung employees, reducing the need for multiple HR centers at each Dell location. The “improving productivity through HRIS” box presents another example.

More firms are installing internet and computer based systems for improving HR productivity. For example, International paper corp. finished installing its “Viking” HR information system a few years ago. In terms of efficiency, the goal was to achieve an HR staff to employee ratio of one to 150, and cost per employee of $800 for delivering HR services. The Viking project included four components. There was a data warehouse which stockpiled a vast array of HR related information on employees. It included new technology to upgrade the company’s existing centralized HR service center. The third part consisted of new software for managing HR activities such as payroll administration. The fourth component included as intranet based employee portal that employees use to self service certain HR related needs.

Technology also makes it easier to outsource HR activities to specialist service providers, by enabling service providers to have real time, internet based access to the employer’s HR database. Outsourcing is increasingly popular. About 84% of the HR professionals responding to one survey said their firms outsource the administration of pension plans, 84% outsource employee assistance/counseling programs, 74% outsource retirement planning, and 73% pension administration, 72% temporary staffing, and about 68% of employers outsource background checks to specialist firms.

The HR portals

HR portals, usually hosted on a company’s intranet, provide employees with a single access point or “gateway” to all HR information.

They let employees, managers, and executives interactively access and modify HR information. They thereby streamline the HR process and enable HR managers to focus more on strategic issues.
Sometimes the firm’s gateway HR portal supports just as few HR specialists. Anheuser Busch used this approach when the time came for annual benefits package enrollments. HR knew there would be a large number of employee inquiries. It therefore replaced its manual inquiry process with Authoria HR, an HR portal from Authoria, Inc.

Doing so let HR digitize and aggregate through a single source all the former paper benefits counselors had been using. That made it much easier for specialists in Anheuser-Busch’s HR call center to answer employees question as they came in the aim is to eventually allow employees to research and answer their own HR questions through a browser based interface.

Wells Fargo used an HR portal when it merged with Norwest Corporation. The merger meant moving 90,000 employees to a new benefit plan, which of course triggered numerous employee inquiries. As at Anheuser-Busch, Wells Fargo armed its HR call center counselors with a specialized portal; this helped them research and answer employee’s inquiries.

NCR also installed a HR portal. It is called HR express, and is organized into three information areas; benefits and compensation, training and career growth, and NCR values and HR policies. NCR also needed a forms center to the sites title bar. HR expresses gives information they need to manage HR tasks, such as those relating to company benefits and updating their personal information. The forms center gives them quick access to any HR forms they need.

Putting HR services online doesn’t just cut costs by letting employees research their own inquiries or by letting HR call center counselors do their jobs more easily. It also enables HR to redeploy its assets and focus on more strategic issues. Putting HR services online is not just for cost savings but to transform the work HR was doing from reactionary dealing being on the cutting edge, making people better employees.


Flow of communications in an organization

Three types of communications in an organization can be classified by their flow: vertical, horizontal and informal. In directing activities of subordinates, the manager issues orders to others further down in the hierarchy. Organization charts show the flow of authority and the channels through which this downward, vertical communication flows. Authority lines are important channels of communication but they comprise only one type of channel. Control reports and memoranda flow back up through the levels of the hierarchy as subordinates are made accountable for their actions. This upward vertical flow of communications is the heart of a control system.

Horizontal channels provide means by which managers on the same level of an organization coordinate their activities without referring all matters to their superior. Such communication is sarcastically named as a “gang plank”. Because many matters can be handled at the same level of an organization by direct mutual interaction instead of a formal communication thereby speeding action while at the same time relieving superiors of unnecessary problems. Multiple copies of memoranda that flow to all positions needing the information increase coordination of effort.

Formal communications are planned to meet the specific needs of the organization; however, many communication are informal. The grapevine may be helpful for the attainment of organizational goals, but it also serves the social needs of the individuals in the organization. A manager can utilize the grapevine as a positive aid, but may also face problems of rumors, gossip, and other negative outlets of expressions by people in the organization. The grapevine cannot be destroyed; therefore, it should receive conscious attention. Informal channels may be superior for some organizational purposes. A “word” can be dropped at the proper time and may remedy a disciplinary problem without resort to a formal reprimand. Because the speed at which information flows through a grapevine is often astounding, management must seriously consider this third type of communication.

Communication may be viewed as a pattern of interconnecting lines, referred to as networks. Researchers have experimented with various structural patterns of communications in small groups.

Overloading of communication channels can cause the network to be jammed with irrelevant messages. Newer methods of processing and transmitting data have increased the number of communications which flow to executives. Managers can literally be buried in memoranda and reports with no hope of digging themselves out. The answer to this problem lies in monitoring the channels to clear messages in order of priority and importance. More messages do not necessarily mean more information. The communication system should provide for editing devices, or persons, to regulate the quality and quantity of communication with regard to sufficiency of information for decision centers.

Timing of communications can result in problems for management. Some types of messages need to be released so that everyone will receive them simultaneously. Other types of messages being transmitted should be timed sequentially so that receivers will not be confused by issues that are not important to them at the moment.

Routing of communications should provide sufficient information for a decision to be made by the proper persons. The route may determine the content of the message and the language in which it is stated. If official information is first received by the grapevine, or from persons outside the organization, the employee may be placed in an insecure position. If a supervisor receives information from subordinates, it signifies a short circuit in the line of communication from top management, and thus threatens the supervisor’s status and authority. The answers to the problem are in the proper planning of a communication system and in the recognition of its human elements.

Determination of the flow of communication and recognition of the many barriers to good communication is basic to the communicating function. Communication networks, communication channels, and barriers to communication must continually receive attention.


Importance of Public Relations in business

Peter Drucker, the well-known management guru, had once remarked that one of the top most priorities of a business leader is to network, socialize and maintain great PR (Public relations). It’s all about great relationships that you maintain with your clients, suppliers, shareholders, employees and every other person you come in contact with.

Our ancient sages and who can be considered as earlier management thinkers during kings’ regimes used to propagate the same idea of public relations advising the kings and other important people to establish contacts with forest chieftains, frontier-chiefs and chief officials in the cities and the countryside to build a network for getting information and always be prepared for war or peace and rule according to the likes of people for the welfare of the kingdom.

But how to build a network and maintain contact is an art every leader has to develop in the modern kingdoms of corporate companies. Here it is not for war or peace or people but for business, its scope and market competition. In this article we are giving a few suggestions to maintain PR with all concerned.

Attend meetings: For a CEO, not a single day should pass without at least meeting one new person. He can attend business conferences, training programs or even one-to-one sittings with important people. In addition to making contacts, he would even start gathering knowledge and experiences of others.

Keep in Touch: Collecting contact details may not be enough. Most of us come from various conferences with a pile of visiting cards without doing anything with it. Hence, a follow-up with each important person after the initial meeting is a must. Think of the business possibilities with each person you meet and work out proposal along those lines.

The two-way Approach: Where most businessmen go wrong is just thinking of the benefit that only you will get from the new found person. Rather, think in which way you will be able to help them. At times, you can give a tip or suggestion that will scale up their business. Help them and, probably, they will help you when you need them.

The long-term approach: In human relationships, ‘time’ is important. And in business, ‘timing’ is important. But to get to the right timing, you have to spend enough time. Never spoil any potential business relationship just because it may not appear to be immediately beneficial. One has to always think long-term. Take it slow but sure. You never know, a person who seems small today may become a giant tomorrow, while a giant of today may be on the streets later.

Always remember that while leadership is an art, business leadership is a far superior art. It requires the understanding of people, understanding their minds and also understanding the various factors that fulfill each person. Thus, in business, PR cannot be done by just outsourcing it to an agency. It’s personal involvement that requires continuous time and effort.


Human Resource Management

Different terms are used to denote human resource management. They are : labor management, labor administration, labor-management relations, employee-employer relations, industrial relations, personnel administration, personnel management, human capital management, human asset management, human resources management and the like. Though these terms can be differentiated widely, the basic nature of distinction lies in the scope or coverage and evolutionary stage. In simple sense, human resources management means employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirements.

Personnel management as defined by the Institute of Personnel Management in UK and subsequently adopted by Indian Institute of Personnel Management is as follows :

“Personnel management is a responsibility of all those who manage people as well as being a description of the work of those who are employed as specialists. It is that part of management which is concerned with the people at work and with their relationships within an enterprise. It applies not only to industry and commerce but to all fields of employment?"

This definition can be summarized as follows :

  • Personnel management is a responsibility of all line managers in an organization, viz., general manager, production manager, marketing manager, finance manager, etc., and it is a staff function, i.e., it is the function of personnel manager who is appointed as a specialist. Thus, all managers in the organization are vitally concerned with personnel management as they must achieve organizational goals through other people’s efforts.
  • Personnel management is a part of management. This part is concerned with the people and their relationship within an organization.
  • This applies to all organizations in the universe, i.e., economic, social , political, religious etc.

Michael J. Jucius defined Personnel Management as “ the field of management which has to do with planning, organizing, directing and controlling the functions of procuring, developing, maintaining and utilizing a labor force, such that the-

(i)Objectives for which the company is established economically and effectively.
(ii)Objectives of all levels of personnel are served to the highest possible degree.
(iii)Objectives of society are duly considered and served.

Human Resources Management(HRM) can be defined as managing (planning, organizing , directing and controlling) the functions of employing, developing of human relations with a view to contribute proportionately (due to them ) to the organizational, individual and social goals.


Difference between HR Management & Industrial Relations

Human Resource Management:
  • There are only two important parties namely employee and employer.
  • Formulation of objectives, policies, procedure and programs of human resources and implement them.
  • Individual employee contacts with the immediate superior.
  • Grievance and disciplinary procedures are resorted to, to solve the employee-employer conflicts.
  • Reformulates the objectives, policies etc ,based on industrial conflicts which are the outcome of unsound industrial relations.
  • Human Resource Management (HRM) is the overall management of all resources including workers, staff, executives, Top management and even suppliers and customers.

Industrial Relations:

Industrial Relations (IR) in practice are the relations between actual work force and management of the organization.

Given below are some of the salient features of IR:
  • The implementation of HRM policies results in IR.
  • There are four important parties namely employees, employer, trade unions and government
  • The sound IR contributes to the organizational goals. The unsound IR result in industrial conflicts demanding for change and reformulation of HRM objectives and goals
  • Employees contact even the top management as a group.
  • Collective bargaining and forms of industrial conflicts are resorted to solve the problems
  • Industrial relations are governed by the system of rules and regulations concerning work, workplace and working community.
  • The main purpose is to maintain harmonious relations between employees and employer by solving their problems through grievance procedure and collective bargaining.
  • Trade Unions is another important institution in the Industrial relations. Trade unions influence and shape the industrial relations through collective bargaining.
  • Industrial relations are the relations mainly between employees and employers.
  • These relations emphasis on accommodating other parties interest, values and needs. Parties develop skills of adjusting to and cooperating with each other.



MAINTAINING Good Human Relations is a personal quality in a person for a social purpose-better understanding and better relationship for cohesive functioning with people. Possessing this human relations quality is the mark of an adult mind.

Human Relations skill is important because of the fact that no man is an island. Even if man considers himself an island and tries to isolate himself, the vast sea of humanity will encircle him. Very often the sea makes its inroads leaving the island no choice but to get submerged in human relationships. Human Relations skill can bring a sea change in every man.

A Human Relations course is an attitude development programme. As a first step toward this development let us believe that a bridge of friendship is better than wall of partisanship. We need to handle people with care and get along with them for personal and common benefits.
Human Relations is:
1. A study of Human Nature
2. Influencing Human Behaviour
3. Ability to get along with people.
4. Selling oneself.
5. Motivating others.
6. Interacting with people, and
7. Perpetuating humanity.

Human Relations can be maintained at several levels. They can be brought under general categories.
1. Human Relations in family life.
2. Human Relations in Social Life.
3. Human Relations in Student Life

To be successful at all levels one should believe:
1. A stranger is a friend not yet met.
2. One can paste everything except broken hearts.
3. Patience is a cousin of humility.
4. No need to confront others as in a tug of war. One can give a long rope to everybody and get them round or let them change gradually.
5. The little touch, a pat or a stroke, brings a great benefit.
6. Admitting one’s mistake is the mark of a great man.
7. One should not generalize without understanding full well.
8. Prejudice is bad.
9. Intolerance is worse.
10. Cheerful disposition in best.

The Basics of Human Relations

1. Remember the names of others and call them by their name affectionately. If they are elders or superiors call them respectfully by the appropriate title.
2. Be a simple person.
3. Don’t get angry too often.
4. Keep smiling.
5. Don’t be too selfish.
6. Behave in a moderate manner.
7. Be concerned with others honestly.
8. Get rid of your own crudeness and misunderstanding.
9. Become a listener.
10. Have a feeling that everyone is good in his/her own way.
11. Congratulate a person on his success and encourage hit when he is disappointed.
12. Help others to succeed.

“The Result of the HUMAN RELATIONS Approach is the minimization of conflict and misunderstanding, the encouragement of the will to collaborate and the promotion solidarity in the social system.”

# Maintaining sound human relations:
It definitely contributes to the improvement of human relations when all other functions of human resources management are performed effectively. But the significance is that the human relations carry demands performing this as a separate function. The following are the measures to promote and maintain human relations:

1.By promoting honesty among the individuals.

2.Frankness clears the misunderstanding and restores the good relation. One way by which this can be promoted is to be frank one self and appreciate the frankness of others.

3.Effective communication also, in a way improves the relations among people. Disputes can be effectively handled only when the manager is effective in his communication.

4.By developing sensitivity to others’ feelings and an ability to appreciate others’ ideas.

5.By becoming a good leader the manger can bring cohesion in the group he leads and thus can contribute to the improvement of human relations.

6.By speaking about your own mistakes before criticizing the others.

7.By requesting the others instead of issuing direct orders.

8.By praising the subordinates publicly even for the slight improvement. But do not o this with over ambition.

9.By making the other people happy about doing the think you suggest.

10.By winning the people to your way of thinking by means of showing respect for the other man’s opinions and ideas.

11.Making one’s home and personal life happier will help in a long way in maintaining harmonious human relations with others as he would be in the life position of “I am O.K.? to some extent.

12.By treating the subordinates with dignity and respect.

13.By understanding all the human needs and giving due preferences in satisfying them.

14.By helping the people in performing their duties.

Understanding People:

In order to understand the people one must know the fundamentals of human behavior. This knowledge helps the manager to know people’s behavior, their needs, ambitions, motivation of people to act.

Concept of Personality

The behavior of any person partly depends on what he feels and thinks about himself. The image that he has got may not be true. But it is important to use because his actions are, most of the time, the result of his own self-image. We should be less judgmental and more perceptive of his actions to understand him better.

The next thing that is important to us to understand him better is how he views the world and others. Though his behavior is not really logical, it appears logical and consistent to him for the above mentioned two reasons that is the view about self and about the world.

Personality is the sum total of the physical, mental, emotional and social characteristics of a person. All these attributes together make the fundamental structure of personality of a particular individual. For this reason one finds it difficult to change any attribute which is only one component of his whole personality. He has to change the total structure of the personality if he has to change one component of it. All this doesn’t mean that personality of the individual cannot be changed at all it only means that changing personality is a complex process that involves of his perceptions of himself and the world.

Individual Differences

Difference among people exist not only in their physical appearance, voice, language and habits but also in their motives, attitudes, abilities and thoughts, but these may not be readily apparent.

People react quite differently to the same stimulus as there is considerable difference in the abilities, attitudes and temperament of people. A challenging problem may frustrate an incompetent person but may stimulate a competent one. The manager must be very perceptive to understand this and to adjust his approach to suit to the individual needs of persons.


Monday, September 24, 2007

10 Top Indian CEOs

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Lakshmi N Mittal
Steel tycoon Lakshmi Niwas Mittal is the richest Indian in the world, with an estimated wealth of $25 billion. He resides in London, has his company registered in the Netherlands, but still holds an Indian passport. Although Mittal Steel was already the world's biggest steel company, his king-sized ambitions were evident when he took over steel giant Arcelor to create a new steel behemoth -- Arcelor-Mittal. L N Mittal left India in the mid-1970s to start his career. He was sent to Indonesia by his father to shut down the family's ailing steel plant and sell the land. Instead, young Mittal saw an opportunity and turned the plant around. To prove that this was no fluke, Mittal acquired a 1.3 million tonne, Iscot Steel plant in Trinidad & Tobago, which was losing $100,000 a day. One year of Mittal-style management and it was making profits, the LN Mittal legend was born. That move helped him get into America. The Mexican government seeing the success that Mittal made of Iscot, asked him to take over their ailing steel plants in 1992. But it was not all that smooth. In 1994 Mittal had differences with his brothers and father, and went on to form his own company. The following year Mittal entered the European market, acquiring the 5 million tonne Kazakh steel plant, Karmet. Meanwhile, Mittal had listed Ispat International on the New York and Amsterdam Stock Exchanges in 1997. Eight years later Mittal Steel became the world's largest steel maker when he took over the US's largest steel producer -- the International Steel Group. He then consolidated all his steel holdings into Mittal Steel.

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Ratan Tata
Ratan Naval Tata, a bachelor, is the chairman of the Tata Group, India's most respected conglomerate. He was born into a Parsi family in Mumbai (then called Bombay) to Soonoo and Naval Hormusji Tata on December 28, 1937. He did a short stint with Jones and Emmons in Los Angeles, California, before returning to India in 1962. He had earlier turned down an IBM job offer. He joined the family business in 1962 and worked with many of his group's companies. He took over as group chairman from the legendary J R D Tata in 1991. Since then, he has been instrumental in boosting the fortunes of the Tata Group, which has amongst the largest market capitalisations in the Indian stock markets. Tata Motors developed the Tata Indica in 1998. This was the first 'entirely Indian' passenger car. Ratan Tata's dream now is to manufacture a car costing just Rs 100,000. Ratan Tata holds a degree in Architecture and Structural Engineering from Cornell University. He has also done the Advanced Management Program from Harvard Business School in 1974-1975. Ratan Tata was honoured with one of India's highest civilian awards, the Padma Bhushan, on January 26, 2000.

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Mukesh D Ambani
Mukesh Ambani, the chairman and managing director of India's largest private sector enterprise -- Reliance Industries Limited -- was born on April 19, 1957. His father, the legendary Dhirubhai Ambani, was then a small businessman who later on rose to become one of the legends of Indian industry. Mukesh joined Reliance Industries in 1981 and was the brain behind Reliance's backward integration from textiles into polyester fibres and into petrochemicals. During the process of backward integration, Mukesh Ambani led the creation of 51 new, world-class manufacturing facilities involving diverse technologies that raised Reliance's manufacturing capacities manifold. The world's largest grassroots petroleum refinery at Jamnagar is his brainchild. He was also the in-charge of Dhirubhai's dream project Reliance Infocomm. But after the split in the Reliance Empire, Reliance Infocomm went to his brother Anil. Mukesh Ambani is now planning to enter retail sector in a big way and will launch a chain of 'Reliance Fresh' retail stores. He also entered into an agreement with the Haryana government to establish a Special Economic Zone with an investment running into billions of rupees. He has a bachelor's degree in Chemical Engineering from University of Bombay and a master's in Business Administration from Stanford University, USA.

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Nandan Nilekani
Nandan Nilekani is the CEO and managing director of Infosys Technologies. He, along with N R Narayana Murthy and five others, co-founded India's IT jewel, Infosys. Born in Bangalore to Durga and Mohan Rao Nilekani, he graduated from the Indian Institute of Technology, Bombay. After graduation, he met Narayana Murthy, who then led Patni Computer Systems's software group, seeking a job. Murthy hired the young engineer. That was the beginning of a relationship that was to create Indian corporate history. Three years later, seven enthusiasts (including Nandan) decided to start their own outfit (Infosys Technologies Ltd) with Murthy in the lead. Their decision rewrote the domestic software industry of India. He became the chief executive officer of Infosys in March 2002. He now leads the company with Narayana Murthy having retired in August 2006. He is married to Rohini, an English-language novelist, and they have two children: daughter Janhavi and son Nihar. He speaks Konkani at home. In 2006, he was awarded the Padma Bhushan by the Government of India. He is regarded by Time magazine as one of the 100 most influential people in the world in its issue of May 2006.

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Azim H Premji
Azim Hashim Premji, the chairman of Wipro Technologies, is one of the richest Indians. He is an icon among Indian businessmen, especially in the software industry. Born on July 24, 1945, Premji was studying Electrical Engineering at Stanford University, USA when due to the sudden demise of his father, he was called upon to handle the family business at the age of 21. Wipro was then Western Indian Vegetable Products, a small cooking oil company. Premji diversified into bakery fats, ethnic ingredient based toiletries, hair care soaps, baby toiletries, lighting products and hydraulic cylinders. And then shifted focus from soaps to software. He transformed Wipro into one of India's most successful IT companies. Under Azim Premji's stewardship, Wipro has grown from a fledgling Rs 70 million oil company into an IT giant with a turnover of $2.4 billion and an employee strength of 57,000. Azim Premji has regularly featured in the Forbes' list of the world's richest people. He was also rated among the world's 100 most influential people by the Time magazine. In 2005, the Indian government honoured him with Padma Bhushan, one of the nation's highest civilian awards.

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Anil D Ambani
The fourth richest Indian today, with a net worth of about $13.5 billion, Anil Ambani is chairman of Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources Limited. Before the Reliance empire split, he was vice chairman and managing director of Reliance Industries Limited. The Reliance group was founded by his late father Dhirubhai Ambani. Anil was born on June 4, 1959. He joined Reliance in 1983, two years after his elder brother Mukesh, as co-chief executive officer. He is credited with leading India's foray into overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. He also directed RIL's efforts to raise $2 billion from global markets. Anil was elected as an independent Member of the Rajya Sabha with the support of the Samajwadi Party, but resigned on March 25, 2006. Ambani who was once ridiculed for being overweight at a shareholder' s meeting is now a fitness freak and runs the Mumbai marathon regularly. He has a bachelor's degree in Science from the University of Bombay and a master's in Business Administration from The Wharton School at the University of Pennsylvania. He is married to former Bollywood actress Tina Munim.

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Sunil Mittal
Sunil B Mittal is chairman and managing director of Bharti group. Bharti is India's largest GSM-based mobile phone service. Son of a politician, he built his Bharti group, along with two siblings, into India's largest mobile phone operator in just ten years. Vodafone and SingTel both own stakes in recently renamed flagship Bharti Airtel. The group also has partnerships with Axa for insurance and with the Rothschild family for exporting fruits and vegetables. He plans to go into retailing along with the world's largest retailer Wal-Mart. The 49-year-old has always been a pioneer. A first generation entrepreneur, he started his first business in 1976 with a capital investment of Rs 20,000. He decided not to be a politician and set up a small bicycle business in Ludhiana. By 1979, Sunil Mittal realised that his ambitions could not be fulfilled in Ludhiana, so he moved out to Mumbai. He initially founded a number of trading concerns, and established the first company to manufacture push button telephones in India. In 1982, Mittal started a full-fledged business selling portable generators imported from Japan. He was one of the first entrepreneurs to identify the mobile telecom business as a major growth area and launched services in Delhi in 1995. Under his leadership the company has gone from strength to strength.

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K V Kamath
Kundapur Vaman Kamath is the managing director and CEO of ICICI Bank, the largest private bank in India. Kamath, born on December 2, 1947, began his career with ICICI -- the parent body of ICICI Bank -- in 1971 and has since then worked to take ICICI places. He has helped the financial institution evolve into a modern, tech-savvy organisation. He joined the project finance division of ICICI in 1971 and moved on to different departments to gather rich experience. In 1988, he joined the Asian Development Bank, Manila in their private sector department. He worked in most of the developing countries in the region including China, Thailand, Philippines, Indonesia and Vietnam. In May 1996, he returned to ICICI as its managing director and chief executive officer. He is a graduate of the Indian Institute of Management, Ahmedabad.

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Kumar Mangalam Birla
Kumar Mangalam Birla, born on June 14, 1967, is among the richest persons in India and the eighth youngest billionaire outside India. He is chairman of the Aditya Birla Group, one of India's largest business groups. Some of the AV Birla group's companies are: Grasim, Hindalco, UltraTech Cement, Aditya Birla Nuvo and Idea Cellular. He took over as chairman of the group in 1995, at the age of 28, after the sudden demise of his father, Aditya Birla. When he took charge, there were doubts about his ability to handle the giant business house, but he proved all naysayers wrong. In the 11 years that he has led the group, he has won admiration, recognition and praise for his management acumen and contribution to the industry. Under his leadership, the group has consolidated its position in existing businesses and ventured into cellular telephony, asset management, software and BPO. He is a chartered accountant and also holds an MBA from the London Business School.

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Rahul Bajaj
Rahul Bajaj is the chairman of the Bajaj Group, which ranks among the top 10 business houses in India. He is one of India's most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit. He took over the reins of Bajaj group in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has risen from Rs 72 million to Rs 46.16 billion. The initiation of liberalisation in India posed great challenges for Bajaj Auto. Liberalisation brought the threat of cheap imports and FDI from top companies like Honda. Rahul Bajaj became famous as the head of the Bombay Club, which opposed liberalisation. The scooter sales plummeted as people were more interested in motorcycles and the rival Hero Honda was a pioneer in it. The recession and stock market collapse of 2001 hit the company hard and it was predicted that the days of Bajaj Auto were numbered. However, Bajaj Auto re-invented itself, established a world-class factory in Chakan, invested in R&D and came up with Bajaj Pulsar Motorcycle. Bajaj Pulsar is currently a leader in its segment. Recently, Rahul Bajaj was elected to Rajya Sabha from Maharashtra. He is an alumnus of Harvard, St. Stephen's and Cathedral.