Human Resource Management

Term Report on Human Resource Analysis

Submitted to: Maam Deep Kiran Submitted by: Maruee Shaikh Muhammad Faraz Usman Muhammad Sufyan Alvi Syed Shariq Hasan Zaid Yousuf Program and Section: MBA Regular B Due on: December 8th, 2011

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Letter of Transmittal
December 8th, 2011 Maam Deep Kiran, College of Business Management, Karachi. Respected Maam, We hereby submit to you a human resource analysis of two companies for the course of Human Resource Management. The companies analyzed in this report are Genix Pharmaceuticals and Hilton Pharmaceuticals. This report gives us an insight into the human resource practices of in an organization and helps us understand the courses better. The term report identifies various problems related to human resource and the respective approach of companies towards solving them. Further suggestions and corrective measures are also mentioned that might be suitable or more appropriate for the companies. In regard to the guidelines and direction provided by you, we have put in all our efforts to make this report a complete and comprehensible piece of work for you. Yours Sincerely, Maruee Shaikh Muhammad Faraz Usman Muhammad Sufyan Alvi Syed Shariq Hasan Zaid Yousuf 11353 8662 11792 11280 11448

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Acknowledgements
First of all we would like to thank Almighty Allah for blessing us with the strength, courage and temperament to go through the entire project. He has been very kind upon all of us and helped us at every step where we needed assistance and companionship. It has been an honor for us to work under the supervision and guidance of respected Maam Deep Kiran who, at every step cooperated with us and corrected us regarding our approach towards this report. For many times, we consulted her in case of problems, where she whole-heartedly assisted us. She has been a great help and mentor. We would also like to thank Mr. Rajesh Kumar, Deputy Manager HR and Admin at Genix Pharma Private Limited and Mr. Muhammad Bilal Khan, Manager Human Resources at Hilton Pharma Pvt. Ltd. for adding so much to our knowledge and co-operating with us for fulfillment of this projects objective. Last but not least, we are thankful to each other as well for the coherence within the team that has led to this collectively collaborative outcome.

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Contents
Letter of Transmittal ....................................................................................................................... 2 Acknowledgements ......................................................................................................................... 3 Executive Summary ........................................................................................................................ 5 Genix Pharma.................................................................................................................................. 6 Mission statement of Genix Pharma ....................................................................................... 6 Information gathered through HR Audit Questionnaire ............................................................. 6 Employees and Hierarchy ....................................................................................................... 6 Companys Turnover and Culture .......................................................................................... 7 The Staffing Process in Brief .................................................................................................. 7 Training and Performance Appraisal ...................................................................................... 7 Business Unit Strategy ............................................................................................................ 7 Hilton Pharma ................................................................................................................................. 8 Information Gathered Through HR Audit Questionnaire ........................................................... 9 Business Unit Strategy ............................................................................................................ 9 Organizational Culture and its Pros and Cons ........................................................................ 9 Training Program .................................................................................................................... 9 Companys Turnover .............................................................................................................. 9 Organogram of Hilton Pharma.............................................................................................. 10 Scope of the Work ........................................................................................................................ 11 The organizations Problems and Suggested Remedies ............................................................... 12 Recruitment and Selection .............................................................................................. 13 Training and Development ............................................................................................ 16 Performance Management ............................................................................................. 19 Salary and Compensation ................................................................................................ 22 General Human Resource Policies .............................................................................. 25 References ..................................................................................................................................... 28 Appendix ................................................................................................................................. 29 HR Audit Questionnaire ............................................................................................................... 30

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Executive Summary
Human resource in any company is one of the biggest assets that contribute to the progress of a company. The quality of human resource decides whether the company is going to excel in the long run or dissolve because human resource is the biggest touch point any company can have. They interact with customers, they are the people who actually execute the strategies and tactics decided by the upper management, they are the ones who formulate smaller tasks and accomplish them fruitfully in order to benefit the organization in the short as well as long run. This report entails about the human resource related problems in the two companies for which we have conducted an HR audit and identified the grey areas that are causing hurdles in the organizations way toward success. The report starts off with the introduction of both companies. Both of the companies are from the pharmaceutical sector of the country and both are operating on a large scale in Pakistan. Hilton Pharma has been operating in Pakistan for the past 25 months now and it is one of the biggest Pharma companies in our country. They have both generalized as well as specialized medicines in their product portfolio. Genix Pharma is another pharmaceutical company which is ranked as the fastest growing company in Pakistan. It is a national company and serves with various medications for different special cases like antibiotics, anti-diabetic, cardiovascular medications etc. Certain areas have been highlighted according to their level of importance for the respective company and then further recommendations are proposed in order to rectify those issues and make the environment of the organization a better place in which employees are motivated and satisfied in fact happy with what they do and how they do it. The areas of importance figured out on the basis of the level of problems that come across in them for both companies collectively include; Recruitment and Selection Training and Development Performance Management Salary and Compensation General Human Resource Policies

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Genix Pharma
Genix Pharma is a national company which is situated in Karachi and operates in other cities of the country along with Karachi. Today, Genix Pharma is considered to be the fastest growing company of Pakistan in the pharmaceutical sector. Their product portfolio covers a wide range of medications including antibiotics, anti leukotrienes, anti-ulcerent, anti-diabetic and also for casdiovascular diseases. According to IMS, they are now considered market leaders in many brand categories like anti-malarial etc. Manufacturing Today, after registering a CAGR (compound annual growth rate) of 187% for more than 5 years in a row, Genix Pharma has managed to come into top 20 manufacturers of the country. Dealing in drugs is a sensitive business; therefore, certifications make a lot of difference to the credibility of the company as well as its products. Genix Pharmas manufacturing facilities work under the guidelines of W.H.O and cGMP (current good manufacturing practices). The companys quality control department also uses modernized and advanced equipment in order to reduce the chances of error and tighten the quality check on all drugs. Mission statement of Genix Pharma Commitment to integrity and deep respect for people and community Vision Fulfill customer expectations Core value Striving for excellence in whatever they do

Information gathered through HR Audit Questionnaire

Employees and Hierarchy Genix Pharma has a total of 625 employees, out of which 450 employees are permanent and the remaining 175 are working on a contractual basis with the company. The breakup of the staff into the hierarchical levels is in the following manner. Managerial level Supervisory level Operational Level Technical Staff 80 30 250 150

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Human Resource Analysis Companys Turnover and Culture The company experiences a very low turnover rate. The turnover rate is not formally calculated on a regular basis but it is estimated to be maximum 0.1% inclusive of the sales staff turnover otherwise it is only estimated to be approximately 0.01%. The company has an open door policy and the structure of the company is centralized. There are many middlemen between the managing director and the bottom line workers. The culture of the organization is friendly and accommodating. The Staffing Process in Brief The recruitment process of the company starts off with need assessment by a particular department. The need is then communicated to the HR department. The HR department verifies the need and once the need is confirmed, they advertise about the vacancy on their official website. They define this need in the manner that when the company knows that a post cannot be filled internally, that means there is a need to hiring a fresh man from outside. If the results by advertising on the website do not bring fruitful results, then the company finally advertises in the newspaper. The need for this process is generally low as the turnover rate is very low. The selection decision is finally taken by the managing director of the company. He decides whether a person is fit for the organization or not. The job description is made on the basis of designation. Training and Performance Appraisal Employees are generally not provided any kind of training but since the company follows the guidelines of W.H.O ad cGMP, it provides training to its employees for the ISO standards which certify the standards of operations in a company and a few related practices. Promotions in the company take place on the basis of merit and performance instead of seniority. Business Unit Strategy The company follows a cost leadership strategy for the operational functions and adopts differentiation strategy for the function of selling. This indicates that the company is having two different business unit strategies for two different functions of the organization.

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Hilton Pharma
Hilton Pharma has been operating in Pakistan for the last 25 years. Over this period, Hilton Pharma has successfully developed and strengthened its pharmaceutical marketing and manufacturing base, which enabled them to achieve the distinction of being the fastest growing national pharmaceutical company. Hilton Pharma is a member of the Progressive Group of Companies. The company provides the combination of best organizational values that include entrepreneurship, strong work ethics, strict compliance with current Good Manufacturing Practices (cGMP) and wide range of products. Hilton Pharma has emerged as Pakistans largest national pharmaceutical company. They market products under license from more than a dozen world-renowned research based pharmaceutical companies besides their own branded generic specialties. Since its inception, Hilton Pharma has mainly promoted research based pharmaceutical products. Companys innovative marketing strategies together with its strong marketing base have helped their products to be significantly positioned in their respective therapeutic areas. Hilton Pharma has attained this prestigious position through continuous focus on human resource development, close team work, innovative marketing skills and modernization of production facilities. Collaboration with research based world renowned multinational companies demonstrates Hilton Pharmas commitment to bring the best and most innovative health products in Pakistan. As a manufacturer and licensee, today Hilton Pharma markets a number of well known international health care products. They believe their motivated and efficient sales force, led by professional managers ensures that the company maintains its competitive position in the market. With well integrated marketing & sales efforts, supported by their highly effective distribution network, Hilton Pharma has emerged as an established and credible name across the country.

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Information Gathered Through HR Audit Questionnaire

Business Unit Strategy Unlike Genix Pharma, Hilton Pharma only follows one business unit strategy and that is cost leadership. They tend to reduce their administrative costs. For the purpose of human resource practices, their strategy is not that strict in terms of cost reduction but for the purpose of administration and other related organizational functions, they follow the strategy of cost leadership. Organizational Culture and its Pros and Cons Hilton Pharma is a seth oriented company, therefore, many of their practices that reflect in their culture are conventional. But there are certain aspects in which they have tried to improve by coming up with better practices. They hold sports tournaments as well so that employees encounter the jelling effect and collaborate with each other, know each other better and develop a better level of understanding. Training Program Their training session starts in February every year and they provide extensive training in various dimensions. Their training sessions revolve around time management, conflict management, efficient utilization of resources, motivational trainings and communication skill improvement. Companys Turnover The companys turnover is very high. The company itself is trying to figure out the reasons for having such a high turnover of employees. The highest levels of turnover are experienced in the sales department of the company due to lower levels of satisfaction and conflicts among salespeople.

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Human Resource Analysis Organogram of Hilton Pharma

Chairman

CEO

Formulations

Quality

Finance

Sales and Marketing

Chemical Manufacturing

Diagnostics

Human Resources

Chief Scientific Officer

Plant Head

Operations Head

GM Supply Chain and Procurement

AGM, CFA and Admin

CFO

Region Head Karachi

Region Head Lahore

Region Head Islamabad

Region Head Faisalabad

Region Head Peshawar

Region Head Multan

Plant Head

Senior GM

Training and Development

Payroll and Compensation

Staffing

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Scope of the Work

The scope of this study covers the following areas. The following guidelines have been taken as a roadmap. Review the key business processes of HR department. Identifying the problem areas among those HR processes and practices that might cause any short run or long run inefficiencies for the organizations in terms of both operational as well as financial aspect. Identifying procedures and actions that might help control the damage due to those problem areas and evaluating the effectiveness of those actions. Identifying the reasons leading to those problem areas and coming up with a way to fix them.

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The organizations Problems and Suggested Remedies

The problems have been classified into separate sections on the basis of HR functions because we have more than one organization. In this way, we can evaluate which area is weaker in the pharmaceutical sector or generates more problem areas than the rest.

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Recruitment and Selection

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Human Resource Analysis The Job Description is made after the person is hired. The department head not HR department make the Job Description. (Genix Pharma) Problem Identified The problem with this way of designing job description is that departmental head might not be well aware of all the tasks to be performed on that job and that would to a problem for the person employed on that post leading to an eventual down trodden performance appraisal by the head in the end. For one designation, there are more than one job descriptions. Repercussions The repercussions of this can be really devastating for the company. The clarity of tasks does not remain there. The objectives are somewhere lost in the process of understanding what the job really is. Eventually, the performance appraisal of the employee is affected and the job is also not defined and remains poorly performed. Suggested Remedy The company should write a specific job description in which all the duties and responsibilities should be clearly defined. In accordance to the job description, a job specification should also be made. This would help them select the most appropriate candidate for a particular job. There should be only one job description and job specification for one designation unless the duties or the way of doing the job changes significantly. Both job description as well as job specification should be available with the company before they appoint a new employee.

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Human Resource Analysis The staffing process is influenced by company politics (Hilton Pharma) Problem Identified The problem that arises here is that the process does not remain fair and the practiced of equa employment opportunity does not remain there anymore. Repercussions The repercussions of this practice are much too high in cost for the company. The company would not be in a condition to utilize the right talent from the employee pool available for the company. As long as the employee remains in the company, he or she would continue to work in his or her manner and the company would not be able to justify the tasks themselves. There would be a misfit between the job description and job specification. Also, the job analysis would turn out to be poor. Suggested Remedy The suggested remedy for this problem is that the company should try to minimize if not eliminate the political influence from its human resource practices. This would lead to efficient utilization of the staffing process and also result in getting the right candidate for the right job.

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Training and Development

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Human Resource Analysis Training is provided only for ISO (Genix Pharma) Problem Identified The problem identified here is that there is not training provided to employees for anything other than how to comply with the ISO standards. According to feedback from employees, they feel that the company should provide them training on the usage of computer work, Inventrix Software which is used by the company, and on supply chain management. Repercussions Since from the information mentioned above, we know that the employee retention rate is very high for the company as the turnover is almost negligible; this indicates that there must be many such employees who are of old age and technology had not been there in their times. Therefore, if the company does not train its employees accordingly, it may lead to reduced levels of productivity and employees would lose the motivation to do their job. They would not be in a state to own that job as their area of expertise due to not knowing how to properly carry it out according to the companys requirements. Suggested Remedy The company should conduct training need analysis. Once a need for training shows up, the company should try to figure out the areas in which training must be given. At this stage, the company must ask for employees contribution so that relevant and appropriate training sessions become possible. The training areas according to the current need should be on the use of MS Office for the purpose of record keeping and data handling, and on supply chain management as suggested by the employees themselves. The employees must be given a mandatory training on the use of the software which the company operates on (Inventrix). The company should also try to develop its employees on individual level so that they become more self-satisfied and feel that the company is concerned about their needs too.

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Human Resource Analysis According to employees, the training sessions are not fruitful and employees do not provide any input into them. Problem Identifies The problem here is similar to that of Genix Pharma. Here, employees do get training but they get training on things that they do not even ask for. The employees do not have any contribution into the training programs that are designed for them by the company. Repercussions The repercussions of this are in two forms. The employees do not come to learn anything productive out of those training sessions and there is no reflection of those sessions on the working environment of the company. The cost invested on the training sessions becomes a complete waste and no results come out. No objectives are met this way, come what may. Suggested Remedy The suggested remedy for Hilton Pharma is also similar to that of Genix Pharma. The company should first conduct training need analysis and then identify the areas in which employees need training. The employees should definitely have an input into this process. Otherwise, the company would provide training on such topics that the employees do not need. The training topics might turn out to be somewhat similar but since the employees currently feel neglected, therefore, involving them should be an important step that the company should take.

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Performance Management

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Human Resource Analysis The Departmental Head decides/recommends whom to promote. (Genix Pharma) Problem Identified The problem identified in this area is that there is no proper performance appraisal system in place through which employees are also asked for their feedback or any other colleague tells about the employees behavior on the job or any other related information. Repercussions The repercussions for this can be that employees might not get the level of compensation, rewards and benefits that they deserve or at least they feel that they deserve. If an employee is having good personal relationship with his or her supervisor then he or she would have brighter chances of getting promoted and hence the supervisor also becomes biased and the system in place becomes inappropriate to be used. This would ultimately lead to employees de-motivation and they might even think of going the wrong way to get their desired ranks and positions in the company. Suggested Remedy The best solution for this problem can be to have a 360 degree feedback for performance management. In this way, each employee would transparently stand out. This method might be more time consuming and costly for the company, but it still remains a better option than losing an honest employees trust in the long run and finally getting lesser productivity and efficiency levels from the hard working employees of the company. In this way, the company would get input from everyone and the claim of having merit based promotions would be justified.

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Human Resource Analysis The political approach is followed for performance management (Hilton Pharma) Problem Identified The problem that arises here is that there remains no fixed format for doing performance management. Any employee who is good in the eyes of the supervisor gets the favor. The favoritism is done on multiple bases. At times it is done on the basis of personal relations. At times, it is done on the basis of family relationships or at times just because of having good coordination in the work setup. Repercussions The repercussions of this problem are that the employees do not get feedback as to how their performance has been and what are the areas that they need to improve in so that they can stand out in the crowd. Due to this employees become disengaged with their jobs and lose interest. Suggested Remedy The solution that the company should implement here is that it should conduct performance management on the basis of rational reasons. Every employee should be asked to give input and then the results should be shared back with the employees. In this way, the employees will get their chance to say what they want to. The company should have clear standards. Because if they do not do so, they might win the situation in the short run but in the long run they will lose all organization loyalty and employees trust. Similar to Genix Pharma, they should also put a 360 degree performance appraisal in place. If the factor is cost cutting, then the collective effects would result in more benefits than costs.

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Salary and Compensation

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Human Resource Analysis Company has a plan to give double rates for the overtime but employees are not paid at all. (Genix Pharma) Problems Identified The problem here is that the employees are misled in terms of what the company promises to give them. The employees are not even paid the normal rate for the overtime worked. This leads to mistrust among employees. Repercussions The repercussions for this element can be seen in two ways. In one way, it is good that they are not paid because they will avoid working extra hours and try to complete their work in time. Another way to look at this picture is that if there is some extra work due to any seasonal element and the employees have to work more than what is routinely assigned to them, they must be paid for the extra effort that they put and the extra hours that they give. If the company does not give them their deserved and well earned compensation for that extra effort, they would not be motivated enough to continue contributing their effort for the companys extra work. This would ultimately make the company lose on sales and other aspects of the business. Suggested Remedy The company should revise the compensation plans. The important thing to do is that they must not make airy claims. If they are giving overtime, then they should clearly mention the rates and if they are not paying any amount for overtime then they should clearly communicate it to the employees. If the employees agree to work extra time and complete the extra work given to them then it would be alright to do so. If the employees do not agree to work extra hours for no compensation then the company should hire temporary workers on hourly basis for the seasonal increase in work or get part time workers. This would keep the costs low for the company and maintain the employees trust and honor for the company as well.

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Human Resource Analysis Improper performance management leads to poorly managed compensation plan Problem Identified The problem that arises from the improper management of performance is the poorly designed compensation plan that comes into place due to the former factor. This adds to further dissatisfaction of workers with the organization and the human resource practices being implemented. Repercussions If there are multiple interrelated problems, then the company might result in losing their human asset. Employee might leave jobs and join some other firms in order to get better and fair compensation plans. From the information that we have come across, we already know that they are also currently facing very high turnover. This reason has a contribution into that increased turnover. Suggested Remedy The suggestion for this step is to revise the compensation plan in the following manner. Define basic for each designation and the benefits that one gets for achieving certain ranks in the organization. Those fringe benefits main include medical incentives, insurance, educational support, etc. But the limit to these fringe benefits should be set according to the level of hierarchy. The remaining components of compensation should be completely performance based and that performance management has to be so fair that no employee could ever challenge it back.

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General Human Resource Policies

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Human Resource Analysis The company has a policy to hire qualified people and the minimum criteria set for qualification to a higher designation is set to be graduation at least along with some prior experience(Genix Pharma) Problem Identified One of the senior managers at the company has a qualification of matriculation only. Repercussions The brings a conflict with the policy of the company. The newly hired employees might feel that they are not having equal opportunities for growth and that becomes unfair with them. Suggested Remedy There cannot be any suggestion for this particular problem as the company might have hired him or her when education was not that important or was not that much regarded. Now the policies are revised and the new rules apply to the newly hired employees. But again, in order to make the employees realize that the company is not being unfair to them, they can simply make them understand that the senior officer had joined the company when people were not aware of the significance of higher education and he has learned from his experience and has gained this position with the help of his experience and expertise in the field. In this way, the employees would be convinced of the companys unbiased practices as well as fairly mentioned policies.

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Human Resource Analysis Supervisors perceive that they clearly direct their subordinates whereas subordinates claim that they are not asked for their opinion and are not given clear directions. (Hilton Pharma) Problem Identified The problem here is the communication gap here among the subordinates and their supervisors. The subordinates do not think that the supervisor shares sufficient information with them which is important for them to know in order to achieve their goals. At the same place, the supervisors claim that they do share all the important information and clearly communicate all the duties. Repercussions The ultimate outcome is not outcome at all. The supervisors would live in their imaginations that they are fairly and efficiently doing their jobs while the subordinates would keep feeling the distance and gap. Suggested Remedy The supervisors should ask for feedback and try to understand that the subordinates might not understand everything in the way they want them to understand. At the same place, the subordinates also need to realize that they need to share this problem with their supervisor so that he or she may become aware of the gap that arising between he two. For this, an open door policy would be encouraged. This would result in ease of sharing and problem solving for each other and eventually make the job simpler to perform.

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References
www.hiltonpharma.com/ www.genixpharma.com/
Human Resource Management by Gary Dessler Managing Human Resources by Louis Gomez-Mejia, David Balkin, Robert Cardy Management by Stephen P. Robbins Literature Review References www.citehr.com

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Appendix

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HR Audit Questionnaire
1. How many locations exist within the business unit? (Include all operating and administrative locations which perform HR activities.) 2. What is the company business strategy? 3. What is your companys HR Strategy? Is the HR strategy aligned with the companys strategy? 4. Outline the HR departments present role, list its function and evaluate its effectiveness? 5. Do you develop a competency-based approach to staffing? 6. Does this company have a clear job description for each job/position? 7. What is the total number of all employees (headcount) at the business unit? managerial level : supervisory level : staff/operator level : total : 8. What is the total number of employees (headcount) for the human resources department? managerial supervisory staff total 9. Please complete the following question with the number of entry and non-entry level positions filled internally and externally during the most recent complete fiscal year: 1. internal external Entry Non-entry 10. How many positions (job titles) exist across the organization? 11. How is the recruitment process? 12. Do you use executive search services to help you in the recruitment area? 13. Who makes the hiring decision? 14. Do you track your staff turnover? What is your turn over rate this fiscal year? 15. Do you provide job to handicapped people? If yes, then what is the ratio of such employees to the total number of employees? 16. Do you provide opportunity to temporary employees to gain permanent job? 17. Does the company develop attractive benefit program that can retain employees? 18. What is the current training and development system for employees?

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19. What was the total number of training hours in the previous year for all employees? Managerial : Supervisory : Staff : 20. Of the total amount of training hours offered, what percentage was: Percentage a. Formal classroom b. Computer-based c. On-the-job d. Self-study e. Off-site 21. How do you evaluate training effectiveness? 22. What types of performance management systems do you use? Please describe. Does it work effectively? 23. What is the current compensation system in your company? Please describe. 24. Do you offer compensation plans that provide a stable base with variables linked to performance? 25. Who design the current compensation system? Does the BOD / HR Department involve in formulating pay strategy? 26. Is the compensation system reviewed periodically? How do you evaluate your pay structure and compensation policy at least annually and adjust it when needed? 27. Do you compare the companys compensation programs with the market rates? Does the current compensation system competitive? 28. Please describe the current benefit and allowance system of your company? (Describe in detail if there are differences among upper / middle / lower level of management / staff?) 29. What is the current system for Career Development in your company? Please describe. 30. What is the current system of succession planning; at what level do you use this approach? Does the succession planning system work effectively? 31. Does your company have Pre-Retirement Preparation Program for their employees? 32. Are employees consulted in the decision making process?

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