MEANING, SOURCES OF RECRUITMENT AND RECRUITMENT PROCESS

MEANING OF RECRUITMENT
Recruitment means to estimate the available vacancies and to make suitable arrangements
for their selection and appointment. It is prior to selection. Recruitment is needed to fill up
vacancies due to promotions, transfers, retirement, and termination etc. of existing staff. In
addition, it is needed due to creation of new vacancies because of expansion and growth of
business. In the recruitment process, the available vacancies are given wide publicity and
suitable candidates are encouraged to submit applications so as to have a pool of eligible
candidates for scientific selection. It is the process of searching and obtaining applications
from interested candidates so as to have a pool of job seekers from whom most suitable
persons can be selected for appointment. In short, recruitment is the process of searching for
prospective employees and encouraging them to apply for jobs in the organization.
Recruitment is a positive function in which publicity is given to the jobs available in the
organization and interested candidates (qualified job applicants) are encouraged to submit
applications for the purpose of selection. It is discovering potential applicants for
organizational vacancies available. Recruitment creates a pool of qualified and interested
applicants for purposeful selection for the jobs in the organization. Recruitment done well
ensures better selection of staff required.
DEFINITION OF RECRUITMENT:
According to Edwin Flippo,”Recruitment is the process of searching for prospective
employees and stimulating them to apply for jobs in the organization.”1
According to Dale Yoder, “recruitment is a process to discover the sources of manpower to
meet the requirement of the staffing schedule and to employ effective measures for attracting
that manpower in adequate numbers to facilitate effective selection of an efficient working
force.”2
SOURCES OF RECRUITMENT: (FOR MANAGERIAL POSITIONS)
Sources of recruitment are the outlets through which suitable and interested candidates are
available. Available sources of recruitment or methods of recruitment can be conveniently
divided into two broad categories. These are: 1) Internal sources and 2) External sources.
(The chart given below shows the sources of managerial recruitment.)Companies can use any
source or both the sources of recruitment as per need. A combination of both the sources is
always desirable.
Sources/Methods of managerial Recruitment

A B

Internal Sources External Sources

1)Promotions 1)Campus Recruitment

2)Transfers 2)Press advertisement
3)Internal notification(advertisement) 3)Management Consultancy
4)Retirements Services & private Employment
exchange.
5)Recalls Schemes 4)Deputation of personnel or
transfer from one enterprise
6)Former Employees to another
5)ManagementTraining
6)Walk-ins ,write-ins, & Talk- ins
7)Miscellaneous External sources

INTERNAL SOURCES/METHODS OF MANAGERIAL RECRUITMRNT:

1)Promotion: In order to motivate the existing employees, management follows the policy of
internal promotions. Promotion means an improvement in pay, position, authority, status and
responsibilities of an employee within the organization. Many achieve promotion through
hard work and good performance. In non-unionizedcompanies, promotions are made on the
basis of merits because employers are free from the union pressures.
2) Transfers: Whenever a new vacancy is created within the organization, management may
fill the vacancy through transfer of existing employee rather than employing a new hand, eg.,
transfer from head office to branch office.

3) Internal notification (advertisement): Sometimes, management issues an internal

notification for the benefit of existing employees. Most employees know from their own
experience about the requirements of the job and what sort of person the company is looking
for. Often employees have friends or acquaintances who meet these requirements. Suitable
persons are appointed at the vacant posts.

4) Retirements: At times, management may not find suitable candidate in place of the one
who had retired, after meritorious service. Under the circumstances, management may decide
to call retired managers with new extension.

5) Recalls: When management faces a problem which can be solved only by a manager who
has proceeded on long leave, it may be decided to recall that person. After the problem is
solved, his leave may be extended.

6) Former employees: Individuals who left for some other job, might be willing to come back
for higher wages and incentives. An advantage with this sources is that the performance of
the person/employee is already known.
ADVANTEGES OF INTERNAL SOURCES OF RECRUITMENT:
Internal recruitment is economical as it is less costly than using outside agencies.
The present employees already know the company well and are likely to develop a loyalty for
the same.
It tends to encourage existing employees to put in greater efforts and to acquire additional
qualifications. This means there is motivation to employees.
It provides security and continuity of employment.
Internal recruitment helps to raise the morale of employees and develops cordial relations at
the managerial levels.
Internal recruitment is a quick and more reliable method.
EXTERNAL SOURCES/METHODS OF MANAGERIAL RECRUITMENT:
Company managements have to use external sources for the recruitment of supervisory staff
and managers as and when necessary. This may be with a view to introducing ‘new blood’ in
the organization. External sources are used as supplementary sources of recruitment. External
sources/methods of managerial recruitment are:
1)Campus recruitment/selection: The growth of management institutes, IITs and Regional and other
Engineering Colleges has provided a popular source of recruitment known as Campus
Recruitment/Selection. Private sector is able to attract many promising aspirants from engineering
colleges. It is an excellent source of recruiting/selecting management trainees. This method is
convenient to companies and students studying in the final year of engineering degree course.
Placement services are now provided by all engineering colleges and polytechnics.
This method of recruitment/selection is easy, quick and economical. It is convenient to the
company as well as candidates. However, there is no guarantee that candidate selected will join the
organization in due course.
Along with campus interviews/campus recruitment, educational and training institutions such as
IIMs, IITs and medical colleges are useful for recruitment purpose. Such institutions provide facilities
for campus interviews and have their placement cells.

2) Press advertisement: Press advertisement is very widely used for recruitment of all categories of
personnel particularly for the appointment of middle level managers. Though quite costly, it provides
wide choice as it attracts a large number of suitable candidates from all over the country.
Press advertisement is also called Recruitment Advertisement as its purpose is to give publicity to
vacancies available in the organization and also appealing deserving candidates to submit
applications. In the recruitment advertisement, the details of job (i.e. job description and job
specification) are given. This gives convenience to interested candidates.

3 ) Recruitment through Management Consultants and Private Employment Exchanges:

Management consultants make necessary arrangement and select the suitable staff required by a
business unit. For this, they give advertisement, conduct tests and also arrange interviews, etc.
Similar service is provided by private employment exchanges that keep details of candidates
interested in jobs and provide services to employers. This source is mainly useful for the selection of
top level executives.

4) Deputation of personnel: For executive positions for short period, the services of an executive
from another company can be used on loan basis. This method is useful only for a temporary period.
The practice of hiring services of managerial personnel is quite common in the case of sister
enterprises.

5) Management training schemes: Some companies introduce management training schemes for
recruitment and selection of executives (e.g., Hindustan Lever ltd.). Here, young talented candidates
of the age group of 20 to 25 are selected as trainee executive in different areas such as accounts,
technical and commercial. After selection, the candidates are sent to their management training
institutes for extensive training. After the completion of training, the candidate is appointed as a
regular executive or manager.
6) Walk-ins, Write-ins and Talk-ins: the most economical approach for recruitment of candidates is
direct applications. The job seekers submit applications or resumes directly to the employer. The
advertisement mentions date, day and timing during which the applicant can ‘walk-in’ for an
interview. From applicant’s point of view, walk-ins are preferable as they are free from the
formalities associated with other methods of recruitment. Write-ins are those who send written
inquiries. These applicants are asked to complete application forms for further processing. Talk-ins
are now becoming popular and the applicants are required to meet the employer for detailed talks.
The applicant is not required to submit any application.

6) Miscellaneous External Sources:

a) Giving extension to existing executives after reaching the age of retirement.
b) Appointment of retired officers from civil service or from public sector organizations.
c) Use of professional meetings and conventions for the selection of executives.
d) Use of executive placement agencies.
e) Assistance from professional associations.
h) Job Fairs

ADVANTAGES OF EXTERNAL SOURCES OF RECRUITMENT:

1) Entry of young blood or new blood in the organization is possible.
2) Wide scope is available for selection. This facilities selection of people with rich and varied
experience, skills and education.
3) Selection can be made in an impartial manner as large number of qualified and interested
candidates are available.
4) Scope for heartburn and jealousy can be avoided by recruiting from outside.
5) The management can fulfill reservation requirements in favor of the disadvantaged sections of the
society.
6) External sources are best when suitable persons are not available from within the organization.
DISADVANTAGE OF EXTERNAL SOURCES OF RECRUITMENT:
1) External recruitment leads to labour turnover particularly of skilled, experienced and ambitious
employees.
2) The relations between employer and employees deteriorate leading to industrial disputes and
strikes.
3) The present employees may lose their sense of security. Their loyalty to the organization may be
adversely affected.
4) Employees feel frustrated due to external recruitment and their morale goes down.
5) External sources of recruitment are costly and time consuming.
RECRUITMENT PROCESS:
Recruitment is a lengthy process consisting of various steps/activities through which search of
prospective personnel in quality and quantity as indicated by HRP and job description and job
specification is made. This lengthy process involves recruitment planning, identification of
recruitment sources, contacting those sources and receiving applications from prospective
employees. These applications are, then, passed on to, selection process for selection of suitable
candidates. Large companies maintain separate recruitment organization for dealing with
recruitment process. Recruitment teams are also formed for the conduct of recruitment process.
According to Famulrao, recruitment process consists of five elements, namely a recruitment policy,
a recruitment organization, developing sources of recruitment, techniques used to tap these sources
and a method of assessing the recruitment programme.
STEPS IN RECRUITMENT PROCESS
1)Initiating recruitment process: Recruitment process starts when the human resource department
receives requisition for recruitment from any, department of the company. The human resource
requisitions contains details about the positions to be filled, number of persons to be recruited,
their duties, qualifications qualities, terms of employment and so on. This information acts as the
base of whole recruitment process. Other steps in the process are taken as per the information
supplied in the requisitions by various departments/production units etc., of the organization.

2) Locating and using the sources of required number and types of employees: Here, internal or
external sources may be selected as per the suitability. For example, if advertisement is to be given,
it will be drafted and sent. Campus interviews and other sources can also be used.

3) Identifying the prospective employees with required qualifications: Here, the details of
interested candidates will be collected. This makes the selection process easy and quick.

4) Providing information: Here, information about the organization, the job and the terms and
conditions of service are supplied to concerned candidates. This facilitates necessary decision and
preparation by candidates.

5) Inducing candidates: Here, interested candidates will be encouraged to apply for jobs in the
organization. For this, notices, press publicity, contact with employment agencies, etc are useful.

6) Evaluating the effectiveness of recruitment process: Here, the purpose is to study the
effectiveness of the process followed and to introduce certain modifications in the process, if
necessary. It is also necessary to see that the recruitment process has achieved its objective and has
gone well in an economical manner.
Recruitment is essential in all types of organization. As a result, every company prepares its
recruitment policy, programme and recruitment planning. The recruitment process is adjusted
accordingly. Large companies as well as reputed companies have well planned recruitment process
and the same is followed with certain modifications as per the need. Small companies follow short
recruitment process as their requirement is limited and they want quick selection of suitable
candidates.
MEANING OF SELECTION
Selection is the most crucial stage in the process of acquiring human resources in an organization.
Selection is next to recruitment. It is the process of choosing the most suitable candidates (properly
qualified and competent) out of many interested candidates. It is a process of selecting the best and
rejecting the rest. This selection is also called “head hunting”. This means searching right candidates
for the specific job in the organization. In this lengthy selection process, interested applicants are
differentiated in order to identify those with a greater likelihood of success in a job. They are
selected and appointed. Selection process assumes that the applicants are more than the number of
candidates to be selected.
Selection is a negative function as it relates to elimination of unsuitable candidates. ’Right man for
the right job’ is the basic principle in selection. Selection of most suitable candidates is a responsible
type of work as selection of unsuitable persons for jobs creates new problems before the business
unit. For appropriate selection, scientific procedure needs to be followed. In addition, for scientific
selection, job study is essential. This means the study of the job for which selection is to be made.
Here, the features of job, qualities and qualifications required for performing the job etc, are studied
in detail. The qualifications of interested candidates are also considered for matching the qualities
with job requirements.
 The importance of scientific recruitment and selection of staff is now accepted in the business
world. Such selection is important as it has its impact on work performance and employee cost.
Scientific methods of recruitment and selection are, now used extensively for the selection of
managers and the supervisory staff. Services of experts are used for scientific selection of required
staff. As a result, the objective of “right man for the right job” is achieved in many organizations.

MEANING OF PLACEMENT
Placement is next to orientation/induction programme and refers to the assignments of individuals
to jobs. It is the process of assigning a specific job to each one of the selected candidates. After the
induction programme is over, the new employees are placed at the jobs which are most suitable to
them. This is placement which is a process of matching jobs and individuals. The placement occurs
when a job is actually assigned to an individual. Placement must be appropriate for the organization
and also for the newly selected person. Putting the right man at the right job is as important as the
hiring of the right person. A misplaced employee remains dissatisfied, frustrated and lacks interest
and initiative in the work/job assigned. This suggests the need and importance of appropriate
placement. Placement includes initial placement (after selection) and placement after promotion,
demotion, transfers and so on.
Placement is allocation of people to jobs. It is placement of an employee to a new job. Placement
is necessary when a new candidate is selected and appointed. In addition, it is required promotion,
transfer or demotion of an existing employee. Placement should be always based on the qualification
and qualities of the candidates selected. It should also be based on the tariff requirement of
different departments. Placement is basically the responsibility of the Personnel/HR Department. It
has to bring proper adjustment between the jobs and qualities available with the selected
candidates. In other words, right man for the right job within an organization is possible through
proper placement of candidates. Initial placement is a temporary placement period, he is confirmed
as a regular employee and his placement is made permanent. If the performance is not satisfactory,
the employee may be placed on some other job or may be even removed.

BUSINESS PROCESS OUTSOURCING

MEANING
Business process outsourcing is the latest craze in India .The philosophy is behind the BPO is
specific to do what you to do best and leave everything else to business process outsourcing
Companies are moving their non-core business processes to outsource providers .BPO saves
precious management time and resources and builds core competencies .The list of functions
outsourced is getting longer by the day.
Simply stated, BPO is a process in which a company delegates same of its in-house
operations or processes to a third party.BPO is a transaction through which one company
acquires services from another while maintaining ownership and responsibility for the
processes. The company then informs providers what it wants and how it wants the work
performed. So the company can authorised the provider to operate as well as re design basic
processes in order to ensure even greater cost and efficiency benefits. E.g, manufacture of
cars do not produce all depart themselves. They obtain some cars from other produces who
have specialised in them. It results in cost cutting hence outsourcing means obtaining goods
or services by contract from and outside source.
The terms IT enabled services [ITES]and business process outsourcing (BPO)are used
interchangeably nowadays .ITES subset of a BPO. If process the process that is outsourced
involves use of information technology it is called ITES else it is BPO .the main motive for
BPO is to allow the company to invest more time, money and human resources in the core
activities and building strategies which fuel company growth .India ITES sector is excepted
to generate nearly 2million jobs in country in the next few years .The revenue from the
industry which stood at 1.4 billion in2002 are expected to rise sharply to about 30 billion by
according to NASSCOM-McKinsey Report .Entry –level recruitment and employment has
not been problems with many fresh graduates with good language skills .In 2008 BPO sector
had 1.16 core people and only 2 lakhs in1998.
The service offered by BPO range from voice based processes to non-voice based processes
.The non –voice based processes are called back offices wherein computation and data
feeding and processing take place .BPO handles projects in a four-fold manner:
1.It invites companies to outsource to it by advertising it by advertising its manpower
efficiency and its technological advantage.
2.it achieves the desired results by prescribing set of service level agreements (SLAs)that it
has to meet.

NEED FOR OUTSOURCING /why outsource?

The following are reasons why outsourcing are undertaken:
1. To free management from day-to-day operations.
2. To have accessibility to world- class capabilities .
3. To redirect resources from non-core activities .towards activities that have greater return
serving customers.
4. To minimise business risks and acquire innovation ideas.
5. To have less dependency on internal resources.
6. To exercise greater control on delivery dates via penalty clauses .
7. To increase flexibility to meet changing conditions.
8 .To improve credibility and image by associating with superior providers .
9. To focus on broader business issues while having details taken over by outside experts.
10. To enjoy lower cost due to economies of scale.
 HR OUTSOURCING OPPORTUNITIES IN INDIA:
BPO industry is drawing significant attention in India by virtue of its utility as an upcoming
business. The shift of Indian economy towards service sector suggest that at the time to come
India will continue to be a major player in the global BPO industry .In comparison to
american or European countries, India has vast pool of skilled human resources ready to work
at lower wages .In call centre operation ,manpower especially accounts for 55 to 60 percent of
total cost .In India, the manpower cost is approximately one-tenth of what it overseas .India
has 8-12 hour time-zone difference with respect to US and other western countries .India
Can offer 24x7 services. Not only does the time difference allow BPOs to serve American
clients by working at nights ,it also help in better utilization of their resources .The
companies can utilise the same resources to serve other clients in India and abroad during the
day .
We need to look at outsourcing less as a way to cut cost and focus instead on how best to
increase brand experience. There is now a great deal of rethinking on free market philosophy
especially with the economic downturn of the kind of world now experiencing .A system of
strict quality checks and regular feedback about dissatisfied customers ,along with the higher
specialization that outsourcing makes possible ,should improve the brand experience .
Companies like Infosys, Wipro , TCS and other have carved a name for themselves in the
business of outsourcing.
1.India has largest number of English speaking population after USA
2. A vast workforce of educated and tech-savvy personnel’s.
3. A booming IT industry with IT strengths recognised all over the world
4 .Cost effective manpower.
5. Incentives available for IT enabled services.
6. Presence of international technology vendors and more inflow of business from
multinationals transnational’s.

BENEFITS OF OUTSOURCING
1.Cost and efficiency savings: Outsourcing becomes cost effective when back-office
functions that are complicated in nature that are handed over to an outside agency e.g. a
reputed form advertises to recruit fresh graduates .Chances are a large number of applicants
will apply with that present office will find it difficult to manage. When this assignment is
handed to a consultant ,the work is done with best of abilities and the firm find it economical.
2. Staffing flexibility :Outsourcing will allow operations that have seasonal or cyclical
demands to bring in additional resources when the firm needs and release them when the
work is complete e.g. account department that faces pressure of work during filing of returns
and auditing periods can settle for additional resources for fixed period of time at a reasonable
cost.
3. Develop internal staff: When a firm has negotiated for a large project and it does not have
competent staff successfully handle it, outsourcing will bring people possessing requisite
skills .Internal staff can work alongside to acquire the new skill e.g. a firm needs upgrade the
business on a variety of custom built equipment .The engines employed in the business do not
have the required skills. Outsourcing this work to work on site allow the engineers to acquire
the new skill.
4.Operational control: Operations whose cost are running out of control must be considered
for outsourcing .Departments that are working with uncontrolled and poorly managed results
fit for outsourcing .Moreover, an outsourcing company can bring better management skills
that what would otherwise be available .
5. Risk sharing: One of the most crucial factors determining the outcome of outsourcing is
risk analysis .Outsourcing certain components of business helps the organisation to shift
certain responsibilities to the outsourced company. As a company is a specialist ,it can plan
risk minimizing factors better.
6. Run business 24x7:Offshore outsourcing to a country like India, which is on a different
time zone ,gives the added advantage of making full use of 24hours day .Since your night is
their day, your
Outsourcing partner can take over and continue the work even after the employees go home
and sleep .They can complete critical tasks and send it back for your review the next day. So
the benefit of outsourcing is that you get more work done in a day thereby increasing overall
productivity.
7. Obtain competitive edge: The ultimate benefit of outsourcing is that it help the
organisation to gain a competitive edge .By outsourcing ,the organisation is not only
providing the customers with best services but also increasing the productivity. Further, in –
home resources intelligently managed. Outsourcing can help to surpass competitors who
have not yet realised the merits of outsourcing.
8. Access to skilled resources : now, it is no longer required to invest in recruiting and
training expensive resources to run business. Outsourcing can take care of resources with
their pool highly skilled resources as well as the respective areas and are experienced in
handling the business assignment of companies that want to outsource.
9. Focus on larger issues: outsourcing allows management to differ the details to a
specialized company. Removing the details permit management to focus on the large issues
within the organisation.
10. New project quickened: a good outsourcing firm has the resources to start a project right
away. Handling the same project in-house might involve taking weeks or months to hire the
right people, train them and provide the support they need. If a project requires major capital
investments, the start-up process can be even more difficult.
 Unit - II
Employee Compensation-I
Concept/Meaning of Wage:
Wage means money given or paid to an employee for the work completed or services given.
Employees/workers are paid compensation for their services called wage payment. It is
normally paid in terms of money. For example, Rs.8000 per month. It is also called
employee compensation or wage payment. Monthly salary payment to a government
employee or bank manager or a college professor is a type of compensation payment for the
services rendered. It is a reward for services given. Wages are paid to all categories of
employees but they are not uniform. They vary from industry to industry and from region to
region. Wage is a monetary payment made by the employer to his employee for the services
rendered. The elements of wage of an employee include basic wage, dearness allowance,
overtime, bonus, fringe benefits and other incentive payments.
Real wage is more important than money wage. Money wage is the payment in terms of
money. Real wage means goods and services which a worker can purchase out of the money
wage paid. Wage payment is necessary to all categories of workers as social status depend on
wage payment.

Factors determining/influencing wage rates/wage policy

Wage rates are influenced by number of factors jointly or collectively. Some of the factors
are:
1) Demand and supply position in the employment market:
If the demand for labour is more, wages paid are higher and when the demand for labour is
limited, the rates of wage payment are also low. In Western countries, wage rates are high
while in India, they are comparatively low due to demand supply position. Similarly, wage
rates are high during the period of inflation and prosperity while they are low during the
period of depression.

2) Nature and features of the job:

When the nature of the job is hard, higher wages are paid. Similarly, wage rate is high in the
case of jobs where special qualifications and experience are required. For example, an
engineer is paid more than a typist/clerk. Thus, job requirements (physical and mental
qualities) also determine the wage rates.

3) Cost of living:
Wages rates are raised when the price level increases. This is necessary for adjusting wages as
per the cost of living. At present, wages of government employees or of factory workers are
raised when the cost of living index goes up. Linking of wages with the cost of living is
necessary for the protection of workers.

4) Bargaining power of workers/Bargaining strength of unions:

When the trade union is strong, the workers get the benefit of higher wages. This is because
of the bargaining power of the trade union leadership. The existence and pushfullness of trade
union is one important factor which determines the level of wage payment. Strong trade union
ensures higher wage rates to workers. Workers from large and organized industries get higher
wages due to strong unions.

5) Efficiency and productivity of work force:

Efficient workers are paid more as they give more production. The wage payment increases
along with the increase in the productivity of work force. Wages are now, linked with the
productivity or the work performance of workers.

6) State regulations:
Wages must be paid as per the rules and regulations made by the government from time to
time. This is applicable to organized workers as well as workers from the unorganized sector.
Workers must be paid minimum wage as decided by the government.

7) Ability of the employer:

Wage rate depends on the ability of the employer to pay. Such ability depends on the profits
earned, financial position of the company and so on. Workers are paid attractive wages when
company gets huge profit.

8) Wage rates in other enterprises in the same locality:

Normally, wage rates in a specific area or locality are identical. The wage rates in two or
more textile mills are rather identical. Wage rates are adjusted to the prevailing wage rates in
an industry.

9) Security of employment:
Employment security is one factor which influences wage rates. Many workers prefer
job/employment security and are willing to accept little lower wage or salary. People prefer
government job due to job security even when wage payment is comparatively low. In private
sector, wages rates ate high but job security is limited.

10) Non-monetary benefits offered:

Non-monetary benefits include medical and welfare facilities, career development
opportunities, fair chances of promotion, decent treatment to workers and so on. Wage rates
offered are normally low when such facilities are offered liberally. Worker prefer sometimes
low wage rate supported by non-monetary benefits as such benefits are better than higher pay
packet.

11) Miscellaneous factors determining wage rate policy:

a) Competition among employees in the labour market.
b) Working conditions at the work place.
c) Cordial industrial relations.
d) Fair and healthy personnel policies.
e) Fair treatment and liberal management philosophy.
Essentials/requisites of a sound wage system/wage plan
1) Wage system/plan should be just and reasonable to employer and employees:
A sound system of wage payment is one which is just and reasonable to both the parties. It
must be according to the capacity of the employer to pay. Similarly, the basic needs of the
employees must be met properly out of the money wage paid to them.

2) Guarantee of living wage:

An ideal wage systems/wage plan should ensure living wage to all employees. Living wage is
useful for meeting the basic needs of workers. It is linked with the cost of living. In addition,
it is useful for raising efficiency and welfare of employees. It provides healthy and satisfied
life to workers. Living wage gives guarantee of certain minimum standard of living to all
workers

3) Easy to understand and simple to operate:

A sound system of wage payment is one which is simple and intelligible to an average
worker. As a result, even an average worker will understand it easily. He will know how
much he is likely to get at the end of the month. Such simple wage system is also easy for
calculation and gives convenience to the employer. A good compensation plan also simplifies
salary and wage administration and control.

4) Flexibility:
A sound wage plan should be elastic and flexible so as to permit necessary adjustments
periodically as per the changing economic conditions. This means it is adjustable as per the
changing needs and requirements of workers. This facilitates periodical adjustments in the
wage rates.

5) Promptness in wage payment:

Sound wage system ensures prompt cash payment to all categories of workers after certain
fixed period like a week or a month. Wage payments must be regular and prompt so as to
enable workers to make their purchases regularly. Promptness in wage payments gives
convenience and psychological satisfaction to workers.

6) Incentive for extra remuneration:

A good system of wage payment is one which creates desire among workers for extra efforts
in order to earn extra remuneration. This means there should be extra reward for special skill,
better workmanship, prompt performance and higher output. Such incentive oriented wage
system encourages employees to be regular, sincere and efficient in doing their work.

7) Gradual increase:
In a sound wage plan, a provision should be made for gradual increase in the basic wage rate.
This increase should be for all categories of workers including unskilled, temporary and
trainees. Such increase should be gradual depending on the experience and skill. The
provision of annual increment is, now, common to all categories of workers. This brings
gradual increase in the wage payment.

8) Attractive to talented workers:

A sound wage system should be attractive to employees as well as to outsiders. This will
reduce labour turnover. In addition, talented, experienced and skilled workers from other
units will be attracted towards the company.

9) Periodical reviews/scanning:
A sound wage plan requires periodical review or scanning in the light of changed situation.
This makes the wage structure flexible and also progressive. Such periodical review gives
certain benefits to employees and naturally they demand such review after every three to five
years.

10) Equal pay for equal work:

A sound system of wage payment should be fair to all workers. In other words, the wage rate
should be based on the principle of “equal pay for equal work”. No discrimination on
religion, cast, sex, creed, etc. should be made while paying wages.

11) Quick settlement of grievances:

In a sound wage plan/system, workers should be allowed to express their grievances as
regards wage payment. For this, suitable procedure and machinery should be provided. This
solves the grievances of workers regarding wage payment and creates a sense of confidence
and security among them.
TIME WAGE SYSTEM
MEANING

Time wage system or time rate system of wage payment is the oldest and simplest
method of wage payment. it is used extensively even today in the industrial sector
as well as in government departments . In the time rate system, wages are paid as
per the time spent by workers in the factory .the production given by the workers is
not taken into consideration. The employer buys the hours of the workers and pays
them compensation accordingly. The typist has to remain present for 8 hours on
every working day. His typing work or number of letters typed within the day is not
taken into consideration for wage calculation. Time rate system is also called day
wage system. The formula for the calculation of wage under time rate is given below;

E =RN where E means total earning, R means rate per hours or day and N means
number of hours or day work.

MERITS / ADVANTAGES OF TIME WAGE SYSTEM

1. Easy and simple; time wage system is easy to understand and simple to follow.
Every worker knows how much wage he will get at the end of the day or month.
Wage calculations are also easy / quick. This gives convenience to employer and
employees.

2. Guarantee of minimum wage: Time wage system guarantees minimum wage

payment to every worker irrespective of the capacity to work. Worker gets regular
and stable income and stable income and this gives a sense of security to all workers
as regards wage payment.

3. Maintain quality of production: In the time wage system, quality of production is

the worker is not in a hurry to complete the work. The worker does rush for job and
spoil the quality because of the temptation to earning more. Worker work with care.
Naturally, the quality of production is maintained. In addition, wastages of all kinds
are minimized.

4. Support from trade unions: Workers and trade union support time wage system as
all workers placed in one category as regards wage payment and this ensures unity
among workers.

5. Avoids quarrels among workers: Time wage avoids heart burning and quarrels
among the workers as uniform wages are paid to all. Here, honestly/sincerity of
workers is not given special weightage. Wage rate is the same for sincere and lazy
worker.

6. Convenient: Time wage payment is convenient in modern factory system where

production process is continuous and integrated. It is not possible to measure the
work completed by one individual worker and hence time wage system is
convenient.

LIMITATIONS OF TIME WAGE SYSTEM:

 1. NOT SCIENTIFIC: Time wage system is not a scientific system of wage
payment as there is no direct linking between wages are and production
or productivity. Wage bill may increase without corresponding increase in
the production.
2. ABSENCE OF POSSITIVE ENCOURAGEMENT: In the time wage system,
there is no positive encouragement to works to improve their
performance as the wage rate is uniform to all workers-efficient and
inefficient.
3. NO INITIATIVE TO WORKERS: Time wages system fail to encourage
workers to take more interest and initiative in the work. In fact, it
encourages them to follow ‘go slow’ policy. This is because wage payment
is not linked with the production given.
4. NO DISTINCTION BETWEEN WORKERS: In the time wage system,
distinction is not made between efficient and lazy workers. Both are paid
at one rate which is unfair. This system gives punishment to efficient and
sincere workers. They are discouraged as they are paid less than what
they deserve. They may even leave the job.
5. LABOUR COST MAY INCREASE: In the time wage system, there is a
possibility of increase in the labor cost without corresponding increase in
the production. Worker may work slowly, give less production but collect
the wage as per time or day wage fixed.
6. STRICT SUPERVISION NECESSARY: In this system, strict supervision on the
workers is essential as payment is for the period and not for the quantity
of production given. This raises expenditure on supervision.
7. NO EFFECT ON PRODUCTIVITY/EFFICIENCY: Time wage system fails to
raise productivity and efficiency of labor force. It is not an incentive
system of wage payment.

PIECE WAGE SYSTEM/PIECE RATE SYSTEM:

MEANING OF PIECE WAGE SYSTEM (WHAT IS PIECE WAGE SYSTEM?):

Piece wage system (also called piece rate system) is another basic system of
wage payment. Here, the base of wage payment is the production/output given
by a worker. It is just opposite to the time wage system. It is also treated as an
incentive wage system as it encourages workers to produce more and also to
earn more. In the piece wage system, wages are paid as per the time spent by the
worker in the factory. Here, the payment is by result in terms of output given. In
this system, the wage rate is fixed per piece of work or for certain quantity of
production Here, the earning of a worker can be calculated with help of the
following simple formula:

WE=NR/ Where WE means worker’s earnings, N means the number of pieces

produced and R means the rate per piece of production.

MERITS/ADVANTAGES OF PIECE WAGE SYSTEM:

1. LINKING OF WAGES WITH PRODUCTION: In the piece wage system, wages

are linked with production or productivity. It raises the productivity of
labour. Workers work with speed and use their capacity fully as the wage
payment is directly related to the quantity of production given by worker.
2. DISTINCTION IS MADE BETWEEN EFFICIENT AND INEFFIENT WORKER: In
the piece wage system, distinction is made between efficient and
inefficient worker and full justice is done to efficient worker as he gets
payment in proportion to the production given by him. Efficient worker
support the piece wage system but it not preferred by inefficient workers.
They get less payment under this method as their capacity to produce is
less.
3. ENCOURAGES WORKERS TO TAKE INITIATIVE IN THE WORK: Piece wage
system encourage workers to take more interest and initiative in the work
as every works gets full reward of his efforts. There is direct efforts-
reward relationship in the piece wage system.
 4. FAIR TO EMPLOYER AND EMPLOYEES: Piece wage system is fair to
employer and employees. The employees get income in proportion to the
production given by them and the employer gets production in proportion
to the wage paid.
5. INCENTIVE SYSTEM: piece wage system serves as the incentive system of
payment. Worker work efficiently and take interest in the work due to
corresponding benefit/ reward in the form of higher wage payment.
6. LIMITED SUPERVISION ADEQUATE: In the piece wage system, strict
supervision on the workers is not necessary as worker work sincerely. This
is because their wage payment is directly linked with their sincerity and
ability.
7. ENSURES CORDIAL INDUSTRIAL RELATIONS: Piece wage system ensures
industrial peace and cordial labor-management relation.
8. FREEDOM OF WORK TO WORKERS: Workers get more freedom of work
and there is effective control on the cost of production in the piece wage
system.

LIMITATION OF PIECE WAGE SYSTEM:

1. NO GURANTEE OF MINIMUM WAGE PAYMENT: in the piece wage system,

there is a guarantee of certain minimum wage payment to a worker. This
may prove to be dangerous particularly to newly recruited workers and
workers who are below average.
2. WORKERS SUFFER EVEN WHEN NOT AT FAULT: Sometimes, workers suffer
in wage payment even when they are not at fault. For example, due to
power failure, worker may not be eligible for wage payment even when
they remain present in the factory for the whole day and are also willing t
work.
 3. COMPLICATED AND DIFFICULT: Piece wage system is complicated and
difficult. Moreover, the management will have to keep elaborate record
of production given by each work. Workers also make complaints as
regard wage payment when they feel that due payment is not made to
them.
4. DISTURBS UNITY AMONG WORKERS: Piece wage system affect the unity
among workers as wage payment will not be uniform to all workers. This
will lead to quarrels among workers. Trade union opposes piece wage
system on the ground that it will lead to rivalry along workers and destroy
unity among them.
5. NOT FAIR TO TRAINEES: Piece wage system is not fair in the case of
trainees. Their capacity to produce is less and naturally they will get less
wage during the training period.
6. QUALITY OF PRODUCTION IS ADVERSELY AFFECTED: Piece wage system
affect the quality of production as workers may work with speed and this
may bring down the quality of production.

Meaning of INDIVIDUAL INCENTIVE WAGE PLAN:

In the case of individual incentive wage plan, the encouragement is given to individual
worker/employee and he is given the incentive payment promptly and directly. This means
the individual incentive wage plan operates at the level of individual workers. He has to work
efficiently, give additional production and share the benefit of his extra efforts at his personal
level. The benefit/ rewardis directly linked with the efficiency and capacity of individual
workers. Here, encouragement is given to workers to show better performance and he is given
incentive payment / extra payment as per his performance. They are many individual wage
incentive plans. They are based on time wages or piece wages plus some arrangement for
incentive payment as per the contribution made by individual worker in terms of production
given or time saved. These plans are suggested by experts like Halsey, Taylor, Rowan and
Gantt.
Each incentive plan has its special features, advantages and limitations
. Individual incentive plans are beneficial to individual workers as well as to employer. Here,
a worker is motivated to work efficiently and the benefit in the form of higher wage is given
to him promptly. For the employer, there will be additional production and profit and a part of
it is given to workers individually.
HALSEY PREMIUM WAGE PLAN
Halsey premium payment plan was suggested by F. A. Halsey, an American expert. It is an
individual incentive plan. In his plan Halsey suggested a combination of time rate and piece
rate. In his plan a worker is given guarantee of minimum wage as per the time rate. In
addition, he will be paid more for his efficiency or extra efforts in the conduct of productive
activities.
The time is calculated for standard job before hand on the basis of time and motion studies.
Every worker has to complete this standard job for which he will be paid certain fixed wage
as per time rate. Workers who are efficient will complete this standard workload quickly and
will use the remaining time for additional production.
In short every worker will have certain minimum wage payment plus bonus payment for the
time saved by him to the total earnings of a worker will be more provided he is efficient this
bonus payment shall be equal to the money value of 50percent of the actual time saved.
Halsey plan is also called 50-50 bonus plan as bonus to individual worker is decided as 50
per cent of time saved thus he will get minimum guaranteed payment plus extra payment for
one hour. (50% of the time saved) .

ADVANTAGES
1) Halsey plan gives guarantee of minimum wage payment for every employee.
Naturally, it is suitable to average workers.
2) It provides reward to those who are efficient and sincere.
3) It encourages workers to be efficient because such efficient is rewarded in cash.
4) It is extremely simple and easy to understand even by ordinary workers.
5) This plan gives emphasis on the time saved and not on the increased production.
However, the workers will have to work during the time saved.
ROWAN PLAN
Rowan premium plan was suggested by james Rowan in 1901 and was very popular in
England this plan is a synthesis of time rate and piece rate systems.
Like Halsey plan, there is a provision of minimum guarantee remuneration to every worker
on time basis. In addition there is a provision of extra payment for those who are efficient
and are in a position to complete their standard workload earlier than the normal time
allotted. The only difference between Halsey plan and rowan plan relates in calculation of
bonus. The bonus i.e. extra payment is based on the proportion of the time saved which the
time taken bears to standard time thus efficiency measurement.

ADVANTAGES
1)It is profitable to employer as the bonus earned by a worker cannot exceed 25% of the
standard time.
2)There is guarantee of minimum wage payment to all workers.
3) It checks over -speeding and avoids one major drawback of Halsey’s plan.
Taylor’s Differential Piece Wage / Rate Plan:
Taylor’s Differential Piece-Rate System was introduced by F.W. Taylor, who believed
that the workers should be paid on the basis of their degree of efficiencies. Under this
method, with the help of Time and Motion Study, the standard time for the completion of a
job is fixed on the basis of which the performance of the workers is evaluated. F. W. Taylor is
known as the father of scientific management and famous for his differential peace rate plan
as an alternative to time rate system which was considered to be unscientific. In his incentive
wage plan he has not made reference to minimum guarantee payment to each worker.
Taylor’s differential piece-rate system states that the worker who exceeds the standard
output within the stipulated time must be paid a high rate for high production. On the other
hand, the worker is paid a low rate if he fails to reach the level of output within the standard
time. Thus, there are two piece-rates, one who reach the standard output or exceeds it, is
paid 120 percent of the piece rate. While the one who fails to reach the standard level of
output, is paid 80 percent of the piece-rate. The minimum wages of the worker are not
guaranteed.

Advantages:
i. Simple: This wage plan is very simple to understand by an average worker. There is
no need for some specific knowledge to understand this plan also it is easy to calculate
the wage payable.
ii. Perfect Distinction: This wage rate provides a perfect distinction between efficient and
inefficient workers and it gives special rewards to efficient workers and punishment to
those who are lazy.
iii. Encourages Efficiency: This wage rate system encourages the workers to be efficient
because there is no guarantee of minimum wage payment and they have to be more
efficient to earn higher wage than standard wage rate.
iv. Removes Inefficient Workers: This wage rate system helps to judge the inefficiency in
the workers and allow their employers to separate them from other industrial workers.
v. This wage rate encourages the efficient workers to join the organisation because with
their higher efficiency they are sure of getting higher wages paid to them.

Emerson’s Efficiency Bonus Plan:

This plan has been named after Harrington Emerson; the innovator of this plan. Under
this plan every worker is guaranteed his day wages irrespective of his performance.
A standard output is fixed, and is represents 100% efficiency. According to the plan up to 66
2/3 the guaranteed time wages are paid to the workers, after this they are paid bonus at stated
ratio of the time wages.
Emerson used 32 empirical bonus percentages for efficiency beyond 66 2/3% under this plan,
the bonus starts from 0.01% above 66 2/3% efficiency and increases to 20% at maximum
efficiency. After this point the bonus is 20% above the basic wages plus 1% for each 1%
increase in efficiency.

Advantages:
i. Beginners are encouraged to work hard under this plan.
 ii. Proper attention is paid to different kinds of workers.
iii. It is easy to understand the Emerson's Plan.
iv. It possesses rational determination of efficiency.
v. The calculation of efficiency is logical.
vi. This plan can be applied to individual tasks as well as group tasks.

Disadvantages:
i. Labour cost is increased due to payment of bonus on low level of production.
ii. There is low rate of bonus in the beginning.
iii. It is a complicated plan as far as calculation is concerned.
iv. It requires a lot of clerical work.
v. Under this plan, management may be tempted to fix a very high level of standard
output.

Group Incentive Plan:

In group incentive plan the entire group of workers will have to work efficiently in a
collective manner and also share the benefit collectively. Group incentive plan distribute
rewards collectively to employees, all employees have to participate for raising production
and all will be able to participate in the extra benefit available. Bonus payment system is a
group of incentive plans. It is divided in two parts they are as follows.

I. Profit sharing:
When shareholders share profits for contributing towards capital then workers
should also get a part of profits for contributing their labour. The workers are an
integral part of any organization and their contribution to its prosperity should also be
rewarded by making them the recipients of profits.
This realization that employees/workers contribute significantly to increase profit
has encouraged the adoption of this system. Profit sharing is a method of remuneration
under which an employer undertakes to pay his employees a share in the net profits of
an enterprise, in addition to regular wages.
Profit sharing is an attractive supplement of a regular wage system in profit
sharing the employer agrees to share a part of the profit with the employees as per the
agreement made. The purpose is to secure whole hearted cooperation from the
workers in the production activities. Such arrangement creates cordial labour
management relation and encourages employees to take more interest in the work.
Both the share (percentage) of profit to be shared by employees and mechanism for its
distribution are determined in advance and also made known to the employees. In
order to be eligible to participate in profit-sharing. An employee needs to serve for a
certain number of years and, thus, earn some seniority. As regards the forms of profit-
sharing, Metzger has classified these into three categories, namely,
i. Current: Under this form, profits are paid to the employees in cash or by cheque
or in the form of Stock option immediately after the determination of profits.
ii. Deferred: Profits are credited to employees’ accounts to be paid at the time of
retirement or at a time of his dissociation from organisation due to reasons like
disability, death, severance, withdrawal from employment, etc.
 iii. Combination: In this case, a part of employee share of profit is paid in cash or
cheque or stock and the remaining part is deferred and credited to his/her
account.
Employees receive their share in the organisational profit in the form of bonus. In
India, the employee bonus is governed by the Payment of Bonus Act, 1965.

Features:
i. Method of extra payment: Profit sharing is a technique under which extra
payment is given to workers it acts as a reward for collective efforts of the
employees.
ii. Benefit to majority workers: The benefit of profit sharing is basically given
to all the employees and workers of all categories regardless of their
individual skills and efficiency.
iii. Status of the workers remains same: In profit sharing the workers are paid
with share in profits but their overall status remains the same there is no
change to their status will always be as wage earners.
iv. Payment on yearly bases: The payment to the works is basically done on
yearly bases as the profit is calculated at the end of the year. It is an
agreement made generally for a period of one year and is renewed year after
year.
v. Payment is out of net profits: Payment is done to the workers only out of the
net profits earned during the year by the employer it is based on the
agreement between the employee and employer.
vi. Employer and employees are both parties to the agreement: The actual
sharing of profits between the employer and employees depends on the
agreement between them and their bargaining power.

Advantages:
1. Brings employees together to work towards a common goal:
2. Motivation levels will be high.
3. The employee focus will be on profitability.
4. Increases commitment to the organization among the employees.
5. Employee is identified with the company he or she will feel part of it.
6. Bridges the gap between the employee and employer.
7. Promotes the well-being of the employees.
8. Additional income for the employee lead a comfortable life.

Disadvantages:
1. The salaries of the individual employees go up equally, not on the basis of
merit or promotion.
2. In the case of smaller companies the drastic fluctuations in the earnings of the
company may affect the personal earnings of the employees.
3. The focus of the employee may be on the profit rather than on quality.

II. Co-partnership:
 The employees are offered shares of the enterprise at reduced rates in this plan.
The payment is also collected in instalments. The employees share profits of the
enterprise as its members. The underlying idea of this method is to make workers feel
as a part of the organization and understand view point of the management. As co-
partners they will behave in a responsible manner and will try to make the concern
more and more profitable and successful.
In a way, co-partnership is an improvement over profit-sharing. In this scheme,
employees also participate in the equity capital of a company. They can have shares
either on the basis of cash payment or in lieu of other incentives payable in cash like
bonus. Thus, under co-partnership scheme, employees become shareholders also by
having company shares. Now, employees participate in both profits and management
of the company.
The finer points of this scheme are that it recognizes the dignity of labour and also
of a partner in the business. This would, in turn, develop a sense of belongingness
among the employees and encourage them to contribute their best for the development
of the organisation

Advantages
1. Lower the supervision required of employees
2. Increase innovation
3. Increase customer loyalty
4. Increase shareholder value
5. Motivate employees to become more productive
6. Improve the communication between employee and managers and increase
cooperation
7. Increase loyalty and reduce staff turnover
8. Increase employee job satisfaction
9. Increase the Company’s likelihood of survival

Disadvantages
1. Where the share price of the company’s shares does not increase and the
employee feels they have no control over the share price outcome, then it can
affect morale of the employees
2. There are costs associated with establishment and administration
3. Share Ownership, specifically option plans can be dilutive – i.e. as more shares
are issued each share you own becomes a smaller percentage of the company.

Profit-Sharing-Scheme
Meaning of profit sharing scheme
Profit sharing is an attractive supplement of a regular wage system. It is a type of group
incentive plan. In profit-sharing, the employer agree to share a part of the profit with the
employees as per the agreement made. The purpose is to secure whole-hearted co-operation
from the workers in the production activities. Such arrangement creates cordial labour-
management relations and encourages employees to take more interest in the work. In brief,
profit-sharing is an agreement under which the employer agrees to give the part of the net
profit to workers provided they raise the profit over and above an agreed limit.
Profit sharing is a group incentive plan. Here, all the workers have to work jointly and also
efficiently and raise the profit to the higher level and share it as per the profit-sharing
agreement.
Profit-sharing is a novel and progressive idea in the industrial world. It is major departure
from the traditional concept of profit were it was treated as the exclusive monopoly of the
employer. As present workers are treated as partners in the production process and profit is
treated as the outcome of the joint efforts of employer and workers.

DEFINATION OF PROFIT-SHARING:
According to prof. Henry R. Seager, “profit-sharing is an arrangement freely entered into by
which the employee receives a share fixed in advance of the profit’’

FEATURES OF PROFIT-SHARING SCHEME:

(1) Method/Technique of extra-payment: Profit-sharing is a technique under which
extra payment is given to workers. It is the reward for joint/collective efforts of
employees.
(2) Payment out of net profit: profit is paid out of net profits and as per the agreement
between employer and employee.
(3) Employer and employees are parties for profit sharing: The sharing of profits
between employer and employee in a particular proportion decided in the agreement.
The net profit calculated as per the terms and conditions laid down in the agreement.
The actual share of employer and employee depends on the understanding and
agreement between the two parties or their bargaining power.
(4) Status of workers remains the same: In profit-sharing, the workers get monetary
benefit, but their status remains unchanged. They remains as wage earners.
(5) Benefit to majority of workers: The benefits of profit-sharing is given to majority of
employees of all categories and also irrespective of their individual skill and
efficiency.
(6) Payment on yearly bases: The profit-sharing agreement is made generally for one
year and is renewed year after year.

ADVANTAGES/MERITS OF PROFIT-SHARING SCHEME:

(1) Provide extra income to workers: workers get extra cash payment due to profit-
sharing arrangement. This money is useful for raising their welfare. Workers can
purchase costly consumer durables out of this money. Thus, profit-sharing provides
better life and welfare to workers. It creates contended labour force with higher
standard of living
 (2) Workers take more initiative and interest in the work: Due to profit-sharing
agreement, workers take more interest in work. This develops team spirit among the
employees because their share in profit depends upon their collective initiative, efforts
and hard work.
(3) Leads to increase in production and productivity: Profit-sharing acts as a driving
force for more production and productivity. It motivates employees to raise the
production as they get direct and immediate benefit of additional efforts on their part.
(4) Fair to employer and employee: Profit-sharing gives more remuneration to workers
along with more profit to employer. It raises profitability through joint efforts of
employer and employees. Employer pays a part of profit to worker but he is not
adversely affected as profit is aid only when it exceeds a particular limit agreed by the
both the parties.
(5) Ensure cordial industrial relations: Profit-sharing creates cordial labour-
management relations. It reduces industrial disputes, strikes and lock-outs. This is
because both have common objective and both are likely to suffer due to industrial
disputes and strikes.
(6) Less supervision required: Profit-sharing reduces the expenditure on supervision of
workers as they take interest in the work on their own. Moreover, wastage of material,
volume of spoiled work, etc. are also reduced.
(7) Bring stability to labour force: Profit-sharing bring stability to labour force as the
benefit of profit-sharing is usually given only to those who work in the company for
the whole year. Thus, profit-sharing brings down the labour turnover and this gives
benefits to the employer. It develop loyalty and devotion among employees.
(8) Promotes social justices: Profit-sharing is a method of social justices. Here, workers
are allowed to participate in the progress and prosperity of their company. Profit-
sharing introduces industrial democracy as workers are treated not only as wage
earners but also partners for sharing the profits of the company.

DISADVANTAGES OF PROFIT-SHARING SCHEME:

(1) Uncertainty: There is high degree of uncertainty in the profit-sharing scheme. Profit-
sharing is uncertain because it will be paid only when the profit exceeds a particular
limit. The profit may not cross a particular limit-due to market forces and the workers
will suffer. Thus, profit-sharing does not give full guarantee of extra payment to
workers. It acts like fair weather plan.
(2) Unfair to efficient workers: profit-sharing is a group incentive plan. It gives equal
benefit to all workers. Distinctive is not made between good and bad workers. As a
result, sincere and efficient workers get less than what they deserve, while and
inefficient workers get more than what they deserve.
(3) Opposition from trade unions: Trade unions and workers feel that bonus payment is
better than profit-sharing. They generally oppose to profit-sharing and demand bonus
from the employer as it is a cheap alternative to profit-sharing.
(4) Disputes on calculation of net profit: in profit-sharing, the net profit is to be
calculated at the end of the financial year. There is a possibility of dispute as regards
the calculation pf the net profit. The employer may like to manipulate the accounts
 and show less profit while workers may calculate it as high. Such disputes affect both
the parties and delay in payment.
(5) Adverse effects on labour-management relations: Sometimes, relations between
labour and management are adversely affected on the point of profit-sharing
agreement. Disputes are possible as regards the profit-sharing agreement itself. This
defeats the very purpose of profit-sharing.
(6) Not useful during depression: Profit-sharing as a method of extra remuneration to
workers can be used during the period of prosperity when profits are high. It cannot be
used during the years of depression when profits are low.
(7) Opposition from conservative employers: Profit-sharing is not acceptable to
conservative employers. They feel that profit is the reward for the risks and
uncertainties. They also argue that workers must be prepared to share profit as well as
loss in the business.

CO-PARTNERSHIP
MEANING OF LABOUR CO-PARTNERSHIP:
Employees are, now treated as equal partners in the production process. They are given a
share in the net profit through profit-sharing scheme. In addition, they need to be allowed to
participate in the management of the business unit. For this, labour co-partnership is
necessary and useful. The concept of co-partnership is wider in scope as compared to the
concept of profit-sharing. Co-partnership means sharing of profit as well as business
management and decision-making. In co-partnership, employees are made part owners of the
enterprise and are allowed to participate in the decision-making process.
The purpose of co-partnership is to give higher status to workers and to give them an
opportunity to participate in the management of the company. This concept of co-partnership
is closer to the concept of industrial democracy and labour participation in management. Co-
partnership offers many advantages to employer and employees.
METHODS OF INTRODUCING CO-PARTNERSHIP:
(1) Profit-sharing in kind: In this method, employees are given share in the profit not is
cash but in the form of equity shares of the company. As a result, they are converted
into regular shareholders of the company with powers to attend company’s meetings
and participate in the management.
(2) Payment of bonus in kind: In this method, bonus payment is made in equity shares
and not in cash. As a result, employees are made shareholders i.e., owners of their
company with full power to participate in the management.
(3) Offering new shares to employees: In this method, the new shares of the company
are offered to the existing employees of the company. For this, a part of total issue is
kept reserved only for the employees.
(4) Employee directors: Co-partnership is possible by taking one or two representative
of workers on the Board of Directors of the company.
FRATURES OF LABOUR CO-PARTNERSHIP:
 (1) Labour co-partnership is a wide concept as compared to the concept of profit sharing.
Here, employees are given a share in the profit plus opportunity to participate in the
management of the company.
(2) In labour co-partnership, employees are given higher status. They are made co-owners
of the company with opportunity to participate in the management indirectly i.e.,
through their representative.
(3) Co-partnership leads to industrial democracy and labour participation in management.
(4) Co-partnership concept is beneficial to employees and management of industrial unit.
If introduced in the right spirit, it leads to cordial industrial relations, industrial peace
and prosperity to the industrial unit.
(5) Co-partnership ensures cordial labour-management relations. Employees are made
more responsible under co-partnership. Their future is linked with the future of their
company. This also avoids strikes, go slow and industrial conflicts.
ADVANTAGES/BENEFITS OF CO-PARTNERSHIP
(1) Provide higher status to workers: Employees are given higher status and are made
the co-owners of their company. In co-partnership, employees are made part of
owners of the company with right to share the profit and participate in the
management. The employees are also converted into co-owners.
(2) Facilitates participation in management: Employees are given an opportunity to
participate in the management of their company.
(3) Employees are made responsible: Employees are made more responsible and their
future is linked with the future of the company.
(4) Ensure cordial labour-management relations: Co-partnership brings cordial labour-
management relations as employees can bring certain changes in the policies of the
company as per their desire.
(5) Brings industrial democracy: Co-partnership brings industrial democracy in reality
with higher status to employees and also an opportunity to participate in the company
management.
(6) Raises employee morale: Co-partnership raises the morale of the employees.

LIMITATIONS OF CO-PARTNERSHIP:
(1) Limited interest of employees: Employees, in general, show limited interest in co-
partnership. They demand bonus or profit in cash and do not purchase shares of their
company as and when offered. They prefer to be wage-earners and are happy with
wages supported by wages and other monetary benefits. Even trade union show
limited interest in co-partnership.
(2) Limited capacity of employees to participate: Employees have limited capacity to
participate in the management of the company. As a result, the co-partnership remains
more in theory and less in practical.
(3) Workers prefer to be wage earners: Employees usually prefer to be wage-earners
rather than becoming co-owners of their company.
(4) Minority position of workers: Employee, as members of the company, are always in
minority. Naturally, their participation in management is rather normal.
 (5) Unfavorable attitude of employees: Employees in general, are not favorable to the
concept of co-partnership. They give limited importance to this concept. As a result,
the concept had made very limited progress, particularly in India.
(6) Co-partnership concept is very attractive/promising but mainly in theory. In
reality, neither employees nor management are favorable to its introduction in a fair
and honest manner. It remains mainly as a theory concept but practical utility is not
visible.

PAYMENT OF BONUS ACT, 1965

Meaning:

The Payment of Bonus Act, 1965, provides for Payment of bonus to employee as defined
under the act. As per the Act, “employee” means any person employed on a salary or wage
not exceeding Rs.3500 per month in any industry to do any skilled or unskilled, manual,
supervisory, managerial, administrative, technical, clerical work. The Act empowers
Government. of India to prescribe the minimum statutory bonus payable to employees. At
present, the minimum limit is 8.335% of basic salary of Rs.3500 per month. The Act covers
all industrial undertakings employing or more persons. The Act provides immunity to certain
categories of organizations like new establishments from the payment of bonus.

Important Provisions of Payment of Bonus Act, 1965:

1. Every employee in the specified establishments drawing a salary not exceeding

Rs.3500 per month is entitled to bonus payment provided he has worked for not less
than 30 days in a year.
2. Every employer is bound to pay a minimum bonus of 8.33% of the salary or Rs.100
per year whichever is higher.
3. If in any accounting year, the allocable surplus exceeds the amount of minimum
bonus payable to employee, the employer shall pay a higher bonus subject to
maximum of 20% of salary.
4. No minimum bonus is payable to a newly set up establishment in the circumstances
prescribed under section 16 of the Act.
5. The bonus amount is to be paid within 8 months from the close of the accounting
year.
6. An employee dismissed from the service for fraud, theft, violent behavior etc. is not
entitled to bonus payment.
EMPLOYEE EMPOWERMENT

Meaning:
Empowerment is a process of awareness and capacity building, leading to greater
participation, decision making, power and control, and to transformative action. It is an
active, multi- dimensional process which should develop confidence and enable a
subordinate to take independent decisions and follow up actions. Empowerment means
giving authority to take decisions freely within one’s area of operations i.e. without the
approval of superiors. Empowerment is one technique/ method of participative
management.

There are two types of empowerment – Individual level and group level . individual level
empowerment means the degree of control exercised by an individual employee on the
work setting. Group level empowerment means the amount of control exercised by the
group as a whole over the work setting.

Benefits/ Advantages of Empowerment:

1. Empowerment develops self confidence among employees. They develop high

value to their job and use their talents fully for their prosperity.
2. Empowerment gives more scope to employees to contribute directly on their
own. They are encouraged to use their talents for the benefit of their
organization.
3. Empowerment develops closer communication between management and
employees which helps cordial industrial relations and peace.
4. Empowerment supports participative management which is one feature of
industrial democracy.
5. Empowerment ensures better performance of employees in terms of better
quality, lower costs and greater productivity.
6. Empowerment provides benefits to employees and organization as well.
Conditions necessary for Empowerment:

1. Overall organizational culture should be favorable: - Favorable organization

culture is the basic condition for empowerment. An autocratic organization
makes subordinates powerless and dependent on their superiors. Such
organization is not in a position to introduce empowerment.
2. Stress on delegation, decentralization and diffusion of power and information: -
For effective empowerment, the stress of the management should be on liberal
delegation of authority and power. There should be adequate decentralization
and the powers and information should be decentralized.
3. Organizational hierarchy should be flat: - For meaningful empowerment, the
organizational hierarchy should be flat. Delegation is effective in flat
organization. This makes empowerment process easy and effective.
 4. Few managers with wider responsibility: - For empowerment, few managers with
wider responsibilities is a convenient situation. Here, the role of manager shifts
from controller to coach and mentor. He gives responsibility and authority to
small teams and encourages them.
5. Desire for employee self –development:- One more condition necessary for
employee empowerment is the genuine desire of the management in the form of
developing self- confidence and attaching high value to job assigned. This desire
should be accompanied by follow-up actions. This will lead employee
empowerment in a natural way.
6. Attitude towards subordinates:- The attitude of higher level managers should be
positive, fair and favorable towards subordinates. Superior should have
confidence on subordinates. They should train, guide and provide emotional
support to subordinates. Autocratic superiors act as obstacle in employee
empowerment.
Forms of / Approaches to Empowerment:

There are five broad forms/ methods/ approaches of empowerment:

1. Helping the employee to achieve job mastery: - For such job mastery, superior
has to provide necessary training, coaching and guided experience that are
required for initial success. Job training is useful for performing the job accurately
and efficiently. Due to job efficiency and sense of confidence, the junior will be
motivated to take initiative and interest in the job assigned. In brief, helping the
employee to achieve job mastery is one form of empowerment.
2. Allowing more control: - Under this, lower level employee will be given more
control on the job to be performed. The employee is give discretion over job
performance. He is allowed to perform the job as per his desire. He is given
freedom while performing the job. Workers have to achieve the performance
outcome as they accountable.
3. Providing successful role models: - Here the junior level employee will be given
an opportunity to observe peers who are performing the jobs successful. Such
observation will motivate junior employees to accept position at higher level.
This encourages workers to work at higher level with a sense of confidence.
4. Using social reinforcement and persuasion:- under this, superior can give promise
for better future and adequate support as and when required. Such promises
encourage junior to accept higher position. This forms of empowerment is
effective and purposeful in delegation.
5. Giving emotional support:- In this forms of empowerment, the superior gives
emotional support to his junior for better performance at the higher level. He
 takes personal care of the junior and see that minor problems do not create
difficulties before the subordinates. The superior also provides assistance in
dealing with the task assign. This raises the morale of the junior and creates a
sense of confidence for accepting additional responsibility.

Empowerment in India- An overview

Empowerment is benefited to employees and also to business organisations. It develops
confidence among subordinates and creates a team of efficient workforce for the future.
Progressive and professional managed Indian companies like Tata Group Companies,
WIPRO, Infosys, ABB, Reliance and Maruti are empowering their employees and are getting
encouraging result. In these companies, empowered teams are formed as they prove to be
highly productive.
In India, empowerment is undertaken on individual basis and also on group basis. At present,
more stress is on the empowerment at group or team level. More common types of team
include lead teams, cross- functional teams, problem solving teams and self-managed teams.
Quality circle is another type of team that operates in many Indian companies. It is a method
of employee empowerment. In brief, empowerment is visible in Indian organisations in the
following forms:
1) Delegation of duties and responsibilities by empowering manager to his subordinates.
2) Quality circles relating to production quality and cost control.
3) Formation of teams (lead teams, cross-functional teams, problem-solving teams, etc.)for
empowerment of subordinates.
4) Suggestion scheme /programme.
5) Works committee and joint management council.
One or more forms of empowerment are used in different industrial organisations. In
many organisations, empowerment concept is popular and gives promising results.

Barriers to empowerment:-
Some of the common barriers to empowerment are as briefly discussed below:
1) Incongruent organizational culture:-
If the organizational structure has been development on authoritarian concept, it certainly
works as impediment for effective empowerment. In such a culture, the authority tends to
centralize at the top. There is lack of meaningful delegation of authority which is the base of
empowerment. Here, most of the decisions are taken at the higher levels and communicated at
lower levels for execution.
2) Inadequate delegation of authority:-
In some organisations, superior managers do not delegate adequate authority to their
subordinate managers. The reason for inadequate delegation may be negative attitude towards
subordinates, authoritative attitude and approach of superior manager, superior’s love and
attraction for authority or fear of exposure of faulty working. In the absence of inadequate
delegation of authority by superiors, empowerment does not work effectively.
3) Tight/ strict control system:-
In some organisations, control systems are rigid, strict and effective. A manager does not
delegate authority to his subordinates as he wants to maintain tight control over the operations
assigned to him. The manager may prefer over constant contact of subordinates for approval
of matters. Such approach of higher level managers discourages delegation as well as
empowerment of subordinates.

4) Love for authority:-

Some managers are autocratic by nature and are power hungry. They are not favorable to
delegation of authority. They avoid empowering the staff. They even desire to raise their
importance within the organisation by marking subordinates to come to them frequently to get
their decisions approved. Such managers act as barriers to empowerment.
5) Fear of retribution by superiors:-
A manager may not empower his subordinates if he is held responsible and punished for each
and every mistake of his subordinates. This type of risk discourages delegation as well as
empowerment of subordinates by managers. A manager need to be given adequate protection
if he is expected to delegate and thereby promote empowerment.
6) Dependency of subordinates:-
Many subordinates feel comfortable and safe with command and control by the boss/superior.
They prefer autocratic leadership. They are afraid of additional powers and responsibilities at
the higher level. They lack self-confidence and are not favourable to delegation.
Empowerment will be difficult with such inferiority complex subordinates.
7) Fear of retribution by subordinates:-
Empowerment is difficult to flourish when there is constant fear in the mind of subordinates
that they will be held responsible and punished for taking initiative on their part. Here,
management or higher level managers should take liberal view so that possible mistake are
avoided by subordinates. Such approach will encourage delegation which is necessary for
empowerment.
8) Attitude towards subordinates:-
Mutual trust is necessary for delegation of authority and empowerment. The attitude of
superior towards his subordinates should be liberal, fair and sympathetic. He should introduce
delegation with proper care and remedial measures. He should encourage initiative by his
subordinates and also guide them properly. Such favourable and fair approach of superiors
will lead to employee empowerment easily and safely.

WORKERS PARTICIPATION IN MANAGEMENT

MEANING OF WORKERS PARTICIPATION:

Workers participation (also called labour participation) means associating workers with the
decision-making process. It is a type of mental and emotional involvement of workers in
industrial management. This progressive concept is radically different from the traditional
concept in which workers are treated as merely wage-earners and are supposed to work as per
the orders/instructions given by their superiors. The structure, form and content of workers
participation depends on the political ideology and systems adopted by a particular society.
Such participation may be direct or indirect i.e. through the representation of workers.
Workers participation is based on one fundamental concept that the ordinary workers invests
his labour in, and ties his fate to his place of work and therefore, he has a legitimate right to
have a share in influencing the various aspects of company's management policy. He should
be given an opportunity to express his views and they should be given due consideration by
the management while framing policies particularly those connected with the workforce
employed. In short, the concept of workers participation in management is considered as a
mechanism where workers have a say in the decision making process of an enterprise.

The concept of workers participation developed in Western countries and has proved to be
successful. As a result, it acquired world-wide recognition and popularity. It, in fact
crystallizes the concept of industrial democracy. Participation is an emotional involvement of
employees in relation to the working of their company. It is a process of giving and sharing
views, ideas and information in between the employer and employees through certain
channels or mechanisms. Such participation should be a purposeful and result-oriented
activity. It should lead to cordial relations between management and employees.

Worker's participation in managerial activities is through their representatives. Such

participation is possible at different levels. Works committees or joint management councils
are two popular methods used for such participation. It may be noted that workers
participation in management is not related to all aspects of management but with certain
aspects such as leave, holidays, hours of work, discipline, promotion, removal of workers,
administration of welfare facilities and other administrative matters in which workers are
directly involved.

DEFINITION OF WORKERS PARTICIPATION:

According to V.G.Mehtras, "Applied to industry, the concept of participation means sharing

the decision-making power by the rank and file of an industrial organisation through their
representatives, at all the appropriate levels of management in the entire range of managerial
action."

OBJECTIVES OF WORKERS PARTICIPATION:

(1) To give higher status to workers and to make them partners in the production process. The
purpose is to ensure human dignity (self-respect) and responsible status to workers.
(2) To create uniform approach of employer and workers on various matters of common
interest through direct negotiations.
(3) To establish cordial industrial relations and to promote industrial peace and harmony.
(4) To raise industrial productivity by improving co-operation between employer and
employees.
(5) To take workers in confidence, to give them an opportunity of self expression on matters
of common interest.
(6) To develop participative management at the industrial unit level.
(7) To promote industrial democracy in actual practice.
(8) To encourage workers to take positive role in running the enterprise.
(9) To stimulate workers for higher productivity.
(10) To provide psychological satisfaction to workers and to bring about a change in the
attitude of workers. It also aims at improving the morale of employees.
(11) To ensure best utilization of human resources by recognizing and tapping the potential of
the employees.

WORKERS PARTICIPATION IN MANAGEMENT

MEANING
The concept of workers participation in management is closely connected with the concept
of industrial democracy. It is a means for the introduction of industrial democracy is actual
practice. This concept has its roots in the human relation movement in the domain of
industrial organizations. Workers participation means associating workers with the decisions
making process. It is a type of mental and emotional involvement of workers in industrial
management. In industrial democracy the opinions and suggestions of workers are taken
into account while framing policies particularly those which are directly connected with
them or affect them direct. This progressive concept is radically different from the
traditional concept in which workers are treated as merely wage-earners and are supposed
to work as per the orders/ instructions given by their superiors.

Workers participation is based on one fundamental concept that the ordinary worker invests
his labour and ties his faith in his place of work and therefore, he has a legitimate right to
have a share in influencing the various aspects of company’s management policy. He should
be given an opportunity to express his view and they should be given due consideration by
the management while framing policies particularly connected with the workforce
employed.

OBJECTIVES OF WORKERS PARTICIPATION

1) To give higher status to workers and to make them partners in the production
process. The purpose is to ensure human dignity and respectable status in the
society.
2) To create uniform approach of employer and workers on various matters of common
interest through direct negotiations.
3) To establish cordial industrial relations and industrial peace.
4) To raise industrial productivity by improving co-operation between employer and
employees.
5) To take workers in confidence, to give them an opportunity of self-expression on
matters of common interest.
6) To develop participative management at the industrial unit level.
7) To provide psychological satisfaction to workers and to bring about a change in the
attitude of workers. Due to participation, they will feel that they are an integral part
of the organization and not merely working hands. Workers will have an opportunity
to express themselves. This satisfies their non-economic needs. It gives them a sense
of belonging pride and accomplishment.
NEED OF WORKERS PARTICIPATION IN MANAGEMENT
1) Giving higher status and psychological satisfaction to workers: workers participation
in management is needed in order to give them a higher status and psychological
satisfaction that they are important and that their views are being taken into account
while taking decisions on matters relating to them. Such participation satisfies the
urge of self-expression. Even for maturity and personality development of workers,
such participation is needed.
2) Maintaining cordial labour-management relations: it is needed in order to establish
cordial labour-management relations through mutual understanding. The
participation of workers in management can act as an effective means for preventing
industrial disputes.
3) Creating uniform approach of employer and workers: workers participation is
needed in order to have uniform approach of employer and workers on matters
important to both the parties. This avoids possible dispute in between the two
parties
4) Raising industrial production: it is needed for raising industrial production and
productivity as workers generally take interests in their work when they are given
due importance, respect and opportunity of self-expression
5) Introducing platform for direct negotiations: workers participation is needed in order
to create a platform (for employer and workers) for direct negotiations and collective
decisions and when required.
6) Creating responsible approach among workers: it is needed in order to make workers
more responsible, disciplined and constructive in their approach in relation to the
activities of the company. This is natural as participation creates a feeling of
involvement.
7) Removing grievances of workers: workers participation is needed in order to remove
doubts, misunderstandings and grievances in the minds of employees.
8) Developing a feeling of involvement among workers: workers participation is needed
for creating a sense of understanding and a feeling of involvement among the
employees.
9) Raising employee morale: finally workers participation is needed for raising the
moral of employees and in order to use their knowledge, skills and talents for the
benefit of the company.

FORMS OF WORKERS PARTICIPATION IN MANAGEMENT

1) Work committees: The Industrial Disputes Act, 1947 provided for setting up of a
works committees consisting of representatives of management and employees
in every undertaking employing 100 or more employees. The government may
direct industrial establishments with 100 or more workers to constitute such
workers committees. The committees are for removing the causes of fraction
between employers and workers in the day to day working of the factory.
Works committees are for the purpose of promoting good relation between the
management and workers. They also provide a platform forum for negotiations
between employer and workers at the factory level.

2) Joint management councils (JMCS): These councils are similar to work

committees with equal representation to employer and employees. These
council enable the workers to participate in management, help them to
understand the problems and difficulties of the industry concerned and bring
about better relationship between the management and the labour. Workers
express their views, problems and difficulties through their representatives on
such councils. Various problems like welfare facilities, discipline, training, removal
of workers etc. are discussed in the meeting of such councils.

3) Employee as Directors: here, one or more representatives of workers are taken

on the board of directors of company. The employee directors are elected by
workers and they express the views of workers in the meeting of the board. Here,
employee directors act as connecting link between workers and top level
management. The purpose is to introduce the concept of workers participation in
management and to protect interest of employees while framing company
policies at the highest level.

4) Participation through suggestion programme/scheme: under participation

through suggestion programmee, workers are asked to give their suggestions to
the management on various administrative and other matters such as machine
utilization, waste management, energy conservation and safety measures. Their
suggestions are considered by a joint committee representing workers, heads of
 departments and technical experts. The suggestions which are accepted. Such
suggestions are for improvement in the existing organizational setup.

5) Workers co-operatives: in this extreme form of labour participation, workers take

over the industrial unit and manage it completely on co-operative basis. Naturally
the entire management is by the workers themselves. This method is called
“Auto-management”. One example in India under this category is that of Kamani
tubes limited. This leading unit was closed down in 1985 due to sickness. Workers
suffered heavy loss. Now workers have contributed to its capital and become its
owners.

Concept of labour welfare:

Welfare means a stage of well being and happiness. Labour welfare means providing happy
and satisfactory life to workers/employees. Employees should be provided better life and
happiness by proving various facilities and amenities in and around the work place. They
include economic, educational, sports, medical, housing, recreational and other facilities.
New welfare facilities are added to the existing facilities from time-to-time. Such facilities are
provided to employees and their family members including children’s.

Welfare facilities are given in addition to regular wages, allowances, bonus payment and
other monetary benefits. It is a supplement to regular wage payment. Welfare facilities need
to be provided by an employer even when he pays attractive wages. In other words, attractive
wages need to be supplemented by liberal welfare facilities. Welfare facilities have a direct
bearing on the physical efficiency of workers. Labour efficiency largely depends on welfare
facilities provided to workers.

Labour welfare is a part and parcel of social welfare. Social welfare is a broad concept and is
concerned with the welfare of the entire society, whereas labour welfare is a narrow concept
and is concerned only with the welfare of the working class particularly industrial workers.
All measures taken for providing better standard of living to workers are called labour
welfare facilities. The scope of labour welfare is very wide as anything and everything done
for providing better life to workers come within the scope of labour welfare. International
labour Organization (ILO) has supported the concept of labour welfare since long.
Employers/managements of industrial organizations are also providing liberal welfare
facilities to their employees.

The concept of labour welfare is also a dynamic one. New welfare measures are added to the
existing ones along with social and economic progress and changes. Welfare facilities
provided about 25 to 30 years ago are now treated as old outdated welfare facilities and are
supplemented by new ones as per the current socio-economic norms. This suggests the
dynamic nature of the concept of labour welfare. Workers always demand more and more
welfare facilities as per changing socio-economic norms and environment. It is necessary to
provide them so as to have efficient and satisfied labour force.

Employees have to share major responsibility in providing welfare facilities to their

employees. It is their moral and social responsibility. Moreover, expenditure on labour
welfare is a profitable investment in the long run. Welfare facilities enhance labour efficiency
and output. An attractive welfare package will attract and retain the best talent and enhance
the moral of workers. This gives benefits to employers/managements. Even trade unions can
play an important role in providing mutual welfare facilities to trade union members.
Government and charitable organizations also provide welfare facilities to industrial workers
along with other sections of the society.

Objectives of labour welfare

1. To provide better life and health to workers and thereby to overcome the sense of
frustration among them.
2. To make workers happy, satisfied and efficient.
3. To relieve workers from industrial fatigue and also to improve intellectual, culture and
material conditions of living of workers.
4. To reduce labour turnover and absenteeism.
5. To provide justice and dignity to all employees through labour welfare schemes.
6. To develop cordial labour- management relations.
7. To reduce mental tension of workers and to relieve them from some important
personnel and family worries.
8. To improve the quality of life of workers and make it more rich, interesting, positive
and meaningful.
9. To provide higher social status to workers.
10. To create a sense of involvement in the work among the workers.
11. To create stable, satisfied and happy labour force in the organizations.

In short, the objectives behind providing welfare facilities are partly humanistic, partly
economic and partly civic. Different welfare facilities collectively provide decent life
to industrial workers. Such facilities give satisfaction to employees and raise their
moral. Welfare facilities also motivate workers to take more interest in the work
assigned.

Labour welfare facilities provided by different agencies in India

1 labour welfare measures/facilities provided by the Government: as already pointed
out, government (central and states) plays a positive role in promoting labour
welfare facilities in Indian industries. Various Statutory Welfare Acts are made by
the government after independence for providing statutory welfare facilities to
industrial workers. They include the Factories Act, 1948, Mines Act 1952, the
Workmen’s Compensation Act, 1923,Plantation Labour Act, Maternity Benefit Act
,1961, Payment of Gratuity Act, 1972, Employees ‘State Insurance Act,1948 (ESI Act,
1948), and the Employees Provident Fund Act, 1952 etc. Under these Acts,
employers have to provide certain basis welfare facilities to their
employees/workers. For example, under the Factories Act, 1948, employer has to
provide canteen, rest and lunch rooms, crèches, medical aid, drinking water, etc. at
the work-place. Appointment of Labour welfare Officers is also made compulsory in
the factories employing more than 500 workers.
FSI Act, 1948 provides comprehensive health insurance benefit to industrial
workers. The objective is to provide compulsory and contributory health insurance
facilities to workers. It provides sickness benefits, dependents benefits and funeral
benefit to industrial workers. ESIC (Employees State Insurance Corporation) is a
compulsory and contributory comprehensive health scheme for the benefit of
industrial workers.
In the case of coal mines, the provision of welfare fund has been made. It is called
coal Mines labour Welfare Fund. This fund is to be utilized for providing housing,
medical, educational and recreation facilities to workers in coal mines. Mica mines
Labour Welfare Fund Act, 1946. In India, Motor Transport Workers Act.
The government also provides financial housing, medical care, canteen, educational
aid to children of workers in the case of dock workers, plantation workers and
workers working in mines. Legal provisions are also made for welfare facilities to
plantation and transport workers.
Government provides financial assistance for providing safety and welfare facilities
to industrial workers in big industrial cities. In all plans, funds have been provided
for labour welfare and for education and training workers.
In some states, labour welfare boards have been established to promote and
maintain welfare facilities in labour localities through welfare centers. Such centers
provide recreational, educational and cultural facilities to workmen and their
families.
Some state governments also run health centers and family planning clinic for the
benefit of workers particularly in industrial townships. In addition, recreation
centers are also run by state governments for the benefit of working class. The
expansion in the welfare facilities by the government is a desirable trend as the
government is the biggest employer in India and should try to be an ideal employer.
Even Municipal Corporation and local bodies provide certain welfare facilities to
 their employees along with other social groups including industrial workers. Labour
welfare programmers of the government relating to Indian industries are expanding
and arte also becoming employee friendly.

2 Labour welfare Measures/Programmes provided by

Employers: Employers/Managements have to share major responsibility in the
field of labour welfare and invest huge funds in this area of employee welfare. All
employers have to provide statutory welfare facilities as it is binding on them. In
addition, many progressive employers provide welfare facilities on voluntary basis
to workers and their families. They are called non-statutory welfare facilities.
Workers in organized industries secure such facilities. They include free transport
facility, housing facility near the place of work, medical facilities, gymkhana, and
subsidized canteen facility, reading room and library, scholarships to children’s,
travel grants, cooperative store workers bulletin, schools and nursery classes, etc.
The Tata Iron and Steel Company (TISCO), Jamshedpur, provides excellent welfare
facilities to its employees. Similar facilities are give to employees by many
engineering units, paper mills, etc. Some associations of employers also provide
welfare facilities collectively. They include Bombay Mill owners Association and
Indian Jute Mills Association. Some companies like Larsen and Turbo Ltd., Reliance,
Godrej, Tata Group of Companies, etc. provide liberal welfare facilities to their
employees. Godrej provides excellent housing accommodation and schooling facility
to the employees. Larsen and turbo Ltd. provides efficient transport facilities to its
employees. In addition, medical, sports and other facilities are also provided.
Shipping Corporation of India provides liberal welfare facilities to its employees.
Many nationalized banks provide “clean Loan” facility to employees to help
argument the economic resources of the employees in need.
Bhilai steel Plant (public sector undertaking) has undertaken extensive construction
programme for providing housing facility to its employees. Housing loans are also
given to workers. In addition, liberal medical and educational facilities are provided
to workers and their families. Indian Oxygen Ltd. Also provides wide variety of
welfare facilities to its employees. Even multinationals and foreign companies
operating in India provide liberal welfare facilities to their employees.
It may also be noted that the quality of welfare facilities provided by many
employers/managements in India in general is not satisfactory. Similarly, the
benefits of welfare facilities are made available only to limited few. Employers
provide more welfare facilities to officers and supervisory staff and less to average
workers who are badly in need of such facilities. In addition, workers are not taken
into confidence while providing such facilities. Some employers show limited
interest in providing welfare facilities to their employees.
 At present the general trend among private sector employers is to provide liberal
welfare facilities to employees as they have experienced the benefits available from
such facilities. Organized industries are favorable to liberal welfare facilities to
employees. IT sector is a leading sector in this regard. IT employees are offered wide
variety of welfare facilities. There is growing awareness as regards beneficial effect
of welfare measures on the well-being of workers, leading to improved industrial
relations and greater productivity. The labour welfare programmes in many
industries including IT sector, engineering companies, service sector companies, etc
are extremely liberal and employee friendly. The facilities are diversified and
companies are spending crores of rupees on welfare facilities. Reference to such
facilities is made in the annual reports and house journals of companies. Industrial
sector provides liberal welfare facilities as compared to other sectors of Indian
economy. Welfare programmes in different industries are, in general, liberal and
employee friendly. The purpose is to make employees satisfied and to raise their
efficiency and moral. Companies get stable labour force due to liberal package of
welfare facilities. Such facilities motivate employees to be favorable to management
and organizational objectives. Expectations of employees relating to welfare
facilities are also increasing along with socio-economic changes. Managements of
industrial units respond to such expectations through liberal packages of welfare
facilities.

3 Labour welfare Measures/ Facilities provided by Trade

Unions: In Western countries, trade unions play an important role in providing
welfare facilities to their workers. This is due to their financial strength, large
membership and constructive leadership. However, in India, trade unions provide
limited welfare facilities to their members. Such welfare facilities are classified as
mutual welfare facilities. Actual facilities provided are limited due to financial
difficulties of trade unions. Secondly, unions provide limited attention to welfare
facilities which are actually as important as wage to workers. In addition, trade
unions feel that labour welfare is the responsibility of the government or of the
employer. In Mumbai City, some unions provide sports and educational facilities.
Co-operative stores are also stared by some unions. Some unions provide cultural
facilities to their members. Trade unions like the Rashtriya Mill Mazdoor Sangh are
doing good work in the field of labour welfare. In addition, Textile Labour
Association, Ahmadabad provides certain facilities like schools, social centers,
libraries and legal aid to textile workers. It may be noted that the Textile Labour
Association of Ahmadabad is doing very good work in the field of labour welfare.
In general, the role of trade union in the field of labour welfare is insignificant.
Unions are interested only in placing their welfare problems and demands before
 the employers. Workers should encourage their unions to provide more welfare
facilities as they are useful to workers in different ways. Unfortunately, Indian trade
unions have neither the will nor the ability and funds to undertake liberal welfare
activities for the benefit of their members.

Labour welfare programmes in Industries

Employee/ management have to share major responsibility in the field of labour welfare and
invest huge funds in this area of employee welfare. All employees have to provide statutory
welfare facilities as it binding on them. In addition, many progressive employers provide
welfare facilities on voluntary basis to workers and their families. They are called non
statutory welfare facilities. Workers in organised industries secure such facilities. They
include free transport facility, housing facility near the place of work, medical facilities,
gymkhana, and subsidised canteen facility, reading room and library scholarship to children,
travel grant, cooperative store workers bulletin, schools and nursery classes, etc.

The Tata Iron and Steel Company (TISCO), Jamshedpur, provides excellent welfare facilities
to its employees. Similar facilities are given to employees by many engineering units, paper
mills etc. Some associations of employees also provide welfare facilities correctively. They
include Bombay Millowners association and Indian jute mills association. Some companies
like Larsen & Turbo Ltd. Reliance, Godrej, Tata group of companies etc. provide liberal
welfare to their employees. Godrej provides excellent housing accommodation and schooling
facility to the employees. Larsen and turbo ltd. Provides efficient transport facilities to this
employees. In addition medical, sports and other facilities are also provided. Shipping
corporation of India provides liberal welfare facilities to its employees to help augment the
economic resources of the employees in need.

Bhilai steel plant (public sector undertaking) has undertaken extensive construction
programme for providing housing facility to its employees. Housing loans are also given to
workers. In addition, liberal medical and educational facilities are provided to workers and
their families. Indian oxygen ltd. Also provides wide variety of welfare facilities to its
employees even multinationals and foreign operating in India provide liberal facilities to their
employees.

It may also be noted that the quality of welfare facilities provided by many employers/
managements in India in general is not satisfactory. Similarly the benefits of welfare facilities
are made available only to officers and supervisory staff and less to average workers who are
badly in need of such facilities. In addition, workers are not taken into confidence while
providing such facilities. Some employees show limited interest in providing welfare to their
employees.

At present, the general trend among private sector employees is to provide liberal welfare
facilities to employees as the have experienced the benefits available from such facilities.
Organised industries are favourable to liberal welfare facilities to employees. IT sector is a
leading sector in this regard. It employees are offered wide variety of welfare facilities. There
is growing awareness as regards beneficial effect of welfare measures on the well-being of
worker, leading to improved industrial relations and greater productivity. The labour welfare
programmes in many industries including it sector engineering companies’ service sector
companies, etc are extremely liberal and employee friendly. The facilities are diversified and
companies are spending cores of rupees on welfare facilities. Reference to such is made in the
annual reports and house journals of companies. Industrial sector provides liberal welfare
facilities as compared to other sectors of Indian economy. The purpose is to make employees
satisfied and to raise their efficiency in moral.

Labour welfare facilities or measures are two types :-

Statutory measures

Statutory measures such are uniform in all industrial establishments and are provided as per
the legal provisions. Such facilities are necessary for the protection and safety (life and
health) of workers. Observance of statutory welfare facilities is binding or mandatory on the
employers under the law. Penalties are also provided for violating rules made in this regards.
Statutory welfare facilities are just minimum required for the protection of life and health
workers. Employees are expected to provide statutory welfare facilities to employees as per
the statutory provisions and also in a fair manner. Statutory welfare measures are as explained
below:

The factories act1948: This act covers area including health, welfare, safety, working hours,
leave with wages etc. important benefits under the act are:
 A no worker shall be required to work in factory for more than 48 hours in any week
(section 51)
 The working hours shall be kept restricted to 9hours on any day (Section 52)
 An adult worker shall have weekly paid holidays, preferably Sunday.
 A worker deprived of weekly holidays, is eligible for compensatory holiday of the
same number in the same number in the same month.
 Provision of double salary to the workers during holidays
 Provision for canteen employing more than 250 workers and crèches where more than
30 women employees are working.
The mines act 1952: In addition to canteen and crèches, the mines act 1952specifies that
there should be provision for first aid boxes and first aid rooms in mines employing more
than 150 workers and appointment of a welfare office in mines employing more than 500
workers.

Workmen’s compensation act 1923: In addition safety and health measures, provision for the
payment of compensation has been made under this act. The act covers the employees whose
wages are less thn rs 500 per month. Amount of compensation depends on the nature of injury
and the monthly wages of employee, his dependent are eligible for compensation.
The plantation labour act 1951:The act makes provision for canteen in plantations
employing 150 or more workers, educational arrangements in the estate for children of
workers, where there are 25 workers children between the age group of 6-12, and provision
for umbrellas blankets raincoats or other such amenities for the protection of workers from
rain or cold as may be prescribed. Appointment of a welfare officer in plantations employing
300 or more workers is also specified in the act. Workers who worked for 240 days during a
calendar year are eligible for paid vacation at the rate of one day for every 20 days worked.

The motor transport workers act 1961: Under this act provisions for canteen, restrooms,
uniform, raincoats, medical facilities etc. are made. First aid facilities equipped with the
prescribed contents are to be provided in every transport vehicle

Employees state insurance act 1948: This act deals with the health benefits to be provided to
the employees working in factories, establishments running with power and employing 20 or
more workers. The main benefits provided under this act include sickness benefits for 56 days
in a year, maternity benefits, disablement benefits, dependants benefits, medical benefits, etc.

Non statutory measures

Non statutory measures/ facilitates are provided to workers by the owners of the organisation
on their own. Such benefits are voluntary and not compulsory binding on the organisation.
Providing benefits depend on the its employees. Even industrial relations and outlook o
workers and unions determine such benefits. Important non statutory benefits offered to
industrial employees are:
 Transport facilities
 Educational facilities
 Housing facilities
 Recreational facilities
 Consumer co-operative societies
 Subsidized lunch/refreshment
 Children care facilities
 Sports and welfare facilities
 Travel grants
 Holidays homes at hill stations
Non statutory benefits are not obligatory on the part of company managements. The level and
degree of facilities vary from company to company. Progressive, liberal and profit making
companies provide liberal package of non-statutory facilities/benefits to employees

Non statutory welfare facilities or measures are more significant than statutory facilities.
However, they are not binding on the employees. Voluntary welfare facilities are offered by
the employer on this own. Progressive managements and financially sound companies such as
Tata L&T Reliance and Infosys provided liberal welfare facilities to their employees. Such
facilities include transport and housing, medical and schooling, subsidised canteens fair price
shops, recreation, sports and cultural facilities to employees. Some companies construct
holiday homes for their employees. Scholarships, uniforms, books, etc. are provided to
children of workers. In addition, provision of crèches and nurseries, sanitary, provision of rest
rooms, lunch rooms and so on are provided to employees under voluntary or non-statutory
welfare facilities.

TRADE UNION
Definition
According to Indian Trade Union Act, 1926, trade union means “Any combination, whether
temporary or permanent, formed primarily for the purpose of regulating the relations between
workman and employers, or between employers and employers, and for improving conditions
on the conduct of any trade or business, and includes any federation of two or more trade
unions.”
Function
1) To make constant efforts for higher wages and other monetary benefits in the form of
bonus and profit-sharing to members.
2) To fight for securing better working conditions, security of employment, monetary
benefits and various welfare facilities like transport, housing and sports facilities to
members.
3) To undertake, go slow and other aggressive activities if injustice cannot be removed
though peaceful means like direct negotiation and collective bargaining.
4) To conduct direct negotiations with the employer as regards various difficulties,
demands and grievances of workers and also for peaceful settlement of disputes. In
addition, to make collective bargaining agreement with the employer. Here, the union
acts as a representative body of workers.
5) To protect the economic interests of workers though certain economic activities like
opening of co-operative store or bank,etc
6) To oppose any political move which is likely to affect the working class and the trade
union movement adversely.
7) To join hands with other unions for common benefits of working class and to support
other unions if the need arises.
8) To protect the rights of workers and to see the labour laws are implemented properly
and also for the benefit of the working class.
9) To oppose to rationalization, automation and other programmes if they are against
the workers and the security of their employment.
10) To conduct direct negotiations with the employer as regards various difficulties,
demands and grievances of workers and also for peaceful settlement of disputes.

Trade Union Movement In India

Like other countries, trade union movement operates in India since long. Before
independence, the movement was restricted to certain organised industries like cotton textile,
jute and so on. The progress of the movement was slow as the industrial development was
restricted to few big cities only. The movement has also made its positive contribution in the
struggle for independence even when it was not directly involved in the same. Many political
leaders of freedom movement including Mahatma Gandhi and S.A Dange were closely
connected with Indian trade union movement. George Fernandis and Shri S.M. Joshi are also
known trade union leaders of recent period.
The trade union movement is making rapid progress after 1951 i.e. along with rapid
industrial growth. The growth of trade union movement in India started along with industrial
development and the emergence of new working class in the country. Indian trade union
movement is recent in origin as compared to its growth in the Western countries. The growth
of trade union in India has been rather late and also slow due to various factors like slow pace
of Industrialisation, heterogeneity and migratory character of Indian workers and illiteracy
among the working class.
The first quarter of the twentieth century saw the birth of trade union movement in India,
though the germs of the movement were found in the last quarter of the 19th century. It was in
1890 that one Mr. N.M. Lokhande, himself a worker, organised a meeting of 10,000 textile
workers for a very simple demand of weekly holiday and it was granted to textile workers in
Mumbai. Mr. Lokhande is rightly called the founder of the organised labour movement in
India. He organised Bombay Mill Hands Association in 1890. Along with Mr. Lokhande, S.S.
Banglee and others took initiative in establishing unions of workers for providing better life
and welfare to the working class. The society of Railway Servants in India was established in
1897 and the Bombay Postal Union was organised in 11907. However, it was only after the
First World War that the trade unionism looks firm roots in Indian soil.
The real progress of the movement started after 1920. The credit for establishing the first
industrial union goes to Mr. B.P. Wadia who organised the textile workers in Mandras in
1918. He is rightly called the founder of organised labour movement in India.
In 11920, The All-India Trade Union Congress (AITUC) was set up to represent the interest
of workers and also to co-ordinate the activities of labour organisations in the country. The
setting up of AITUC gave a great fillip to the rapid formation of unions thoughout the country
and in big and small industries. Political leaders including Mahatma Gandhi took active
interest in the progress of the trade union movement during the British period. Mahatma
Gandhi himself established Ahmedabad Textile Lobour Association (ALTA) at Ahmedabad.
The establishment of ILO (International Labour Organisation) in 1919 also helped the
growth of trade union movement in India. It is important to note that the movement made
progress during the pre-independence period even when the British government and
employers in India were against the growth of the movement. This growth of trade unionism
was mainly due to the interest taken by political leaders and political parties in the movement.
In 1926, the Trade Unions Act was passed which was a landmark in the history of the trade
union movement in the country. This Act gave a formal recognition to the workers right to
organize and form a union. The Act gave legal and corporate status to registered trade unions
and conferred on them and their members a measure of immunity from civil suits and
criminal prosecution. The Trade Unions Act, 1926 basically provides for the registration of
trade unions. Any seven or more workers may, by subscribing their names to the rules of a
trade union and otherwise complying with the provisions of the Act with respect of
registration, apply for registration of the trade union under the Act. Along with this the
registered has to submit its audited account to an appropriate authority. In addition, certain
returns are required to be submitted. The Act enhanced the position of union in the minds of
employers and the general public. This Act is an important in India. The movement came to a
standstill during the second World War period as the situation was not favourable for the
growth of the movement.
After independence, the progress of the movement was rapid.The planning period crested
more favourable economic and industrial environment for the growth of trade union
movement. At present, we have trade unions practically in all industrial and commercial
establishments. In addition, there are trade unions operating at industry level, regional level
and national level. The All India Trade Union Congress (AITUC) (set up in 1920), Indian
National Trade Union Congress (INTUC) (started in1947) and controlled by the Congress
Party), Hind Mazdoor sabha (HNS), United Trade Union Congress (UTUC) (formed in 1949
and same radicalists), and Bharatiya Maazddoor Sabha (BMS) aresome important trade
unions operating at the national level.

Weaknesses of Indian trade union

1. Existence of rival union.

In India, rival union exist at all levels, in every industrial unit, 2 or more unions
control by different political parties exist such small unions waste their time, energy
and resources while fighting among themselves rather than fighting for protection of
workers. Inter union competition leads to many industrial disputes. The policy of
“Divided and Rule” is used. The very purpose of trade unionism is defeated due to
multiplicity of union.

2. Inadequate coverage.
In India, trade union movement exist throughout the country, but it is restricted to
organised sector only. The progress of the movement is rapid only in certain states
like West Bengal, Kerala, Maharashtra and Tamil Nadu trade union activity is mainly
concentrated in metropolitan centres, where large scale industries are located. This
ltd. coverage is again divided among rival unions. This makes the unions weak in
barging power.

3. Weak financial position.

Due to ltd. membership, small size of unions, poverty of workers and ltd. interest of
workers, majority of Indian Trade Union are not in position to undertake various
economic, social and cultural activity for benefit of members.

4. Political leadership.
 Political leadership to Trade Union is actually harmful to the cause of working class
strikes are prolonged by political leaders for personal prestige. Very often,
negotiations with employers fail due to uncomproming outlook of political
leadership. Thus outside leadership is one major weakness of Indian Trade Unions.

5. Absence of full paid office bearers.

Many union leaders work on honorary basis. They devote limited time and energy to
union activity. The office bearers are also not trained properly they lack the
knowledge of trade unionism and labour laws in India. Absence of whole time paid
officers affect the functioning and activity of trade union. Unions undertake limited
activities due to absence of full time paid office bearers.

6. Limited stress on welfare activity.

Majority of trade unions in India undertake limited welfare activities. Other activity
like provision of educational and medical facility, provision of welfare facility etc. is
not undertaken by large majority of unions. As a result workers are not interested
towards the unions and the contribution of unions in raising labour welfare is also
limited. Limited stress a welfare activity is also due to financial difficulty.

7. More reliance on strike and litigation.

Trade unions in India concentrate attention on strikes and other activity like go slow
and demonstration. Trade Union has a right to strike but strike should be used as a
weapon of the last resort. Undue stress a strikes and litigation is one basic defect of
trade unionism. Many union organise strike first and then negotiation.

8. Absence of loyalty of workers to unions

In India, workers migrate from one union to another frequently such migration
suggest the absence of loyalty of workers to their unions, this also indicates absence
of confidence in the unions. Migration of workers affects the financial position of
unions and also their bargain power

9. Lack of public sympathy.

Indian trade unions are interested in dispute strike and demonstration. They give
limited attention to peaceful method or method for settlement of dispute. The
general public gets information about the union only when the union organise strike
etc. people feel that unions are only for strikes and disputes as a result public
support, sympathy is not available to trade union.
 10. Unfavourable attitudes of employer’s management.
In India, employers or management are not favourable for rapid growth of healthy
trade unionism. They don’t provide adequate support and facility to unions. Efforts
are made to break the union operating in a satisfactory manner. This conservative
attitude of management harms the growth of healthy Trade Unionism in India.

Problems before Indian Trade Union

The weaknesses of trade union are actually problems before Indian Trade Union. Such
problems or challenges are:

1. How to remove the present multiplicity of Trade unions and how to bring about unity
among rival unions.
2. How to reduce the present domination of politician and political parties on the Trade
Unions at all levels and how to develop new leadership from among the working class
itself.
3. How to develop popular support of working class to the unions and how to achieve
wide coverage for the unions in other words, how to develop loyalty of workers
towards the trade union.
4. How to expand the activities of the unions with stress on welfare activities. So as to
provide better welfare to the working class.
5. How to replace the present aggressive and strike oriented approach of union leaders by
compromising, constructive and peaceful outlook for solving the problems of workers.
6. How to make trade unions financially strong and stable organisation for undertaking
variety of activities for the benefit of working class.
7. How to secure sympathy from employee, government and public.
8. How to introduce unity among all India trade union for introducing common policy and
ideology for the benefit of working class as a whole.
9. How to remove present weaknesses of trade union so as to make the strong, stable and
utility oriented.
10. How to adjust the activity and function of Trade Union under the present environment
created by globalisation, liberalisation and economic reforms.
11. How to maintain stable and purposeful existence in the light of current globalisation
process.

Suggestions/ measures for healthy growth of trade unions in India

Indian trade union movement is not strong, united and effective in giving protection to
workers: there many weaknesses of Indian trade unions. There are responsible for weak
bargaining position of trade unions. All such weaknesses need to be removed as early as
possible. This is necessary for strong and healthy trade union movement in India
The following suggestion/ measures are worth noting for the healthy growth of trade
unionism in India:
1) Creating unity among unions:
The present weaknesses like small unions, limited membership, multiplicity of unions, weak
financial position of unions and inter-union rivalries can be removed if unity is established
among the unions. It is desirable to have a few strong unions with huge membership rather
than larger number of weak unions with limited membership.
2) Removal of inter-union rivalries:
Inter –union rivalries affect all unions and also the healthy growth of trade unionism .such
rivalries are due to multiplicity of unions and political leadership to unions. The movement
lack solidarity due to inter- union rivalries. It is, therefore, necessary to bring unity among
unions. The national level unions should prepare a common code of conduct with a view to
resolving inter-union rival.
3) Elimination of unhealthy political influence:
The present linking of unions with political parties and politicians is highly dangerous for the
healthy growth of trade unionism in India. The present political influence should be thrown
away by the unions. The leadership of “outsiders” is harmful to healthy growth of trade
unions. Such leadership exploits unions for their benefit.
4) Promotion of working class leadership:-
Trade unions need working class leadership and not political leadership. Efforts should be
made to developed new leadership from amongst the working class. For this, proper
education and training should be given to the office-bearers of the unions. Even public
sympathy will be available to unions if they develop constructive leadership from within the
working class itself. Thus, the present political leadership should be replaced by responsible
trade union leadership.
5) Expansion of union activities:-
Indian trade unions do not undertake economic, social and culture activities which are equally
important for raising the welfare for the working class. Many unions are more or less like
strike committees. Such unions get support only when the strike is organized. After the strike,
member goes away from the unions. This situation is undesirable. Expansion/ diversification
in the activities of trade unions are essential for raising the utility and popularity of trade
unions.
6) Providing financial stability:
Most of the trade unions in India are financially weak. The financial problems of the unions
can be solved by raising the membership and by collecting more contributions from members.
In addition, special donations should be collected from the members at the time of bonus
payment.
7) More stress on peaceful means:
Trade unions in India should replace their aggressive approach in the form of strikes, gherao;
go slow, etc by peaceful and constructive approach in the form of direct negotiations and
collective bargaining. The unions can protect the interest of the working class through
peaceful and democratic means. The unions should raise their bargaining power and settle
their disputes on the negotiation table.
8) Promoting responsible trade union leadership:
Trade unions leaders need full knowledge of the constitutional and legal rights available to
unions. They have to use these rights to secure and promote workers interests. Personal
integrity, patience, understanding and courage are some of the qualities required by the trade
union leaders. Such leaders can make positive contribution in building healthy trade union
movement in India.
9) Change in the outlook of employee:
employees in India should adopt more liberal and progressive outlook towards trade
unionism. Attempts to discourage the information of unions, encouragement for the
formatting of rival unions, bribing the union leaders and creating difficulties in the smooth
working of unions are undesirable practices. Such policy of divide-and- rule will not be
profitable to them in the long run.
10) Miscellaneous suggestions/measures for healthy growth of Trade unions:
A) There is a need to eradicate illiteracy among workers and to enlarge the membership of
unions.
B) There is an urgent need of reforming the structure of trade unions.
C) It is necessary to cover unorganized sector within the scope of trade unionism. The worker
from this sector is large and need protection through unity of actions.
D) There is a need for widening the philosophical basis of trade unionism in India.

CHALLENGES FACED BY INDIAN TRADE UNIONS IN THE

LIGHT OF GLOBALISATION
India has, now adopted a new model of development in the from of liberlisation, privatisation
amd globalisation.Tthe country has accepted market- based strategy to accelerate
development with least amount of state intervention. This basic change in the economic
policy has created new problems and challenges before indian trade unions. The new
challenges are different as compared to the challenges of the previous period. The need of
trade unions is universally accepeted by the working class even in the present period. they are
certianly not becoming irrelevant even the present period. however, the situation under which
they have to function has changed considerably. The current challenges before the unions are
also different. this is the outcome of globalisation and liberlisation process which started in
india by 1991.
New development in the labour field after the commenencement of globalisation process are
as noted below.

1.Growing importance of capitalist class

Globalisation gave new strength to the indian capitalist class. This class agrued for
labour reform which implies the power to " hire and fire" workers and freedom to determine
wages according to market demand and supply. It may be noted that officially, government
has not supported these labour reforms through new legislation. It has not supported the
demand of the capitalist class but it silently worked to reduce state intervention. as a result,
employers useg different menthods to reduce the size of the labour by decentralising
production and even sub-contracting certain operations to small business.This led to reduction
in the growth of jobs in the organised sector and increase in the share of the informal sector in
industrial employment.
Regular workers are being replaced by contract workers to reduce wages costs. This started
the process of weakening of trade unions.
In additions, lockouts were used by employers to retrench workers and prolonged lockouts
were used as instruments of pressurizing workers to accept certain unfair conditions of work
before lifting lockouts. This techque was used by private sector companies in all states.
however, all such policies of employers/ capitalslist class are responsible for making indisn
trade union movement weak. Under globalisation, labour has already lost its teeth. its
bargaining power is also limited. The militant trade unionsm has no scope in india under
economic reforms. trade union movement has now become weak with limited bargaining
power.
2. Reducation of surplus labour
During the process of globalisation, the state itself started the process of " shedding the load
of surpluse workers'. For this, various menthod such as freeze on frech recruitment and
offering voluntary retirment schemes( VRS) to employess are used. during the last decade,the
public sector accounted for 60% of the privatisation of the enterprises futher lead to a decline
in employment, dilution of collective barganing, worsening in working conditions and
reducation in wages. All this affects trade unions in india.

3. Concept of labour flexibility

In recent years, the capitalist class is asking the state to permit labour flexibility in business.
This implies the right to retrench labour, to permit business firms to replace regular workers
with either temporary or contract labour so that the benifites of provident fund, gratuity, paid
leave, etc are denied to a part of the working class. These actions are for cost reducation so
that the firms can face competition while earning reasonably good profits. Data indicates that
the total numbers of workers employed by factories declined from 62.8% lakhs in 1999-00 to
60.8 lakhs in 2003-04. However, the proportion of contract worked increased from 19.7% in
1999-00 to 24.6% in 2003-04. During the period, the profits of companies increased
substaintainlly. This suggest that the benefits of labour flexibility were taken by the capitlist
class at the cost of labour. The new development in the form of the labour flexibility is
harmful trade unions and their growth in future.

4. New class of highly paid labour labour is emerging

There is growing demand for highly skilled labour in IT and other sectors. Firms recruit
such experts by paying attractive packages. In brief, a new class highly paid workers is
emerging in india. This form their own associations to seek larger benefits to them.
5. Growing popularity of industrywise unions
Employees now perfer to have industrywise union rather than joiningh all indian level unions
of political parties. in additions, there is absence of co-operation and consolidations among
major unions. The left rules unions ignore the government labour policies in the left rules
states. However, such union pays a different role in states ruled by BJP or Congress.

6. Absence of coperation among major unions

Politically affiliated unions are showing a change in the attitude with the change in the ruling
party. They play different roles in the different states. there is inadequate co-operation among
all indian level trade unions. Unity of action among unions is lacking and this makes the
movement weak and ineffectives in india.

7. Formation of new types of unions

IT, BPO and retailing are fast growing sectores in india. They provide employment to skilled
white coller workers. These workers gets attrative pay packets. They gets benefits from
individual bargaining rather than collective bargarning. this class of white coller workers do
not want to be a party of trade union along with other industrial workers. The government
wants to declare the IT and BPO sector as " public utilities" whereas trade unions wants
workers from IT and BPO sector to join their unions. Special economic zones are exempted
from the application of labours law. This can be regardes as anti- labour attitude of the
government. however, trade union find it difficult to fight against this government policy.
The new development noted above are likely to create challenging sitution for the growth of
indian trade union movement. the strenght of the movement will reduce gradually and the
movement will become weak in the near future. The bargaining power of trade unions has
already weaked. unions have to give up the strategy of confrontable and confict and shift to
co-operation and colloration. They have to depend more on negotiations, dialogue and not on
strikes and disputes. The benefits of the sitution will be easily available to capitalist class.
The unions have to understand new trends and forces under globalisation and bring about
suitable change in their strategy. In brief, the unions will have to face new problems and
challenges different from the challenges of the previous year, every new development noted
above creates new problems before the trade unions. The unions have to understand the
changing scio-economic scenarioin indiaand adjust their straegies accordingly, this is better
alternative rather than getting sidelined by the state and capitalist class. The future of trade
unions in indian depends on their respones to new challengens developed due to the
introducations of new LPG model of development.
In brief, the challenges faced by indian trade unions in the light of liberalization, privatization
and globalization are as noted below.
1.Unfovorable attitude and polices of the government which are harmful to the growth
of trade unions.
2.Unfavourable attitude of judiciary towards labour and labour laws: The basic
approch of judiciary is dynamic, progressive but unfavourable to the growth and
 popularity of trade unions.
3.Formation of new unions of IT, BPO, and retail sector employees for their
benefits: t These union perfer to be awa from other industrial unions. This well affect
the unity and strenght of trade union.
4.Reducation on the number of the regular industrial workers: This will reduce
the strenght of the workers.
5.Pro-capitalist class policies of government create problems before trade unions.
In additions, current challenges before trade unions are:
1.How to deal will ideal with anti- labour economic environment developed in india
due to liberalisation, privatization and globalisation model of development.
2.How to convince white- coller worker to shed with their class arrogance and be part
of the board labour labour movement in india?
3.How to put pressure on the government so as to avoide declaring any sector as "
pubic utility".
4.How to replace the present trend of individual bargaining with collective
bargaining?
5.How to adjust the strategies of trade unions as per changing the socio-economic
scenario in india?

Labour Turnover
Meaning
Labour turnover means movement ,shifting or migration of workers from one unit to another
or form one industry to another.Turnover refers to the rates change in the work force in an
enterprise during a given time period.Seperation of labour is possible due to various reason
like resignation by workers,removal of workers and so on.
Definition
According daleyoder “labour turnover may be defined as the time to time changes in the
compostion of work force that result from highering ,release and replacement of employees.
Causes
1)Low wages ,low rate of bonus payment and absence of monetary incentives:-A worker
prefer a job or an employer or an organization where wages are paid high and attractive,the
rate of bonus payment is more and various monetary incentives are offered in a libral
manner.This is natural as every workers want more money for enjoying better quality of
life.workrers leave the job where wages are low and monetary benefits are not offered.
2)Hard nature of job in a factory,inadequate safeguard against accident and absence of
transport facilities:-Every workers likes to have a comfortable job or the job in which
physical extortion is limited similarly a workers prefers a job where physical risk involve is
less and have satisfactory transport facilities for going the place of work.A workers leave the
job or organization where such non-monetary facilities are absent.
3)Poor working condition,ill treatment to employees and their harresment by supervisor:-
Workers always prefer proper working condition,i.e poor light,rest room,water
supply,canteen, cleanliness and so on.Similarly they feel that they should not be insulted or
given load or inhuman treatmentby the managers.They leave the job when working condition
are bad or when they are given bad treatment by supervisor.
4)Availabilty of better employment opportunities other factory in the same locality:-Labour
turnover is more during the period of prosperity when job opportunities are easily will be low
during the period or depression due to mass unemployment.
5)Faulty recruitment and selection policy,favourtism while giving promotion and absence of
training facilities:-Labour turnover takes place when unsuitable person are selected and
appointed for the job similarly favoritism in promotion and transfer leads to dissatisfaction
among the workers.Employees leave the job when training facilities for self improvement
and self development are not available.
6)Absence of security of employment,Absence of job satisfaction and Absence of chances of
promotion in the future:-Workers prefer job where security of employment available,similarly
highly educated and technically satisfied person leave the job when they do get the job
satisfaction even when the salary is attractive and chances of promotion are practically absent.
7)Unfavourable climate condition,industrial unrest and absence of co-ordial labour
management relation.Sometimes workers leave the job due to industrial dispute,strike and
lockout in the organization.They do not like to work in the tension.
8)Personal causes like illness,accdent,marriage,death in family,sickness and migration from
industrial township to village or native place.
9)Poor human relations,lack of motivation and inefficiency grievance solving provisions:-
Workers leave their job when there is no attachment to the job and when employer fails to
solve their grievances even after long period.
10)Miscellaneous causes:-
i)Death,retirement of the workers.
ii)Shifting of production unit to far away place.
Effects/consequences of labour turnover
a)Effects on employer on management
1)Reduction in the quality and quantity of production:-High labour turnover brings down the
quality and volume of production.The available production capacity is not utilized fully.The
spoiled work increases and also the wastages in the production process.
2)Expenditure on training of workers is wastage:-The expenditure incurred by the employer
on the training of worker is wasted when worker leave their job after completing their
training.Morever has to incurred additional Expenditure for training newly recruited workers
In place of or those who left.
3)Vacancies may not be filled in:-An employer may not be able to fill in vacancy resulted
from the departure of the existed workers this affect smooth working of the production unit
also the quality of production.
4)Team spirit is adversely affected:-Team spirit among the workers is adversely affected due
to high labour turnover as newly recruited workers need sometime to develop friendly
relation with the existing workers.
5)Market reputation is adversely affected:-The market reputation of the employer is adversely
affected due to high labour turnover.This is because of his inability to execute the order as
agreed before.
6)More expenditure on recruitment and selection:-Due to high labour turnover, an employer
has spent more time and money on advertisement, selection,medical examination and so on.
7)Increase in industrial accident:-High labour turnover leads to increase in industrial
accidents as new workers are recruited very often.In addition the existing workers are
transferred frequently from one department to the other this leads to accidents and financial
loss to the employers.
b)Effects on workers and employees
1)Benefits of long and continuous service are not available:-Due to shifting of employment,a
worker has to sacrifice the benefits of long and continuous service.such benefits includes
pension,provident fund,promotion and so on.
2)Benefits of skills and experience are not available:-A worker develop special skills and
ability due to long and continuous service in one unit.However it becomes meaning less once
the worker leaves the present job and join a new one which is all together different his
experience and skills are not rewarded by the new employer.
3)Problem of Psychological adjustment:-A worker has to face the problem of psychological
adjustment due to frequent migration from one unit to another.He has to face new work
environment and find it difficult to adjust the new situation.
4)Low salary and Fear of removal:-After leaving one job,the worker may be required to join
as a new entrant in the new organisation.He is appoint an temporary and Provation.
5)Unfavourable impression on new employer:-A worker who changes his job very often is
always looked upon by others including new employers with suspicion.He is not readily
acceptable suggest that something is wrong with him.In brief labour turnover is harmful to the
parties employer and employees.Every employee has to make all possible efforts to keep it at
the lower level.
Measures to minimize labour Turnover
1)Provision for scientific training facility:-Training should be given to workers as it creates
interest and involvement in the work.It creates quick chances of promotion and induces
workers to stay in the same company over a long period.
2)Attractive pay skills and Monetary incentives:-Wage is a matter of life to workers they
suggest that an employer has to offer attractive pay skills and monetary incentives like bonus
etc to workers.Attractive wages and monetary incentives bring down the rate of labour
turnover.
3)Decent and satisfactory working condition:-Workers always prefer satisfactory working
conditions and libral welfare facilities,workers prefer to stay in the same organization for a
long period due to satisfactory working conditions and liberal welfare facilities.
4)Introduction of scientific recruitment and selection policy:-Labour turnover is partly due to
faulty recruitment and selection policy.This can be avoided if the recruitment is made through
proper testing of mental,social and physical qualities of candidates.
5)Impartial promotion and transfer:-Promotion policy needs to be impartial.Equal
oppourtunity of promotion should be provided to all workers.Workers,particularly efficient
and sincere,leave their jobs when the promotion policy is unscientific transfer of workers
should also be made in an impartial manner.
6)Security of employment:-Workers prefer secured or permament jobs they usually do not
leave the jobs when they are given adequqte security of employment.Thus security of
employment brings down the rate of labour turnover.
7)Effective labour management communication:-Employer should maintain cordial relations
with the workers.Efffective communication with them is useful for cordial labour
relation.This also avoids possible confusion and misunderstanding in the minds of workers.
8)Fair treatment to workers:-Labour turnover is the cumulative effect of grievances of
workers against the work environment.Such grievances need to be removed through suitable
measures fair treatment to workers brings down the rate of labour turnover.
9)Liberal facilities to workers:-Employees should be given various facilities and concessions
in a liberal manner.Such step is useful for bringing stability to labour force.Such facilities
include old age pension,group insurance,free medical treatment and so on.
10)Exist interviews for corrective measures:-Employer should arrange interviews of workers
who resign their jobs.Efforts should be made to find out the causes responsible for their
leaving the job.Exist interviews and attitude survey of employees are certainly useful for
introducing most appropriate measures for reducing labour turnover.

Labour Absentism
Meaning
Labour Absentism is another serious problem connected with industrial workers.Labour
absentism means absent of a worker from the regular work without prior permission,notice or
sanction,It is unauthorized or unsanctioned leave.
Definition
According to Webster dictionary “Absentism is the practice or habit of being a absenty and
absenty is one who habitual stay away.
Causes
1)Hard nature of job:-When a worker has to do hard work month after month,he gets tired
physically and mentally.He naturally remains absent wihout intimation to his employer.These
leads to labour absentism.
2)Poor working conditions and sickness:-If the working conditions are unhealthy,workers are
affected physically and menatally.They are tired of work environment and naturally remain
away from the work.In addition workers remained absent without intimation due to industrial
sickness.
3)Absence of regular leave arrangement:-Every worker normally requires at least 15 or 20
days leave with in a year for his personal work including family responsibilities.In the
absence such leave management workers take unauthorized leave.
4)Inefficient transport facilities:-Many factories are located far away from railway station or
away from the city limits.In case of any disturbances either transport system.The transport
system workers are unable to reach their work place at the proper time.They naturally remain
absent.
5)Attraction to village life:-Majority of indian workers come from villages to towns for
employment.Physically they are into but mentally they are in their villages.There ii are in the
villages and naturally they feel like visiting their villages vary often this meets to labour
absentism.
6)Absence of recreation facilities:-Workers in big cities do not get adequate sports recreation
facilities.They are not happy in the cities because the overall atmosphere is not suitable to
them.They desire to have some change and pleasure in their daily routine.
7)Absence of strict discipline:-In many factories,unsanctioned absent of worker is not taken
seriously.Disciplinary action is not taken even when a worker is found regularly
irregular.This lead to absentism.
8)Effective personal policies:-In many industrial establishment policies relating to
transfer,promotion,punishment etc are not rational.This create feeling of frustration among
workers.They develop dislike for the work and this leads to absentism.
9)Alcoholism and Gambling habits:-Industrial worker in big cities are use to drinking and
gambling workers are unable to attend their duties regularly due to such habits.This leads to
absentism particularly among male workers.
10)Miscellaneous Causes:-Miscellaneous causes include absence of discipline,sense of
responsibility among workers,absence of interest and involvement in the job
assigned,sickness,accident dissatisfaction among workers due to low wages,unscientific
recruitment and selection and so on.
Effects/consequences of labour absentism
a)Effects on employer or management
1)Disturbance to normal flow of work:-Due to high labour absentism,normal functioning of
the factory is disturbed.Absentism create production bottlenecks and brings production
losses.Thus the factory fails to operate with full capacity.Absentism leads to force stoppage of
work.
2)Adverse effect on market reputation:-Due to high labour absentism the production
suffers.The employers fails to execute the orders already accepted.This affect market
reputation and the whole business in the long run.
3)Additional expenditure on the work force:-Due to high labour absentism,an employer has to
make stand by arrangements.This puts additional financial burden in the form of
wages.Sometimes the employer has to request some workers to work a longer period.This
leads to additional expenditure.
4)Disciplinary Problems:-Management is against labour absentism.It prefers to take some
action against the worker who is regular and irregular.Such action may be warning,pay cut or
remark in the personal record.Such action leads to dissatisfaction and Non-cooperation from
workers.
5)Monetary loss:-Due to labour absentism,the production rate goes down but the factory
expenses remains the same.This leads to monetary loss to the employers.
b)Effects on Workers/Employees
1)Additional pressure of work on regular workers:-On many occasion,workers who are
present have to do the work of those who are absent.This increases the pressure of work on
those who are regular and sincere in their attendance as a result regular and sincere workers
suffers.
2)No Payment for unauthorized leave:-In many factories,days salaries is not paid to those
who remain absent without prior permission.This brings financial loss to a worker.No
work,no pay is the general rule in many industrial units.
3)Removal of regularly irregular workers:- In some companies irregular workers are given
warning and finally removed from the job.This affect the workers and his family in serious
manner.
4)No promotion and responsible position to irregular workers:-In many companies irregular
workers are not given promotion and responsible position.There absence comes in the way of
their promotion.
Measures to minimize labour absentism
1)Provision of satisfactory working condition:-An employer should provide fair work
environment that workers will not have industrial fatigue.In brief it is possible to reduce
labour absentism by providing proper working condition and essential facilities at the work
place.
2)Arrangement of annual leave:-An employer should make arrangement for providing annual
leave of 15-20 days to every worker as per his convenience.Such arrangement will reduce
absentism among workers considerably.
3)Provision of transport,housing and recreational facilities:-It is possible for the employer to
provide free or concessional transport facility to workers from the railway station to the
factory gate.This ensures regular attendance .Similarly company can provide housing facility
to the staff near the factories for avoiding absentism.
4)Incentive payment to regular employees:-An employer can encourage regular workers by
providing monetary incentive.Cash prices may be given to those who are regular throughout
the year.Workers who are regular may be given special bonus for the regularity.Regularity in
attendance should be taken in consideration while giving promotion..
5)Strict action against habitual absentise:-Disciplinary action should be taken against those
who are very irregular.Warning or even dismissal of regularly irregular workers is also
possible strict action will certainly improves regularity among all other employees.
6)Appointment of surplus staff:-An employer should maintain surplus staff in proportion to
the labour absentism in his unit.The possible effect of absentism on production schedule can
be avoided due to such measures.
7)Sound personal policies:-Labour absentism is partly due to dissatisfaction among
employees as a result of faulty personal policies.This situation can be ractified by introducing
fast and fair personnel policies relating to recruitment,promotion,pay skills,welfare facilities
and so on.
8)Safety Accident prevention:-Safety at the work place and prevention of accident through
suitable measures are two important measures useful for reducing the rate of absenteeism.
Due to safety measures,workers attempt their work regularly.
9)Proper education and Human approach:- Absenteeism among employees can be better
tackle through guidance, motivation and counseling and not simply by imposing punishment.
Workers should given proper education and orientation as regards absenteeism and its ill
effect. They should be encouraged to be regular through proper information, guidance and
publicity. This problem should be treated as human problem.
 Measures to minimize labour turnover
I. Introduction of scientific recruitment and selection policy:-
Labour turnover is partly due to faulty recruitment and selection policy. This can be
avoided if the recruitment is made through proper testing of mental, social and
physical qualities of candidates. Such scientific recruitment and selection will avoid
the tragedy of misfits and unsuitable candidates will not be recruited at all.

II. Provision for scientific training facility:-

Training should be given to workers as it creates interest and involvement in the work.
Industrial training brings stability to labour force. It creates quick chances of
promotion and induces workers to stay in the same company/ organisation for longer
period.

III. Attractive pay scale and monetary incentives:-

Wage is a matter of life and death to workers. They leave the job as and when higher
wages are offered by other employer. This suggests that an employer has to offer
attractive pay scale and monetary incentives like bonus, etc. to workers. Attractive
wages and monetary incentives bring down the rate of labour turnover.

IV. Decent and satisfactory working condition:-

Workers always prefer satisfactory working condition and liberal welfare facilities.
Workers prefer to stay in the same organisation for a long period due to satisfactory
working condition and liberal welfare facility.

V. Impartial promotion and transfers:-

Promotion policy needs to be impartial. Equal opportunity of promotion should be
provided to all workers. Workers particularly efficient and sincere, leave their jobs
when the promotion policy is unscientific. Transfer of workers should also be made in
an impartial manner. Thus impartial promotions and transfers bring down the rate of
labour turnover.

VI. Security of employment (job security):-

Workers prefer secured/ permanent job. They usually do not leave the job when they
are given adequate security of employment. Thus, security of employment brings
down the rate of labour turnover.

VII. Providing job satisfaction:-

A worker should get job satisfaction, mental peace and psychological feeling that he is
making some positive contribution for the profitability and stability of his company.
Job satisfaction brings stability to labour force. Job enrichment, job rotation and job
transfers etc. are some measures useful for creating job satisfaction and for reducing
the rate of labour turnover.

VIII. Effective labour management communication:-

Employees should maintain cordial relations with the workers. Effective
communication with them is useful for cordial labour management relations. This also
 avoids possible confusion and misunderstanding in the minds of workers.
Development of two- way communication system between the management and the
employees will help to reduce the rate of labour turnover to a considerable extent.

IX. Fair treatment to workers:-

Labour turnover is the cumulative effect of grievances of workers against the work
environment. Such grievances need to be removed through suitable measures. Fair
treatment to workers brings down the rate of labour turnover.

X. Liberal facilities to worker:-

Employees should be given various facilities and concession in a liberal manner. Such
a step is useful for bringing stability to labour force. Such facilities include old age
pension, group insurance, free medical treatment, and housing loan and so on.

XI. Exit interviews for corrective measures:-

Employers should arrange interviews of workers who resign their jobs. Efforts should
be made to find out he causes responsible for their leaving the job. Exit interviews and
attitude survey of employees are certainly useful for introducing most appropriate
measures for reducing labour turnover.

Measures to minimise labour absenteeism

I. Provision of satisfactory working condition:-
An employer should provide fair work environment so that workers will not
have industrial fatigue. Similarly, it is possible to make a hard job of workers
little easy by introducing suitable measures. In brief, it is possible to reduce
labour absenteeism by providing proper working conditions and essential
facilities at the work place.

II. Arrangement of annual leave:-

An employer should make arrangement for providing annual leave of 15 to 20
days every worker as per his convenience. Such arrangement will reduce
absenteeism among workers considerably.

III. Provision of transport, housing and recreation facilities:-

Workers sometimes remain absent due to the absence of housing, transport and
other welfare facilities. It is possible for the employer to provide free or
concessional transport facility to workers from the railway station to the
factory gate. This ensures regular attendance. Similarly, companies can
provide housing facility to the staff near the factories for avoiding
absenteeism.

IV. Incentive payment to regular employee:-

An employer can encourage workers to be regular by providing monetary
incentives. Cash prizes may be given to those who are regular throughout the
 year. Workers who are regular may be given special bonus for their regularity.
Even encashment of unavailed leave can be provided for. Regularity in
attendance should be taken into consideration while giving promotions. Such
incentives encourage workers to be regular.

V. Strict action against habitual absentees:-

Disciplinary action should be taken against those who very irregular. Warning
or even dismissal of regularly irregular workers is also possible. Strict action
will certainly improve regularity among all other employees.

VI. Appointment of surplus staff:-

An employer should maintain surplus staff in proportion to the labour
absenteeism in his unit. The possible effect if absenteeism on production
schedule can be avoided due to such measures. However, it is a costly
measure.

VII. Sound personnel policies:-

Labour absenteeism is partly due to dissatisfaction among employees as a
result a faulty personnel policy. This situation can be rectified by introducing
just and fair personnel policies relating to recruitment, promotions, transfers,
pay scales, welfare facilities security of employment and so on.

VIII. Safety and accident prevention:-

Safety at the work place and prevention of accident through suitable measures
are two important measures useful for reducing the rate of absenteeism. Due to
safety measure, workers attend to their work regularly.

IX. Proper education and human approach:-

Absenteeism among employees can be better tackled through guidance,
motivation and counselling and not simply by imposing punishment.
Absenteeism is basically due to lack of commitment on the part of the
employees. Workers should be given proper education and orientation as
regards absenteeism and it ill-effects. They should be encouraged to be regular
through proper information, guidance and publicity. This problem should be
treated as human problem. In short, for minimising labour absenteeism, a
comprehensive, integrated and human approach on the part of management is
absolutely essential.

HRM IN CHANGING ENVIRONMENT.

Change has become ephemeral everywhere –be it in economy, business, politics, environment
and so on. Business has changed or expanded from regional to national to global. Along with
the changes in the other business aspect, changes are also occurring in the environment of
human resource management. These overall changes require HRM to play more crucial role
in the management of business organization.
Human resources management (HRM) is one basic function within an organization that
focuses on recruitment, management and development of the people who work in the
organization.
The focus of HRM is a strategic and comprehensive approach to managing people, effectively
for the benefit of an organization.
HRM is now, moving from traditional function which are increasingly outsourced.it is now
expected to add valve to strategic utilization of employees. It is the governance of
organization s employees. HRM has to study changing environment around it minutely and
adjust its role accordingly.

Business environment is flexible, dynamic and ever changing due to political, economic,
social, environmental and other factors and forces. This lead to corresponding changes in HR
acts as an important factor of organization success in the practical world. Today, HRM needs
to since, respond and deal with all the issue of the organization at different level and prove its
worth.in brief, business environment is a type of changing environment and create new
problems, challenges and opportunities before business organization. In order to deal with
changing environment and so on HR environment and HR management.

HRM has to deal with the following aspect of changing environment.in fact; HRM has to deal
with the challenges which an organization faces due to environmental changes which take
place regularly. Environmental changes / challenges before HRM are observed at the
following levels ;

A) ENVIRONMENTAL CHANGES /CHALLENGES:-

1) Work force diversity
2) Globalization
3) Legislation
4) Technology
5) Increasing cut –throat completion
6) Skill shortage
7) Rise of service sector
8) Rapid socio-economic changes
9) Evolving work and family roles

B) ORGANIZATIONAL CHANGES/CHALLENGES;-
1) Controlling production and other cost
2) Improving product quality
3) Organizational restructuring
4) Creating new / distinctive capabilities.

C) INDIVIDUAL CHANGES/CHALLENGES;-
1) Productivity
2) Empowerment
3) Matching people and organizations research
4) Brain drain
 5) Ethics and social responsibility
6) Job insecurity.

CHANGING ENVIRONMENT OF HRM;-

Business environment is changing environment and so is HR environment. Significant
changes are taking place in the environment of human resources management. As a result,
HRM is emerging as a source of competitive advantage. Economic liberalization and
globalization have made major impact on HRM. Companies in India are using human
resources as a strategic tool for competitive advantage. Due to changing environment for
business, different opportunities and challenges are available before Indian companies. These
are professional skills.

A) Large majority of companies are giving emphasis on the up gradation of managerial

and professional skills.
B) Organizational restructuring has emerged as an important strategy.
C) Decision making is being increasingly handled at the group or team level and not at
the individual level.
D) Middle level manager have become more participative and result –oriented
E) There is increasing emphasis on training and retaining talent.
F) Employee compensation is being linked with the employee performance.
G) There is special stress on multi-skilling of employees and transparency.
H) Companies are downsizing to reduce surplus staff.

HR function may be uniform over a long period. However they need to be adjusted as per the
changes in the overall environment for business.

FACTORS RESPONSIBLE FOR CHANGING ENVIRONMENT OF HRM:-

The factors responsible for changing environment of HRM include the following:-
1) Work force diversity
2) Economic and technological change.
3) Intense competition
4) Globalization
5) Organizational restructuring
6) Changing environment for business , and
7) Changes in the nature of jobs and work.

DETAILS OF FACTORS RESPONSIBLE FOR CHANGING ENVIRONMENT OF HRM;-

1) WORK FORCE DIVERSITY ;-

Work force diversity is quite normal in the case employees/work force. Such diversity
is spreading and deepening I many industries. We have woman, minority group
member, older workers, young workers and so on .new problem develop along with
increasing number of woman in an organization. Such problems need careful
consideration and follow –up actions. Increasing number of woman employees in the
work force bring the need of changes in the HRM polies. For e.g. new facilities such
 as flexible work scheduling child care facilities, maternity and paternity leave, transfer
to location of husbands place of posting required to be provided .in short increased
diversity of work force will place tremendous demand on the HRM management
function. Further, creating unanimity from a divorce work force has also become a
challenge for HR managers.

2) ECONOMIC AND TECHNOLOGICAL CHANGES;-

Several economic and technological changes have been introduced in production
activities in recent years they have altered employment and occupational pattern.
There is shift of occupational structure from agriculture to industry to service. The
new economic policy, 1991 and globalization process thereafter have introduced
multicultural dimensions with certain implications for HRM with new problems and
challenges
Technology has become the hall mark of modern organization. Modern organizations
have become technology-driven organization. Men’s are replaced by machine and
manufacturing technology has turn to automation and robotisation. New development
in the manufacturing process will reduce the blue-collar jobs and the new jobs are
likely to become the skilled job. Even in office administration, the use of automation,
personal computers and word processing has increased considerably. The use of
internet facility is quite extensive in business organizations.in short, economic and
technological changes have created an altogether different environment for HRM with
new problems and challenges.

3) INTENSE/ CUT THROAT COMPETITION;-

At present (currently) business organizations are facing intense internal and external
competitions. This reduces the duration of products life cycle. Competitor introduce
frequently new / novel product in the market as substitutes. Every organization has to
make continuous effort for the survival in the competitive market. Innovative human
resource management and practice are needed for facing such cut-throat competition.
Such intense competition is one factor responsible for changing environment of HRM.
Stress on product research and development, product innovation, effective sale
promotion of the employees, effective communication with dealer and customer are
some measure useful for facing changing and environment due to intense competition.

4) GLOBALIZATION;-
There is integration of economies of different countries leading to globalization.
Countries have come closer for economic co-operation due to globalization. India is
moving towards globalization since 1991 when the new economic policy was
introduced. Due to globalization, there has been growing tendency among the business
firms to expand their production and marketing activities to new markets abroad.
Globalization increases competition in the international business. This competitive is
not domestic but global is character. Companies have to produce better quality of
goods at lower cost for competitive position in global markets.
Globalization offers scope for business expansion to multinationals. They dominate
global markets due to their competitive position. For global marketing highly skilled
labour force is required. For such labour force, selection, training and compensation
 polices need to be formulated properly. HRM has to accept new challenges under
globalization. Such challenges relate to scientific training man power development,
empowerment and appropriate compensation policy. It is also necessary to raise
quality of available manpower in terms of productivity, loyalty, morale and stability.

5) ORGANISATIONAL RESTRUCTURING;-
Organizational restructuring is introduced in order to make the organization efficient
and highly competitive. Mergers and acquisition of firms have become common forms
of restructuring for organizational competitiveness. Downsizing is also used for
organizational restructuring. Eliminating layers of managers, closing facilities and
merging with other organization are some more forms of restructuring used by
companies. Whatever may be the form of restructuring, jobs are redesigned and
people (employees) are affected.in organizational restructuring, HRM faces the
challenges off dealing with the
Human consequences of change. For example, the cost of downsizing many be too
heavy.
Restricting process disturbs the employees. They are uncertainty and work under
pressure. Here, HRM needs to focus on the changed scenario uniquely but that is not
so easy or simple. In short, under organization restructuring, the management of HR
activities become crucial for HR managers.

6) CHANGING BUSINESS ENVIRONMENT ;-

Change in the necessary feature of present world. Everything in the world is changing.
Future belongs to those who can best management change. Committed and
commitment to change. It enables organization to manage change effectively. In brief
changes environment of HRM.

7) CHANGING NATURE OF WORK;-

The nature of jobs and work has changed along with changes in technology and
globalization. Due to the new machine and technology. Companies can relocate
operations to location with low wages. This trend towards increased use of temporary
or part time workers is also observed in the business organization.

The nature of has changed from manual to mental knowledge work. Production activities are
decentralized manufacturing units with huge capacity and manpower are more used for the
conduct of production. Organization is giving emphasis on their human capital for e.g.
Knowledge, education, training, skills and expertise on the part of workers skills (employee’s
brain power) and not merely on the number of workers. They are giving opportunity to
employees to develop new skills and also allow them to use their knowledge and skills
through employee empowerment.

The factor noted above is responsible for correspondence changes in the HR environment.
The challenges posed by changes environment are important. HRM has to give attention to
new challenges developed in the business sector and adjust differ HR function and activities
accordingly. HR environment is changing. The functions are responsible of HRM have not
changed but they are to be conducted or adjusted under the present situation which is different
from the situation available 20 or 30 above.

CHANGING ROLE OF HRM.

The HR environment is changing and correspondingly the role significance of HRM. The
role of HRM should be adjusted as per the new trends in the HR environment. For this, new
HR practices such as employee empowerment, team work, training for knowledge workers
and flatter organization are introduced. The function performed by human resource managers
of the present are different as compared to the function performed in the older days. This
change is the outcome of environmental change of many years. New HR practices are
introduced as per the changing HR environment. This was necessary for adjusting the HR
practices as per environmental changes that took place. This suggests changing role in HRM
in the present period. At present HR department is not concerned only with issue of policy or
administration. It needs to introduce more interactive approach. HR is now getting involved
in decision-making and making contribution to the company as a whole. This changing role is
a type of natural process for suiting the changed environment. The new role or practices have
emerged to successfully respond to environmental changes. Some important HR practices
introduce in the recent period are as explained below. These practices suggest the changing
role of HRM.

1) INTRODUCTION OF FLATTER ORGANIZATION;-

Old pyramidal organization is new replaced by flatter organization. This change
reduces the levels of supervision and control. Flat organization is now increasing in
the business field. Main features of flat organization are that there are more people to
report to the managers. As a result they will be less able to meddle in the work of their
subordinates. In addition there will be empowerment of subordinates at lower level.

2) SUPPORTING BUSINESS;-
The HR function need to adapt to what the modern business need-a highly dynamic
employee management that can react and adapt to the rapidly changing requirements
of the organization. HR management is expected to contribute to the success of the
organization as it deals with the organizations human capital which gives competitive
advantage to the firm. By managing current incoming and outgoing employees, HR
ensures that the company has the right people for the right jobs.

3) EMPLOYEE EMPOWERMENT ;-
The old system of strict and rigid supervision and control is now given up. Managers
are no more exercise formal power over subordinates for getting the work done. There
is positive change in the attitude and awareness of employees has become absolute.
The present generation of worker/employee popularly termed as a ‘KNOWLEDGE
WORKER. He needs to be given greater autonomy and decision making power
through information sharing and provision of control over the factors that affects the
 performance. This trend of giving more autonomy and freedom in decision making
raise productivity and also raises interest and motivation of worker. Granting sanction
to the employees to make decision in their work matter is called ‘EMPLOYEE
EMPOWERMENT “and offer benefits to the employers and employees. Such
empowerment of employees is a normal practice in large, progressive and professional
organization and gives good dividend to organization. This trend towards employee
empowerment indicates changing role of HRM. Modern HRM needs to be engaged
with employee issue, listing to their issues and building the partnership between HR,
employees and managers. This will ensure success and stability of the organization.

4) TEAM WORK;-
The old concept of division of labour and specialization (introduced by Adam smith)
remained in practice till the 20th century and was popular in the business world.
However, single function concept has ceased its relevance in modern organization due
to process oriented work nature. Modern organization (including multinationals) rely
more on multi-function of worker so that they do not remain confined to a single
function but can do more then on specific function. This is particularly true in the case
of concern for downsizing by the organization. As a result, a workers contribution to
the organization becomes more as a member of the team. The managerial implications
are that these worker to be need to be managed not as individual in isolation but as the
member of the team. Under team work management, manager need not follow a
holistic approach of management for managing such workers.

5) ETHICAL MANAGEMENT ;-
HR managers of the present generation have the pressures and challenges of working
ethically. Ethical issue poses fundamental questions about the justice, fairness,
truthfulness and social responsibility. Serious concerns have been raised about the
ethical standards used by the managers and employees functioning in business
organization. Cheating on expense account accepting and paying bribes and kickbacks
forging signatures, lying to supervisors, drug abuse and falsification of records are
commonly notices unethical practices of employees.
For HR managers, there are ethical ways in which the manager ought to act in relation
to a give human resource issue. However, ethical actions are not easy to decide or
determine. Ethical issue in HRM often have dimension such as extended
consequences. The basic problem before HR manager is how to deal with this ethical
dimension? Researchers have suggested some useful guidelines that can help HR
managers to respond to various ethical issues.

Meaning of competencies

The concept of competency is essentially about performance. Competencies relates

to an employee- motive, traits, skill, aspects of one’s social image, social role or a
body of knowledge which can result in effective performance in a job. Competency
analysis is used to inform about performance management, recruitment and
selection, employee development and employee rewards. Competency is also skills
and behaviors that organizations expect their staff to practice in their work.
 Competencies consistently seek ways to improve the quality of products/ services in
order to meet the needs of customers and clients. Competencies examine all HR
activities to achieve successful job performance.

Definition of competencies

1) Competencies are measurable human capabilities that are required for effective
work performance demands -marrelli
2) Competencies are underlying characteristic of a person that result in effective or
superior performance. –mansfield
3) Competencies are skill, mindset, through patterns and the like that when used either
singularly or in various combination, results in successful performance. -Dbois
4) Competencies are underlying characteristic of an individual which are causally
(change in one variable cause change in another) related to effective job
performance. –boyatzis

Features/characteristics of competencies
A) Leadership competencies.
B) Interpersonal competencies.

A) Leadership competencies

1) Decisiveness:- decisiveness is the ability to think positively. The person should be

able to formulate appropriate line of action. Persons who are competent to take
decisions are ideally suited for the corporate world.
2) Team leadership:- competencies of a person is to appraise performance and counsel
team members. He should clarify goals, task and gather ideas for improvement. He
should encourage high performance and team work.
3) Development of people:- no man is an island. We can progress along with others. A
person must have the competencies to develop people who are the backbone of the
organization. People learn many things from their superiors.
4) Strategic orientation:- ability of the person to familiarize other coworkers with new
jobs, policies and services. Socialization of newcomers being with strategic
orientation because it becomes an advantage to the person taking the initiative.
5) achievement orientation:-achievement orientation takes place when a leader or
executive has high goal for subordinates. He has high expectations for their
performance. He shows confidence in subordinates and encourages them to take
greater responsibilities.
6) Self- confidence:-self-confidence is a rare quality because of which a person feels
that he has capacity to solve his problem in dependently. It enables him to deal with
challenging situations effectively.
7) Courage and conviction:- courage enables a person to control fear when facing
unfavorable situations. Conviction is the firm belief of a person. When these traits
are combined a person is better positioned for the job.
8) Impact and influence:- the presence of a person that creates positive impact is
favored by the employers because he can influence the subordinates and get the job
done. Such a person can influence opinion of other persons in the organization.
9) Relationship building:- people who have good friends in the workplace are more
likely to be satisfied. Good working relationships gives us several benefits. We crave
friendship and positive interactions just as we crave for food and water. Relationship
building depends on (a) trust (b)mutual respect (c)mindfulness (d)open
communication and (e)welcoming diversity.

B) Interpersonal competencies
1) Respect for client:-clients provide business and they expect to be treated well. The
management expects executives to give respect to the clients so that regular
business is obtained. Every client likes to be appreciated valued.
2) Listening skill:-listening skills are vital for interpersonal communication. Listening is
the ability to accurately receive and interpret messages in the communication
process. Listening is so important that some top management provide listening skills
training for their employees.
3) Oral communication skill:- oral communication is the ability to talk with other, to
give and exchange information and ideas such as ask questions, give directions,
coordinates work tasks, explain and persuade. Better oral communication skill is the
ticket to success in the business world.
4) Written communication skill:- good writing skills allows he person to communicate
the message with clarity and ease. Better writing skills create better impression on
the people around you including the boss, colleagues and clients. Avoid grammatical
errors and spelling mistakes.
5) Negotiations skills:- every time a contract is signed, a sale secured or a deal agreed,
the effectiveness of the person behind the negotiation has influence. It is a process
by which compromise or agreement is reached while avoiding argument and dispute.
In many situations specific forms of negotiations are used e.g negotiation with trade
union.
6) Coaching skills:- coaching is an essential leadership skill which is high in demand.
Leaders that coach as they manage show guaranteed, consistently high results in
people development and business growth. In order to cultivate coaching skills one
requires focused learning and feedback.
7) Presentation skill:- presenting in formation clearly and effectively is a key skill to get
the message or opinion across people. While making presentation talk naturally and
change the tone, pitch and volume of the voice. In case you are using visual aids
break the monotony with humorous remarks and comments.
8) Conflict management skill:- personal differ in their sensitive to comments or actions
of other as well as their ability to deal with the stress created by a conflict
situation.While it is important that we are sensitive to how we affect others, it is
 equally important not to take offence easily ourselves. Employers look for persons
with the competencies to settle the conflict rather than magnifying it.
9) Flexibility:- flexibility is vital competency that an employer wants in an employee
who is expected to behave considering the situation. A flexible person to behave
considering the situation. A flexible person respond positively and smoothly to
implement change. He possesses ability to incorporate innovations practices into the
workplace to improve effectiveness and efficiency. Flexibility ensures to remember,
decide and act at the right time inorder to complete the job.

Meaning of learning organization

Learning organization refers to a company that facilitates the learning of its members
and continuously transforms itself. Learning organization develop as a result of the
pressures facing modern business. Learning process makes the company strong
enough to face competition in the market. Learning organization acquire knowledge
and innovate regularly to survive and progress in a rapidly changes environment.
Learning organizations anticipated and adopt more readily to environmental impacts.
It makes development of ne products, processes and service more faster.it is found
more comfortable to learn from competitors. It practices transfer of knowledge from
one department to another. It takes lesser time to implement strategic changes. It
stimulations continuous improvement in all areas of the business.

Definition
Learning organization is where people continually expand their capacity to create the
results they truly desire, where new and expensive patterns of thinking are nurtured,
where collective aspiration is set free and where people are continually learning how
to learn together.

Disciplines of leaning organization

1) System thinking
The factors contributing to developing learning organization are acquired gradually.
All characteristics that are acquired gradually. All characteristic that are required to
convert an organization into learning organization must be present. In case, some
characteristics are missing then the organization will find it difficult to achieve its
goals.
2) Shared vision
Employees should be motivated so that they adopt learning as a continuous process.
Employees must share the vision of the management to enables the organization to
achieve business goals. Where the vision is imposed from the top, employees remain
in different to it. They get involved when the vision is shared with the employees at
all levels of the organization.
3) Mental models
 The assumption held by individuals and organizations are called mental models.
Every organization preserves sound behaviors, norms and high values that it wants
the employees to learn. It is the responsibility of every management to create a
learning environment based on trust and confidence. confidence attitude will defeat
the very purpose of learning. Unwanted values must be discharged.
4) Team learning
Generally employees are curious to know and understand the working of the
organization and the environment affecting it. When observing something that is
inconsistent with or beyond our current knowledge, employees experience tension
which prompts them to star learning. The desire to learn is to see oneself better than
others. The accumulation of individual learning is called team learning.
5) Personal mastery
According to peter drucker knowledge constantly makes itself absolute. Personal
mastery relates to the commitment of an employee to the process of learning. An
organization where employees learn faster as compared to the competitive
organization where employees are slow learners, such a business always shines.

Creating learning organization

Steps
1) Top management commitment
When top management decides to switch over to learning organization it has to
discard its traditional organization structure permitting participation and
disagreements. Top management has to bring about visible changes in beliefs, values
and goals.
2) Vision of learning
Commitment of top management gives confidence and managers who act as change
agents work towards creating learning organization. In such environment, it is
possible to create vision of learning organization. vision is to clear sense of the
future.
3) Wide acceptance
When vision of learning is created it is communicated throughout the organization
for wide acceptability. Communication is so provided that management gets
maximum number of employees associated with learning organization. Wide
acceptance on the part of the employees will automatically win over resistance
against learning organization.
4) Introduction of novel techniques
Learning organization is altogether a different cup of tea. Traditional structures and
processes create obstacles in the implementation of learning organization. It is
necessary to introduction new techniques, structures and processes to ensure that
now the organization has change environment where cooperation of everyone is
expected to achieve organizational goals.

Benefits/merits of learning organization

1) Greater motivation
Well-informed employees are appreciated for their skill, values, and work. As they
are aware about their role and importance in the organization, employees are highly
motivated to contribute more. This encourages are highly motivated to contribute
more. This encourages creativity and free thinking leading to satisfying problems-
solving .employees enjoys job satisfaction.
2) Creativity
Learning organization offers several opportunities to use creativity. Creativity is the
generation of a novel idea that solves a problem. As mistakes are taken for granted
in a learning organization employees remain free from worries creativity is one of the
greatest assets of human capital.
3) Employee development
Employee are encouraged to improve their personal skill and qualities so as to learn
and develops. They benefit from their own and other peoples experiences.
Development prepares individuals for the future. It focuses on learning and personal
development.
4) Social Interaction
Learning requires social interactions and interpersonal communication skills. The
major emphasis in interpersonal communication skill. The major emphasis in
interpersonal communication is on transferring in formation from one person to
another.

Limitation of learning organization

1) Lack of control
An employee with low motivation tends to fail behind as there is no fixed time to do
it. Lack of fixed schedule can mean learning becomes complicated with different
deadlines gives to different people at different stages of their learning.
2) Lack of uniformity
Organization recognize that employees differ in their attitude, perception and
grasping abilities some may prefer images, some prefer just reading words, some
prefer oral communication while some may learn by doing uniformity in learning
styles may not be practical.
3) Misplace emphasis
There is too much emphasis on learning and not enough on getting the job done.
There is possibility of creating misunderstandings when too much freedom and
accessibility to information is giving to the employees .too much of openness will
endanger the trust between employees.
4) Employee resistance
Resistance to learning can take place within a learning organization if sufficient
rewards are not forthcoming. Resistance can also occur with people who feel
threatened by change or believe that they have most to lose. They will create all
sorts of resistance to block learning.
Employee branding
Meaning /concept of employee branding
 Employee branding means what an employee projects about himself and the
organizational culture. He should be able to act as brand ambassador of his
organization. Such an employee is known to display high affiliation towards the
organization. every employee branding indicates an organizations reputation as a
good employer. It is the practice of aligning an employee’s behavior and also
employees point of view with the image that the organization wants to project to its
customers and external stakeholders.

Definition
Employee branding is the process by which employees internalize the desired brand
image and are motivated to project the image to customers and other organizational
constituents.

Employee branding is the image projected by employees through their behaviors,

attitudes and actions.

4E’S of employee branding

1) Employee engagement
Employees believe in the values of the business. They are passionate to work to
make things better. They strongly believe in the philosophy of the business and
desire to contribute in its success. They show respect to work environment and want
to maintain decorum informed about the development in their field. They show
balance in work life.
2) Employee empowerment
Empowerment distributes decision-making power throughout the organization.
Effective leaders empower other by providing them with the information,
responsibilities, authority and trust to make decision and act independently.
3) Employee education
Offering employees education opportunities has several benefits to employers. A
well trained workforce is an important productivity enhancer. Employee greatly
value education benefits. Employees educations has found favors both from
employees and employees because it :
a) Promotes self esteem
b) Improves quality of life
c) increases productivity
d) enhances performance, and
e) increases independence
4) Employee equity

A company should invest in employees benefits programs the develop employees as

real asset in order to determine the worth of the employees, the business can use
criteria such as:
 a) team work
b) efficient use of resources
c) Profitability
d) learning and innovations and
e) Corporate social responsibilities.

Need for innovation

1. solve problems :The course of business growth in future can only be anticipated but
cannot be accurately predicted .Some of the planning models worked well in the past but it
cannot be continued now because of significant changes taking place in the field of
technology ,consumer preferences, telecommunication along with the sweeping changes in
IT. An organisations that continuously learn, adapts itself to the environment, innovates
products , processes and formulates better policies will certainly a march over its
competitors.
2. People related process: When management introduce innovatio ,little can be
accomplished alone unless it is widely supported by the employees who enjoy relative
autonomy .HRM is a field full of challenges .Employees who are authority oriented may not
be reliable .some of them may be rebel and other submissive .The rebels may take wrong
risks and submissive may not take any risk . Rarely employees command respect and trust
from others that is needed if innovation is to be supported .Organisation that associate with
sustained innovation system credit their success to finding the best people .Our interest lies
in the “people related processes “which are found in successful innovation firms.
3 .HRM Practices :High performance work practices have been highlighted an innovation
within scope of HRM .The challenge before the management is how to develop that makes
significant contribution to organisational strategy .Innovation is deeply engrossed in HRM
practices relating to recruitment ,retaining skilled employees .
4.Flexible HR Policies :An organization that follows flexible HR policies will find it
convenient to adopt innovation .where management maintains conservation HR policies ,it
would be difficult to adopt innovation because employees do not enjoy selective freedom at
workplace .HR policies giving adequate space for implementation of training ,appraisal,
induction and learning will find introduction of product and technological innovation
simplified .
5. Combination of strategies :No single HRM approach may be sufficient to promote
innovation but the organisation requires combination of strategies e.g. .and organisation
following bureaucratic strategy will have many rules and produces whereas a market friendly
strategy will have fewer rules and procedures .IN order to be successful management cannot
settle for extreme choice and has to work out viable combination between two strategies
mentioned above.
6. Importance to human capital :Human capital is a part of resource –base of firms .HR is
called key ingredient to organisational success or failure including success and failure in
company innovation performance Individual employee directly give rise to superior
innovation performance .Such human capital is substantially above normal in innovative
capacity whether this is an inborn quality or acquired through training. superior innovation
performance could be result in capabilities coming within interactions within a firm ‘s human
capital pool.
7.standard mode of operation :Many operations stuck in the standard mode of operation
.They try to make existing model work better and do not spend time locating a better model
and a better way of doing things.
8.correct conceptualisation :change creativity and innovation are commonly used terms
.mostly they are used as synonymous but that are finer lines in distinction .change involve
moving from one condition to another but change is not necessarily innovation .but a
company fundamentally finds a novel way to reach and serve it customers has achieved
innovation.

Creating and innovative organisation

The process of translating what starts off as a creative idea into something useful that people
wants and need innovation .Innovation is made possible by the creative people who use
strategy ,systems leadership and culture to make innovative organisation .managers cannot
except team to come up with brand new concepts every now and then but they certainly
except the team to solve problems may be with innovative ideas.
In innovative organisation ,corporate strategy and culture support innovation .Innovation is
appreciated ,failure is taken for granted and organisation is prepared to take risks.

MANAGERIAL ROLES
We are passing through critical times. The managerial society is faced with an administrative
crisis as well as social problems. Managers form backbone of our industrial society. They are
called upon to make optimum use of scarce resources. There is nothing in modern society
more vital than that of manager. He is a planner, producer, and marketer and is the man
responsible for creativity and innovation. He is a key figure in the technical task of creation of
wealth. A manager is expected to acquaint himself with several disciplines in order o
understand the complexities of the total environment in which his business operates.
Managerial roles are specific behaviors associated with the task of management. Managers
adopt their roles to accomplish the basic functions of management. Managers are responsible
to contribute in the formulation and implementation of strategies. They are also responsible to
give direction to the organization to achieve goals without sacrificing their core value in the
context of present scenario.

MEANING OF INNOVATION CULTURE

An innovation culture is one that supports the creation of new ideas and the implementation
of those ideas. Leaders must enable employees to see innovation in the right sense.
Innovation is a skill and not a gift. It can be mastered by anyone and applied systematically.
Employees must be properly trained in creativity methods and innovation management.
Innovation is a competitive weapon. Conducting regular idea generation workshops help
employees significantly. Innovation is a process. An innovation culture is an environment that
supports creative thinking and advance effects to extra economic and social value from
knowledge. In doing so it generates new or improved products, services or processes.
Innovation culture can leverage the existing strength of given research and innovation
exercise. There is no guarantee that an innovation culture will lead to innovation but it
certainly is a pre-requisite. Innovation culture is sharing ideas in a team.

CREATING THE INNOVATION CULTURE

An innovation culture begins with accepting that the world really has changed and being open
to more changes to come. How one goes about building an innovation culture has to be
unique and unexpected. Who would have thought that regular cameras will become unwanted
and cell phones will become cameras? Culture is not a soft matter when the business is done.
Culture is a compliment to the formal and established rules of doing business. An
understanding of and commitment to the organizations culture will guide employees to shine
in their career.

Business Process Reengineering: 6-Step plan for Business

Process Reengineering

Process engineering is an innovative process for which a disciplined approach

to the effort is essential. It involves a six-step plan.
These steps are:
Step 1: State a case for action.
Step 2: Identify the process for reengineering.
Step 3: Evaluate enablers for reengineering
Step 4: Understand the current process.
Step 5: Create a new process design and
Step 6: Implement the reengineered process.

These steps are explained below:

(i) State a case for action:

The need for change should be effectively communicated to the employees of the
organisation through educational and communication campaigns.

Two key messages to be articulated are:

(i) A need for action and

(ii) A vision statement.

 The objectives of reengineering must be in the form of a qualitative and quantitative
vision statement. These objectives include goals for cost reduction, time-to-market,
quality and customer satisfaction levels and financial indicators. For example, the
vision statement by Federal Express (a US courier company) in its infancy was “we
will deliver the package by 10.30 a.m. the next morning”.

Steps Manufacturers Take When Reorganising:

Percentage of
Steps Manufacturers
Outsourcing one or
(i) more operations 31%

Eliminating a product
(ii) line 34%

Reducing the number

(iii) of suppliers 34%

Reducing the number

(iv) of production workers 41%

Flattening the layers of

(v) management 56%

Organising operations
by customer or product
(vi) line 60%

Investing in automated
(vii) equipment 76%

Significantly improving
process flows in the
(viii) factory 87%

The CEO of the company is responsible for communicating the vision statement first
to the senior management and then to the rest of the firm. A senior management
steering committee that includes the CEO typically champions the change process,
sets goals, assigns resources and expedites progress.

(ii) Identify the process:

All the major processes in the firm should be initially identified and few processes
should be selected for reengineering.
The following questions define the criteria for selecting processes for
reengineering:
i. Which processes are currently more problematic?

ii Which processes are critical to accomplishing company strategy and have the
greatest impact on the company’s customer?

iii. Which processes are most likely to be successfully redesigned?

iv What is the scope of the reengineering project and what are the costs involved?

v. What is the strength of the reengineering team and the commitment of process
owners and sponsors?

vi. Can continuous improvement deliver the required improvements?

vii. Is the process antiquated or is the technology used outdated?

Response to these questions can be weighted in accordance with the company’s

need for improvement. The selected process should have a manageable
reengineering project scope with well-defined process boundaries.

(iii) Evaluate enablers:

Information technology and human/organisational issues act as enablers of the
reengineering process. Technology evaluation has now become a core competency
required of all companies. Companies should develop the ability to evaluate current
and emerging information technology and identify creative application to redesign
their existing processes.

The current organisational culture should also be evaluated in light of the impending
change to be brought about by reengineering. Participative and customer-oriented
cultures that have evolved from the quality revolution provide a suitable environment
for further change. But the magnitude of change created by process redesign makes
the management of change a necessity. Issues of measurement and compensation,
career paths, work enrichment and new skills training should be addressed.

(iv) Understanding the current process:

The current process must be understood by making use of process evaluation
techniques such as flow charts, fishbone diagrams and quality function deployment.
The purpose is to create a new, radically better process. The current process must
be studied to understand the activities which are essential to completion.
All activities can be classified into three types:
(a) Value-adding work – work for which customer is willing to pay.

(b) Non-value adding work – work which creates no value for the customer but is
required in order to get the value adding work done.

(c) Waste – work that neither adds nor enables value.

Value adding work consists of all of the activities that create the goods and services
that customers want. For example, if a customer’s order has to be executed, value
adding activities include inventory allocation, picking, packing, route planning and
shipping. Waste work is work whose absence would not be noticed by the customer.
Waste work needs to be eliminated.

Non-value adding work is the glue that binds the value-adding work in conventional
processes. It is mainly the administrative overhead – the reporting, checking,
supervising, controlling, reviewing and coordinating. Michael Hammer argues that it
is necessary to design non-value adding work by reorganising the value-adding tasks
into a new and more efficient process.

(v) Create a new process design:

Process redesign requires beginning with a clean slate. Reengineers should suspend
current rules, procedures and values so as to create new process design. They also
need to utilise the principles of reengineering. The first emphasis in reengineering a
process is to eliminate all waste work. Next, the focus is on the elimination of non-
value-adding work. Hammer has found that less than 10 percent of the activities in a
process are value-adding activities.

(vi) Implement the reengineered process:

Leadership is critical to the implementation process as well as to the entire
reengineering effort. Process engineering teams are typically responsible for
implementing the new designs. However, support and buy-in from line managers are
crucial to success. Training employees in additional skills needed to perform in the
new environment is also essential.