A CRITICAL STUDY OF HUMAN RESOURCE DEVELOPMENT

PRACTICES IN DURGAPUR STEEL PLANT

THESIS SUBMITTED TO THE UNIVERSITY OF BURDWAN FOR THE AWARD

OF DOCTOR OF PHILOSOPHY IN ARTS (BUSINESS ADMINISTRATION)

Submitted by

AMAR KUMAR MISHRA

Supervised by
Dr. PRADYUMNA KUMAR TRIPATHY ASSISTANT
PROFESSOR
DEPARTMENT OF BUSINESS ADMINISTRATION
UNIVERSITY OF BURDWAN

THE UNIVERSITY OF BURDWAN

BURDWAN- 713104
WEST BENGAL
2012
Dr.Pradyumna Department of Business Administration
Tripathy. Assistant THE UNIVERSITY OF BURDWAN
Professor Golapbag, Burdwan-713104,
West Bengal,
Website: www.buruniv.ac.in

CERTIFICATE

This is to certify that the work entitled A CRITICAL STUDY OF HUMAN

RESOURCE DEVELOPMENT PRACTICES IN DURGAPUR STEEL PLANT
submitted by Mr. Amar Kumar Mishra in partial fulfillment of Doctor of Philosophy in
Arts (Business Administration) of The University of Burdwan is a faithful and bonafide
research work carried out under my supervision and guidance.

This is also to certify that the results of the investigation reported in this thesis have not
so far presented for any other degree or diploma of any other university.

In submitting the thesis, Mr. Amar Mishra has confirmed to all the requirements of the
regulations and provisions of the statutes of The University of Burdwan.

(Dr. P. K. TRIPATHY)

ii
 DECLARATION

I do hereby declare that the thesis titled A CRITICAL STUDY OF HUMAN

RESOURCE DEVELOPMENT PRACTICES IN DURGAPUR STEEL PLANT is an
original piece of work done by me and has not been published or submitted elsewhere
for any other degree or diploma in full or in part.

Burdwan
Date: Amar Kumar Mishra
 ACKNOWLEDGEMENT

Initially I would like to express my special thanks to my supervisor Prof. P.K.Tripathy

for his valuable guidance. This thesis would not have been completed without his
continuous support and supervision.

I also would like to thank Dr Dilip Roy, my techer, mentor, guide who taught me what
management is.
.
Above all I would like to express my gratitude to my father Late Deo Kant Mishra and
mother Geeta Mishra for the endless love, warm support and the teaching on Human
Dignity that they gave me through out of my life.

The acknowledgement can never be complete without mentioning the support I received
from my friends Raksha and Aditya always in my ecstasy, eccentricity, depression or
exclamation, trials or tribulations.

Finally, I thank to all the persons who had been, who are and who will remain a part of
my life.

\
 LIST OF TABLES

Data regarding SAIL figure- manpower, production, LP, profit. 72

Data regarding DSP-manpower, production, LP, profit. 79

HR mechanisms in various countries 83

HR mechanisms in various organizations 83
The training process 93
Different TOTO modules 101
Training programmes for Executives 105
Training Statistics (eaxecutives) 117
Training Statistics (non-eaxecutives) 117
training cum competency enhancement 118
Training in special areas. 118

HR Climate- overall pic\ture 174

General HR climate 177
OCTAPAC culture 179
HR Mechanism 181

Correlation between Labor productivity and Profit 192

Correlation between Labor productivity and Production 194
Correlation between Labor productivity and Manpower 195
Correlation between Manpower and Profit 197
Correlation between Manpower and Production 198
Correlation between Training and Labor productivity 200
Correlation between Training and Lost time 201
Combined Correlation between all the variables-SAIL 203
Multiple regression Profit- Training & Productivity 204

v
 Multiple regression Profit- Manpower, Productivity 205
Multiple regression Production- Manpower, productivity 206
6.4.11 Multiple regression Production- Training, productivity 207
 CONTENTS

CHAPTERS

1. INTRODUCTION 1-12

Introduction to the study 2

Research Objectives 5
Conceptualization of model 6
Research design 7
Research Methodology 8
Statistical tools and software 11
Cauterization and presentation 11
Scope of the study 12
Conclusion 12

2. LITERATURE REVIEW 13-47

Introduction 14
Literature Review of relation between HR practices and firm performance. 15
Literature Review of relation between HR practices and financial performance. 26
Literature Review of HR practices in firms all over the world.. 31
Literature Review of HR practices - Indian context 34
Literature Review of relation between labour productivity and financial
performance. 38
Literature Review of relation between HR Climate and firm performance. 43.
Conclusion 46
3. INDUSTRY PROFILE 48-79

Indian iron and steel Industry 49

Profile of SAIL 49
Profile of DSP 73

4. HR PRACTICES IN DURGAPUR STEEL PLANT 80-160

4.1 Introduction 81
4.3 HR policy of Durgapur Steel Plant 83
Training and development 85
Performance Appraisal 126.
6Career Planning & Promotion Policy 150
Potential Appraisal 157

5. HR CLIMATE 161-184
Introduction 162
What is HR Climate? 165
About the Instrument 173
5.5 Interpretation of Result 174

6. DATA ANALYSIS AND INTERPRETATION 185-209

Introduction 186
Chart wise Interpretation 186
6.3. Graph wise Interpretation 188
Statistical Interpretation 192
Correlation between Labor productivity and Profit 192
Correlation between Labor productivity and Production 194
Correlation between Labor productivity and Manpower 195
Correlation between Manpower and Profit 197
Correlation between Manpower and Production 198
Correlation between Training and Labor productivity 200
 Correlation between Training and Lost time 201
Combined Correlation between all the variables-SAIL 203
Multiple regression Profit- Training & Productivity 204
Multiple regression Profit- Manpower, Productivity 205
Multiple regression Production- Manpower, productivity 206
6.4.11 Multiple regression Production- Training, productivity 207

7. FINDINGS AND CONCLUSION 210-218

Findings 211
Conclusion 215
7.1.3.2 Limitation 217
7.1.4 Scope for future research 217

REFERENCES 219-236

APPENDIX

ix
 CHAPTER I

INTRODUCTION

1
 Introduction:

Human Resources Development (HR) as a theory is a framework for the expansion of

human capital within an organization through the development of both the organization
.
and the individual to achieve performance improvement
It is the integrated use of training, organization, and career development efforts to
improve individual, group and organizational effectiveness. HR develops the key
competencies that enable individuals in organizations to perform current and future jobs
through planned learning activities. Groups within organizations use HR to initiate and
manage change. Also, HR ensures a match between individual and organizational needs.
According to Nadler who coined the term HR is defined as organized learning
experiences in a definite time period to increase the possibility of improving job
performance and growth.
McLean and McLean (2001) have offered the following global definition of HR after
reviewing various definitions across the world:
Human resource Development is any process or activity that, either initially or over the
longer term, has the potential to develop adults work based knowledge, expertise,
productivity and satisfaction, whether for personal or group/ team gain, or for the benefits
of an organization, community, nation or ultimately the whole humanity.
Another popular definition of HR given by Patricia McLagan of ASTD is HR is the
integrated use of training and development to improve individual, group and
organizational effectiveness.
According to Rao and Pareek HR in the organizational context is a process by which the
employees of an organization are helped in a continuous planned way, to:

1. Acquire or sharpen capabilities required to perform various functions associated

with their present or expected future roles;
2. Develop their general capabilities as individuals and discover and exploit their
own inner potentials for their own or organizational development purposes, and;

2
 3. Develop an organizational culture in which supervisor-subordinate relationships,
team work and collaboration among sub-units are strong and contribute to the
professional well being, motivation, and pride of employees.

HR it is obvious is not a set of mechanisms and techniques but a process. The mechanisms
and techniques such as performance appraisal, counseling, training, potential appraisal,
career planning etc. are used to initiate, facilitate and promote this process.

HR is needed by any organization that wants to be dynamic and growth-oriented or to

succeed in a fast-changing environment. In the wake of globalization, liberalization and
privatization on economic front, organizations are expected to make objective assessment
of existing status of their HR system and processes in order to evolve need based
pragmatic HR agenda for the future. The increasing global level competition forced Indian
organizations too to give top priority to the issues of human resource development (HR).
Currently, HR system, processes and practices make significant difference for all those
who emerge as winners and who maintain their position for a long time in the global
market. All the relevant processes of change can be implemented successfully, if the
human resource effectiveness is ensured through the HR system and processes and if the
management practices an appropriate style for managing the same. It is the need of the
hour that all the individuals, groups and teams of an organization have to give their best
and to get the best from one another if the organizations intend to have competitive edge
over their rivals. Organizations, therefore, need to configure their HR strategies keeping
them well aligned with the overall corporate strategies. HR is a sub-system of HRM; it is a
process of competence and commitment (motivation) development of human resources
of all cadres / levels in organization; and for the purpose, HR functionaries must develop
various subsystems and appropriate climate to facilitate the competence and
commitment development of human resources. Further, management must facilitate the
effective implementation of HR policies and strategies and must ensure the effective
functioning of various sub-systems at pragmatic level. In the process of HR, competence
and commitment development of human resources must be focused
in relation to their existing jobs / roles as well as to their likely future jobs / roles with
which they will be expected to engage themselves. Besides these, in the process of HR,
mutual relationships and team spirit & team work among the people and groups in
organization should be emphasized. Finally, in the process of HR, designing / re- designing
of various sub-systems and maintenance and ongoing improvement in organizations
overall health & self renewing capabilities should also be taken care of. In order to
facilitate such a process of HR, various sub-systems, viz., Employees Training,
Employees Performance Appraisal, Performance Feedback & Counseling, Employees
Potential Appraisal & Development, Career Planning & Development, Succession
Planning, Job Enrichment, Role Innovation, Quality of Work Life, Organizational Re-
structuring, Organization Development (O.D.), Employee Communication, Human
Resource Information System (HRIS) etc. need to be designed / re designed ; the related
policies / strategies need to be formulated / re-formulated ; and their effective functioning /
effective implementation need to be ensured. For all these, not only the qualified,
competent and committed HR professionals are required but such professionals need to
develop and maintain high concern for HR cause in the mind set not only of themselves,
but also of line & staff managers, trade union leaders, team leaders & members, and
individuals in organization. Appropriate management styles need to be practiced in order
to ensure the effective implementations of HR policies & strategies as well as to ensure
effective functioning of HR subsystems. Ultimately, HR policies & strategies and HR
sub-systems need to be well aligned & integrated with overall organizations system,
policies and strategies and such a well aligned and integrated HR system policies and
strategies must make significant and measurable contribution to the overall organizations
performance / effectiveness.
Research Objectives:
An integrated HR system makes significant and visible contribution to the organizations
performance. However, there is dearth of empirical evidences regarding what constitute
HR practices and how HR practices are instrumental in bringing about change in an
organization. While it goes without saying that human are the most important resources
that energize and direct all other resources for the accomplishment of the goals of the
organization, the linkage between practices and performance is somewhere illusive. Also
a holistic model showing the interrelation of HR practices, HR climate and individual &
organizational outcomes has remained a holy grail. The present study is an attempt to fill
up this gap. In the light of the above problem identification, following research objective
has been set forth for the research work:

a) Critical study of different HR practices being followed in Durgapur Steel Plant.

b) Measurement of HR climate prevailing in Durgapur Steel Plant which is but the
reflection of effectiveness of HR practices followed in the plant.
c) Finding the causal relationship with the help of correlation coefficient between
various independent variables and dependent variables e.g. training-labor
productivity, training-lost time, labor productivity-production, labor productivity-
profit etc.
d) Finding the nature of relation between the independent and dependent variables
using multiple regressions to study the impact of independent variables
manpower, training, labor productivity on dependent variables profit and
production.
e) Establishing a model showing linkage between HR practices, HR Climate and
outcome.
 Conceptual Model:

The researcher has conceptualized the following simple model that rests on the
assumption that adoption, patronage and implemention of HR practices improves HR
climate in an organiztion. As the saying goes a happy worker is a better worker; the
better climate improves the performance of employees that fosters organizational growth.

HR CLIMATE EMPLOYEE OUTCOME ORG OUTCOME

HR PRACTICE

General climate Openness Confrontation Trust Authenticity Proactive Agreeableness Team Work
Labor Productivity
Performance appraisal
Production Profit
Potential appraisal Motivation Commitment Positive Synergy Enthusiasm Belongingne
Labor Turnover Loss time
Meeting of target
Career planning and Promotion policy

Training and development

Job Rotation
Research Design:

Any successful research rests upon an effective design of the research work. The design
should be such that it tracks all the research questions that need to be answered. It also
facilitates a framework for collecting and analysing data in the light of identification of
causal connection between variables. (Bryman & Bell, 2003:40). In the light of the
present research intended to study the nature of relationship between HR practices and its
impact on the performance of the firm, the research design has been framed with a view
to track the Research Objective mentioned above.

A close examination of the above aspects highlights the need to pursue a two pronged
approach for the present research agenda. The first one has to be directed towards a
critical descriptive study of the various HR practices/mechanisms that are being followed
in the Durgapur Steel Plant and measurement of HR climate based on primary data and the
second one would carry out finding relation between the variables. Accordingly the
research design involving sampling techniques, questionnaire construction, data analysis
techniques etc has to be formulated. The nature of the present research necessiates the need
to employ both qualitative and quantitative research techniques to trace all present issues
related to the research which is quite justified in carrying out resaerch in HR .Therefore an
ideal way of exploring into the process would entail a combination of questionnaire survey
coupled with statistical relation. Accordingly the present research has been segregated
into two parts- the first part involves critical study of various HR practices followed in
the plant and measurement of HR climate prevailing in the organization and the second
one is directed towards finding relation between various independent and dependent
variables. Since the two parts of the research entails two approaches, the research
methodology has been segregated into two parts and discussed separately.
Research Methodology

PART-I (A):

Any organization that would like to be dynamic and growth oriented has to pay attention
to the development of its human resources. People must be continuously helped to
acquire capabilities for effective performance of new roles/ functions /tasks that may
arise in the process of organizational growth and change in the environment. Thus HR
becomes crucial for organizational dynamism and growth. In the recent past, mechanisms
like performance appraisal, counseling, career planing, promoton policy, potential
appraisal, job enrichment has been introduced in various organizations. A minimum
positive developmental climate is essential for the success of these programmes. Thus,
survey is used to find out the extent to which such developmental climate exists in the
organization after a detailed and critical study of the various HR mechanisms.

Questionnaire 1:. HR Climate survey developed by authors T V Rao and E Abraham

has been used to study the HR climate and for Organizational Diagnosis.

Sampling unit, size, technique: Convenience Sampling technique, a form of non-

probability sampling is used for primary data collection. This technique is used to make
research process faster and meaningful by obtaining a large number of completed
questionnaires quickly. A list of executives was taken from taken from the CHR office. The
questionnaires were given to 124 executives from across the departments and hierarchy. 93
responded positively.
About the instrument : The instrument consists of 38 items on five-point scale to
measure 12 dimensions like : positive problem solving, recognition and reward, growth
and development, innovation and change, experimentation, interpersonal openness and
risk taking, top management commitment to HR, commitment to competence
development, personnel policies, positive attitude and objectivity, developmental climate,
interpersonal helpfulness and team spirit.

Reliability and Validity: coefficient of correlation computed between the 38 items

revealed high inter-item coefficient of correlation, indicating high internal consistency
among the items.Further to check the relaibility of the questionnaire coefficient of alpha
also known as Cronbach alpha was calculated. Cronbach alpha computed was 0.769 that
revealed high reliability

INTERPRETATION: Higher score on the dimension indicate better perception of

climate.
1= extremely poor HR climate 2=
Poor HR climate
3= average HR Climate
4= good HR Climate, where most employees have positive attitude to HR policies
and practices.
5= extraordinarily good HR Climate.

After data collection, it was coded in Excel 2007 and SPSS 16.0. Descriptive statistics
(mean, standard deviation) was used to analyze the result.

PART I(B): Training Effectiveness Questionnaire developed by T V Rao has been used
to check the effectives of training function at the plant.

Sampling unit, size, technique: Random Sampling technique, a form of probability

sampling is used for primary data collection. This technique is used to make research
process unbiased and meaningful. A list of executives was taken from taken from the CHR
office. The questionnaires were given to 47 line managers and 22 HR personnel from
across the departments and hierarchy.
About the instrument : The instrument consists of 25 items on five-point scale to
measure various dimensions of training functions effectiveness such as induction
programme, training facilities, trainers effectiveness, Training Need Identification
effectiveness etc.

Reliability and Validity: coefficient of correlation computed between the 25 items

revealed high inter-item coefficient of correlation, indicating high internal consistency
among the items. Further to check the relaibility of the questionnaire coefficient of alpha
also known as Cronbach alpha was calculated. Cronbach alpha computed was 0.82 that
revealed high reliability.

INTERPRETATION: Higher score on the dimension indicate better perception of

climate.

1= extremely poor HR climate 2=

Poor HR climate
3= average HR Climate
4= good HR Climate, where most employees have positive attitude to HR policies
and practices.
5= extraordinarily good HR Climate.

PART II:

Data regarding profit, turnover, labor productivity, manpower were collected from
various secondary sources which include Annual Training Report, Annual Report of the
plant, Directors Report of SAIL , Parliamentary discussions, Labor Statistics, Earlier
research work, books etc. After the data collection, it was coded in SPSS 16.0 statistical
tool. Multiple regression and correlation were used to strengthen the results.
10
Statistical Tools and software:

Keeping in view the objectives, nature of questionnaires and type of data; the
following statistical tools were used:

For training eggectiveness questionnaire and HR climate questionnaire:

Descriptive statistics - Arithmetic Mean. Standard Deviation, Range

For degree and nature of relationship between independent and dependent variables:

Karl Perasons Coefficient of correlation (r)

Coefficient of determination (R)
t test
Multiplle Regression Analysis

Further the data analysis has been done usingfollowing softwares:

SPSS 16.0
MS Excel

Chapterization and presentation of Research:

The entire research work on the topic A Critical study of Human resource
Development Practices in Durgapur Steel Plant has been segregated in the following
chapters:
CHAPTER 1: Introduction to the study.

CHAPTER 2: Literature Review to develop a theoretical framework.

CHAPTE.3: Profile of the organization under study viz Durgapur Steel Plant.

CHAPTER 4: HR practices at Durgapur Steel Plant.

CHAPTER 5: HR climate survey at Durgapur Steel Plant

CHAPTER 6: Data Analysis and interpretation.

CHAPTER 7: Findings, conclusion, limitation and scope for future research

Scope of the research: The research has been conducted at the Durgapur Steel
Plant, Durgapur. Adequate measure has been taken to include the executives
from all the hierarchies and departments to make the result holistic. However the
respondents while using questionnaire on HR climate had been chosen from
those who had a minimum of 5 yearrs of experience in the plany. Secondary
data regarding manpower, production, labour productivity, profit, lost time etc.
were collected from Annual Reports of the plant.

CONCLUSION: This chapter represents the description of the procedures used

to measure the constructs and collect the data. The organization selected for the
study was Durgapur Steel Plant, Durgapur-one of the unit of Mharatna Public
Sector Undertakings SAIL,. The researcher has spelt out the research objectives .
the researcher has further elaborated research design which included the research
process by the research plan. A conceptual model has been proposed by the
researcher. The sampling plan has been laid down. The researcher has also
incorporated data collection and data analysis procedures adopted.
 CHAPTER II

LITERATURE REVIEW

13
Introduction

The entire literature review has been conducted keeping in view the specific objective of
the study to keep it compact and concise and for this attempt has been made to disseminate
the review in the following category:

Literature Review of relation between HR practices and firm performance.

Literature Review of relation between HR practices and financial performance.
Literature Review of relation between HR practices and HR Climate.
Literature Review of relation between HR Climate and firm performance.

The review has been done at 360 degree for a better understanding:

Literature Review of Research with US firms, where the term was coined..
Literature Review of Research with firms across rest of the world.
Literature Review of Research with reference to Indian firms.

Findings and framework for study

14
Literature Review of relation between HR practices and firm performance.

Does HR really matter?

The fact that HR practices are related to firm performance has well been documented .In
the last 20 years; researchers have built the evidence that links the HR activities with
outcomes or corporate performance. A plethora of research exists examining the
relationship between HR practices and performance. (Schuler & McMillan , 1984; Schuler
& Jackson, 1987, 2005; Storey, 1992; Arthur 1994; Dyers & Reeves 1995; Huselid 1995;
Purcell 1995; Delaney & Huselid 1996;Huselid & Becker 1996; Ichinowski, Shaw &
Prennushi, 1997; Delery 1998; Pfeffer 1998; Wright & Snell 1998; Gratton, Hope-Hailey,
Stiles & Truss 1999; Delrey 1998; Truss 2001; Guest, Michie, Conway & Sheehan 2003;
Paauwe 2004; Paauwe & Boselie 2005: Wright, Snell and Dyer 2005)). Such research
has been conducted at the corporate (e.g. Huselid), business unit (e.g. Wright, Gardner and
Moynihan, 2003) and departmental level. Studies have examined multiple industries (e.g.
Guthrie, 2001), within a single industry (e.g. MacDuffe, 1995) or even within a single
corporation (Wright et al., 2003). While the observed effect sizes may differ across the
studies, it is well established that in almost all cases HR practices are found to be at least
weakly related to performance (Boselie, Dietz & Boon. 2005; Wright, Gardner, Moynihan
& Allen, 2005). Organizations are realizing that the success of their long range planning
and strategic approaches rests on corresponding analysis and planning by human resources
(Buller, 1988). This conclusion is supported by a recent meta-analysis concluding that the
mean effect size for the HR practices-performance relationship is approximately .14
( Combs, Ketchen, Hall & Liu,2006) implying that a one standard deviation increase in the
use of high performance work systems is associated with a 4.6% increase in return on
assets.

Arthur, J.B. (1994) conducted cross sectional study of 30 US steel minimills.taking 10

variables decentralization, participation, general training, skilled workers, level of
supervision, social events, due process, wages, benefits, bonus,, percentage unionized as
HR measures clustered into two systems: control and commitment. Outcome measures
were taken manufacturing performance (labour efficiency, scrap rate) and employee
turnover. Using Regression methods he found commitment based HR systems associated
with lower scrap rates and higher labour efficiency than control-based systems.

MacDuffie, J. (1995) conducted cross sectional study taking 62 automotive assembly

plants in 16 countries (volume plants).HR measures were identified as HR policies (index
of four items - hiring criteria, incentive pay, presence of status barriers and level of
training), Production organisation measures were use of buffers (3 items) (e.g. incoming
and work in progress inventory), work systems (6 items including employment
involvement (production-related suggestions, job rotation and quality tasks), total
automation, production scale, model mix complexity, parts complexity, production
design age and Outcome measures were taken as labour productivity (hours of actual
effort to build a vehicle), quality (consumer perceived, defined as defects per 100
vehicles). He used hierarchical regression and found that innovative HR practices affect
performance not individually but as interrelated elements in an internally consistent HR
system and these systems contribute most to plant productivity and quality when they are
integrated with manufacturing policies of a flexible production system.

Huselid, M.A. (1995) also conducted cross sectional study of 968 US-owned firms with
over 100 employees. The HR measures taken wereh high performance work system scale.
13 items elicited two factors (i) employee skills and organisational structures items:
formal job design, enhanced selectivity, formal training, quality of work program, quality
circles, labour-management teams, information sharing programmes, formal grievance
procedures, profit and gain-sharing plans, enhanced communications, (ii) Employee
motivation items: formal appraisal, linked to compensation, merit in promotion
decision rules;outcome measureswere taken as turnover, productivity (log of sales per
employee), corporate financial performance market based measure Tobins q, and
accounting based measure gross rate of return on capital employed (GRATE).;controls
variables were taken as firm size, capital intensity, firm and industry levels of union
coverage, industry concentration, growth in sales, R&D intensity, firm-specific risk,
industry levels of profitability, net sales and total assets.Using Regression analysis he
concluded that high performance work systems have an economically and statistically
significant impact on turnover, productivity and corporate performance. One standard
deviation increase in HPWS is associated with a relative decrease of 7.05% in turnover,
and on a per employee basis, a $27,044 more in sales and $18,641 and $3,814 more in
market value and profits respectively.

Delaney, J.T. and Huselid, M.A. (1996) conducted cross sectional study of 727
organizations taking HR measures: Staffing selectivity index (3 items), training index (3
items), incentive compensation (3 items), grievance procedure, decentralised decision-
making, internal labour market index (5 items), vertical hierarchy; Outcome measures:
Perceptual measures of organisational performance assessing organisational performance
over the last three years relative to similar organisations (on product quality, customer
satisfaction, new product development) and on perceived product market performance
(profitability, market share) over three years relative to product market competitors and
Controls: profit/not-for-profit, subsidiary, number of employees, form age, market
competition, union pressure, percentage of managers.he also used regression analysis and
found that progressive HRM practices are positively related to perceptual measures of
organizational performance, but do not support the assertion that complementarities
among HR measures enhance performance.

Youndt, M.A., Snell, S.A., Dean, J.W. and Lepak, D.P. (1996) on their Cross sectional
study using Single industry: 97 manufacturing plants and applying regression analysis
found that HR system focused on human capital enhancement directly related to multiple
dimensions of operational performance. This was predominately so for links to a quality
manufacturing strategy, giving broad support for contingency perspective.

Huselid, M.A. Jackson, S.E. and Schuler, R.S. (1997)s cross sectional study of 293
publicly held US firms found significant relationship between strategic HRM and
employee productivity, cash flow, and market value. They concluded that on a per
employee present value basis, a one standard deviation increase in overall HRM
effectiveness corresponds to an estimated increase in sales per employee of 5.2. per cent ,
a cash flow of 16.3 per cent, and a market value of 6%.

Ichniowski, C., Shaw, K., and Prennushi, G. (1997)s Cross sectional study of 36
finishing lines in 17 US owned companies matched with 2190 monthly observations of
productivity data taking HR measures: Identified 8 HR variables (incentive pay,
recruitment and selection, employment security, flexible job assignment, communications
and labour relations) and identified 4 distinctive combinations of HR practices it was
found that innovative HRM practices raise worker productivity and systems of innovative
HRM practices had large effects on production workers performance while changes in
individual employment practices have little or no effect.

Patterson, M.G., West, M.A., Lawthorn,R., and Nickell, S. (1997) did longitudinal study on
67 single site single product manufacturing firms with less than 1000 employees. HR
measureswere identified as acquisition and development of employee skills (selection,
induction, training and use of appraisals); job design (skill flexibility, job responsibility,
job variety and use of formal teams); quality improvement teams, communication,
harmonization, comparative pay, incentive compensation systems and outcome
measureswre selected as labour productivity, real profits per employee (profits before tax,
deflated by the producer price index of the industry and controlling for size of firm).
They used Qualitative and quantitative data collection, multi-level and found that HR
practices account for 19 per cent of variation between companies in change in
profitability and18 per cent of variation between companies in change of productivity.
The acquisition and development of skills and job design are significant determinants of
change in both productivity and profitability.

Guest, D.E., Michie, J, Sheehan, M, Conway, N. & Metochi, M (2000)s cross sectional
study of 610 firms above 50 employees revealed effective use of progressive HR
practices is linked to superior performance, and also linked to perceptions of positive
employee attitudes and behaviour.
Guest, D.E., Michie, J, Conway, N & Sheehan, M (2003) conducted both cross sectional
and longitudina taking 366 firms with over 50 employees. They selected 48 items on
HRM covering nine main areas: recruitment and selection, training and development,
appraisal, financial flexibility, job design, two-way communication, employment security
and the internal labour market, single-status and harmonisation, and qualityas HR
measures and found that using objective measures of performance, greater use of HR
practices was associated with lower labour turnover and higher profit per employee, but
showed no association with HR and productivity. There was a strong association between
subjective estimates of HR and productivity and financial performance. The study
supports the association between HRM and performance but does not show that HRM
causes high performance.

Guzzo, Jettle and Katzell (1985) and Schuster (1986) also found that HR interventions
have a significant positive effect on productivity / firms performance. Better strategic HR
practices contribute for harmonious industrial relations scenario, increased trainability, and
low need for employment externalization and downsizing of manpower (Kandulla, 2001).

The impact of human resource practices on firm-level outcomes has gained dominance as
a research issue in the human resource management field. Previous studies
(Huselid,1995; Huselid et al.,1997; Huselid and Becker, 1997) show that human resource
practices are related to business performance, especially those known as best or high
performance practices, whose objective is to increase employees abilities and
motivation.

According to Watson Wyatts (2002) Human Capital Index Study, strong HR practices
are the leading indicators of financial success, responsible for as much as 47% increase in
market value. The study analyzed selected HR practices to measure and found that
companies with the best human capital record had a three times greater return to
shareholders over five years- 68% compared to a 21% - return for companies with the
weakest practices.
Ferris et al. (1999) suggest that perhaps one of the most integral issues for our
understanding of the human resource practices- firm performance relationship is that of
the black box. More specially, if there is indeed an impact of human resource systems
on firm performance, how does this effect occur?

An attempt to articulate these intermediate linkages and processes was proposed by Snell
et al. (1996), who begin by noting the lack of any theoretical explanation as to how
human resource systems influence organizational effectiveness. They argue that human
resource practices may be crucial for developing organizational learning, which in turn is
ultimately related to competitive advantage.

A number of scholars tried to link the effect of certain HR practices to specific

organizational outcomes. The adoption of training programmes was positively associated
with financial performance (Russell, Terborg & Powers 1985). Job security, compensation,
culture and demographics have an impact on turnover (Arnold and Fedman 1982,
Baysinger and Mbley 1983).

Bartel (1994) established a link between the adoption of training programmes and
productivity. Guzzo, Jette and Katzells (1985) meta analysis demonstrated that training
and goal setting had significant and positive effects on productivity. Brown and
Medoffs study (1978) also finds relation between employee turnover and organizational
productivity.

Sivasubramaniam and Kroeck (1995) verify the various perspective of human resource
management as the concept of fit or integration.

Guest (1997) suggests the various types of human resource management can be classified
in two dimensions as internal and external fit. External fit explain HRM as strategic
integration whereby internal fit as an ideal of practices. Several of researchers try to
examine which fit is appropriate.

20
Youndt et al. (1996) who observes the external fit, their result shows more particular fit
between high performance HRM practices and quality strategy.

Stavrou-Costea (2005) also argued that the effective human resource management can be
the main factor for the success of a firm.

As supported by Lee and Lee (2007) HR practices on business performance namely

training and development, teamwork, compensation/incentive, HR planning, performance
appraisal and employee security help improve firms business performance including
employees productivity, product quality and firms flexibility.

Using cross sectional survey data, Nkomo (1986, 87) examined the link between HR
planning and business performance, and found no correlation. These results were
supported by another survey based study (Delaney, Lewin and Ichinowski, 1988, 1989)
into HR practices and financial performance and found no link.

Work by Ulrich and colleagues on the OASIS research programme used the PIMS database
and found positive relationships between specific HR practices and business results
(Ulrich, Geller and DeSouza 1984, Cowherd & Kaminski, 1986).

A later study (Yeung and Ulrich) found that the manner of alignment between HR and
business strategy had an impact on organizational performance. This work built on a
previous study by Schuler and Jackson who, with cross sectional data, showed how HR
practice varied depending on the business strategy profile (Jackson, Schuler and Rivero
1989, Schuler and Jackson 1987, Schuler 1987).

Ruwan (2007) empirically evaluated six HR practices (realistic job, information, job
anlysis, work family balance, career development, compensation and supervisor support)
and their likely impact on the Executive Turnover.
Along the same line, Abang, Maychiun and Maw (2009) found that two components of
human resource practices namely training and information technology have direct impact
on organizational performance.

Zaini, Niufar and Syed (2009) found four HR practices i.e. training and development, team
work, HR planning and performance appraisal have positive and significant influence on
business performance.

Schaffner (2001) on his study assert the relationship between job training and
productivity.

Batt (2002) finds that high involvement practices such as autonomy, team
collaborations and training are related to reduce employee turnover and increased
productivity.

Along the same line Huselid, Jackson and Schular (1995) finds that an increase in high-
performance work practices decrease turnover.

Further, Hequent (1993) clarifies the negative correlation between training and turnover
in a number of companies.

Bradely, Petrescu and Simmons (2004) explain that creating on-going learning as well as
training in work place has a highly significant impact on job satisfaction and
organizational performance.

Ballot, Fakhfakh and Taymaz (2006) researchers have found evidence on the impact of
training on productivity. Mudor, Tooksoon (2011) examined the relationship of HR
practices with job satisfaction and turnover and found they are positively associated.
Altarawmneh and al-Kilani (2010) examine the impact of HR practices on employees
turnover intentions. The results showed that HR practices had a significant effect on
employees turnover intentions. However, no statistical evidence was found regarding the
effects of other HR practices on employees turnover intentions.

Wright and McMahans work points to the importance of human resources in the creation
of firm specific competitive advantage.

Becker et al. (1997) similarly argued that HR practices operate most directly through
employee skills, motivation, and work design, resulting in behavioral outcomes such as
creativity, productivity, and discretionary effort, which are expected to work through
operational and eventually through financial market outcomes. Hence in order to assess
the most immediate consequences of an HR system, Becker et al. (1997) and Dyer &
Reeves (1995) would suggest examining employee outcomes as they are predicted to be
affected most directly.

More recently, Wright and Nishi (2006) offered further justification for examining
outcomes of HR below the organizational level. Specifically, these authors argued that,
while most of the research to date has focused on the links between business level HR
practices and performance, the theoretical explanations offered for these relationships
cross multiple levels of analysis, including individuals and job groups. They noted that
empirical research has focused only on the business unit linkages between practices and
performance, and has virtually ignored the lower level mechanisms through which these
linkages are purported to occur.

Richard & Johnson (2001) examined the impact of HR effectiveness on a number of

performance variables and found that HR effectiveness was directly related to employee
turnover and return on equity.

This is exemplified by Terpstra & Rozells study (1993) of the relationship between
recruitment/ selection practices and firm performance. They found a significant and
positive link between extensiveness of recruitment, selection and firm performance.
The use of performance appraisals and linking such appraisals with performance has also
shown strong relationship in most research works (Gerhast & Milkovich, 1990).

Koch and McGrath (1996) reported that firms using more sophisticated staffing practices
(planning, recruitment and selection) had higher labour productivity.

Huselid (1995) reported that HR practices can influence firms performance through
provision of organizational structures that encourage participation among employees and
allow them to improve and redesign how their jobs are performed.

Green, Wu, Whitten and Medlin (2006) reported that organizations that vertically
aligned and horizontally integrated HR functions and practices performed better and
produced more committed and satisfied HR function employees who exhibited improved
individual and organizational performance.

Several researchers have examined the relationship between HR practices and

organizational commitment. For example, in an individual level analysis, Paul and
Ananthramans (2004) study of software professionals showed that HR practices had a
significant positive relationship with organizational commitment. Payne and Huffman
(2005) found in a longitudinal study that organizational commitment mediated the
relationship between mentoring, an HR practice in the organization studied and employee
turnover over time. In a unit-level study, Wright, Gardner & Moynihan (2003) found a
positive relationship between HR practices and organizational commitment and
performance in a study of 50 business units from a large food service corporation.

Deepak et al concluded that organizational performance and competitiveness can be

enhanced by utilizing high performance work system. Through universalistic and
contingency approach using regression (189 at 95% level of confidence) analysis, it is
identified that relative use of HR practices displays stronger association with
organizational performance.
(Deepak, K D., Jmes, PG, Patrick MW (1989) HRM and Firm Productivity, National
Academy Of Management Meetings).

Ruwan empirically evaluated six human resource practices and their likely impact on the
Marketing Executive turnover .Result of the regression shows that HR Practices on job
analysis are strong predictors of Marketing Executive Turnover.

Along the same line Abhay, Maychiusn and Maw (2009) concluded that two components
of HR Practices namely training and development and information technology have
direct impact on organizational performance.

Planning, performance appraisal and team work and found their positive and strong
influence on business performance.

Altarawmneh and al-Kilani (2010) examined the impact of HR Practices on employees

turnover intentions. The result showed that job analysis has a significant impact on
employees turnover.

Schaffner on his study asserts the relationship between job training and turnover.

Ballot, Fakhfakh and Taymaz (2006) have found evidence of the impact of training on
productivity.

Mudor and Toocksoon found strong and positive relationship between HR practices and
Job-satisfaction and turnover.

Arthur, J. B. (1994) conducted a cross sectional study of 30 US steel mini mills to study
the impact of HR practices taking 10 variables on the performance (labour efficiency,
scrap rate and employee turnover). Using the method of regression he found that
commitment based HR systems is associated with lower scrap rates and higher labour
efficiency than control-based HR systems.
Bailey (1993) contended that human resources are frequently underutilized because
employees often perform below their maximum potential and that organizational efforts
to elicit discretionary effort from employees are likely to provide returns in excess of any
relevant costs. Bailey argued that HR practices can affect such discretionary efforts
through their influence over employee skills and motivation and through organizational
structures that provide employees with the ability to control how their roles are
performed. HR practices influence employee skills through the acquisition and
development of a firms human capital. Recruiting procedures that provide a large pool of
qualified applicants, paired with a reliable and valid selection regimen, will have a
substantial influence over the quality and type of skills new employees possess.
Providing formal and informal training experiences, such as basic skills training, on-the-
job experience, coaching, mentoring, and management development, can further
influence employees development.

Ichniowski, Shaw,and Prennushi (1993) found the impact of cooperative and

innovative HR practices to have a positive and significant impact on organizational
productivity. Similarly Arthur (1994) found in 30 steel mills that those with committed
HR systems, emphasizing the development of employee commitment, had lower turnover
and scrap rates and higher productivity than firms with control systems, emphasizing
efficiency and the reduction of labor costs.

A number of authors have explored the links between individual HR

practices and financial performance.

Substantial research on the HR practices- performance relationship has demonstrated

that HR practices are related to number of firm performance measures such as Market
Value (i.e. Tobins Q) (Huselid,1995), Return on Equity (Delery and Doty,1996), and
operational measure of performance (MacDuffe, 1995).

Cascio (1991) and Flamholtz (1985) argued that the financial returns associated with
investment in progressive HR practices are generally substantial. Similarly, work in the
field of utility analysis (Boudreau,1991; Schimidt, Hunter, MacKenzie,& Muldrow
1979) has concluded that the value of a one-standard deviation increase in employee
performance is equivalent to 40 percent of salary (per employee) and that that the
organizational implication of HR practices that can produce such an increase are
considerable. Becker and Huselid (1992) presented field data suggesting that standard
deviation may in fact well be in excess of 40 percent of salary. Similarly Terpstra and
Rozell (1993) found a significant and positive link between the extensiveness of HR
practices and firm profits. Russell, Terborg and Powers (1985) demonstrated a link
between the adoption of employee training programme and financial performance. The
use of performance appraisal (Berman, 1991) and linking such appraisals and
compensation have also been consistently connected with increased firm profitability
(Gerhart & Milkovich, 1992).

Huselids study (1995) of the relationship between HR practices and corporate

performance serves as probably the seminal and definitely most cited work in this area.
He developed and validated indexes of high involvement HR practices through factor
analysis and found them to be strongly and positively linked to various methods of
organizational performance and productivity.

Delaney and Huselid (1996) found that practices consistent with a high-involvement HR
strategy were positively linked to organizational performance.

Follow up empirical works have shown reasonably strong positive relationships between
the extent of a firms adoption of high-involvement HR practices and organizational
performances (MacDuffe 1995; Delery & Doty 1996; Youngt, Snell, Dean& Upak 1996;
Huselid, Jackson and Sculer 1997; Chadwick & Cappelli 1998; Katau 2007).

Lam & White (1998) reported that firms HR orientations; measured by the effective
recruitment of employees, above average compensation and extensive Training &
Development; were related to Return on Assets (ROA), growth in sales and growth in
stock values.
Wan et al. (2002) examined the relationship between HR practices and firm performance.
HR practices were creating positive effect on organizational performance. Results
calculated through regression suggested that effective implementation of key HR
practices increases organizational performance. On the other hand, companies interested
in enhancing HR performance may emphasize the need for empowerment and training.
(Wan D, Kok V, Huat C (2002): Strategic Human Resource Management and
Organizational Performance. Comens Benefits Review Saranac, 34 (4): 10-33).

Flamholtz and Cascio (1991) concluded that financial returns associated with investments
in progressive HR practices are generally substantial.

Schimidt et al. (1979) explored that increasing one unit of employee performance is
equivalent to 40 % of salary increase.
(Schimidt FL.: Impact of valid selection procedure on work force productivity, Journal of
Applied Psychology, 64:609-626).

Cascio (1991) argues that the financial return associated with investments in progressive
HR practices is generally substantial. Russel, Terborg and Powers (1985) demonstrated the
link between the adoption of employment training programmes and financial performance.

In a similar cross sectional study of 62 automotive assembly plants in 16 countries,

MacDuffe, J. (1995) studied the impact of HR policies (index of four items- hiring
criteria, incentive pay, presence of status barriers and level of training) on Performance.
The findings based on hierarchical regression revealed that innovative HR practices
affect performance not individually but as interrelated elements in an internally consistent
HR systems and these systems contribute to plant productivity and quality when they are
integrated with manufacturing policies of a flexible production system.

In a major cross sectional study of 968 US owned firms with over 100 employees
Huselid, M.A. (1995) studied the impact of hr practices on firms performance. The
independent variables included employee skills and organizational structures-formal job
design, enhanced selectivity, formal training, quality of work programme, quality circles,
labour-management teams, information sharing programmes, formal grievance
procedures, profit and gain sharing plans, enhanced communication, employee motivation-
formal appraisal, linked to compensation, merit in promotion decision rules. The outcome
measures were turnover, productivity, corporate financial performance- market based
measure, Tobins q, and accounting based measure- gross rate of return on capital
employed. The findings based on regression analysis revealed that high performance work
systems have an economically and statistically significant impact on both turnover,
productivity and corporate performance. One standard deviation increase in HPWS is
associated with a relative decrease of 7.05% in turnover, and on a per employee basis, a $
27,044 more in sales and $ 18641 and $ 3,814 more in market value and profits
respectively.

Delaney, J.T and Huselid, M.A. (1996) took 727 organizations and examined the
relationship on HR practices- corporate performance. The HR measures taken were
staffing selectivity index (3 items), training index (3 items), incentive compensation (3
items), grievance procedure, decentralized decision making, internal labour market index
(5 items) and vertical hierarchy. The outcome measures included perceptual measures of
organizational performance assessing organizational performance over the last 3 years
relative to similar organizations (on product quality, customer satisfaction, new product
development) and on perceived product market performance (profitability, market share)
over three years relative to product market competitors. The regression analysis
concluded that progressive HRM practices are positively related to perceptual measures
of organizational performance, but does not support the assertion that complementarities
among HR measures enhance performance.

In another cross sectional study of 97 manufacturing plants, Youndt, M.A., Snell,S.A.,

Dean,J.W. and Lepak,D.P.(1996) enumerated that HR system focused on human capital
enhancement directly related to multiple dimensions of operational performance. They
also relied on regression analysis.
Delery,J.E. and Doty,D.H.(1996) surveyed 114 banks from a single industry. The
independent variables chosen were internal career opportunities (4 items), formal and
informal training (4 items), appraisal (2 items), profit sharing (1 item), employment
security (4 items), employee participation (4 items), job description (4 items). They
studied the impact on two financial measures- return on average assets and return on
equity. The method used was hierarchical regression analysis and the findings read as;
three individual HR practices-profit sharing, results oriented appraisal and employment
security had relatively strong universalistic relationships with important accounting
measures of performance. Contingency relationships between strategy and three HR
practices- participation, results oriented appraisals and internal career opportunities
explained a significant portion of the variation in the same performance measures.
Similarity to the market type employment system was positively related to firm
performance. The study demonstrated that universalistic, contingency and
configurationally perspectives can explain significant levels of variation in financial
performance.

Ichniowski,C.,Shaw,K., and Prennushi,G. (1997) conducted cross sectional study of 36

finishing lines in 17 US owned companies matched with 2190 monthly observations of
productivity data. They identified 8 HR variable sand identified 4 distinctive
combinations odf HR practices. The outcome measures were taken as productivity,
quality. Using OLS regression they found that innovative HR practices raise worker
productivity and systems of innovative HR practices had large effects on production
workers performance.

Patterson,M G., West,M. A., Lawthorn,R , and Nickell,S.(1997) took 67 single site single
product manufacturing firms with less than 1000 employees. The HR measures were
taken as Acquisition and development of employee skills, job design, quality
improvement teams, communication, harmonization, comparative pay and incentive
compensation systems. The outcome measures were identified as labor productivity, real
profits per employee. They adopted qualitative and quantitative data collection method
and used regression analysis to come out with the findings that HR practices account for

30
 19 % of variation between companies in change in profitability and 18 % of variation
between companies in change of productivity.

Literature Review of relation between HR practices and firm performance: researches

conducted world wide:

Numerous researchers outside US have built upon this foundation over the last few years
to add to this literature.

Harel and Tzafrir (1999) found that among public and private organizations within Israel,
HR practices were related to perceived organizational and market performance.
(Harel, G. H., and Tzafrir, S.S.(1999), The Effect of Human Resource Management
Practices on the Perception of Organizational and Market Performance of the Firm,
Human Resource Management ,38,3,185-200).

Katou and Budhwar (2006) in their study of 178 Greek manufacturing firms found
support with the Universalistic model and reported that HR policies of recruitment,
training, promotion, incentives, benefits, investment and health & safety are positively
related to organizational performance

Lee & Chee (1996) found no relationship between HR practices and firm performance
where as Bae & Lawler (2000) found a significant relationship between HR and firm
performance in their sample of 138 Korean firms.
(Lee,M.B., and Chee,Y.(1996),Business Strategy, Participative Human Resource
Management and Organizational Performance: The Case Of South Korea, Asia Pacific
Journal of Human Resources, 34, 77-94).
Bae,J., and Lawler,J.J.(2000), Organizational Performance and HRM strategies in
Korea: Impact on Firm Performance in an Emerging Economy, Academy of Management
Journal, 43,3,502-517).
Morishima (1998) found support for the contingency perspective in a sample of Japanese
companies. Firms with well-integrated high-involvement work practices and firms with
well-integrated practices consistent with more traditional Japanese employment strategies
both did better than firms with poorly integrated practices.
(Morishima, M. (1998), changes in Japanese Human Resource Management: Implication
for firm performance, paper presented at University of Urbana-Champaign)

Lopez, Peon and Ordas (2005) examined the relationship between high performance
human resource practices, organizational learning and business performance taking a
sample of 195 Spanish companies employing over 200 people using structural equation
modeling as a statistical technique. The findings show that high performance human
resource practices have a positive effect on organizational learning, which in turn has a
positive influence on business performance. Nevertheless, a direct effect of human
resource practices on business performance has not been observed. They concluded that
human resource practices by themselves are not a source of competitive advantage, since
this will depend on their capacity to provide incentives for employees to put their
knowledge into practice and thereby promote active cooperation.

Ngo, Turban, Lau & Lui (1998) investigated the linkage between HR practices and
organizational performances in Hong Kong and found them to be strongly and positively
related.
(Ngo, H.,Turban, D.,Lau, C.,Lui,S.(1998), Human Practices and Firm Performance of
Multinational Corporations: Influences of Country of Origin, International Journal Of
Human Resource Management ,9,4,632-652).

Tessema and Soeters (2006) examined how, when and to what extent HR practices
affected performance in Eritrea; Africas youngest and poorest country. They reported that
successful implementation of HR practices is strongly and positively related to
organizational p[erformance.
(Tessema, M. T., and Soeters,J.L.(2006)Challenges and Prospects of HR in Developing
Countries: Testing the HRP performance link in Eritrea, International Journal Of
Human Resource Management ,17,1,86-105).

Tsais study in Taiwan (2006) reported that effective use of employee empowerment
practices is positively related to organizational performance.
Tsai, C.(2006),High Performance Work Systems and Organizational Performance : An
Empirical Study of Taiwans Firms, International Journal Of Human Resource
Management ,17,9,1512-1530).

Findings obtained from Huangs (2000) study of 315 firms in Taiwan demonstrate that
organizational performance is significantly related to training and development,
performance appraisal and other HR functions.

Zheng, Morrison and ONeil (2006) explored high performance HR practices in 74

Chinese Small and Medium Enterprises and with parameters such as performance based
pay, participative decision making , free market selection and performance evaluation ,
only high-level employee commitment was identified a as the key HRM outcome for
enhancing performance.
(Zheng,C., Morrison, M., ONeil,G. (2006), An Empirical Study of High Performance
HRM Practices in Chinese SMEs, International Journal Of Human Resource
Management ,17,10,1772-1803).

Huselid (1995), in his study of 968 US companies, identified a positive link between
HRM practices and firm performance. One standard deviation increase in HRM practices
increases firm performance by 25 %.
( Huselid, MA (1995) . The Impact Of Human Resource Practices On Turnover,
Productivity And Corporate Financial Performance, Academy of Management. Journal,
38: 635-672).
 Qureshi et al. (2010) on their study on impact of HRM Practices on 38 banks in Pakistan
found that four independent variables namely selection, training, compensation and
employee participation have a high positive effect on the financial performance, while
job definition and career planning system have a negative and insignificant impact on
perceived firm performance

Literature Review of relation between HR practices and firm performance-. Indian

Context:

A considerable amount of interest has gained ground on understanding the link between
HR and performance in Indian context in the past few years (Budhwar & Sparrow 1997;
Amba Rao et al 2000; Singh 2003; Paul & Anandraman 2003; Budhwar & Boyne 2004).
The linkage with specific reference to Indian scenario have been explored in the work of
Lawler, Jain, Venkata Ratnam & Atmiyananda, 1995; Sparrow & Budhwar 1997;
Venkatratnam 1998; Ambarao, Patrick, Gupta & Vonder Embse 2000; Ramaswamy &
Schiphorst 2000; Budhwar & Khatri 2001; Budhwar & Sparrow 2002; Paul &
Ananthraman 2003; Singh 2003; Budhwar & Boyne 2004; Bhatnagar & Sharma 2005.

T V Rao conducted a survey on HR practices in India in I975 .The survey of 53 public and
private sectors revealed that 30 % of the companies had HR Department, a proper HR
policy is framed only by 32 % of the company, a performance appraisal system is followed
by 26% of the companies, a definite training policy is followed by more than half (55%)
of the companies, team building is focused by almost 50% of the companies and most of
the companies (almost 80%) has encouraged employees counseling.
A similar study by the same researcher in 2001 reveals that most organizations seem to
have well developed performance management system or are in the process of having the
same; feedback and counseling is the second system mostly followed; there is no
potential appraisal in most of the companies, 360 degree feedback is being tried out in 75
% of the organization under study; employees satisfaction surveys, TQM interventions,
total productivity management, team building workshops, visioning exercises, train the
trainer programmes etc. are some of the OD interventions being used by those
organizations.

In a HR climate study of fifty three Indian organizations conducted by Rao and Abraham
(1986), forty nine per cent organizations were found to claim to give very high importance
to HR processes and sixty eight per cent organizations were found to have specifically
designated manager to look after HR function.

In his study of Indian Organizations, Abraham (1989) concluded that forty three percent
cases of the organizational performance could be explained by the HR profile and its
components; HR climate is a significant contributor of organizational performance.

Perceived extent of introduction of innovative HR practices was found as the most

significant predictor of organizational commitment (Agrawal, 2003). A better ethical
environment of the organization leads to better HR climate for an organization (Sharma
and Pooja, 2001). Employees perceive different dimensions of climate with different
intensities (Gani and Shah, 2001).

In a perception based study of HR heads of eighty four Indian Organizations, Singh

(2000) found high variation in the use of HR practices across different organizations.

In their study of forty four large companies of various sectors, Wognum, Lam and Jo
(2000) found that involvement of various stakeholders in the strategic HR process has a
positive effect on perceived HR effectiveness.

The findings of a recent study carried out by Singh et al. (2008) showed that the best HR
practices have a positive relationship with organizational performance; motivational HR
policies have a positive impact on generic performance; if HR Policies are updated on a
regular basis, there is a high likelihood that the organization will be high on morale,
adaptability, quality of product and services, learning and growth, and overall impact on
industry.
In an another recent study conducted by Purang (2008), it was found that there exists a
positive relationship between the dimensions of HR and the organizational commitment of
the managers; the results of the study showed that four dimensions of HR, viz., Career
Planning, Employees performance appraisal, Job Enrichment and Organization
Development were found as strong predictors of organizational commitment.

Rao (1986, 1990) in A Schematic Presentation of linkage between HR Instruments,

Process, Outcomes and Organizational Effectiveness has suggested that all the sub-
systems / process mechanisms (e.g. Employees Training, Employees Performance
Appraisal, Employees Career Planning etc.) have inter linkage with one another as well
as are well linked with organizations plans and strategies.

Further, Kandulla (2001) developed Strategic HR Framework which may be perceived

as a modified / enlarged version of the Raos Schematic presentation.

Paul and Ananthraman (2003) found that each and every HR practice has an indirect
influence (not having direct casual connection) on the operational and financial
performance of the organization; further, HR subsystems based practices such as training,
job design etc. directly affect the operational performance parameter, viz., employees
retention, employees productivity, product quality, speed of delivery and operating cost.

In a study of eighty nine selected Indian institutes of higher education, Jain, Chatterjee
and Jain (2007) found the motivational climate of such institutions to be strong in the
dependency motive and as such it was perceived as less favorable (Jain, Chatterjee and
Jain,2007).

In an in depth study of performance appraisal systems (PAS) of eight manufacturing

organizations of India, Jain and Kamble (2005) revealed that HR department does follow
up work on training needs as identified through PAS. In the study of Jain and Chatterjee
(2006), HR oriented institutional climate across the selected eighty eight
academic institutions of higher education sector was found as moderately favorable
and communication as regards to the selected seven dimensions was also found as
moderately favourable.

In the survey of fifty three Indian organizations (made by Rao and Abraham, 1986), it
was found that fifty five per cent of organizations surveyed have a definite and formal
policy as regards to employees training which indicates towards the commitment of top
and senior executives for training function.

With a relatively large questionnaire survey of 137 companies; Budhwar & Sparrow
(1997) analyzed the levels of integration of HR in the corporate strategy and development
of responsibility for HR to line managers in India.
(Budhwar,P. and Sparrow, P. (1997),Evaluating Levels Of Strategic Integration and
Development of Human Resource Management in India, International Journal Of
Human Resource Management ,8,476-494).

Singh (2003) from his survey of 84 companies found a significant relationship between
strategic HR orientation index and firm performance.
(Singh, K. (2003), Strategic HR Orientation and Firm Performance in India,
International Journal Of Human Resource Management, 14, 4,530-543)

Amba-Rao et al (2000) in his empirical study compared performance appraisal practices

and management values in India among foreign and domestic firms in India. (Amba-
Rao,S.C., Petrick, J.A., Gupta, G.N.D., and Von der Embse,T.J.(2000),Comparative
Performance Appraisal Practices and Management Values among Foreign and Domestic
Firms in India, International Journal Of Human Resource Management ,11,1,60-89).

Paul & Ananthraman (2003) in their study of 35 Indian companies determined ,

developed and tested a causal model linking HRM with organizational performance
through an intervening process. They observed that no single HR practice has direct
causal connection with organizational financial performance, though HR practices have
an indirect influence on the operation and financial performance of the organization.
(Paul, A. K., and Ananthraman, R.N.(2003),Impact of People Management Practices on
Organizational Performance: Analysis of a Causal Model, International Journal Of
Human Resource Management ,14,7,1246-1266).

In their study of 137 large manufacturing firms, Budhwar and Boyne (2004)
differentiated the HR practices in public sector and private sector companies in India.
Their findings suggest that against the established notion, the gap between the Indian
Public Sector and Private Sector HR policies ( structure of HR department, role of HR in
corporate change, recruitment and selection, pay and benefits, training and development,
employee relations and key HRM strategies) is not very significant, but in few functional
areas (Compensation and Training & Development), private sectors firms have adopted a
more rational approach their public sector counterparts. (Budhwar, S., and Boyne,G.
(2004),Human Resource Management in the Indian Public and Private Sectors: An
Empirical Comparison, International Journal Of Human Resource Management
,15,2,346-370).

Ashok Som in his study of 194 organizations in India found that innovation of HR
practice is positively related to organizational performance. (Som, Ashok. (2008)
Innovative Human Resource Management and Corporate Performance in the context of
Economic Liberalization in India, The international Journal Of Human Resource
Management, 19, 7, 1278-1297)

Literature Review on HR Practices and Labor productivity:

Productivity is a widely considered concept in overall analysis of industrial success. In

order to achieve organizational goals and enhance organizational productivity, flexible
and capable employees play a crucial role. Further, it is extensively accepted that labor
productivity is likely to be the outcomes of creative HR strategies. It is now commonly
accepted that employees create an important source of competitive advantage for firms.
Recent years have witnessed burgeoning interest in the degree to which human resource
systems contribute to the organizational effectiveness. Pfeffer (1994, 1998) argues that
success in todays hyper competitive market depends less on advantages associated with
economies of scale, technology, patents and access to capital and more on innovation,
speed and adaptability. Pfeffer further argues that these later sources of competitive argue
are largely derived from firms human resources. Based on these and similar arguments
Pfeffer (1994, 1998) and others (e.g. Becker, Huselid, Ulrich, 2001; kochan, Osteman
1994; Lawler 1992, 1996; Levine 1995) strongly advocates greater investment in high
performance or high involvement human resource practices. This trend has led to
increased interest in studying the impact of HRM on organizational productivity. Sauian
(2002) has emphasized that production processes in manufacturing should be the most
productive as well as to get such kind of enormous productivity there should be an
efficient HR system. Most firms use productivity as a measure of organizational success.
Sauian (2002) has mentioned number of measures of productivity including capital
productivity, labor productivity, profitability indices as well as total output productivity.
But along with the HR literature, this study has considered only labor productivity, which
is an important element used to determine competition among manufacturing firms.
Especially in manufacturing estates, labor is the crucial input comparing to other
variables (Datta, Guthrie and Wright, 2003). Many researchers (Data et al., 2003; Hayens
and Fryer, 2000) have pointed out that HR practices impact on the outcomes such as
employee satisfaction, employee commitment, employee retention, employee presence,
relationship between workers and management, employee involvement, employee trust
and employee loyalty. They have also indicated that these outcomes and HR practices can
lead to a firms performance such as profit, market share, increase in sales, productivity,
product service quality and customer satisfaction. Further, a number of studies have found
a positive relationship between high performance HR practices (Huang, 1999) and
different measures of firms productivity.

As a result it is important for a firm to adopt Human Resources Development (HR)

practices that make best use of its employees. The practices of the HR heavily affect
productivity of the organization. There is a growing research literature on the area of
management and organizational science which has been dominated by the question of
whether HR practices make a difference to company performance (Patterson, West,
Lawthom and Nickell, 2003). As such various authors put step forward to make a link
between specific HRM practices and firm productivity. Heynes and

Fryer (2000) found a positive relationship between the HRM policies, practices, service
quality and firms overall performance. Further, they explained that positive relationship
between HRM and organizational performance on the manufacturing paradigm too. Goel
(2008) has stated clearly with the justification of number of scholars that resources lead
to sustain competitive advantage when they are valuable, rare, inimitable, and non-
substitutable. While technology, natural resources, and other economic indicators such as
economies of scale can create value, but these sources of value are increasingly available
to almost anywhere and they are easy to copy, especially when compared to complex
human resources system. The firms productivity varied in the extent to which they had
well developed policies covering the human resource planning, job analysis, recruitment
and selection, induction, training, compensation and welfare, performance appraisal,
industrial relation, and discipline handling. The transparency and maintaining equity of
these policies reduce feeling of alienation at work and such practices create trust in the
minds of the employees which in turn may promote productivity of the employees.
Therefore, these areas of HRM practices were explored in this research. The effective
implementation of the HRM policies can deal with those productivity issues in the firm.
Huang (1999) has identified in his study that companies which closely coordinate with
good HRM practices achieve better performance than companies do not. Schuler and
Jackson (1997) note that businesses require employees to possess specific skills,
knowledge, and abilities needed to implement their competitive strategies and the
development of the desired behavior and abilities depends on the design and
implementation of specific HRM methods. Firms adopting an innovation strategy must be
prepared to adapt to rapid market change and technological progress. Their employees
need to be creative; to be cooperative with each other; to be able to pursue long-term
objectives; to devote proper consideration to the quality and the quantity of products and

40
services provided; to be able to take risk; and to cope successfully with ambiguity and
uncertainty. To develop employees with those qualities, job descriptions should be bored,
employee interaction should be strongly encouraged, career options should be extensive,
training and career development should be emphasized and pay scales should be based on
internal equity and also there should be excellent job security and performance
evaluations should stress teamwork and long-term orientation. Schuler and Jackson
(1997) defined this series or related HRM practices and methods as enhancing the overall
performance of the firms in general, HRM involves the design and implementation of a
set of internally consistent policies and practices that ensure a firms human capital to
contribute to the achievement of its business objectives (Datta et al., 2003). In the
research by Schuler and Jackson (1997) statistically significant results were obtained
between HRM practices and labor productivity. In that study they found that HRM
practices such as training and development, compensation and performance management
having a positive effect on the firms profit and productivity.

Efficiency and productivity are essential concepts in almost every organization's tool kit.
Labor productivity that measures the amount of goods and services produced by one hour
of labor - is a revealing indicator of several economic indicators as it offers a dynamic
measure of economic growth and competitiveness within an organization or industry.

Labor productivity is equal to the ratio between a volume measure of output and a
measure or input use (the total number of hours worked or total employment). (Freeman
2008, 5)

Labor productivity = volume measure of output / measure of input used

The volume measure of output reflects the goods and services produced by the
workforce. Numerator of the ratio of labor productivity, the volume measure of output is
measured by total production. The measure of input use reflects the time, effort and skills
of the workforce. Denominator of the ratio of labor productivity, the input measure is the
most important factor that influences the measure of labor productivity. Labor input is
measured either by the total number of hours worked of all persons employed or total
employment (head count). (Freeman 2008,5)

While most of the research works have established a direct bearing of HR practices on
organizational performance some have questioned the degree of relationship. A selected
number of such studies are presented below:

There have been some researchers who have questioned the degree if not the nature of
relationship between HR practices and performance/ productivity. (Delaney et al 1989).
Furthermore, the literature does not agree about the reason why, once these practices
have been implemented, they are not always successful. This raises the question of
whether human resource systems have the capacity to generate competitive advantages
by themselves or they must be sustained or reinforced with other variables (Barney and
Wright, 1998). Nevertheless, the relationship tends to be relatively small in statistical
term.

Skelly (1996) found that HR practices do not affect performance of organizations;

Batt (2002) found that HR practices do not pay off in small organizations that operate in
local markets.

Cappelli and Newmark (2001) identified that HR practices may raise productivity
slightly but they also raise labor costs.

Capelli, P., Newmark D (2001), Do high performance work practices improve

establishment level outcomes? Industrial Lbour Review, 54(4): 75-737)
Literature Review on HR Climate and firm performance:

A number of research studies have been conducted to determine the level of HR climate
in an organization and the factors affecting it. Some of the reviewers are mentioned
below:

Silkhe and Chaudhary(2010) analyzed and examined the relationship and impact of HR
climate on job satisfaction as an organizational performance measure in selected public
sector organizations. The findings indicate that HR climate has a definite impact on job
satisfaction which in turn leads to the increased organizational performance.

Riyaz Rainayee,(2000) in a study on HR climate in commercial banks found that the over
all level of OCTAPAC values in the banks was perceived at a moderate level.

Sharma &Purang,(2000) in their study on Value institutionalization and HR climate: A

case study of Navaratna Public sector organization found a positive relationship between
value institutionalization and HR climate, meaning there by a better and more ethical
environment of the organization shall lead to a better HR climate for the organization.

Jain,Singhal&Singh,(1997) conducted a study on HR climate in two PSUs,i.e BHELand

NFL and concluded that the HR climate is mainly a function of the effectiveness variables
including individual efficiency, organizational efficiency and productivity and HR
variables including management policy on HR, Organizational development , role analysis
and training.

Krishna &Rao,(1997) carried out an empirical study on organizational and HR climate in

BHEL and found that HR climate in the organization encouraged middle and senior
managers to experiment with new methods and try out creative methods.
Eisenberger,Fasolo and Davis-LaMasto,(1990) found that the increased performance and
positive work attitudes came from those employees who perceived that the HR Deptt. is
concerned about them.From a practical point of view,this suggests that job satisfaction
can be an important barometer of HRM effectiveness.
Gonzalez (1999) states that companies must realize that the "Health of the organizational
climate will determine their ability to sustain high performance". Research has identified
statistical correlations between specific elements in the organizational climate and four
performance measures, profitability, customer loyalty, productivity and employee
retention. Climate works with key performance levers like clear understanding of
organizations strategy and developing high potential people to form an integrated
peoples strategy. These levers shift the performance and climate sustains the shift
(Gonzalez, 1999).

Various studies have looked into the congruence between individual needs,
organizational climate, job satisfaction and performance. Studies indicate job satisfaction
as a function of the interaction between personality characteristics of the individual and
the perception of the environment by the employee (Downey, Hellriegel & Slocum Jr.,
1975). The interaction effects of personality and climate dimensions were less related to
pay and promotion satisfaction, instead they were more so to co-worker and supervisory
satisfaction.

All the organizational climate dimensions (which include HR climate dimensions as a part)
were found positively correlated with job satisfaction (Kumar Sravan and Ravichander,
1998). All the dimensions of organizational climate dimensions were found to have
positive correlation with organizational commitment (Reddy et al., 2000).
The study conducted (Jain, Singhal and Singh, 1997) had shown encouraging results, that
there exists a significant and positive relationship between HR climate, organizational
effectiveness and productivity.

The researchers conducted studies to know the influence of the HR climate on the
individuals attitudes and behaviors. Eisenberger, Fasolo and David-LaMastro (1990)
found that increased performance and positive work attitudes came from those employees
who perceived that the HR department is concerned about them. Rohmetra (1998),
Kumar and Patnaik (2002) , Locke (1976) conducted similar studies and found the impact
of HR climate.

Centre for HR, Xavier Labour Relations Institute (XLRI) developed a 38-item HR climate
questionnaire to survey the extent to which development climate exists in organisations.
Using this instrument the first survey of HR climate in Indian organisations was carried out
by Rao and Abraham (1986). They found that the general HR climate in the organizations
appears to be at an average level (54%). The most important factor contributing to this
seems to be a general indifference on the part of the employees on their own development.
In another study,

Abraham (1989) observed that HR climate is a powerful intervening variable in translating

HR practices into profit.

Venkateswaran (1997) found that, to a large extent, a favourable HR climate was prevalent
in a public sector undertaking in India.
Srimannarayana (2001) identified below average level of HR climate in a software
organisation in India. However, Agarwala (2002) found that the HR climate was
significantly more developmental in IT industry when compared to the automobile
industry.

Mishra & Bhardwaj (2002) concluded that the HR climate in a private sector undertaking
in India was good.
Rodrigues's (2004) study in the engineering institutes in India found the HR climate highly
satisfactory. Pillai's (2008) study identified that HR climate existing in banks as moderate.
This study further found that a supportive HR climate in banks stimulated the learning
orientation of the employees.
CONCLUSION:

An exhaustive review indicates that while a direct relation and exact degree of relation
between the two variables under study (Independent HR practices and Dependent
Organizational Outcomes) is not so visible, nevertheless the impact is there. On the basis
of the literature review it can thus be suitably argued that 4 levels of outcomes of HR
practices can be identified - employee, organizational, financial and market, suggesting
that the impact of HR is likely to work outward through these levels.

Employee outcomes consist of effective affective reactions such as satisfaction

and commitment as well as behavioral reactions such as absenteeism and
turnover.

Organizational outcomes focus primarily on operational performance measures

such as quality, productivity and customer satisfaction.

Financial outcomes, such as, accounting profits, represent the next step in their
casual chain.

Market outcomes consist of measures of the market value of firms based on stock
price.

Effective HR practices results in higher organizational performance. Enhancement of

effectiveness of HR practices is likely to result in an increase in the organizations
productivity and also in the reduction of employees turnover. It also points out the
significance of the intervening variable HR climate. Thus it could be hypothesized that
various HR practices if applied in it its true sense as a religion rather than mere rituals do
impact directly the HR climate of the organization concerned. This better HR climate, in
turn, enthuse motivation, willingness, commitment, belongingness among the Human
Resources associated that coupled with effective and efficient training and development
pedagogy improves the ability and skill of the human resources. The
ultimate effect is on the productivity that harbingers production, profit, reduced labor
turnover, reduced loss time, more congruence between plan and actuality.
 CHAPTER III

Organization Profile

48
Iron and Steel Industry in India

The Indian iron and steel industry is nearly a century old, with Tata Iron & Steel Co
(Tata Steel) as the first integrated steel plant to be set up in 1907. It was the first core
sector to be completely freed from the licensing regime (in 1990-91) and the pricing and
distribution controls.

Indian Iron and Steel Industry can be divided into two major sectors Public Sector and
Private Sector. Further on the basis of routes of production, the Indian steel industry can
be divided into two types of producers- Integrated Producers and Secondary Producers.

Integrated Producers--- These producers convert iron into steel. There are three major
integrated steel players in India, namely Steel Authority of India Limited (SAIL), Tata
Iron and Steel Company Limited (TISCO), and Rashtriya Ispat Nigam Limited (RINL).

Secondary Producers--- These are mini steel plants ( MSPs), which make steel by melting
scrap or sponge iron or a mixture of the two. Essar Seel, Ispat Industries and Lyoyds
Steel are the largest producers of steel through the secondary route.

Steel Authority of India Limited:

th
Set-up on 19 January, 1954 as Hindustan Steel Limited for managing the Rourkela Steel
th
Plant, 3 other integrated steel plants came under it and SAIL was formed on 24 January,
1973 as a holding company for the plants replacing Hindustan Steel Limited.

Steel Authority of India Limited, a state owned public sector undertaking , is the biggest
industrial company and Indias largest steel manufacturer with assets worth Rs. 6000
crores, Turnover of over Rs. 19000 crores and the employees exceeding 250000. SAIL is

49
a leading PSU in which the Government of India owns about 86% of equity. The
company's four integrated steel plants and three specialized facilities produce a variety of

50
steels used in the construction, engineering, utilities, railway, automotive, and defense
industries. Its product line includes hot- and cold-rolled sheets and coils, galvanized
sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel,
and alloy steels Indian government owns approximately 85 percent of the company It
began to operate under a "miniratna" status; was given a navratan status since 1997. Due
to its continuous surging, the Government of India has accorded the status of maharatna
th
to SAIL through a memorandum issued on 19 May, 2010. It is listed on Indian Stock
Exchange with minimum prescribed public shareholding under SEBI guidelines since
1992.

SAIL strives to be a respected world class corporation and the leader in Indian steel
business quality, productivity, profitability, and customer satisfaction. It builds lasting
relationships with customers based on trust and mutual benefit, upholds the highest
ethical standards in conduct of its business creates and nurtures a culture that supports
flexibility, learning, and is proactive to change. It charts a challenging career for
employees with opportunities for advancement and reward values the opportunity and
responsibility to make a meaningful difference in people's lives.

VISION

To be a respected world class corporation and the leader in Indian steel business in
quality, productivity, profitability and customer satisfaction.

CREDO

We build lasting relationships with customers based on trust and mutual benefit.

We uphold highest ethical standards in conduct of our business.

50
We create and nurture a culture that supports flexibility, learning and is proactive to
change.

We chart a challenging career for employees with opportunities for advancement and
rewards.

We value the opportunity and responsibility to make a meaningful difference in people's

lives.

Early History

The history of the iron and steel industry in modern India is closely bound up with
political and economic developments since the country achieved independence from
Britain in 1947. Most of the productive units run by SAIL were built as state ventures
with aid and assistance from industrially developed countries, and operated by SAIL's
predecessor, Hindustan Steel Ltd. SAIL's main subsidiary, the Indian Iron & Steel
Company Ltd., India's largest single iron and steel company, developed separately as a
private company before nationalization, but it depended on state subsidies from 1951
onward and had to function within the terms of the government's planning system.

The industry, however, did not spring from nowhere in 1947. Iron had been produced in
India for centuries. With the consolidation of the British raj, the indigenous industry
declined and the commercial production of steel did not begin in earnest till 1913, when
the Tata Iron and Steel Company began production at Sakchi, Jamshedpur. The enormous
sum of INR 23 million to set up the company was raised by founder Jamshedji and his
sons, partly from family funds but mostly from Bombay merchants. Several maharajahs,
and other wealthy Indians also supported the movement for Indian self- sufficiency
(Swadeshi) but did not want to appear openly anti-British. Tata was to dominate the Indian
steel industry until the 1950s. The Indian Iron & Steel Company was set up in West Bengal
in 1918 by the British firm Burn & Co., with plans to become a rival steelmaker. Steel
prices declined in the early 1920s, however, and the company
produced only pig iron until 1937. The acute depression suffered by the iron and steel
industry after World War I was alleviated by the government's protective measures. The
industry continued to make steady progress.

From the late 1920s, when the British authorities introduced a system of tariffs that
protected British and Indian steel but raised barriers against imports from other countries,
the Indian market was divided in the ratio of 70 to 30 between British producers on the
one hand and the Tata company on the other-thus effectively excluding indigenous
newcomers. By 1939 the Tata works were producing 75 percent of the steel consumed in
what was then the Indian Empire, consisting of the present-day India, Pakistan,
Bangladesh, and Burma.

In the late 1930s, as European rearmament pushed iron and steel prices upward, the
export of Indian pig iron increased and two small firms began to compete directly with
the Tata Company in steel production. The first was the Mysore State Iron Works, which
had been set up by the maharajah of Mysore in 1923 to produce pig iron at Benkipur,
now Bhadravati. The second was the Steel Corporation of Bengal, a subsidiary
established by the Indian Iron & Steel Company in 1937, the year after it had bought up
the assets of the bankrupted Bengal Iron and Steel Company. The Steel Corporation of
Bengal was reabsorbed into its parent company in 1953. All three companies profited
from the British connection during World War II. Annual output rose from one million
tons in 1939 to an average of 1.4 million tons between 1940 and 1945.

In 1947, when India became independent, 2the three major iron and steel companies had
a total capacity of only 2.5 million tons. A great deal of their plant was already more than
three decades old, and badly in need of repair and replacement, while demand for iron
and steel was growing.
Industry Changes in the Late 1940s-50s

Like other Third World states that achieved political independence but found their
economic prospects determined by their subordinate position in the world economy, the
new republic's policymakers decided to seek economic growth through a combination of
protection for domestic industries, heavy public investment in them, encouragement of
savings to finance that investment, and state direction of production and pricing. The
Mahalanobis model of the Indian economy, based on the assumptions that exports could
not be rapidly increased and that present consumption should be curbed for the sake of
long-term growth through import substitution by the capital goods sector, provided the
theoretical justification for this set of policies, which closely resembled what was done in
the Soviet Union in the 1930s, in China in the 1950s, and in Africa and Asia in the 1960s,
though with much less loss of life than in most of these cases.

The First Five Year Plan, from 1951 to 1956, involved the use of government funds to
help Tata Iron and Steel and Indian Iron & Steel to expand and modernize while
remaining in the private sector. As for new projects, in 1953 the government signed an
agreement with the German steelmakers Krupp and Demag on creating a publicly owned
integrated steel plant, which was sited at Rourkela, in the state of Orissa, to make use of
iron ore mined at Barsua and Kalta. Krupp and Demag were chosen after the failure of
Indian requests for aid from Britain and the United States, but were excluded from the
project by 1959, when the Estimates Committee of the Lok Sabha, the lower house of the
Indian Parliament, concluded that getting investment funds from them was equivalent to
borrowing at an interest rate of 12 percent.

In order to carry out its side of the agreement the government set up Hindustan Steel Ltd.
in 1954, as a wholly state-owned company responsible for the operation of the Rourkela
plant. By 1959, when the plant was commissioned, Hindustan Steel had become
responsible for two more plants, at Bhilai in Madhya Pradesh and at Durgapur in West
Bengal, under the Second Five Year Plan, which started in 1956. The Bhilai plant,
located between Bombay and Calcutta, was designed and equipped by Soviet technicians,
under an agreement signed in 1955, and by 1961 it included six open-hearth furnaces
with a total capacity of one million tons, supplied from iron ore mines at Rajhara and
Dalli. The Durgapur plant, meanwhile, was built with assistance and advice from Britain
and sited near the Bolani iron ore mine. Hindustan Steel took over the operation of all the
iron ore mines supplying its plants, all three of which had been located to take advantage
of existing supplies. This policy of locating steel production near raw materials sources
reflected the relatively small and dispersed nature of the domestic market for steel at that
time, and contrasted with the market-related location policies of companies in more
advanced steel-producing countries, such as the United States.

Hindustan Steel's other major venture was its Alloy Steels Project, also based at
Durgapur, which was inaugurated in 1964. Hindustan Steel's tasks included not only steel
production but also the procurement of raw materials, and its subsidiaries included, in
addition to the iron ore mines already mentioned, limestone and dolomite mines and coal
washeries. It also operated a fertilizer plant at Rourkela.

The modernization of the two private sector leaders and the program of public sector
investment together raised Indian steel output from about one million tons a year in the
1940s to three million tons in 1960, then to six million tons only four years later. Pig iron
output rose by an even greater margin, from 1.6 million tons in 1950 to nearly five
million tons in 1961. Both wings of the iron and steel industry contributed to the
expansion of the engineering and machinery industries envisaged in the Mahalanobis
model, and in turn were stimulated by the increased demand to raise production volume
and quality. In 1965 Hindustan Steel's latest project, for an iron and steel plant with an
associated township at Dhanbad in the state of Bihar, was transferred to a new company
created one year earlier, Bokaro Steel Limited. Contact continued between the two
companies, however, mainly through an arrangement whereby the chairman of each
company was made a part-time director of the other. Like the Bhilai plant, the Bokaro
project was initiated with aid and advice from the Soviet Union, including blueprints,
specialist equipment, technical training, and a loan at 2.5 percent interest. After the
establishment of SAIL the Bokaro Company was changed back into a division of the
public sector steel company.

Throughout its first five years of production, 1958 to 1963, Hindustan Steel's losses rose
steadily from INR 7.51 million to INR 260 million. It made a small profit in 1965 and
1966, only to slip back into the red and stay there until 1974, the last year of the
company's existence under that name. Among the reasons the company gave for these
disappointing results were the losses incurred at the Rourkela fertilizer plant, the Steel
Alloys Project, and the Durgapur steel plant; an increased rate of interest on government
loans; an increase in provision for depreciation; and the high costs of imported plant and
equipment.

Problems Leading to the Creation of SAIL in 1973

The rate of growth of the iron and steel industry, and of the engineering and machinery
producing sectors, with which its fate was so closely linked, declined significantly once
the phase of import substitution was complete and the droughts of the mid-1960s had
forced a diversion of resources from industry. Pig iron output, which had risen so
spectacularly in the 1950s, rose from seven million tons in 1965 to ten million tons in
1985, while production of steel rose from 6 million tons to 12 million tons in the same
period. The industry suffered due to state intervention to keep its domestic prices low as
an indirect subsidy to steel users, and-though the technical problems were different-from
a heritage of outdated and inefficient plants and equipment.

Indian government policy since 1965 has been to use its iron ore less as a contribution to
domestic growth than as an export, earning foreign exchange and helping to reduce the
country's chronic deficit on its balance of trade. Production of ore increased, from 18
million tons in 1965 to 43 million tons in 1985, in order to supply a growing number of
overseas markets.
With the expansion and diversification of Hindustan Steel, the separate establishment of
Bokaro and the beginning of planning for new plants at Salem, Vishakhapatnam, and
Vijaynagar, it became increasingly clear that public sector iron and steel production
would need some new form of coordination to avoid duplication and to channel resources
more effectively. The Steel Authority of India Ltd. was established in January 1973 for
this purpose, to function as a holding company along the lines of similar but older bodies
in Italy and Sweden. The new organization was placed on a secure footing when the
Indian Iron & Steel Company was nationalized, giving SAIL control of all iron and steel
production apart from the venerable Tata Iron and Steel Company and a number of small-
scale electric-arc furnace units. At the time of nationalization the Indian Iron & Steel
Company included a steel plant at Burnpur in West Bengal; iron ore mines at Gua and
Manoharpur; coal mines at Ramnagore, Jitpur, and Chasnalla; and a specialist subsidiary,
the IISCO-Ujjain Pipe and Foundry Co. Ltd., based at Kulti.

Both SAIL and its predecessor sought to expand capacity to meet predicted rises in
demand for steel. In 1971 Hindustan Steel had unveiled plans for India's first coastal steel
plant at Vishakhapatnam. The project, which in 1991 was in the process of being opened,
with one blast furnace already in operation, was expected to allow productivity of 230
tons per man year compared with less than 50 in SAIL's existing plants. The Authority
also invested heavily in modernizing its oldest plants, at Rourkela and Durgapur.

Challenges in the 1980s

The 1980s were not a happy decade for SAIL. It suffered losses between 1982 and 1984
but went back into the black in the following two years. Meanwhile Tata Iron and Steel
was consistently profitable. By 1986, when the Indian steel industry's total capacity was
15.5 million tons, only 12.8 million were actually produced, of which SAIL produced 7.1
million. Thus imports of 1.5 million tons were needed to meet total demand, after years
of exporting Indian steel. By 1988 all the main steel plants in India except
Vishakhapatnam were burdened with obsolescent plants and equipment, and Indian steel
prices were the highest in the world. The government proposed a ten-year plan to
modernize the plants, based on aid from West Germany, Japan, and the Soviet Union just
at a time when the worldwide economic recession was deepening and the World Bank
was recommending the privatization of SAIL and the liberalization of steel imports.

In 1989 SAIL acquired Vivesvata Iron and Steel Ltd. In its first year under SAIL's wing
this new subsidiary's production and turnover showed an improvement over its last year
in the private sector. This progress contrasted with results for SAIL as a whole in 1989-
90, since production declined, and once again planned targets were not met. Various
factors contributed to this disappointing outcome, including unrest at the Rourkela plant
as a result of the management's decision not to negotiate with a new union, Rourkela
Sramik Sangha, which had challenged the established union, Rourkela Mazdoor Sabha,
and had even won all the seats on the plant's elected works committee. Another problem,
continuing over several years, arose from defects in power supply; the impact of power
cuts on steel output in 1989-90 was estimated as 170,000 tons lost, and the supply of coal
was unreliable.

During this time period, SAIL remained in the public sector as a central instrument of
state plans for industrial development. The country's reserves of iron ore and other raw
materials for iron and steel made the industry central to the economy. At the beginning of
the 1980s India had recoverable reserves of iron ore amounting to 10.6 billion tons, a
natural endowment that it would take 650 years to deplete at then current rates of
production. The high-grade ore within this total--that is, ore with an iron content of at
least 65 percent--was, however, thought likely to reach depletion in only 42 years; yet it
still represented about one-tenth of the world total. SAIL struggled to maintain
production, let alone expand it, in large part because of circumstances outside its control.
Since the purchase of raw materials typically accounted for 30 percent of the Indian steel
industry's production costs, any rise in the prices of coal, ferro-manganese, limestone, or
iron ore cut into the industry's profitability. In the first half of the 1980s, for example,
prices for these materials rose by between 95 and 150 percent, at the same time as
electricity charges rose by 150 percent. Most of these increases were imposed by other
state enterprises.
Nor did it help SAIL that the high sulfur content of Indian coal required heavy
investment in desulfurization at its steel plants. Indeed, the industry had chronic problems
in trying to operate blast furnaces designed to take low-sulfur coking coal. The more
suitable process of making sponge iron with non-coking coal, then converting it to steel
in electric arc furnaces, was introduced in the private sector later, though by 1989 only
300,000 tons were being produced in this way. India's basic output costs of INR 6,420
per ton in 1986 compared well with the averages for West Germany (INR 6,438), for
Japan (INR 7,898), and for the United States (INR 6,786). What finally kept Indian steel
from being competitive was the imposition of levies that raised its price per ton by about
30 percent, and which included excise duties, a freight capitalization surcharge, and a
Steel Development Fund charge.

In spite of such problems, and in response to them, SAIL announced in December 1990
an ambitious plan to increase its annual output of steel from 11 million to 19 million tons,
thus transforming itself from the world's thirteenth largest steel producer to its third
largest, within ten years. SAIL's use of its steel production capacity, running at about 77
percent in 1990, would be raised to 95 percent by 1996, thus permitting output of crude
steel to rise by two-fifths over its current level. Output for 1990 had actually been only
six million tons, however, compared with 6.9 million tons in 1988, and eight million tons
in 1989. SAIL was no more able than large steel companies in other countries to achieve
the optimum balance between demand and supply, between increasing the quantity of
output and improving its quality by modernizing, and thus escaping from its heritage of
outdated plant and equipment. Neither Hindustan Steel nor SAIL was ever in a position
to defy the circumstances of the Indian economy or of the world steel industry on their
own, but they achieved, in large part, the more modest goal of contributing to India's
postwar economic growth.

The 1990s and Beyond

As part of an economic reform policy, India set plans in motion to partially privatize its
nationalized industries in 1993. As such, 10 percent of SAIL was offered to private
investors over the next several years. In 1994, the company announced its plans to offer
an additional 10 percent to international investors in order to raise funds for plant
modernization and expansion.

While SAIL worked to reach the goals set forth in the early 1990s, the company faced
severe challenges in the latter half of the decade. Falling international steel prices, high
costs related to its modernization program, increased inventory levels brought on by
private sector growth, the Asian economic crisis, and falling export sales took their toll
on SAIL's bottom line. In fact, during the 1998-99 fiscal year, the company posted one of
the largest net losses in its history--$360 million.

Overall, the global steel industry struggled during the late 1990s and into the new
millennium. By 2002, a turnaround appeared to be on the horizon and demand in India
had increased by 5.7 percent. V.S. Jain was named chairman that year and was tapped to
reverse SAIL's fortunes. Under his leadership, the company planned to raise its
production capacity to 20 million tons by 2011. SAIL's output surpassed ten million tons
of saleable steel in 2003 while exports grew by 53 percent over the previous year. By
2004, the company was producing 12.5 million tons.

Although SAIL appeared to have weathered the industry downturn, it continued to face
problems related to coking coal supplies. Jain explained the issue in a June 2004
Hindustan Times article. "Coking coal has been a global problem," he claimed. "Since
China restricted exports to bolster its domestic industry, global prices have gone through
the roof. Our current coking coal requirements are 13 million tons, of which 9 million
tons is imported. Due to constraints, we had to cut production last year and make
exorbitant spot purchases." Jain added, "We are exploring the option of buying equity
stakes in coking coalmines in Australia and New Zealand. We are also looking at
substitutes like coal tar and other petroleum derivatives."

Along with the challenges brought on by the coking coal concerns, SAIL was forced to
deal with rising steel prices. Over the past several years, the company had worked to
overcome industry problems by diversifying into new business areas in an attempt to
bolster profits. In 2001, the company formed a joint venture with the National Thermal
Power Corp. to create NTPC SAIL Power Company Ltd., a company designed to manage
the Captive Power Plants. Other newly formed joint ventures included the Bokaro Power
Supply Co. Ltd. and the Bhilai Electric Supply Co. Ltd. Believing that it had a solid
strategy in place, SAIL's management team remained optimistic about the company's
future. India's economy was growing, leading SAIL to assume that the country's steel
consumption would nearly double the 2004 levels, reaching 55 to 60 million tons by
2012. Although the company's bottom line stood to benefit from this estimate, the
cyclical and turbulent nature of the steel industry left SAIL's future hanging in the
balance.

It is now Indias largest and worlds ninth largest steel producer having 5 integrated steel
plants , 3 steel plants producing special steels and alloy steels and a plant producing
ferroalloys , located principally in the eastern and central regions of India and situated
close to domestic sources of raw-materials, including the companys iron ore, limestone
and dolomite mines. The company has the distinction of being Indias largest producer
of iron ore and having the countrys second largest mines network. This gives them a
competitive edge in terms of captive availability of iron ore, limestone, and dolomite
which are inputs for steel making.

SAILs vast portfolio of long, flat and tubular products is marketed within and outside
India by its Central Marketing Organization (CMO). SAILs Raw Materials Divisions
headquarters has different mines under its control, with its headquarter at Kolkata. To
develop new technologies for the steel industry and achieve world standards in steel,
SAIL has a well equipped Research and Development Centre for Iron and Steel (RDCIS).
Centre for Engineering Technology (CET) provides technical expertise to SAIL and SAIL
Consultancy Division takes up technical and managerial consultancy assignments for
organizations.

60
SAIL has also partnered with different organizations to form Joint Ventures e.g. Romelt,
USIT, Metal Junction.com, Steel Power Supply Company Limited (SPSCL) etc.

The company history sections lists out major chronological events that happened to the
company
-
1913: Production of steel begins in India.

1918: The Indian Iron & Steel Co. is set up to compete with Tata Iron and Steel Co.

1948: A new Industrial Policy Statement states that new ventures in the iron and steel
industries are to be undertaken only by the federal government.

1954: Hindustan Steel Ltd. is created to oversee the Rourkela plant.

1959: Hindustan Steel Ltd is responsible for two more plants in Bhilai and Durgapur.

1964: Bokaro Steel Ltd. is created.

1968: SAIL took over the management of Maharashtra Elektrosmelt Ltd. a small
compact company, at Chandrapur, Maharashtra for utilising some of its facilities for
R&D works as well as maximising its production of ferro manganese for use in SAIL
plants. The unit produces several goods of special steels. The Company proposed to
diversify into manufacture of ferro alloys, low carbon pig iron etc.

1973:

- The Steel Authority of India Ltd. (SAIL) is created as a holding company to

oversee most of India's iron and steel production.
 - CEDB was converted into a separate company in the name of Metallurgical
Engineering & Consultants (India), Ltd., Bolani Ores Ltd., Metal Scrap Trade
Corporation and Mysore Iron & Steel Co. Ltd. became subsidiaries of SAIL.
Maharashtra Eleckrosmelt Ltd., Visvesvaraya Iron and Steel Ltd., Indian Iron &
Steel Co., Ltd., IISCO-Ujjain Pipe & Foundry Co., Ltd. are all subsidiaries of the
Company.

- The Bhilai Steel Plant was set up in the late fifties at Madhya Pradesh with a
capacity to manufacture 1 million TPA of ingot steel, with Russian Collaboration.
The products include heavy rails, heavy structurals and squares, merchant sections
besides semis like blooms and billets and pig iron for sale.

- The Durgapur Steel Plant was erected in W. Bengal in the late fiftees with British
collaboration. Set up as a 1 million TPA ingot steel capacity plant, it was
subsequently expanded to 1.6 million TPA in 1960. The plant is a major producer
of railway materials like wheels and axles, fish plates and sleepers. It also
manufactures light and medium sections, merchant sections and skelp.

- The Rourkela Steel Plant was commissioned in the late fifties with the assistance
of Federal Republic of Germany. Situated in Orissa, the plant was the first of its
kind of integrated steel plant in India and was designed to produce only flat
products. It was the first plant to introduce basic oxygen furnace process. It also
has a fertilizer plant with a capacity to produce 4, 60,000 TPA of calcium
ammonium nitrate.

1974: SAIL International Ltd., was incorporated to coordinate the export and import
business.

1976 : Durgapur Mishra Ispat Ltd., Bhiali Ispat Ltd., an Rourkela Ispat Ltd., were formed
as fully owned subsidiaries of SAIL for taking over the running business of Alloy Steels
Plants, Bhilai steel Plant and Rourkela Steel Plant on tranfer from HSL.
1978 :

- On 1st May, Metallurgical & Engineering Consultants (India), Ltd., Hindustan

Steel Works Construction Ltd., National Mineral Development Corporation Ltd.,
Bharat Refractories Ltd., India Firebricks & Insulation Co. Ltd., and Bharat
Cooking Coal Ltd. (1974), were delinked from SAIL.

- The Indian Iron & Steel Co. Ltd. became a subsidiary of SAIL. The Kulti Works
of this company, with an annual capacity of 1.57 lakh tonnes is the largest
producer of cast iron and spun pipes.

1982:

- The Salem Steel Plant was inaugurated at Salem in Tamilnadu in March. It

represents the dispersal of industries and balance regional development bringing
the latest sophistication in cold rolling. The products find application in major
industries viz., nuclear, petroleum, chemicals, fertilizers, food processing,
Pharmaceuticals, dairy, household appliances, cutlery etc.

- On 21st May, MSTC ceased to be a subsidiary of the Company.

1985: A number of technological improvement schemes were undertaken, the most

notable being the conversion of open hearth furnace No. 10 into twin hearth furnace.

.1988:

- The Visvesvaraya Irons & Steel Co. Ltd. became a subsidiary of SAIL with SAIL
acquiring 60% of the shares of the Company. It has an installed capacity of
saleable steel to the tune of 77,000 TPA of alloy and special steel and 48,000 TPA
 of mild steel. It produces 200 varieties of sophisticated alloy steel and ferro
alloys.

- The Bhilai Steel Plant set up a blast furnace bell-less top charging system.

1990: A modernization programme was started to revamp and technologically upgrade

the plant. After the modernisation the plant is slated for a crude steel capacity of 1.9
million TPA.

1992:

- The Company produce various qualities and grades of iron and steel i.e., mild
steel, alloy steel, special steel, stainless steel, ferro alloys, ERW pipes, spirally
welded pipes, etc. The Company's activities include planning, promoting and
organising an integrated and efficient development of the iron and steel and its
associated input industries such as iron ore, cooking coal, manganese, limestone
etc. It has a well equipped Research & Development Centre for Iron & Steel
(RDCIS).

- The Company's R&D unit at Ranchi was set up with a view to promote
continuous improvement in critical performance indices of the steel plant in order
to increase productivity, reduce production cost and improve quality by
production optimization or by introduction of new technologies. The centre
undertook various collaborative ventures with agencies both in India and abroad.

- .It was listed on Indian Stock Exchange with minimum prescribed public
shareholding under SEBI guidelines.
-
1993:

- India sets plans in motion to partially privatize SAIL.

-
- Government approval for modernization of BSL stage-I was received.

- The Company launched the consultancy division with a view to harness the
resources and expertise in steel related areas and market engineering, technical,
managerial and training services.

- The Company undertook to float a joint venture company in collaboration with

USX Engineers & Consultants Inc., Pittsburg, USA for development and
execution of technology and system integration for computer applications in basic
industries such as those engaged in steel mining and metallurgy.

1994:
- Two major schemes viz. new sinter plant III and expansion of oxygen plant II
were taken up for implementation. C.O. Battery No. 10 was commissioned.

- A number of production units like new sinter plant, basic oxygen furnace shop
continuous casting plant were commissioned. At Rourkela steel plant, five of
phase II modernization packages viz. power distribution, mobile equipment for
RMHS - II sizing plant at Satara, Tarkera intake facilities and make-up water
pump houses for Tarkera works were commissioned.

1995:
- Under the modernization programme, the new units like Basic Oxygen Furnace
Shop (BOF), Continuous Casting Plant (CCP) and New Sinter Plant were
stabilized.
 - The operation of hot rolling mill was stabilized in April 1996. The mill would
enable rolling of stainless steel and carbon steel slabs at Salem itself.

- SAIL ventured into setting up a power project at Bhilai in joint venture with M/s.
Larsen & Toubro and CEA, USA Inc.
- .

1996:
- To augment availability of iron ore for Bhilai steel plant, the company planned to
develop Rowghat iron ore mines for which MP Government recommenced
clearance of Rowghat project subject to signing of MOU between Ministry of
Railways, MP Government, SAIL and NMDC for construction of Railway line
from Dalli Rajhara to Jagdalpur from both end simultaneously.

1997:

- SAIL got Navratan status.

- Major production facilities of modernization like continuous casting machines,
steel refining unit and coiler-4 were installed.

- The Modernization of rail & structural mill (stage 1-phase) was commissioned.

- A Steel rolling mill will be set up by Steel Authority of India Limited (SAIL) at
Da-gaon, 60 km north-west of Guwahati.

- The hot rolling mill complex of the public sector Salem Steel Plant, a subsidiary
of the Steel Plant, a subsidiary of the Steel Authority of India Limited (SAIL), has
been awarded the ISO-9002 certification in a record period of one year within its
commissioning.
- Sailcon, the SAIL Consultancy Division, entered into an agreement with USX
Engineers and Consultants Inc of the US (UEC) to assist UEC in providing
 technical consultancy for its client Tisco for the installation of the galvanising
lines at the Gopalpur complex.

- The SAIL signed an agreement with National Securities Depository Limited for
admission of its shares eligible for trading on depository system through
electronic mode.

1998:
- In view of Steel Authority of India Ltd's (SAIL's) rising demand for cooking coal,
Coal India Ltd (CIL) contemplated a joint venture with SAIL for opening new
mines.

- In an effort to help the country save foreign exchange, Coal India Ltd (CIL) and
Steel Authority of India Ltd (SAIL) entered into an agreement for the supply of
coal.

- . - The Bhilai Steel Plant (BSP) of Steel Authority of India Ltd (SAIL) awarded the
prestigious national quality award for the sixth time by the Indian Institute of
Metals (IIM) for the year 1997-98.

- SAIL's research and development centre for iron and steel (RDCIS) which
decided to undertake research work for the private sector, signed an MoU with
Usha Martin Industries to carry out investigation of patented steel wire-rod and
wire samples of the company.

1999:

- The Steel Authority of India Ltd (SAIL) forged a marketing tie-up with
Tyazpromexport (TPE) of Russia to sell the entire range of castings and pig iron
produced by Kulti Works, a division of Indian Iron and Steel Company (Iisco).
 - SAIL joined the Ulsab-AVC (ultra-light steel auto body-advanced vehicle
concepts) consortium, a grouping of 28 steel producing companies around the
world formed to support the automotive industry's search for steel-based solutions
to its long-term challenges.

2000:
- The Company signed a MoU with Egypt's public sector Metallurgical Industries
Corporation (Micor) for the establishment of a modern technical and management
training centre for the Egyptian steel industry.

- The Company signed a memorandum of understanding with the ministry of steel,

as directed by the cabinet, for the implementation of business restructuring with
detailed milestones.

- . - The Company set up an office of restructuring at its corporate headquarters to

facilitate coordination on all aspects of the detailed business restructuring exercise
it is currently engaged in.

- Durgapur Steel Plant of Steel Authority of Indian Ltd set up a slag granulation
plant on build-own-operate basis to generate more revenue through better waste
utilization.

- The Durgapur Steel Plant of SAIL commissioned the computerized integrated

production planning and control (PPC) system that helps in practically every
aspect of plant operation and dispatch.

- The Company formed a joint venture with Calcutta-based Bansal Mechanical

Works to set up a steel service centre at Bokaro.
 - Private sector steel majors Tisco, Kalyani Steel and the public sector Steel
Authority of India formed a three-way joint venture for undertaking e-commerce
activities in the steel sector.
- Steel Authority of India Ltd., Tata Steel and Kalyani Steels Ltd. entered into an
agreement for creation of an Internet-based global, independent B2B Steel Market
place.

- Steel Authority of India Ltd's Research & Development Centre for Iron and Steel
signed a memorandum of understanding with MECON to enable complementary
of strengths in Iron & Steel and allied areas.

- Steel Authority of India Ltd and the National Thermal Power Corp. begin for a
joint venture for three captive power plants and associated units of SAIL.

- Steel Authority of India Ltd, Tata Steel and Kalayani Steels Ltd signed a joint
venture agreement for the formal creation of metaljunction.com Pvt. Ltd, to
manage their e-marketplace, metaljunction.com. .

- The Company entered into a joint venture with Tata Iron and Steel Co and
Kalayani Steel for the creation of a company to manage their steel e-commerce
venture, metaljunction.com.

- The Steel Authority of India and National Thermal Power Corporation float two
separate joint ventures for hiving off SAIL's power generation business.

2003:

- -Bhilai Steel Plant (BSP) develops a special grade steel for the country's naval
warships in collaboration with the Defense Metallurgical Research Laboratory,
Hyderabad
 - -Durgapur Steel Plant (DSP) developes target steel for ballistic testing used in
defence sector with stringent specifications

2004:

- -SAIL forged alliance with CIL to develop coal mines in Mozambique

- -SAIL R&D division gets Golden Peacock Innovation Award

- -SAIL ties up with Kudremukh Iron Ore

- -SAIL signs strategic agreement with BHP Billiton

- -SAIL ties up with Durgapur Projects (DPL).

- -SAIL ties up with BHP Billiton

2005:

- -SAIL ties up with GAIL.

- -Steel Authority of India Ltd's Bhilai Steel Plant has been adjudged the best
performing steel plant in the country for 2003-04.

- -SAIL join hands BCCL to develop Moonidih mine

2007: Steel Authority of India Ltd's Management Training Institute (MTI) inked a
memorandum of understanding (MoU) with the Indian Institute of Management (IIM)

70
Indore for conducting programmes together for various organizations in areas of mutual
interest.

71
2008: Steel Authority of India Limited and Larsen and Toubro Limited (L&T) signed a
Memorandum of Understanding (MoU) to jointly set up, develop, manage and own
captive/independent power plants at suitable location/s to meet future power requirements
of SAIL.

2009:

- SAIL signed a Joint Venture Agreement with Coal India Ltd, Rashtriya Ispat
Nigam Ltd, NMDC Ltd and NTPC Ltd for setting up of a Special Purpose
Vehicle i.e. International Coal Ventures Pvt. Ltd (ICVL) for acquisition of coal
mines/block overseas for securing coal supplies.

2010:

The Government of India accorded the status of maharatna to SAIL through a

th
memorandum issued on 19 May, 2010.

The following statements depict net profit, turnover, and manpower and labor
productivity of SAIL in the last 20 years:
YEAR L.P(MT/P/Y) MANPOWER PRODUCTION(T) PROFIT(CRORES)

1994-95 NA NA 13867 1108

1995-96 NA NA 14710 1319
1996-97 NA NA 14131 515
1997-98 70 208765 14624 133
1998-99 84 174736 14934 -1574
1999-00 96 159940 16250 -1720
2000-01 105 156719 16233 -729
2001-02 111 147601 15502 -1696
2002-03 123 137496 19207 -304
2003-04 137 131910 24178 2512
2004-05 144 126857 31805 6817
2005-06 150 138211 32280 4013
2006-07 200 132973 39723 6202
2007-08 214 128804 46176 7537
2008-09 215 121000 49331 6175
2009-10 226 116950 43935 6754
2010-11 241 110794 47041 4905

The 5 integrated steel plants are located at

Durgapur- Durgapur Steel Plant (DSP)

Bhilai Bhilai Steel Plant ( BSP)
Rorkela Rourkela Steel Plant (RSP)
Bokaro Bokarp Steel Plant (BSP)
Burnpur Indian Iron and Steel Company Steel Plant (IISCO)

Besides 3 steel plants producing special steels and alloy steels are located at
Salem
Durgapur
Bhadravati

And a plant producing ferroalloys is located at

Chandrapur

3.3 Durgapur Steel Plant

The Durgapur Steel Plant (DSP), a subsidiary of Steel Authority of India Limited (SAIL),
is the nerve centre of the Asansol-Durgapur industrial belt. It is the largest industrial unit
in Durgapur-Asansol Belt of West Bengal, third integrated plant of the then Hindustan
Steel Limited to come under Public sector in India; first two being Rourkela Steel Plant
and Bhilai Steel Plant in that order.

One of the integrated steel plants of SAIL or Steel Authority of India, Durgapur Steel
Plant, the dream of Dr. B.C. Roy, West Bengal's second Chief Minister, is a place of
immense importance. The plant boasts of being the most significant site in the city.
Situated on the banks of the Damodar River, at a distance of about 158 km from Kolkata,
Durgapur Steel Plant has its geographical location as 23 27' N and 88 29' E. Though not
an individual company, the plant is the largest industrial unit in West Bengal. It has
played a historical part in the industrial development of India. Apart from extending
quality products, the plant also works for maintaining a healthy and clean environment.
There are necessary pollution control facilities installed at the plant, for maintaining a
healthy environment.

History
Initiated during the 1950s, Durgapur Steel Plant changed the face of India, bringing with
it a lot of technical and industrial growth for the country as a whole.
Durgapur Steel Plant was built with the help from Consortium of British Firm, ISCON.
The nucleus of the Durgapur Industrial Complex started taking shape in 1957.Dating
back to the post-Second World War times, the then Labour Government of Britain
nationalized the steel industry. With the nationalization came rationalization. Unyielding
and unprofitable steel plants were weeded out. The British engineering industry, shattered
by the war, tried to limp back to health. However, their hopes were ruined as the
government did not envisage any new steel plant. It was at this time that India's Minister
of Steel T T Krishnamachari grabbed offers to build steel plants by West Germany and
Soviet Russia. Not to be outwitted, Britain offered financial and technical assistance to
build a new one million tonne steel plant in India. Tatas had been working on their two
million tonne expansion at Jamshedpur. Indian Iron and Steel Company tried to beat out
their old plant in Burnpur to a million tonne capacity with World Bank aid.

A team of Colombo Plan (an aid programme for Commonwealth countries), under the
chairmanship of Sir Eric Coates, surveyed four sites in Eastern India, two near Sindri,
one near the present Bokaro and Durgapur on the river Damodar. The team zeroed in on
Durgapur, thanks to the vision of Dr. B C Roy, the then West Bengal Chief Minister, and
the robust rapport he enjoyed with Jawaharlal Nehru. Durgapur, perhaps the only steel
plant in modern period, was born without a feasibility study or detailed project report! Sir
Eric Coates' recommendation became the feasibility report. Vendor catalogues and offers
papered together as part of Coates' report, served as the detailed project report! The
Colombo Plan mission, headed by Sir Eric Coates, visited India in 1955 and
recommended Durgapur as the venue for setting up the Integrated Steel Plant. The location
was considered highly desirable because of its proximity to the coal-fields, Grand Trunk
Road, Calcutta-Delhi Railway line, Calcutta Port, Power from DVC and water from
Durgapur Barrage. The plant is at a distance of 158 km from Calcutta. It is separated over
an area of 6.4 square kilometer and within its perimeter there are about 32 km of road and
180 km of railway tracks. The plant started in 1960 with an initial capacity of 1.0 MT/
annum (MTPA). Of crude steel with an investment of Rs. 189.6 crores including Rs.
17.36 crores for township development. The plant operated almost at the rated
capacity during the years 1963, 1964-65 and 1965-66. The capacity was
extended to 1.6 MTPA in late sixties with an additional investment of Rs. 67.83 crores. The
performance of the plant after expansion was much below the rated capacity which called
for settling up a number of committees to investigate into and suggest remedial measures.
Later in the early eighties, British Steel Corporation, MECON and the Japanese Iron and
Steel Federation were entrusted with the job of making a developmental plan for
Durgapur Steel Plant. Based on their findings, SAIL decided to modernize DSP with a final
Government approved definite cost of Rs. 2668 crores in 1989 which later escalated to
more than 4500 crores. Witnessing the massive modernization programmes, DSP scripted a
success story for all the organizations to emulate. The present capacity of the DSP is 1.802
MTPA.

Covered under ISO 9001: 2000 quality management system, Durgapur Steel Plant today
is extremely well equipped and is stuffed with all the state-of-the-art technology required
for quality steel making. With modernization, the plant flaunts improved productivity,
improved energy conservation and better quality products. Everything in the steel
complex and mills zone, comprising its Blooming & Billet Mill, Merchant Mill, Skelp
Mill, Section Mill and Wheel & Axle Plant, have been covered under ISO: 9002 quality
assurance certification. The plant also boasts of up-to-date electrical and electronics
laboratory, hydraulics and pneumatics laboratory and workshop, for effective training and
development of its employees. The major facilities that exist in the plant include the raw
materials handling plant, coke ovens and coal chemicals, the sinter plant, blast furnaces,
the steel melting shop, the continuous casting plant, rolling mills, and the wheel and axle
plant. The factory has an extensive network of road and rail transport.

The integrated steel plant is one of the largest industrial complexes in West Bengal. It is
spread on 6.5 sq km and employs about 14,000 people. The Durgapur Steel Township,
spread on around 40 sq km, is well planned, and has all modern facilities for a high
standard of living.

The Durgapur Steel Plant is the only major indigenous supplier of wheel sets, loco
wheels, carriage and wagon wheels and axles to the Indian Railways. The S-profile
wheels it has developed for the Indian Railways are undergoing field trials. These wheels
dissipate heat better during braking and can run at high speed.

For years the steel plant has been a catalyst of sorts for the socio-economic development
of the region. It has contributed in a major way to provide tube well facilities in the water-
scare peripheral areas, and to educate the rural population through the up-gradation of and
addition to the available educational facilities. It has also assisted in developing roads and
other infrastructural facilities.

The Durgapur Steel Plant has also played a major role in encouraging small-scale
industries. A total of 196 small-scale industries are registered with the plant, out of which
29 have been accorded ancillary status. The plant proposes to extend help by financing
infrastructure projects in the villages, mainly in education, health care, drinking water
supply and sanitation.

The DSP boasts of having following major plant units:

Coke Ovens
Blast Furnace
Steel Melting Plant
Continuous Casting Plant
Booming and Billet Mill
Section Mill
Merchant Mill
Skelp Mill
Wheel and Axle Plant
In addition to production units, the plant has a score of other supporting units which cater
to the need of technical service of various production departments. Some of them are as
follows:
Refractory, Foundry, Central Engineering Maint, Electrical Repair Shop, Plant Electrical
Dist, Captive Power Plant, Plant Design and Drawing Department, Loco Repair Shop,
Wagon Repair Shop, Traffic, Oxygen Plant, Telecom, Industrial Engineering Department,
Instrumentation and Research and Control Laboratory.

These departments help the plant run smoothly with rendering the services wherever
needed working in conjunction with the works department for overall favorable growth in
productivity of the plant.

Besides there are quite a number of other functional areas which play vital roles to meet
the various needs of the plant as well as its employees. They are as under:

Centre for Human Resource Development, Personnel Department, Materials

Management Departments, Finance Department, Medical Organization, Education
Department, Town Administration, Purchase, Public Relation Department, Marketing,
Centre for Information & Technology and Production Planning and Control Department.

These departments cater to the various needs of the plant personnel such as salary,
finance, personnel grievance, education, hygienic sanitary conditions, and good living
environment and for the plant selling the products and purchasing from outside parties,
training the manpower etc.

A well laid out modern township spreading over 40 square km has also been built to
provide basic amenities e.g. subsidized housing and transport, free education and medical
treatment to more than 19000 employees and their families. With more than 1900 houses,
the township is divided in 3 zones. The plant runs 19 primary and 10 secondary/ higher
secondary schools to provide free education to 25000 children of SAIL employees in
Hindi, English and Bengali medium.
Apart from 5 zonal Health Centers in the Township and a Plant Medical Unit in the
works, a 625 bed hospital in the Township is one of the leading of its kind in West
Bengal compromising of 135 doctors, 262 nurses and 679 para medical staffs.

The CHR has all modern facilities including the state of the art Electronic and Electrical
lab, Hydraulic and Pneumatic lab and workshop for effective Training and Development
of its employees.

What is more, the entire mills zone of Durgapur Steel Plant is covered under ISO-9002
quality standards.

Awards and Accolades won by DSP:

DSP bagged the INSSAN Award for the year 2009-10 from INSSAN Northern Region
Chapter, in recognition of effective implementation of suggestion scheme. It also won the
Greentech Safety Award for the year 2008-09 Greentech HR Excellence Award for the year
2009, Greentech HR Excellence Award for young Managers for the year 2009 & Greentech
Environment Excellence Award for the year 2009 from Greentech Foundation.

DSP was awarded the Rajiv Gandhi National Quality Award for the year 2008-09 by
Bureau of Indian Standards, New Delhi and Golden Peacock National Training Award
for the year 2009-10 by Institute of Directors, New Delhi besides winning the Safety
Innovation Award for the year 2009 by Institution of Engineers.

For the year 2006 DSP bagged two PMS SHRAM VEER award.
The mammoth growth of the industry is visible from the following data depicting the
manpower, profit, production and labor productivity of few years:

YEAR L.P EXECUTIVES NON EXE MANPOWER total prod PROFIT

1994-95 29.71 2652 25512 28164 NA 1108

1995-96 46.02 2547 24871 27418 NA 1319
1996-97 52.32 2364 23882 26246 NA 515
1997-98 65.5 2348 23184 25532 NA 133
1998-99 71.55 2186 21814 24000 NA -1574
1999-00 79.37 1834 19073 20907 7488 -1720
2000-01 89.2 1776 18726 20502 8027 -729
2001-02 100.21 1913 17728 19641 8470 -1696
2002-03 108.27 1815 16113 17928 8763.12 -304
2003-04 119.47 1689 15168 16857 9000.15 2512
2004-05 131.15 1582 14629 16211 9170.615 6817
2005-06 140.96 1549 14252 15801 8986.64 4013
2006-07 143.38 1679 13468 15147 9212.18 6202
2007-08 195.88 1675 13068 14743 9917.81 7537
2008-09 210.67 1625 12608 14233 10023.04 6175
2009-10 213 1676 11906 13582 10462.95 6754
2010-11 226.2 1655 11852 13507 10614.2 4905
 CHAPTER IV

HR PRACTICES IN
DURGAPUR STEEL PLANT

80
Introduction:

Human Resources Development (HR) as a theory is a framework for the expansion of

human capital within an organization through the development of both the organization
.
and the individual to achieve performance improvement
It is the integrated use of training, organization, and career development efforts to
improve individual, group and organizational effectiveness. HR develops the key
competencies that enable individuals in organizations to perform current and future jobs
through planned learning activities. Groups within organizations use HR to initiate and
manage change. Also, HR ensures a match between individual and organizational needs.

According to Nadler who coined the term HR is defined as organized learning

experiences in a definite time period to increase the possibility of improving job
performance and growth.

McLean and McLean (2001) have offered the following global definition of HR after
reviewing various definitions across the world:

Human resource Development is any process or activity that, either initially or over the
longer term, has the potential to develop adults work based knowledge, expertise,
productivity and satisfaction, whether for personal or group/ team gain, or for the benefits
of an organization, community, nation or ultimately the whole humanity.

Another popular definition of HR given by Patricia McLagan of ASTD is HR is the

integrated use of training and development to improve individual, group and
organizational effectiveness.

According to Rao and Pareek HR in the organizational context is a process by which the
employees of an organization are helped in a continuous planned way, to:

81
 1. Acquire or sharpen capabilities required to perform various functions associated
with their present or expected future roles;
2. Develop their general capabilities as individuals and discover and exploit their
own inner potentials for their own or organizational development purposes, and;
3. Develop an organizational culture in which supervisor-subordinate relationships,
team work and collaboration among sub-units are strong and contribute to the
professional well being, motivation, and pride of employees.

HR it is obvious is not a set of mechanisms and techniques but a process. The mechanisms
and techniques such as performance appraisal, counseling, training, potential appraisal,
career planning etc. are used to initiate, facilitate and promote this process.
About what constitute, HR mechanisms or techniques; there is no consensus. Not only
the countries, but even the organizations differ in the practices as has been presented in
the table given below:

Table 4.1

NATION HR mechanisms
Training and development, Performance Appraisal, Career
CHINA planning
FRANCE Training, internal career path, competence development etc.
JAPAN Individual development, Training, Career Development
KOREA Training and development, OD, career development etc.
SINGAPORE OD, CD, education, training, retraining.

Table 4.2

ORGANIZATIONS HR MECHANISMS
Training and development, Performance Appraisal, Career
BEML planning, OD
BHEL OD interventions, problem solving workshops, Team building
 exercises, survey feedback
BOB performance appraisal, training, skill inventory
Role Analysis exercise, Performance appraisal, potential
COL appraisal, counseling
JYOTI LTD. Performance appraisal, OD
IOC Role Analysis, Performance appraisal, Counseling
L&T Performance appraisal, training, OD, Counseling
Performance Appraisal, Training, potential appraisal, career
SAIL planning
Performance appraisal, counseling, Training, OD, Job rotation,
SBI Potential appraisal
SBP same as SBI
SFL Performance appraisal, training, manpower planning, Role clarity.
TVS performance appraisal, training, career development
VOLTAS Training, performance appraisal, communications

The most common of these mechanisms are found to be performance appraisal,

training and development, career planning, potential appraisal.

HR Policy of Durgapur Steel Plant:

Since its inception DSP has laid a sound infrastructure for the industrialization of the
country. Besides, it has immensely contributed to the technical and managerial
competencies in the country. The resurgence of the organization, following a long period
of depression is an outstanding stance for all the organizations. The turnover of its
fortune is the result of the vision of the organization which has continuously strived to
increase its competitiveness and value-creation ability.
DSP has always believed that HR is the most important resource, has adopted and applied
it as a religion than mere ritual and continues to work for its development. The HR
activities in DSP focus on multi-skill training, performance improvement work-shops,
learning from each other training modules, providing opportunities for open interaction,
close co-ordination through a process of mutual dialogues, motivation measures such as
payment of wage arrears, restoration of encashment of earned leave, adequate
representation to SCs, STs, consistent efforts for improving safety standards etc.

A system of tracking and rewarding innovations in plants/ units by employees on a daily

basis has been introduced since 2007 generating enthusiasm among employees at all level
to think and deliver innovatively. Major drive has been undertaken by the company to
provide greater exposure to large number of its employees, through visits to different
companies both in India and abroad. Frontline workmen were involved in the planning
processes and the concept is being further strengthened to motivate the employees several
reward schemes were introduced over and above the existing schemes.

In order to develop its human resources for harnessing their potential to the fullest and for
according ample opportunity for realizing individual as well as organizational goals,
company made sustained efforts through various training and development activities with
focus on preservation of skills, transfer of skills and knowledge, training in
specialized/advanced skills and technology in collaboration with reputed organizations
and development of effective managerial competencies through association with premier
institutes. Preparing employees for tomorrow, for effectively taking up challenges and
discharging new roles and responsibilities was given a major thrust. To achieve
sustainable growth and to foster motivational climate, among several initiatives, major
thrust is on rationalization of manpower. It has reaffirmed its commitment to achieve
excellence in performance and employee satisfaction through an innovative, harmonious,
and proactive work environment.

To accomplish this, there is a separate Centre for Human resource Development which
has been established with the following objectives:
 Ensure a proactive approach to maintain productive industrial
relation policy through a participative approach.

Build a culture of learning and continually address, evaluate and

improve technical and managerial competency by improving
training and ensure optimum utilization of manpower.

Encourage creativity and recognize & reward exemplary efforts,

achievements and results.

Adopt methods to empower employees and harness their

potential by reinforcing a sense of ownership and commitment.

For continuous improvement in morale, motivation and employee

satisfaction through innovative approach.

Proactive and customer oriented Human Resource team engaged

in continual innovation and change.

Training:

HR we know is an organized series of learning within a specified time limit to produce

behavioral changes in the employees having the ultimate objective of making full
participation of employees in work and life. This full participation can be achieved only
if the latent potential of the employees will be realized and their commitment to the
causes of the organization will be secured. The latent potential includes the capacity to
acquire and utilize new skills and knowledge as well as hitherto untapped ideas regarding
the efficiency and effectiveness of the organization. The task is achieved through HR
which through the provision of learning, development and training opportunities improve
individual, team and organizational performance. HR is brought about through a bunch of
sub-systems like Training and Development, Performance and Potential Appraisal,
Organization Development and Career planning etc.
Of these, training is a sub-system with some peculiarities of its own. If human resources
have to be developed, the organizations need to create conditions in which people acquire
new skills and knowledge and develop healthy patterns of behaviors and styles. One of
the main mechanism of achieving this environment is Training which can be defined as
an attempt to improve current and future employee performance or potential by
increasing his/ her ability and willingness to perform through learning and creating an
environment to sustain harmonious superior-sub ordinate relationship, team work ,
motivation and a sense of belongingness.

Historically, training has had much more to reckon with the vagaries of corporate
fortunes than other sub-functions. It can also be regarded as the oldest sub-system of HR.
Over the years it has come to be viewed as the active arm of the management for preparing
the personnel for upgrading and updating their capabilities to meet new organizational
challenges.

A brief understanding of a few terms that are used in other field interchangeably but have
various connotations from HR point of view; seem desirable.

Learning is a relatively permanent change in behavior that occurs as a result of practice

or experience.

Education is the development of the knowledge, values and understandings required in

all aspects of life rather than particular areas of activity.

Development is the growth and realization of a persons ability and potential through the
provision of learning and education.

Training is the planned and systematic modification of behavior which enables

individuals to achieve the levels of knowledge, skill and competence needed to carry out
their work effectively through learning events, programmes and instructions.
Training Policy of SAIL

Training policy of SAIL is based on the realization that the development of human
resources is crucial to the success of the organization. It puts emphasis on utilizing
optimally the training facilities to keep the employees continually abreast of relevant
changes in the internal and external environment. Training , it envisages, has a major role
to play in developing managerial abilities, molding attitudes and thereby influencing the
work culture.

In the last few years, it has taken steps to improve the quality of training by the Trial of
developing Standard procedures, conducting training audits and strengthening of
networks of trainers.

The managerial training needs of corporate cadre executives (E6- E8) is catered by the
Management Training Institute (MTI), Ranchi, the apex management institute of SAIL
founded in 1962. MTI is an ISO: 9001 institute since 1994. It operates as a unit of
Directorate of Personnel of SAIL and conducts over 100 training programme every year
to meet the needs of managerial training of senior executives of SAIL. It is an in-house
training centre of SAIL and contributes in the areas of education, training, consultancy
and research.

There are three components complementing each others

The Corporate HR
MTI and
Plant Training Centers

These together embody the total HR set up of SAIL.

The Following are the boards, councils and committees in existence in relation to CHR
functions::
1) Training Advisory Board (TAB) : It is the apex body of SAIL to guide the HR
initiatives for the organization. TAB comprises of Chairman, Functional Directors
& MDs of Plants. ED (HR) is the convener of TAB. Chief Executives of
Plants/Units is special invitees depending upon Agenda Points. TAB generally
meets annually to assess the HR achievements and gives directions for future
concerning HR practices and initiatives in SAIL.

2) Meeting of Heads of Training (HoTs): The Meeting of HoTs is a forum

where on the basis of guidelines from meeting of TAB, HR activities of SAIL are
planned, implemented in Plants/Units and reviewed. In this meeting ED (HR) and
HoTs of SAIL Plants/Units meet periodically and develop the actions for the whole
year and review performance.

3) Management Trainees Training System (MTTS): It provides an opportunity

to freshly inducted MTs to acquire relevant skill and knowledge through a
structured training system. This system of training provides a comprehensive
foundation to the trainees to shoulder responsibilities successfully as frontline
executives.

4) Management Development Programmes (MDP) : There are two

Management Development Programmes for the frontline Managers of the
Company viz. MDP-I for executives of E-1 and E-2 Grades and MDP-II for E-3
and E-4 Grades respectively. These hierarchy based programmes are based on the
requirements of managerial skills and attitudes suitable for executives at those
levels.

5) Unit Training (UT) : The system of structured on-the-job-training called Unit

Training (UT) aims at bringing up the capabilities of all shop floor workers to
recognized, written and agreed standards of job competence. UT ensures that
current work practices are reviewed and updated continuously so as to improve
performance and that good practice is passed and sustained. UT is conducted for
 learning operational skills under a Master Trainer. UT Standards Manual and UT
Manuals for specific skills guide the training.

6) Basic Engineering Skills (BES) : To provide basic maintenance skills

necessary for the achievement of high level of plant availability and low cost of
maintenance EES training route is a very important method adopted in SAIL.
Reinforcement of practical skill training centers/workshops is vital in EES
Training.

MTI concentrates on in-housing development of senior executives of SAIL and

contributes towards transfer of learning to the actual job thereby giving tangible results
towards increasing profitability of the company

The following Services are being offered by MTI:

Diagnosing organizational issues

Assessment of Training Needs
Design and execution of need-based training
Preparation of training manuals/ exercises/ case-studies
Providing Consultancy
Research and consultancy in developing effective HR system
Disseminating management knowledge through publication.

Objectives:

With following specific objectives, MTI is committed to enhance the managerial

competence of its customers which are senior executives (Assistant. Managers and
above):
 to provide need based managerial training to customers.
 to facilitate the process of solving managerial problems of customers.
to create and maintain an ambience that is conducive to learning.
to enrich and disseminate management knowledge through research and
publications.
to enhance competence of in-house employees for continually improving the
performance of MTI through training and development.

Training Process:

A. Organization Objectives and Strategies:

The first step in the training process of any organization is the assessment of its mission,
vision, objectives and strategies that emphasize on :

What business are they in?

At what level of quality do they wish to provide the products or services?
Where do they want to be in future?

It is only after answering these and related answers the organization must assess the
strengths and weaknesses of its human resources.
On the strength of its people SAIL has adopted following
Vision:
To be a respected world class corporation and leader in Indian steel business in
quality, productivity, profitability and customer satisfaction.

90
 Achieve market leadership and prosper in business through satisfaction of
customers needs by continual improvement in quality, cost and delivery of
products and services.

91
Credo:
We build lasting relationship with customers based on trust and mutual benefit.
We uphold highest ethical standards in conduct of our business.
We create and nurture a culture that supports flexibility, learning and is pro active
to change.
We chart a challenging career for employees with opportunity for advancements
and rewards.
We value the opportunity and responsibility to make a meaningful difference in
peoples lives.

In consonance with above vision and credo statements, the following steps have been
taken to align training strategies with organizational goals/ Business Plan:

Generating awareness and commitment to corporate plan 2012.

Identifying shortfalls in critical skills and conducting competency mapping

exercises.

Extending support for company wide interventions relating to Project

Management, Knowledge Management, total Productivity Maintenance,
Enterprise Resource Planning, Economic value added, e Business etc.

Learning from each other workshops to get synergetic effect.

Performance improvement workshops at plant location.

Reviewing of policy and system training needs and evaluation of training

effectiveness.
B. Training Needs Assessment:

Needs assessment diagnosis present problems and future challenges to be met through
training and development? S before committing high resources, organizations would do
well to assess the training needs of the employees.

Identifying training needs is a process that involves establishing areas where individuals
lack skill, knowledge and ability in effectively performing the job and also identifying
organizational constraints that are creating road-blocks in the organization.

Training Needs Assessment is an annual exercise in SAIL . TNA for corporate cadle
executives is done by MTI. Reporting officers are given TNA from time to time in the
month of October to write job profile, required technical and managerial competencies of
the job and to identify gap in the competencies of the job holder for each executive under
his arm of control. On the basis of the previous training records and consultation with the
representatives of Training Department, training need of executives are identified. The
comments of the Reviewing officers are obtained on the identified training needs. The
filled-in forms are submitted to MTI by November of each year.

The representatives from MTI visit Plants and units to verify training needs and find out
Organizational, Departmental and Individual training needs from Head of departments ,
CEO of Plant, Director of SAIL and other members of top management are also
contacted to find out organizational training needs.

All these needs from multiple sources are compiled and analyzed. This analysis is used
for making ATP and earmarking executives for various training programmes. Based on
the training needs assessed, the Annual Training Prograame is prepared which becomes
operational for the ensuing financial year i.e. April-MARCH.

The following figure depicts the complete cycle of SAT adopted by MTI and the role of
Training Needs Analysis in the whole process
Table 4.3

Identification of Organizational problem with Possible Training Solutions

Training Needs Analysis

Setting Programme Objectives to Meet the Identified Needs

Design of the Programme to Fulfill the Defined Objectives and identified

needs

Verification of the Design

Pilot run and Design Validation

Refining Design

Conducting Programme

C. The various programmes conducted by MTI are given below:

GENERAL MANAGEMENT PROGRAMME:

Advance Management Programme (AMP)

Senior Management Programme (SMP)
Holistic Management
Enhancing Managerial Effectiveness
Creating Future
Strategic Management and
Resource Management
SKILL ENHANCEMENT PROGRAMME:

Management of System and Monitoring

Negotiation skills
Communication and presentation skills
Counseling Skills
Creativity and Innovation
Problem solving and decision making

Marketing decision making

HRM at shop floor
Presentation skill for Marketing Executives
First thing first
Managing self and team
Training of Training Officers (TOTO).

FUNCTIONAL MANAGEMENT PROGRAMMES

Cost Control by Design

Business Finance and Investment Planning
Training of Training Officers (TOTO)
Learning to Manage with optimum manpower
Human Resource Management
contract Management
Total Quality Management
Customer Relationship Management
Retail Management\
SPECIAL PROGRAMMES

Leadership for Young Managers

Leadership through Principles
Developing Global Managers
Leading for Innovation and Creativity
Learning from Each other workshops
Benchmarking
Programmes for Heads of Departments
Corporate Social Responsibility
Strategic Brand Management
Retirement Planning
Corporate Governance

PROGARAMMES ON COMPUTER

Applications of PC
Advanced Programme on JAVA
Advanced Programme on Oracle, 9i
Advanced Programme on Visual Basics
Advanced Programme on web page design

PROJECT MANAGEMENT PROGRAMME

Project Management
Contract Management for Project Executives
Integrated Approach to Project Management
Human Skills of Project Management
MS Project
Programmes overview at MTI

Advanced Management Programme: This programme is organized for newly promoted

General Managers of SAIL. The programme aims at enabling the participants to develop
understanding of the emerging business opportunities and challenges and the organization
with entrepreneurial approach and values-based management.

Business Finance & Investment Planning: the programme enables participants to

appreciate the financial challenges of business so that they can identify their role in
meeting them by acquiring the basic knowledge of various aspects of finance and
applying it to manage costs and to make more effective business decisions to improve the
performance and profitability of the company.

Cost Control by Design: The programs enables participants to realize the increasing
significance of profitability as an strategic tool for competitive advantage, understand and
interpret the cost information available to the department for identification of key areas
for cost reduction and plan innovative measures for cost reduction in their departments.

Corporate Social Responsibility: The programme is developed to sensitize managers

about the increasing importance of corporate social responsibility of business and
reinforce their predisposition for effective implementation of corporate social
responsibility initiatives.

Customer Relationship Management: The aim of this programme is to enhance

customer value through managing customer relationships more effectively.
Communication and Presentation skills: The programme is aimed at enabling the
participants to manage the work situations effectively through adept communication and
enhance presentation skills.
Holistic Management: The aim of this programme is to bring in change in the focus of
senior executives from a functional orientation to a holistic one to meet the newer
challenges of todays competitive business environment.

Creating Future: The aim of this programme is to develop newer insight for the future
changing business environment. It also aims to impart necessary competence to visualize
and create future by managing change.

Marketing Decision Making: the programme aims at enabling marketing executives to

respond to market uncertainties more effectively through better application of modern
marketing tools and techniques and superior marketing decision-making ability. The
learning in this programme is reinforced through asophisticated marketing simulation
game designed to reflect the complexities, uncertainties and challenges inherent in
marketing decision-making and analysis process.

Contract Management: The programme is focused on imparting necessary inputs on the

essential features of management of contracts including Indian Contract Act, strategies
for contract preparedness, execution and closing of contracts, modes of tendering and
their advantages, effective tools and practices of evaluating contracts and cost-reduction,
legal and statutory requirements for employing contract labour, conciliation/arbitration
practices/procedures and statutory & commercial issues of contract labour with respect to
job/ works contract.

Developing Global Managers: The aim of this programme is to provide insights into the
global perspectives of business in todays changing business scenario and developing
managers to manage fast changing business most effectively.
Team Management: The programme aims at developing skills in managing self and
time effectively and harness skills in time planning required to achieve organizational
goals as well as life objectives.
Enhancing Managerial Effectiveness: This programme focuses on making participants
aware of the changing business scenario, their role to achieve organizational goals and
acquire the managerial skills essential for their role transition.

Managing Self & Team: The aim of this programme is to enable the participants to
develop self-capability and strong orientation to work in teams.

Negotiation Skills: The programme aims at helping participants to appreciate the

significance of negotiation and enable them to develop/enhance effective negotiation
strategies and skills for delivering results in the workplace.

Problem Solving and Decision Making: The programme aims at helping the
participants in improving their problem-solving and decision-making skills under
increasingly demanding nature of managerial jobs.

Project Management: The course concentrates on imparting an integrated approach to

the management of projects and in this way helps the individual members develop their
managerial skills and their ability to work in teams for accomplishment of projects in
time.

Retail Management: The aim of this programme is to develop knowledge knowledge

and skills participants essential to manage retail business and equip them with tools and
techniques so that they can manage retail business most effectively.

Strategic Management: This programme will enable the participants to orient

themselves towards strategic thinking, understand key issues with respect to formulation
and implementation of business strategies that will affect the future identified issues for
achieving corporate goals effectively.
Training of Training Officers: The aim of this programme is to develop the managers
as trainers through systematic approach to training so as to enable them to carry out
training needs analysis and develop relevant training situations to meet the training
objectives.

D. Training Methodology:

All training programme of MTI being targeted towards practicing and experienced
managers, are participative by design. The theoretical inputs are backed by practical
examples and syndicate discussion. Business cases are used in all programmes. The
programme which contain the behavioral inputs are often supported by role paly,
instrument and outbound exercises conducted in a serene atmosphere. Yoga and physical
exercises are also integral part of some development plan aimed at enhancing individual
effectiveness and group dynamics. Roles play and Hands on Exercises support skill
development related programmes. Computer simulated games and exercises help the
participants to horn their newly learned skills in competitive environment.

E. Training Infrastructure:

The training infrastructure consists of four central air conditioned conference halls for
main sessions, four syndicate rooms for group discussions, a computer lab, open learning
Centre with computer based training packages , library with nearly 15000 books and 126
journals. Training aids like over 240 Video Cassettes/ CDs of management films,
LCD/DLP projection systems, facilities for audio-video recording and playing back of
proceedings, role exercises or business exercises are available.

F. Learning Strategy:

MTI believes in andragogy and it follows SAT approach as depicted below. All
programmes in MTI has structured input as requirement of the participants. The
structured input and participative approach through syndicate work, cases, role plays,
simulation, outdoor exercises etc. ensure that learning is effective. Learning sheet is used
to record not only learning from the programme but from each session. Action plan for
application of learning is also part of the learning sheet. Post training contacts with
participants and study of post training effectiveness facilitates application of learning.

G. TRAINERS:

The institutes faculty (trainers) represents a unique blend of academicians and successful
practicing managers. They are backed up by a large number of senior line managers,
professors from knowledge institutions and foreign and Indian consultants. Thus, there is
a judicious mix of theory and practice forms the core and its experience and expertise is
geared to conduct a range of need-based programmes in all the training programmes at
MTI.

The training needs of members of faculty are assessed through TNA system of the
company.

In addition to annual training, the faculty competence is upgraded through:

Training with foreign associates

Advance courses in National level Institutes.
Attending International and National Seminars/Workshops.
Presenting papers in various forums.

In the beginning of year, Functional Facilitator holds a discussion with Individual Faculty
member to decide his tasks and targets.

To meet the required targets, the competency level of each Faculty Member is assessed
through a Format. A plan is drawn to bridge the competency gap of the Faculty Member.

For existing trainers as well as for development of Line Mangers as Trainers, MTI has
specific modules of Training of Training Officers (TOTO).
100
The different modules in TOTO, which collectively address all the trainers roles are
given in the following table:

DIFFERENT TOTO MODULES

Table 4.4

Module - 1 Systematic Approach to Training (Phase I)

Module - 2 Systematic Approach to Training (Phase II)
Module 3 Training Techniques.
Module - 4 Dealing with People (Interpersonal Skills
for Trainers)
Module 5 Appreciation Programme on Systematic
Approach to Training
Module 6 Trainer as Internal Consultant
Module 7 Programme for Manager as Trainer (Phase
II & II)
Module 8 Instructional Skills for Occasional Trainers.

Module - 9 Computer as an Aid to Trainers

Some programmes of specialized nature that have been conducted at MTI through
external agencies are given below:

Advanced Programmes in Computers.

E-Commerce.
Accounting Standard.
Administrative Vigilance
Corporate Governance
H. FOCUS AREAS OF TRAINING:

Prompt Decision making

Leaderships at all levels
Sustaining Growth
Implementation of Projects

I. QUALITY and AUDIT OF TRAINING:

SAIL has introduced the system of Internal Audit of Training so as to stimulate the
growth and development of effective training. The system of Internal Audit of Training
has been established since 1994.

To assess relevance and process of training, the Training Department has Quality
Management System (QMS) in place. The QMS at MTI is certified to the ISO 9001-2000
Standard. The audit of quality of training is done every quarter by internal auditors.
Annual audits are conducted by external auditors and certifying agency conducts
surveillance audit once in a year. The Management Review Committee (MRC) meets
every quarter to look into deviations and thereby decides about corrective action. Using
various indices, the committee also reviews the trend and variation over a period of each
quarter.

J. EVALUATION OF TRAINING:

Training effectiveness is evaluated at three levels:

1. Reaction
2. Learning
3. Application
Reaction Level: For assessing training at reaction levels following three indices are
used:

1. Customer Satisfaction Index (CSI)

2. Support Service Index (SSI )
3. Content and Process Rating (CPR ) of individual sessions.

After each programme, the reaction level assessment is obtained from the participants on
a prescribed format. Based on responses, the CSI on a four-point scale is obtained.
Similarly SSI is also calculated. Each session of the programmes is assessed by the
participants for its content and the process adopted by the concerned faculty. The
minimum acceptable level is 3 and there are efforts for continual improvement by
progressively increasing the minimum limit every year.

Learning Level: a lot of importance is given to the second level of assessment that is,
learning. What do they learn and what learning they intend to apply at work place is
important piece of information to assess effectiveness of any Management Training
Programme.

A system of Learning Sheet has been introduced in every training programme. A well
structured format of Learning Sheet is distributed to all participants. Participants are
requested to record learning points against each session of the programme. They are also
expectedto specifically list down those proposed applications for which the progress can
be monitored by them. Copies of this sheet are retained by MTI and the Participants. A
copy is also sent to the Head of Department of the Participant with request to guide and
support the participants in applying his learning points at the work place.

Application Level: assessing effectiveness of training at result is a long drawn

process. There are various methodologies but each methodology requires collection of
primary data from the workplace of the participants. In 2009-10, following two
programmes were taken-up for post-training effectiveness:
Managing Change and Cost Control by Design.

TRAINING PROGRAMMES IN DURGUPUR STEEL PLANT

Training in Durgapur Steel Plant is given the prime importance. There is a separate
training department to look after training of manpower.

Training in the plant is provided in accordance with the training plan that is prepared
every year based on the report of the training coordinators. The training coordinator takes
into consideration the following before making training plans:

Training plans vs. Fulfillment for the preceding year.

Competency Mapping for the current year.
Critical Skills/ Skill retention plan.
Skill Development for New Projects/Modernization.
Unit training (SOP/SMP) Manual development and Training.
Performance Improvement Workshop on Key Issues.
Any other issue as per need of the department.

Training programmes in DSP are technical as well as non technical; meant for executives
as well as non executives.

For the non executives there are more than 450 training programmes in the plant.
Following are the training programmes (read development) for the executives with a brief
description of some of them:
Table 4.5

No. programme For whom (Level)

1 Enhancing Managerial Effectiveness E5
2 Management Development Programme I E1 & E2
3 Management Development Programme II E3 & E4
4 Micro Planning E1-E6
5 Creativity and Innovation E1-E5
6 Communication and Presentation Skill E1-E5
7 Managerial Leadership E5 & E6
8 Emotional Intelligence E2-E5
9 Self Development for Managerial Effectiveness E3-E6
10 Supervisors Development Programme Non executives
11 Company information Supervisors and S1-S2

MANAGEMENT DEVELOPMENT I

Objectives:
At the end of the programme, the participants will be able to :

Enhance their understanding of the challenges ahead of SAIL and identify

organizational priorities.
Function effectively as team members.
Communicate effectively to motivate subordinates.
Acquire the skills of planning and problem solving.
Analyse issues and apply key learning points in their areas of work.

Topics:

Programme briefing & ice breaking.

 Business challenges.
 Making team work.
Planning and time management.
Problem solving.
Role of front line executives.
Communicating effectively.
Presentation skills.
Motivating the teams and Positive Disciplenes.
Duration: 4 days

MANAGEMENT DEVELOPMENT II

Objectives:
On completion of prograame the participants will:

Better understand
Recent development in the business environment and the ways to meet the
challenges.
Their role in terms of the key elements of their work and for establishing and
maintaining systems standards.
Ways of effective team working and development of sub-ordinates.
Problem solving techniques.
Ways to make effective decision.
Be better able to:
Apply the skills of team building and work more effectively within a team.
Establish and maintain systems of work & standards of performance.
Achieve consistency in working through effective problem solving and decision
making.
Communicate more effectively.
 Make decisions keeping in view financial implications.
Topics:

Present Business Scenario.

Your role in the organization.
Problem solving and creativity and Decision making.
Financial implications of decision making.
Developing subordinates.
Communication.
Team working.
Duration: 4 Days
Venue: CHR

PROGRAMME ON ENHANCING MANAGERIAL EFFECTIVENESS

Objectives:

At the end of the programme, the participants will

Become aware of the changing business scenario and understand their role to
achieve the organizational objectives.
Acquire the managerial skills essential for their role transition.
Identify potential areas improving their managerial effectiveness.

Topics:

Business realities and challenges ahead of SAIL.

Implementation and monitoring of systems and standards.
Effective negotiation.
Working together.
Leading for results.
Profitability and cost management.
 Inter personal effectiveness.
Value attitude and work culture.
 Action plan.
Duration: 4 DAYS
Venue: CHR

COMPANY INFORMATION FOR SUPERVISORS/SENIOR TECHNICIANS:

Objectives:
At the end of the programme the participants will be able to

understand the present Business Scenario, various systems and procedures

constraints and prospects before the organization.
contribute more effectively towards Cost Reduction and target fulfillment in their
own area of control.

Duration 2 Days
Venue - CHR

SUPERVISORY DEVELOPMENT PROGRAMME:

Supervisory Development Programme is known as SDP. This programme is for the

supervisory or Senior Technicians who have a very important role and who hold the key
job position in an organization. It is the responsibility of the supervisors to ensure that his
sub-ordinates perform their jobs well.

Objectives:

to understand the current policies and practices of the organization.

to help supervisors realize their own career goals and aspirations in a planned
way.
 to help supervisors acquire knowledge, skills and abilities required to adapt to
complex changes in environment.
ADVANCED MANAGEMENT PROGRAMME:

AIM: to strengthen managerial capabilities and quqlity of work life of executives at E8

level.

Objectives:
By the end of the programme, the participants will be able to:

develop insights into issues related to managerial capabilities.

Process more and more energy through mind-selling exercise
Implement appropriate strategies for improving profits in plant.

Contents:

Paradigm of values:
dis-identification
theory of Games
Theory of Samskars
Doctrine of Karma
Theory and Method of Work
Giving Model of Motivation
Mind stilling exercise.
Profit Improvement Strategies and Business Reengineering:
SWOT analysis of product structure and selection of product mix.
Marketing strategies.
Financial Control.
Working Capital Management
Skill For Managing People:
antecedent, behavior and consequence approach
ingraining, integrating and involving employees in organizational processes
 Reinforcement technologies.
Target Population:
Newly Promoted General Managers (E 8)

PROGRAMMES ON BASIC ENGINEERING SKILLS:

Aim: The aim of the programme is to improve the knowledge and skills of technicians
working in the area of maintenance.

Objectives:
By the end of the programme, the participants will be able to:

Use correct tools and tackles for the job.

Diagnose the faults and take corrective action.
Carry out qualitative maintenance work.

Contents:

Electrical & Electronics:

* Electrical fault finding * thyristors * maintenance and testing

of AC motors
*Troubleshooting of AC motors * maintenance of brakers * engineering methodology
* DC Motors-testing and maintenance * DC machines and control systems

Mechanical:

* Key Fitting * Industrial Pneumatics *Bearing Fitting * Material Handling

* Coupling and Alignment * CNC Lathe * TIG Welding * Basic Carpentry
110
* Industrial Hydraulics * Vulcanizing/ Repair of conveyor belt
Target Population:
Technicians/ Sr. Technicians working in the maintenance area

111
Duration: 3 to 6 Days

PROGRAMME ON MICROPLANNING:

Aim: The aim of the programme is to improve the planning skills of those executives
involved in the day-to-day operations of the business.

Objectives:
By the end of the programme, the participants will be able to

Understand the need to plan effectively in order to optimize operational

performance and increase managerial effectiveness in an incereasingly
competitive and changing environment.
Recognize the importance of defining the objective accurately.
Be more aware of the resources that are available to them.
Sunderstand the difference between symptoms and root causes when problem
solving.
Apply a systematic approach to Microplanning.
Have developed the skills to prepare a detailed microplan.
Be able to associate their own priorities with the priorities of the organization.

Contents:

Defining planning
Practical Microplanning tasks
Objective setting
Sproblem symptoms and root causes
 Asking the right questions
Planning aids
Network planning
 Information systems.
Final microplanning tasks.

Duration: 5 Days
Target Population: Executives at levels E1-E6

PROGRAMME ON TOTAL TEAM WORK:

AIM: To stimulate improved performance in a working group through team work.

Objectives:
By the end of the programme, the participant will :

be better able to apply the management skills of leadership, communication and

team working.
Be more aware of the need to improve interpersonal relationships.
Be more able to bring about and sustain improvements in individual performance,
work teams performance and collective performance of all employees.
Have developed a common understanding of the terms like managerial style and
organizational culture.
Have developed team action plans for implementations back at the workplace.

Contents:

Introduction
Leadership communication and team work
Outdoor activities
Characteristics of effective leadership, communication and team work
Team performance assessment.
Leadership and Decision Making Styles.
 Behavior at work
Managerial Styles.
 Analysis of organizational culture.
Team action plan development
Programme Review

Target Population: Groups of executives at levels E3-E5 from the same work area.
Duration: 3 Days
Venue: CHR

UNIT TRAINING SYSTEM:

Aim: Unit Training System is a systematic on-the-job training which aims to achieve
standards performance with respect to quality, quantity, safety and efficiency. Unit
training is imparted by experienced knowledgeable and skilled workman called unit
Trainees with the help of Unit Training Manual.

Objectives:
The objective of Unit Training System is to:

Bring up capabilities of employees to an agreed standard of performance.

review and update current practices through documentation of Standard Operating
Procedures
Make standard practices as target for training.
Ensure that best practices are passed on.
develop skill for overcoming identified deficiencies.
eliminate wasteful and unsafe practices.
Set competence standards.

Contents:

There are 4 Unit Training Manuals for establishing Unit Training System:
 Unit Training Guidance Manual
Trainer Manual for Resource Management Programme
 Trainer Manual for Job Instructional Techniques Programme
Trainer Manual for Line Mangers Appreciation Programme Key
steps are:
Defining correct practice
Analyzing shortfalls in current performance and practice
Preparing the manual
Establishing what needs to be assessed and preparing the tests.
Implementing training
Assessing competence
Follow up by swift supervision, reinforcing and maintaining standards

Target Population: Non-executives

Duration: 6-10 days
Venue: Shopfloor in Plant

TRAINING METHODS IN DURGAPUR STEEL PLANT:

Case Method: case methods which are prepared based on the actual experience of
organizations; help the candidate understand the real problem faced by managers in
organizations. The trainees study, analyze and discuss the case; identify the apparent or
hidden problems and identify the root causes and try to suggest probable solutions from
which eventually select most viable one. It gives trainees a good opportunity to sharpen
their analytical, problem solving and judgemental skills. The whole exercise aims at
improving the decision-making skills of the trainees.

Problem : Oriented Exercises and Projects: This method consists of assigning specific
problems that might have faced cooperation. The projects on a variety of subjects could
be written up for trainees. The trainees are divided into groups and separately on the
problem. In the final session, the group presents their reports, followed by more general
discussion on the issues in hand.
Management Exercise Games: in these cases, the trainer simulates situations where the
employees are exposed to actual work problems. After the exercise is complete , the
trainer discusses the behaviour of the employees during the exercise with the group. He
appraises exercise with the help of theoretical concepts. In this way, the employees learn
quickly and also understand their mistakes or problems easily through direct experiences.

Lectures: Lectures are the most familiar way of instructions. Trainee Department
arranges guest speakers to give a foundation lecture on the subject. It motivates the
trainees towards organizations and also increases their knowledge. The lecturers share
their vast experiences with the new comers by giving them short speeches on various
issues.

Films and Audio: Visual: Films and audio visuals are important tools of learning being
used in training. Films are used for many purposes. It educates all the trainees on special
subjects and discussion upon it. The films show how the peoples handle different issues,
provides complete step by step learning.

Computer Open Learning System: Computer Open Learning System is an important

training programme in CHR. Trainees learn how to handle computers. There is a series of
computer set in front of the trainees and there are lots of problems regarding the
computers. The trainee solves those problems themselves by operating computers in the
guidance of an instructor.

Syndicate Method or Group Discussion: these methods basically consist of dividing up

the trainees into a number of groups to work on different subjects. The groups are called
syndicates. Generally, each syndicate has a brief and background papers carefully
prepared by the instructors. The syndicate discusses the issues involved in the subject
area assigned to it. The instructor is present while the syndicate works on their assigned
subjects but gives only general guidance with minimum direction. The trainees learn
from their participation in work and experience that the trainees bring to syndicate
discussion lectures.
Training Evaluation: There are 4 levels of training evaluation:

1. Reaction,
2. Learning,
3. Behavior and
4. Result.

At the Reaction level, two mechanisms are applied by the CHR-

Continuous evaluation by the trainer based on gestures, posture, body

language.
Evaluation through Feedback on 4-points scale. A minimum average of 3
is considered successful.

At the Learning level, pre and post test of the trainees are conducted on the relevant area
of training. A questionnaire consisting of ample number of questions is given to the
trainees before training session and the same trainees are then given same questions after
the completion of the training to check the effectiveness of the oncerned training
prograame and trainer.

At the Behavior level, the evaluation is carried over through competency mapping. The
training department provides the assessment form to the Reporting Officer to check past
competency labeled in 3 categories: X, Y and Z where they stands for fully competent,
partly competent and not competent. The departmental heads are asked to give score out
of 100 to those who have undergone the training programme after they have returned
along with comment. They label the returned trainees again in 3 categories X, Y and Z
with the same meaning of fully competent, partly competent and not competent. The
more the conversion from not competent/ partly competent to competent now category;
the more the successful evaluation.

At the Result level, surveys and questionnaires are conducted .

 TRAINING STATISTICS (EXECUTIVES)

Table 4.6

YEAR
LESS THAN ONE WEEK MORE THAN ONE WEEK PARTICIPANTS
2008-09 130 5 2387
2009-10 129 5 2154
2010-11 113 7 1973
TOTAL 372 17 6514

Table 4.7

Training to new entrants

EXECUTIVES NON EXECUTIVES TOTAL
2010-11 162 5 167
2009-10 65 532 597
2008-09 255 575 834
2007-08 50 234 289
2006-07 0 105 105
2005-06 31 73 104
2004-05 177 75 252
2003-04 75 94 169
2002-03 1 152 153
2001-02 36 557 593
2000-01 60 817 877
1999-00 219 1077 1296
Table 4.8

Training com competency enhancement

EXECUTIVES NON EXECUTIVES TOTAL
2010-11 1269 2308 3567
2009-10 1471 4688 6159
2008-09 1399 2216 3615
2007-08 899 2307 3206
2006-07 3182 4617 7799
2005-06 1657 3338 4995
2004-05 1485 2225 3710
2003-04 1277 2411 3688
2002-03 745 2742 3487
2001-02 31 523 554
2000-01 213 725 938
1999-00 275 649 924

Table 4.9

Training in special areas

EXECUTIVES NON EXECUTIVES TOTAL
2009-10 1326 2306 3632
2008-09 600 1711 2311
2007-08 876 1155 2031
2006-07 1312 1187 2499
2005-06 2249 1867 4116
2004-05 1934 3107 5041
2003-04 1471 2744 4215
2002-03 1584 2727 4311
2001-02 2168 4042 6210
2000-01 1035 1035 2070
COMPETENCY MAPPING:

COMPETENCY Any underlying characteristics required performing a given task,

activity, or role successfully can be considered as competency. Competencies may take
the following forms:
Knowledge

COMPETENCY MAPPING:

COMPETENCY Any underlying characteristics required performing a given task,

activity, or role successfully can be considered as competency. Competencies may take
the following forms:
Knowledge
Attitude
Skill
Motives
Values
Self-concept
Other characteristics of an individual

Daniel Katz in Harward Business Review has grouped those under three areas:

Technical competencies dealing with the technology or know-how associated with the
function, role, and task. It is referred by some as functional competency.
Managerial competencies also called organizational competencies dealing with the
managerial aspects, organizing, planning, mobilizing resources, monitoring, systems use
etc.
Behavioral competencies dealing with personal, interpersonal, team related etc. this is
also called Human competencies.

IIM professors have added another area which include visualizations, model building etc.
and they termed it as conceptual or theoretical competency.

Competency Mapping is the process of identification of the competencies required to

perform successfully a given job or role or a set of tasks, at a given point of time. It
consists of breaking a given job or role into its constituents tasks or activities and
identifying the competencies (technical/ managerial/ behavioral/ conceptual) needed to
perform the same successfully.

Competency Assessment is the assessment of the extent to which a given individual or a

set of individual possess these competencies required by a given role or set of goals or
levels of roles.

COMPETENCY MAPPING IN DSP, SAIL

Competency mapping is conducted in the major integrated steel plants for ISO accredited
departments and also some non-ISO areas as per the internally developed methodology to
assess employees job wise competencies and bridge identified gaps through relevant
training interventions. This potent HR tool helps in preventing recurrence of critical skill
gaps.

The idea of competency mapping in Durgapur has come in the year of 2002. Every year
competency assessment takes place. During the assessment of the competency, the
organization come to know where the competency gap or where the skill is required
among the employees.
120
Methodology:

Select the Departments

Identify key functions/Areas/Job Clusters/Quality Positions/ Work Platform
List the competency required in each area of the above
Identify employees occupying the positions
Design the format and prepare the test questions
Evaluate the skill through on-the-job performance
Evaluate the knowledge through test
Collate results and prepare the capability matrix
Reassess after training whether they are competent and maintain records of
individual Employees reassessing their competence at least once in two years.
If they are not found competent after training, send the list of employees
identified for training to Head of department/ Head of Trainin

Various competencies required for executives are given below:

Business Environment Knowledge: Knowledge and understanding of economic,

legal, socio-political trends.
Function Specific Knowledge: Knowledge related to profession as a whole,
knowledge which is determined by authority and responsibility of other positions.
Knowledge of mission-values and Standard operating practices, policies.
Making Business Decision: Use business related data to support effective and
timely business decision by
Systematically gathering relevant business information.
Identifying strength and weaknesses of a particular business line.
Recognizing opportunities and threats and acting on them rapidly.
Using business facts collected in daily decision making.
 Vision: Develop a vision for the future of the organization by
 Grasping the meaning of trends and interrelationships between the organization
and its environment at the local, national and international level
Identifying fundamental values and beliefs to guide the organization into the
future.
Systematic Thinking: Identifying connections between situations that are not
obviously related
Using common sense, past experience and basic rules to identify key underlying
issues.
Generating and testing hunches which may explain complex situations or
problems.
Networking: to cultivate informed network which may help to get things done
through
Developing contacts with people outside the immediate work unit
Using network as a source of information and support.
Organizing Resources: Ensure that all financial, personnel and/or other resources
are in place to meet needs by
Identifying and acquiring the resources.
Allocating and utilizing the resources in a timely and cost effective way.
Inspire People: To generate a sense of purpose for the work done by the
organization through instilling and enthusiasm, loyalty and commitment among
team members at all levels of the organization.
Team Player: to contribute to greater objective in a team environment through:
Cooperating and interacting well with others.
Contributing actively and fully to team projects.
Working collaboratively as opposed to competing with others.
 TRAINING EFFECTIVENESS QUESTIONNAIRE:

This questionnaire was administered with the intention to assess the effectiveness of the
training function in the DSP. Questionnaire was administered to 47 line managers and 22
HR personnel and the average score is given alongside.

A: Not at all true

B. A little true
C. Somewhat true
D. True to a great extent.
E. very true

S.No. QUESTION MEAN 1 MEAN 2

1 Induction training is given adequate importance in your 5 5
organization.
2 Induction training is well planned. 5 5
3 Induction training is of sufficient duration. 5 5
4 Induction training provide an excellent opportunity for 5 5
newcomers to learn comprehensively about the organization.
5 The norms and values are clearly explained to the new 5 5
employees during induction.
6 Senior management takes interest and spends time with the 4 4
new staff during induction training.
7 The new recruits find induction training very useful in your 4 4
organization.
8 The induction training is periodically evaluated and 4 4
improved.
9 The employees are helped to acquire technical knowledge and 4 4
skills through training.
10 There is adequate emphasis on developing managerial 5 4
capabilities of the managerial staff through training.
11 Human relation competencies are adequately developed in 5 3
your organization through training in human skills.
12 Training of workers is given adequate importance in your 5 5
organization.
13 Employees are sponsored for training programmes on the 4 4
basis of careful identified developmental needs.
14 Those who are sponsored for the training programs take the 4 4
training seriously.
15 Employees in this organization participate in determining the 4 3
training they need.
16 Employees sponsored for training go with a clear 3 4
understanding of the skills and knowledge they are expected
to acquire from the training.
17 The HR department conducts briefing and debriefing sessions 3 3
for employees sponsored for training.
18 In-company programmes are handled by competent faculty. 4 4
19 The quality of in-company programs in your organization is 4 4
excellent.
20 Senior line managers are eager to help their juniors develop 4 4
through training.
21 Employees returning from training are given adequate free 4 3
time to reflect and plan improvements in the organization.
22 Line managers provide right kind of climate to implement 4 4
new ideas and methods acquired by their juniors during
training.
23 Line managers utilize and benefit from the training programs. 4 4
24 External training programs are carefully chosen after 4 4
collecting enough information about their quality and
suitability.
25 There is well designed and widely shared training policy in 5 5
the company.
Combined mean = 4.5 (line magers) and 4.7 (HR executives)

Interpretation:

The organization has a separate training department to look after executive

training requirements

It has facilities (training centre, audio visual aids etc.) for in-house training of
executives

Every new employee in supervisory/ managerial cadres is put through an

induction programs.

It conducts in-house management training programmes regularly for the

executives.

The organization encourages executives to attend outside programmes without

any hesitation.

There is a separate budget for training.

After an executive returns from training he is provided an opportunity to utilize

what he learnt in the programme.

People are trained for the job before promotion.

It on-the-job coaching programmes where executives are helped to develop their
managerial capabilities through formal coaching by their bosses.
 PERFORMANCE MANAGEMENT

Employee performance management includes planning work and setting expectations

continually monitoring performance and the capacity to perform; periodically rating
performance in a summary fashion, and rewarding good performance.

In an effective organization, work is planned out in advance. Planning is the setting of

performance expectations and goals for groups and individuals so as to channel their
efforts toward achieving organizational objectives. Getting employees involved in the
planning process will help them understand the goals of the organization, what needs to
be done, why it needs to be done, and how well it should be done.

The regulatory requirements for planning employees' performance include establishing

the elements and standards of their performance appraisal plans. Performance elements
and standards should be measurable, understandable, verifiable, equitable, and
achievable. Through critical elements, employees are held accountable as individuals for
work assignments or responsibilities. Employee performance plans should be flexible so
that they can be adjusted for changing program objectives and work requirements. When
used effectively, these plans can be beneficial working documents that are discussed
often, and not merely paperwork that is filed in a drawer and seen only when ratings of
record are required.

In an effective organization, assignments and projects are monitored continually.

Monitoring well means consistently measuring performance and providing ongoing
feedback to employees and work groups on their progress toward reaching their goals.
Regulatory requirements for monitoring performance include conducting progress
reviews with employees where their performance is compared against their elements and
standards. Ongoing monitoring provides the opportunity to check how well employees
are meeting predetermined standards and to make changes to unrealistic or problematic
standards. And by monitoring continually, unacceptable performance can be identified at
any time during the appraisal period and assistance provided to address such performance
rather than wait until the end of the period when summary rating levels are assigned.
In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training,
giving assignments that introduce new skills or higher levels of responsibility, improving
work processes, or other methods. Providing employees with training and developmental
opportunities encourages good performance, strengthens job-related skills and
competencies, and helps employees keep up with changes in the workplace, such as the
introduction of new technology.

Carrying out the processes of performance management provides an excellent

opportunity to identify developmental needs. During planning and monitoring of work,
deficiencies in performance become evident and can be addressed. Areas for improving
good performance also stand out, and action can be taken to help successful employees
improve even further.

From time to time, organizations find it useful to summarize employee performance. This
can be helpful for looking at and comparing performance over time or among various
employees. Organizations need to know who their best performers are.

Within the context of formal performance appraisal requirements, rating means

evaluating employee or group performance against the elements and standards in an
employee's performance plan and assigning a summary rating of record. The rating of
record is assigned according to procedures included in the organization's appraisal
program. It is based on work performed during an entire appraisal period. The rating of
record has a bearing on various other personnel actions, such as granting within-grade
pay increases and determining additional retention service credit in a reduction in force.
Note: Although group performance may have an impact on an employee's summary
rating, a rating of record is assigned only to an individual, not to a group.
In an effective organization, rewards are used well. Rewarding means recognizing
employees, individually and as members of groups, for their performance and
acknowledging their contributions to the agency's mission. A basic principle of effective
management is that all behavior is controlled by its consequences. Those consequences
can and should be both formal and informal and both positive and negative.

Good performance is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the
actions that reward good performance like saying "Thank you" don't require a
specific regulatory authority. Nonetheless, awards regulations provide a broad range of
forms that more formal rewards can take, such as cash, time off, and many non monetary
items. The regulations also cover a variety of contributions that can be rewarded, from
suggestions to group accomplishments. In effective organizations, managers and
employees have been practicing good performance management naturally all their lives,
executing each key component process well. Goals are set and work is planned routinely.
Progress toward those goals is measured and employees get feedback. High standards are
set, but care is also taken to develop the skills needed to reach them. Formal and informal
rewards are used to recognize the behavior and results that accomplish the mission. All
five component processes working together and supporting each other achieve natural,
effective performance management.

EVOLUTION OF PERFORMANCE APPRAISALS IN INDIA

The systematic study of performance appraisal practices in India is limited. Either such
studies have been carried out to investigate the total manpower practices, including
appraisal practices, or these have been directed to study appraisal practice alone. The
total evolution of performance appraisal system in India can be divided in five phases:
First Phase of Performance appraisals began in the early sixties was prepared in the form
of Annual Confidential Reports (ACR, also known as Employee Service Records (ESR)
in some organizations. Negative remarks in the ACT or ESR were considered damaging
for career growth. It was thus important to keep the boss in good humor so that the ACR
or ESR did not get spoiled. The ESR was largely trait based and the traits used were
sincerity, punctuality, dynamism, job-knowledge, loyalty, initiative, leadership etc. The
ACR and it was this strict confidentiality that was supposed to serve as the motivating
force for them. This may be considered as Phase 1 of the performance appraisal systems
in India.

In the Second Phase that spanned late sixties and early seventies, the main change was in
communication of adverse remarks to the employees. It was felt that unless this system
of communicating to the employees in writing any quality or trait on which they got a
rating of 33 per cent or less. Even though the communication was sent to the employer by
the personnel department or the establishment section in a routine manner, the employees
took it very seriously because it required office played a key role in moderating the
assessment, and he normally had all the powers to overrule the ratings of the reporting
officer of the employee.

In the Third Phase of appraisals, the employee was given a scope to state his own
accomplishments in the confidential report form. The term annual confidential report was
replaced during this period by Performance Appraisal. The appraisal process began at the
end of the year with a statement by the appraise about his significant accomplishments
during that year. Some organizations later turned this opportunity given to the appraisee to
express his significant achievements as self-appraisal. However, this term was a
misnomer as there was no scope for the appraisee to appraise himself. A few
organizations subsequently developed this part of the appraisal by adding other questions
about difficulties faced, plans for improvement next year etc. Everything else remained
the same. The formats became a little more elaborate and in few cases, the appraisal
included the details of the actual work done, largest achieved etc. The confidentiality,
however, was maintained as before. In most cases, there was no communication to the
appraisee about the performance assessment. In a few of them, a column of training needs
was introduced. The appraisals continued to be control oriented and not developmental.

It was really in the Fourth Phase that the system of performance appraisals underwent
quantum leap. This phase began in the mid-seventies and in a way was initiated in
India by Larsen & Turbo Limited, followed by the State Bank of India, Bharat Earth
Movers and few other organizations. This phase witnessed a shift from control to
development, appraisal to analysis, strong links to training, confidentiality to openness
and traits to quantifiable tasks and targets. The movement towards open and development
oriented appraisal systems was initiated by L&T when it adopted a system making
appraisal more performance based, participative (dialogic and interactive), open and
developmental. It required the employee and his reporting officer to plan the performance
(the term key performance areas or KPAs was introduced) or the appraisee in the
beginning of the year, review it after six months with the boss, analyze the factors
affecting performance, discuss developmental needs, have performance counseling and
share the ratings with the appraisee. The system required active participation of the
appraisee and was intended to be a performance planning, performance reviewing and
performance developing system. In the late seventies and early eighties, most
organizations wee fascinated by this open and development oriented system. Some of
them even started new HR departments by appointing HR managers having the skills to
design, monitor and implement the system. While a few organizations switched over to this
system, it took about 10 years of experience to fully understand its intricacies and
dynamics. The change process was slow largely because the employees were not used to
the openness introduced by the new system, the HR managers did not have enough skill
base to monitor it, and the top management lacked patience and perspective about its
potential advantages. Several organizations could not get out of the mindset created by
earlier confidential report system. They continued to use it for promotions, which were
considered as the most important indicators of development. It is only by the mid eighties
that organizations started setting down and feeling comfortable with the open appraisal
systems.

130
Phase Fifth has started only in last three years with organizations showing some maturity
and growth in terms of their understanding of appraisals. This phase is characterized by a
movement towards development in spirit and form. This is symbolized by the substitution
of the term performance appraisal by performance review system, performance
development system, performance analysis and development to rewards and from
comparative assessment to assessment in relation to plans. There is a movement from
rewards and controls to culture building and development and the new phase also
indicates a shift towards appraisal by multiple sources rather than by only the reporting
officer.

The literature review on performance appraisal in Indian corporate suggests that appraisal
is undertaken primarily for three objectives:
to determine salary increments;
to facilitate organizational planning, placement, or suitability; and
for training and development purposes. Other objectives of appraisal were:
informing employee where he stands, follow-up interviews, discovering
supervisory personnel, little or no change in the statements o of objectives except
for a shift towards adopting a more formal statement of objectives at the time of
introduction of forms or changing from design.

The review further suggests show that companies have different criteria to evaluate their
employees. There are basically three groups of criteria being used for appraisal purpose:
Evaluation of qualitative characteristics, such as, intelligence, integrity, honesty,
leadership an attitudes, abilities, etc.,
evaluation of actual performance- qualitatively and quantitatively; and
evaluation of development and future potential and development by an employee during
the period under consideration.

However, companies face certain problems in developing evaluative criteria. Such

problems are in the area of developing uniform and generally agreed-upon norms on any
overall company basis; developing quantitative an qualitative indices of work
performance; developing criteria for evaluating employee's potential; and fitting
employee evaluation with organizational objectives. Some other problems are in the area
of implementation of the results of appraisal. In many cases, where companies are using
formal appraisal system, independent decisions are taken by management in terms of
rewards, promotion, transfer, and development. Such decisions jeopardizes the objectives
of formal appraisal system

PERFORMANCE APPRAISAL IN DSP:

Durgapur Steel Plant adheres to the performance appraisal policies as laid down by Steel
Authority of India Limited through its personnel manual.

The Beginning:
Priorities for Action and the Performance Appraisal System are two of the major HR
initiatives undertaken by Steel Authority of India Limited. The change in focus was indeed
to these initiatives in the context of the overall strategy adopted by the company.

In this strategy, the HR initiatives were assumed to play significant roles in terms of:

Improvement of work culture as a pre-requisite for improvements in other areas

and to tune up the organization for modernization.
Rationalization of organization and of manpower along with increase in
production, capacity, and investment in new technology.
Training and Development effort attendant upon technological skill and
managerial ability.

Amendment of the Appraisal System for Executives was one of the first HR initiatives in
the company. Initially, the exercise began as a move to amend the promotion policy to
make it totally performance oriented. Gradually it was realized that the Promotion Policy
would not be so changed without having an adequate acceptable instrument for
measurement of performance. This was an important step in the attempt to improve the
work culture by convincing employees that their career growth was linked with the
performance of the company.

So the company reviewed its appraisal system and found that it needed drastic
amendments.
SAIL approached two consultants from IIMA to assist in designing and implementing a
performance appraisal system. The PAS was identified as one of the systems to change as
a part of the priorities for action initiative. An internal team designed a preliminary
appraisals system after going through the current system and its deficiencies. The
consultants studied the system and suggested marginal changes and got approval to
change it further through a process of testing it out on internal managers. The change was
introduced through a series of workshops to prepare internal resource persons. The
internal resources persons were prepared to assist in implementation. Their roles lasted
for over three year period. They assisted in preparing manuals and sensing the
implementation needs and failures and suggesting corrective action. Over three eyras
period the system was introduced and stabilized the reward and promotions systems were
revamped and the output used for recognizing good performers. The system brought in
role clarity, improving the training system and brought in improved accountabilities
though not to a satisfactory level. The system was revised after four years and changes
made incorporating the suggestions of various stake holders. The system lasted for the
next ten years or more.

After ten years the company reviewed its appraisal system and found that it needed
drastic amendments

From the managements point of view it was found-

The appraisal system was not adequately distinguishing between different levels of
performance. Analysis showed that ratings were skewed; 68% of the executives were
being assessed in the top two ranks and no one in the bottom rank. With a large
percentage of officers bunching at one level it became difficult to take administrative
decisions on the basis of performance. It also raised doubts about the validity of a system
which produces outstanding performers but not outstanding performance.

The system was not sufficiently grounded in the requirements of the company. It did not
reflect the Value System of the organization.

Officers were not participating fully in the system. Basically Officers did not see any
value, because they did not see the output of the system being linked to any tangible
decision making.

The concern of the employees, as brought out by a survey, was as follows:

Jr. Officers felt that there was no focus on what was expected from them. They did not
know the areas in which they were expected to contribute so that their assessment could
improve.

They felt that the system was not participative enough. They felt they do not have
sufficient opportunity to be heard.

There were three assessment levels, Reporting Officer, reviewing Officer and Higher
Authority. Since each level could countermand the previous one, the Reporting Officer as
the immediate supervisor felt that they had little role to play.

In response to these opinions an exercise was initiated to revise the system. An initial
draft was prepared and thrown open for discussions. Discussions were held at various
levels with the Head of the Personnel, the Steel Executive Federation of India, The Chief
Executive and group of Executives. At each level there were suggestions and
modifications made. They wanted very frequent performance review. In addition to the
structured responses, in-depth interviews were held with a cross section of officers.
On the basis of all their feedback and the discussions, the system was finally
implemented for the year 1986-87. The salient feature of the system was:

To integrate company and individual goals through a process of performance

assessment linked to achievements or organization objectives.
To increase awareness of targets/ tasks and the responsibility of officers at all
levels to ensure fulfillment of company objectives.
To ensure a more objective assessment of performance and potential.
To distinguish between differing levels of performance or relative basis and to
identify officers with potential to grow in the Organization.
To identify the development actions to be taken to enhance the performance of the
officers.

The Executive Performance Appraisal System was reviewed and the revised system is
being implemented from the year 1991-92. This system is intended to be used as an
effective instrument for developing people.

It is envisaged that the revised Executive Performance Appraisal System becomes a basis
for a better relationship between appraisers and appraisees and create an environment in
which the individual executive recognizes the appraisal system as a tool for his
development and growth.

The revised Executive Performance Appraisal System also envisages identification of

Key Performance Areas and Tasks/ Targets for each appraisee for each assessment year,
as its integral parts.

The appraisee and the appraiser are expected to jointly identify the Key Performance
Areas and the Tasks/ Targets. This provides an opportunity to each executive to
participate in the crucial process of achieving clarity of roles and expectations,
resources/facilities required, constraints that need to be considered and above all
commonly understood criteria for performance evaluation.

At present basically there are two types of performance appraisal done on the basis of
post of the Steel Authority of India Limited employee.

They are:

Executive performance appraisal system

Non-executive performance appraisal system

Again, within Executive Performance Appraisal there are two type of appraisal system-

Executive Performance Appraisal System up to E-7 grade and

PESB format for E-8 and E-9 grades

EXECUTIVE PERFORMANCE APPRAISAL SYSTEM

Methodology:

The Executive Performance Appraisal System is used to assess the performance of

executives and to plan for their development up to E-7 grade and PESB format for E-8
and E-9 Grades.

PESB has been introduced as new Performance Appraisal System for Board and below
Board level positions for PSUs. This system was adopted in SAIL with effect from the
Appraisal Year 2000-2001 for the executives in the E8 and E9 grades.

Up to E 7 grades, Executive Performance Appraisal System comprises of five parts:

 PART A: Self Appraisal
 PART B Performance Review and Planning
PART C: Performance Assessment
PART D: Development Plan
PART E: Final Assessment

Self Appraisal:

The self-appraisal form is completed by the appraisee twice every year, once in the
month of October for the period April 1 to September 30, and again in the month of April
for the period October 1 to March 31.
The self appraisal forms are sent by the Personnel department to the Reporting Officers to
be handed over to the appraisees. Reviewing Officers/HODs are kept informed for the
same.

After completion of self-appraisal form, it is returned to the Reporting Officer by the

appraisee.

The Reporting Officer after studying the self appraisal calls the appraisee for
Performance Review and Planning.

Performance Review & Planning

The appraisal system provides for the formal review and planning of performance twice a
year between the appraisee and the Reporting Officer. The first PRP session i.e. the mid-
term PRP is held after the self-appraisal form is completed by the appraisee in October.
The second PRP i.e. the annual PRP is held after the self-appraisal for the last six months
of the year is completed in April. These PRP sessions are in addition to the informal
performance review and planning discussion which take place between the Reporting
Officer and appraisee on work related needs.
The objectives of PRP are to:

Discuss the performance of the appraisee in relation to the tasks/targets set, the shortfalls
and mid-course correction,if required.
Discuss the major strengths which have facilitated the appraisees performance and also
those aspects that he needs to develop.
Identify and finalize the thrust areas for the next six months/one year, resources required,
constraints to be overcome and a mutual understanding of expectations from each other.

Performance Assessment:

After Annual PRP session, the Reporting Officer, Reporting Officer (o) and Reviewing
Officer assess the performance of the appraisee on performance and potential factors. In
addition there is a special relevant factor specific to the function /area of work of the
appraisee, identified for the year. This factor is identified on the basis of the thrust areas
of the year. The factor so identified is is communicated to each appraisee along with the
tasks/targets set for the year. Each factor is assigned weight on a 5 point rating scale to
indicate its importance in the overall assessment.
Each factor carries a weight as indicated below:

E1-E4

FACTORS WEIGHTAGE
PERFORMANCE FACTORS
1. Quality of output 2
2. Quantity of output 2
3. Cost Control 2
4. Job knowledge and skill 2
5. Team spirit and lateral co-ordination 2
6. Disciplene 1
7. Development and quality of assessment of subordinates 1
8. Safety* /any other relevant factor 1

POTENTIAL FACTORS
1. Communication 2
2. Initiative 1
3. Commitment and sense of responsibility 1
4. Problem analysis and decision making 1
5. Planning and organizing 1
6. management of human resources 1
PERFORMANCE FACTORS WEIGHTAGE
1. Quality of output 1
2. Quantity of output 1
3. Cost Control 2
4. Lteral co-ordination 2
5. Team spirit 1
6. Disciplene 1
7. Development and quality of assessment of subordinates 2
8. Safety* /any other relevant factor 1

POTENTIAL FACTORS
1. Communication and sense of responsibility 2
2. Planning and organizing 2
3 management of human resources 2
4. Problem analysis and decision making ability 2
5. Communication 1

For each appraisee there is a maximum of 3 total factor scores awarded by the Reporting
Officer, Reporting Officer (O) and Reviewing Officer. Weightages have been indicated
 for the assessment of them as 50% for the Reporting officer, 25% for the Reporting
Officer (O) , 25% for the Reviewing Officer.In case, there is no Reporting Officer (O),
the weightage for the Reviewing Officer will be 50 %. By multiplying the total factor
score given by the assessing authorities with the above weightages the weighted score for
Reporting Score, Reporting Officer (O) and Reviewing Officer is obtained. A total of this
gives the average appraisal score. The average appraisal score thus obtained is converted
by the Personnel Department into an indicative grading of the appraisee as per following
guidelines:

84 and above O
68-83 A
52-67 B
C

The first 10% of the executives of the appraisal group listed in descending order based on
average appraisal score are categorized as O, the following 20 % are categorized as A,
the next 45%-55% as B and last 15%-25% as C This is the primary grading.

The Reporting Officer (o) will make his individual assessment independently in the same
pattern as listed out for the Reporting Officer.

Higher Authority above the Reviewing Officer may call for the appraisal reports and
record his comments on the overall performance/potential of the appraisee. In case of
appraisees in the grade E-7/ E-8 the Chairman may call for reports to record his
comments.

Development Plan:

140
Development of executives is envisaged through training, job rotation/enrichment and
counseling/coaching. The training need identification and plan for fulfillment of the same

141
is done through the system of training need identification. In case the appraisee is
recommended for job rotation/enrichment, the specific area is indicated. This is based on
appraisees potential/ development needs/future growth etc. Both the Reporting Officer
and Reviewing Officer indicates job rotation/ job suitability of the appraisee.Personnel
department makes a job rotation plan based on the comments of the Reviwing Officer
and implement the same in in consultation with the concerned heads of departments or
higher authorities. Howver, it is mandatory in case of executives being graded as C non-
promotable. Counseling/Coaching as a means to develop appraisees is also considered.

Final Assessment:

Final assessment is done by a Performance Review Committee (PRC). The PRC suitably
constitutes in such a manner that the Head of the Department to which the assessee
belongs or the authority above the Reviewing Officer is included in the committee. The
constitution of PRC is given below which is formalized with the approval of respective
Chief Executive of the Plant/ Unit:

The PRC is given the following inputs for every executive in an appraisal group:

Factor score awarded by Reporting Officer, Reviewing Officer and Reporting

Officer (o).
Indicative grading based on average appraisal score.
Primary grading based on the specified distribution of the score.
Overall performance of departments.
Discrepancies in the trend of scores awarded by different Reporting or Reviewing
Officers for the appraisers in an appraisal group.

Once the final grading is complete, the same is entered in each executives appraisal form
and is duly signed by the Chairman or a member of the PRC. Based on the decision of the
PRC, the Personnel Department ensures communication of the non-promotable ratings
and the reasons thereof to the appraisee concerned. The assessment year being from 1st
April to 31st March, the executives rated non-promotable are not considered for
promotion for the ensuing one year. However, they may appeal for review to the
Chairman of the PRC within 10 days of receipt of communication.

Further in case the reporting/reviewing officer of an appraisee changes during an

appraisal year, pro-rata assessment is made by each reporting/reviewing officer

PROCESS OF IDENTIFYING KEY PERFORMANCE AREAS:

Key Performance Areas are the key or critical functions of a job or role that make a
distinct contribution to the achievement of organizational goals. Key Performance Areas
(KPAs) stress what main functions the appraisee as an individual is expected to perform
during the performance appraisal period. One criterion for identifying Key Performance
Areas is to see on what basis a role occupant can be said to show outstanding
performance on his job and his performance can be evaluated.

Key Performance Area for few positions:

Key Performance Area for Assistant Manager (Stores/ Cylinder Division)

Ensuring availability of right number of cylinders in all the shops when required.
Initiating and monitoring the process of spares work orders and stock work
orders.

Key Performance Area for Assistant Manager (Production/ Machine Shop)

Work simplification in machine shop.

 Ensuring supply of spares and consumables to the main production departments.
Key Performance Area for Shift Manager (Production)

Capacity utilization.
Improvement of quality.

IDENTIFYING KEY PERFORMANCE AREAS:

Identifying KPA and setting targets is a useful way of planning ones own performance.
After identifying KPA, Tasks/Targets may be set under each Key Performance Area.

Process:

Have a clear understanding of the objectives of the department/ group goals for an
effective identification of the KPAs.
List all the main activities you usually undertake as a part of your job/role. Check
and list those activities which are most important; those which
Make a distinct contribution to organizational goals. Are specific contributions of
the job/role as distinct from other job/roles.
Form criteria by which performance of job holder/role occupant can be evaluated.
Separately write these down, group them if necessary and edit for overlap etc.

TARGETS/ TASKS

Targets or Performance Targets may be qualitative or quantitative. They should be

measurable, time bound and should specify level of acceptable performance for getting
high performance ratings. Under each Key Performance Area it is possible to identify
such targets. Targets are specific, measurable and observable activities to be completed or
accomplished by an executive during a particular point of time. In order to perform the
key function or KPA, the role occupant will have to make certain planned efforts.
Normally for each such effort there would be specified, quantifiable targets. Wherever it
is not possible to quantify efforts, the role occupant may define the specific tasks in
qualitative terms.For objectives that are not quantifiable, a list of associated
tasks/activities and time schedule for completion must be agreed upon.

IDENTIFYING TASKS/TARGETS UNDER KPA:

Once the KPA are identified, the next step is to identify specific Tasks/Targets. While KPA
indicates only critical dimension of a job or a role, Tasks/Targets indicate what is to be
achieved, the level of achievement, or criteria for considering the objective to have been
achieved.

Process:

Take the list of your identified Key Performance Areas.

List objectives which correspond to the Key Performance Areas. The primary purpose of
listing down objectives is to help the role occupant in planning for the coming year.
Set quantifiable targets for achievement of each such objective. For each objective that is
not quantifiable, specific activities may be identified so that performance can be
evaluated by reviewing the accomplishments at the end of the review period. These can
be termed as Tasks.
Set a time frame for the completion of the targets that are quantifiable and also for
completion of the tasks.
For achievement of certain objectives one may have to list a few associated activities.
While setting objectives whether with quantifiable targets or specific targets or specific
tasks, emphasize the individual effort or contribution.
The tasks/ targets should be those for which the role occupant is individually responsible
and the achievement of those tasks/ targets reflect the level of performance of the role
occupant.
List all the tasks/targets with time frame and discuss with the appraiser. During
discussion the appraisee and the appraiser should plan for the resources / facilities
required achieving the tasks/ targets and also take into consideration or discuss the
inhibiting factors.

Once the KPAs and tasks/ targets etc. are identified, a check list is used to assess the
optimality of the process. / The check list is being filled after completing the KPAs and
tasks/ targets identification as an appraisee or jointly with the appraiser.

Are you more clear about where you should put your efforts more in your work
during the next year?

Do you have a clear direction for your work and activities for next year?

Have you thought of the support required by you from other sources?

Have you made a realistic assessment of what support will be available to you
from other sources during next year?

Are the KPAs, tasks/targets comprehensive enough to cover all important aspects
of your work and contributions during next year?

Have you been specific in target setting?

Have you focused on what you as an individual expect to do and accomplish in

your tasks and targets?

Have you gained reasonably good ideas of the time you need to spend on various
activities?
 Do you and your reporting officer have a shared understanding of the expectations
you have from each other?
 Do your tasks and targets indicate what you will be doing is different from what
your subordinates/superiors/colleagues will be doing?

Do you have a clear idea of the standards of performance expected on each task
and target?

Do your KPAs, tasks, targets indicate that you are performing tasks that are
appropriate for your level?

Have you anticipated all difficulties and planned for the same?

Have you used all resources and possible assistance you have in the organization
to do youir work?

Are you satisfied with the process of task/target setting?

A 5 point scale is used to assess how well one has identified his KPAs, tasks and targets
etc. where

5= very much
4= to a reasonable degree
3= to some degree
2= to a little extent
1= not at all.

To have a birds eye view on the effectiveness of performance management system in the
Durgapur Steel Plant a mini questionnaire was administered.
Questionnaire:

ERFORMANCE APPRAISAL PRACTICES

1. The stated primary objective of the performance appraisal in my organization is

a) Mainly to develop employee capabilities.

b) Mainly to control employee behavior through rewards/ punishments, etc.
c) Both control and development.
d) Others (specify)

2. In practice the performance appraisal system in my organization appears to serve

the following purpose

a) Development of employees
b) To control employee behaviour
c) Both (a) and (b)
d) Others (specify)

3. The following components of performance appraisal are present in our

performance appraisal system

a) Some form of agreement on tasks/ targets/functions between a boss and

his subordinates forms the basis for appraisal
b) Appraisal discussion which aims at helps the appraisee to recognize his
strengths
c) Appraisal discussion which aims at helps the appraisee to recognize his
weaknesses
d) Appraisal feedback to tell the employees the areas he needs to improve
e) Self-appraisal to communicate to the boss the accomplishments of an
employee.
 f) Appraisal on managerial qualities (leadership, coordination, initiative etc.)
g) Identification of training and development needs.
h) Appraising potential for promotions.
i) Performance appraisal discussions with focus on feedback and counseling.
j) Identifying factors affecting performance and communicating them to the
boss for his assistance.
k) Signature by subordinated on the form after assessment by the boss.
l) Appraisal of the boss by the subordinates.

4. Please write below if you think there is anything different or unique about the
performance appraisal system used by your organization.

FINDINGS AND CONCLUSION:

On the basis of the responses through questionnaire, interview with the executives in HR
as well as other areas and following criteria it can arguably be said that the system is
effective, efficient and working well in the Durgapur Steel Plant, Durgapur.

Line managers take it seriously and the performance plans are completed on time
for 80% of the cases in any given year.

Line managers take adequate time in performance planning and review

discussions.
 The system throws up an immense amount of data about the problems faced by
the employees, their suggestions/ views and their specific development needs.
These can be utilized to design specific interventions.
 The performance plans are of good quality and achieve the objectives of
clarifying the goals, roles and time frame, and performance standards for each
department and individual.

Performance review discussions conducted are of good quality and the employees
look forward to these with enthusiasm and treat them as learning opportunities.

Organizational support is planned in the form of removing bottlenecks, arranging

training programs, job-rotation and the like.

There is a performance culture generated in the organization and the performance

management system is a part of it.

Performance appraisal system here is linked with training, promotions, salary and
reward, administration and research and OD.

It is linked with training as the identification of training and other development

needs are partially flows from performance analysis and review.

It is linked with promotion in a limited way as performance appraisal rating does

form only one of the inputs in promotions.

It is linked with reward administration as consistent good performance is

rewarded some way or the other. Sometimes it is through giving increased
responsibility, salary increments etc.

It is linked with research and OD as the data generated through appraisal system
helps a great deal in studying several issues related to organizational life.

The system has been successful in correcting imbalances in the assessment.

 Officers are actively participating in the system.

Development aspects of the system such as performance planning and review

discussion have not been fully implemented and needs much greater training
effort.

CAREER PLANNING and PROMOTION POLICY

Hope and advancement in ones career is one of the most motivating factors at any level
of management. Some expectations of possible future opportunity of individual are
necessary to keep his motivation high. Most young people coming to organizations are
career minded, ambitious and looking for fast growth. Career advancement for most
managers is the prime motivating factor. They want to know where they would be going
in the organization after three, five or ten years from their joining. The importance of
career management ,thus, has gained increasing recognition by management of public
and private sector organizations. In a changed context where the employee turnover is
high and the average tenure of an executive in an organization has reached its lowest,
career planning takes on a different meaning. The HR philosophy is that people perform
better when they feel trusted and see meaning in what they are doing. In the HR system,
corporate growth plans are not kept secret. Long range plans for the organizations are
made known to the employees. Employees are helped to prepare for change whenever
such change is planned; in fact, the employees help to facilitate the change. Major
changes are discussed at all levels to increase employee understanding and commitment.
It does not merely mean predicting or envisaging what higher jobs will be available, but it
essentially means helping the employees plan his career in terms of his capabilities within
the context of organizational needs. it implies that the individual after becoming aware
some of his capabilities and career opportunities and development opportunities, chooses
to develop himself in direction that improves his chances of being able to handle new
responsibilities.

150
A number of organizations have worked out career paths and linked promotion policies to
career planning development. Durgapur Steel Plant is one such organization that has
adopted it in its truest sense as a religion than mere ritual by treating it as a part of the
career system and linking it to performance appraisal, potential appraisal and manpower
planning.

CAREER PLANNING:

Career planning for Executive Cadre integrates the aspirations of executives with the
operational requirements of the Company. In a large measure, this is being taken care of
by the minimum assured growth which arises within the clusters linked to performance.
In addition, the Company adopts a development oriented approach to performance
shortcomings/ strengths which ensure a more relevant and precise input in terms of
Company efforts to improve performance of the executives. Each plant/unit prepares a
list of executives with high potential and a list of identified low performers.

Executives with High Potential:

Executives with a minimum of 3 years in the company and a minimum ACP of 45

constitute the high potential group. This list is updated in the month of June every year
and a job rotation, training and career advancement plan is prepared for such executives.
These executives are rotated among other departments, not necessarily in their lines of
promotion in order to groom to occupy senior posts at a later date. However, for
executives graded as C non-promotable, job rotation is mandatory and basically aims at
change of assignment. To motivate these executives to maintain high levels of
performance as well as to meet the organizational needs for utilizing their services
effectively, career advancement is planned. However, executives whose ACP falls below
40 in any year or whose ACP remains below 45 for four consecutive years are deleted
from this list. In order to ensure that executives at relatively younger age are exposed to
different environments, the executives identified with high potential in the scale of E-3/ E-
4 is given opportunity to move to other Plants/ Units.

Executives with Low Performance:

Executives with minimum service of 3 years in the company and having an ACP of 10 or
less are included in this list. This list is also updated in the month of June every year and
job rotation and training for such executives is planned. Plant also arranges to counsel
these executives to improve their performance. The names of the executives is deleted
from this list if their ACP rises to 15 or beyond in any year or if ACP remains above 10
for four consecutive years.

PROMOTION POLICY:

The objectives of promotion policy of Durgapur Steel plant can be put together in the
following words:

to integrate growth opportunities of the executives with fulfillment

of Companys objectives.

to man executive posts in the company with competent personnel

having growth potential, and to utilize their capabilities in the
working environment to the maximum through opportunities
available for advancement.

to provide for a system which is conducive to equity, fairness and

objectivity in matters concerning promotion of executives.
 to ensure uniformity and consistency , to the extent possible, in
promotion of executives of different Units of the company.
 to motivate executives of the organization for better performance by
rewarding their contribution to the growth of the organization.

to ensure continuity of the management and systematic succession

planning for senior/key posts in the executive cadre.

to integrate executives into a cohesive team.

There are two systems of promotion within the executive cadre in the Company:

Promotion within clusters of scale of pay.

Promotion between clusters of scale of pay.

For the purpose of promotion and career planning of executives, scale of pay is grouped
in the following six clusters and all promotions are made from one scale of pay to the
next.

CLUSTER GRADE
A E-1 & E-2
B E-3 & E-4
C E-5
D E-6
E E-7
F E-8
Promotion within Clusters:

Within clusters of scales, promotions are linked to performance. The final ratings of the
executive performance appraisal system provides categorization of executives in terms of
different levels of performance. Performance is measured in terms of total credit points
earned in the scale To link performance appraisal ratings with the promotion policy, the
following credit points are adopted:

APPRAISAL RATINGS APPROXIMATE % OF CREDIT POINTS

EARNED FOR THE YEAR EXECUTIVES EARNED
O 10 50 points
Appraisal Ratings earned for the
year 20 40 points
B 45-55 30 points
C 15-25 15 points
C (non-promotable) 0 5 points

The list of all eligible executives along with the following records are placed before a
Departmental Promotion Committee-

Appraisal reports for the years

Credit points calculated
Bio-data giving main areas of experience
Status regarding debarring from promotions etc.
Any other relevant records. The Departmental Promotion Committee considers and
recommends candidates, if found suitable, for promotion and also decide on transfers
between Sections/Departments/Zones Units before the promotion orders are issued
subject to clearance from Disciplinary and Vigilance angle.
For promotion within Clusters A and B, such committees are constituted by respective
Chief Executives. Promotions from E-5 to E-6 are effected centrally at Corporate Office
based on vacancies.

Promotion of Executives within Cluster A (E-1 to E-2):

The methodology for promotion within Cluster A is regulated on the ground that the
DPC considers and effect the promotion of Executives in E-1 scale collecting 120 credit
points or more from appraisal reports for the immediately preceding four years are
promoted to E-2 scale on the next available date of promotion, subject to the condition
that no such executive will be promoted to E-2 scale prior to completion of four years in E-
1 scale relaxable by a maximum period of three months. All other executives in E-1 scale
who are promotable under the system will be promoted not later than completion of five
years in E-1 scale, irrespective of total credit points collected. In case of Management
Trainees where the training period is one year and eligibility for promotion is based on
accumulation of 120 credit points, their gradation on the basis of training marks secured at
the end of one yead training is done by a high level training performance review
committee consisting of the head of personnel, head of training and the concerned heads
of line departments of the level of AGM/ DGM on the following basis:
upto first 25% of trainees are rated as O (50 points), next 50 % as A (40 points) and rest 25
% as B (30 points).In case the group size is small the gradation is done by the training
performance review committee keeping in view the percentage of marks obtained during
training and general performance in on-the-job training.

Promotion of Executives within Cluster B (E-3 to E-4):

The executives who have acquired 100 credit points on the basis of the appraisal ratings
are considered for promotion from E-3 to E-4 by the Departmental Promotion
Committee.
Promotion Between Cluster ( E-2 to E-3, E-4 to E-5 to E-6, E-6 to E-7, E-7 to E-8)

Promotion from one cluster to another depends on the availability of vacancies in the next
higher cluster. Eligible executives in a given line of promotion are assessed in respect of
their comparative performance on the basis of the factors specified as follows:

FACTORS MAX ATTAINABLE POINTS

Average Credit Points 50
Qualification 20
Length of service in the current scale of pay 15
Interview/assessment by DPC 15
TOTAL 100

However, for promotion from E-7 to E-8 grade, the following is adopted as the
assessment criteria:

FACTORS MAX ATTAINABLE POINTS

Average Credit Points 50
Qualification 10
Length of service in the current scale of pay 10
Interview/assessment by DPC 30
TOTAL 100

From E-2 to E-3, E-4 to E-5, executives with three years of service in the scale will be
eligible for consideration. From E-5 to E-6 executives with four years of service in the
scale will be eligible for consideration. From E-6 to E-7, executives with four years of
service in the scale will be eligible for consideration and will be based on vacancies.
From E-7 to E-8, executives with three years of service in the scale will be eligible for
consideration and through interview by a Selection Board.
 Findings:

The following has emerged from the system of career planning and promotion policy at
the Durgapur Steel plant:

There are clear corporate goals for the ensuing 3, 5, 10, 15 years.
According to the corporate plans, an organizational analysis is conducted
periodically to determine the types and changes, functions, activities and
procedures.
Career planning here is a top management philosophy and commitment.
Career planning in DSP is closely linked with manpower planning, potential
appraisal and other human resource system.

POTENTIAL APPRAISAL

In Indian organizations, it is a normal practice to promote people on the basis of their past
performance. Most of the organizations are hierarchical in nature. The past performance
of an individual, nevertheless, an important indicator; can only reflect whether he has
been able to do a given job at a given level successfully or not. It is an indicator of the
future potential to the extent the two jobs are similar in functions. However when an
individual is promoted on the basis of his past performance, an assumption is being made
that competence in performing the present role is a sufficient indicator of competence to
perform a higher and different role in the organization. This assumption is not true and as
one truly says, a wrong assumption always leads to a wrong conclusion.
It is with this major inadequacy of the system of promotions based on performance
appraisals that a new system of developing employees for occupying higher position has
been thought of. This new system is called Potential Appraisal. The system in India was
initiated by Crompton Greaves Limited and currently is practiced by many companies
including Dr. Reddys, BPL, SAIL, SBI,

While research in behavioral science indicates that every employee can be trained and
developed to perform complex roles in an organization, it is difficult for organizations to
keep on developing every employee to perform a higher role after every few years.
Keeping in view its own interest, it is necessary for every organization to identify the
potential in every individual to handle higher roles and responsibilities. The organizations
will have to make at different points of time clear-cut choices from among its employees
for occupying higher positions. These choices will have to be made on the basis of data
and evidence gathered about the employees from their performance in different roles as
well as simulated settings relating to new roles. Thus, a good potential appraisal system
attempts to generate data about employees and their potential for occupying higher
positions from a variety of sources and helps the top management to make decisions
about the suitable persons for a given job. A good potential appraisal system also helps
the management in identifying employees who could be developed through job rotation,
training etc.

POTENTIAL APPRAISAL POLICY in DSP, Durgapur:

The individual is given ratings out of 1 to 5 on each of the following dimension to assess
the potential of the individual by his superior:

Attributes which are to be demonstrated in day to day activities:

Leadership abilities-Demonstrate abilitiesfor guiding collective decision making

for succession planning.
 Crisis management-ability to take risks.

Team building- demonstrate effectiveness in re-organizing higher department

making diverse and divergent views group processes without loosing sight and
objectives.

Ability to build a strong vision-demonstrate ability to manage.

Focus on long term issues

Strong thinking-translate vision into goals

Business Sense-Commitment to bottom-line results by enhancing revenues

generation by addressing interest of customers and stake-holders.

Balancing need for viable short-term and long-term performance.

Spotting and pursuing new business opportunities wherever possible.

Communication skills- Communicate ideas and information effectively and

market key points effectively through public speaking and presentations, ability to
convert ideas through action plan and ensure acceptability within the organization
and performance at Board meetings.

Final Ratings on Potential = total of all ratings * 15

(Prorated to15 marks) 25
It is found that DSP believes in the multiplication and development of human resources
through organized efforts. The potential appraisal is quite apt and is linked with all the sub-
systems of HR.

a) Feedback and counseling

b) Training
c) Job rotation
d) Data storage and
e) Manpower planning.

It is linked with feedback and counseling because the individual whose potential is
assessed is told of the result of the assessment. Feedback is given through counseling
sessions. It aims at helping the individual to discover his strengths and weaknesses so that
he would develop career ambitions that suit his potential.

It is linked with training. It provides training opportunities for developing the individual.
Whenever a sizeable number of employees are found lacking certain common qualities,
they training department attempts to organize in-company programme to develop them.
The training department continuously analyze the potential appraisal data of the
employees and design or sponsor for them training programmes on the basis of this
analysis.
In cases, where the employees are found to possess certain qualities, but do not have the
opportunity to develop them, they are put into jobs that help this development. Job
rotation is planned on the basis of potential appraisal indeed.

The data generated by the potential appraisal system is stored in the individual files. This
helps in identifying people having the required characteristics.

160
 CHAPTER V

HR CLIMATE:

161
Introduction:

A major challenge for any organization in this era of international competition seems to
be survival and sustainability amidst cut-throat competition. It is increasingly argued that
the organizations, best able to meet the challenges will be those that can acquire and
utilize valuable, scarce and inimitable resources ( Barney,1995) .Human resources can
fall into this category, particularly, if they are effectively deployed through appropriate
human resource practices and management of organizational culture (Barney and
Wright,1998) . While this has always been true, recent changes focus attention on ways
human resources development activities can be used to ensure organization have what it
takes to successfully meet the challenges (Desimone et. al. 2002). Human Resource
Development (HR) is a process by which the employees of an organization are helped, in
a continuous, planned way, to: 1) acquire or sharpen capabilities required to perform
various functions associated with their present or expected future roles, 2) develop their
general cap-abilities as individuals and discover and exploit their potentials for their own
and/or organizational development purposes, and 3) develop an organizational culture in
which supervisor-subordinate relationships, teamwork, and collaboration among sub-
units are strong and contribute to the professional well being, motivation, and pride of
employees (Rao 1985).

The management process in an organization can be described as the application o certain

principles and techniques to achieve organizational objectives. The task of management
can therefore be conceptualized as the achievement of specified objectives by utilizing
the three basic resources of money, capital and people. While these resources are to an
extent interdependent, it is people that are the prime concern of the personnel
management function. Personnel management is therefore that part of general
management which focuses on the management of people, and involves the recruitment,
selection, maintenance, development, utilization of, and accommodation to human
resources by the organization (French, 1987).
In every work setting there are dozens of organizing forces operating simultaneously on
the behavior of employees (Landy, 1989). While industrial/organizational psychology is
concerned specifically with the behavior of individuals in their jobs, the understanding,
prediction, and control of occupational behavior can only be achieved through the context
of the organization. It follows that any research about personnel management practice
must be considered in the context of the organization and the effect it has on those
working in that organization. One of the better known ways of studying enterprises has
been to measure organizational climate.

Organizational climate is a concept that enables the industrial/organizational psychologist

to identify how the organization is a psychologically meaningful environment for
individual organization members (Payne and Pugh, 1976). Descriptively, it represents the
individual member's perceptions of the conditions, factors, and events that occur in the
organization (Ekvall, 1987). The concept is useful in attempting to diagnose problems in
organizational settings. Just as the perceptions of the individual are at the centre of any
clinical intervention in clinical psychology, so are the perceptions of the characteristics of
the organization, by the members of the organization, central to the diagnosis of
organization's problems and dysfunctions.

Organizational climate can be viewed as that which is represented by the employees'

perceptions of the objective characteristics of an organization (Landy, 1989). For
example the number of managers employed by an organization is objective, but
employees' feelings about those managers are subjective. Climate differs from the
structure of an organization. Structure is the anatomy of the organization, the bare bones
or the skeleton. Climate, on the other hand, is the way the employees view the personality
of the organization. Muchinsky (1987) debates whether the components of climate are
actual attributes of organization or merely the perceptions of the employees working in
the organization. That most researchers concur that organizations differ by climate,
implies that it could be seen as an organizational attribute. Yet such a view contradicts
the idea expressed by Landy (1989) above, that climate is a representation of employees'
perceptions.
Dimensions such as structure, standards and reward policies can be conceived as being
made up of attribute sets that may be generated from the way organization deal with their
members and environments (Hellriegal and Slocum, 1974), and are identified through the
responses of employees to questionnaires (Litwin and Stringer, 1968). There is nothing
inherently good or bad about an organization' climate, rather it assumes value only when
it is related to certain outcomes (Muchinsky 1987). This is similar to when a wet day is
"bad" for a day at the beach, but "good" for the growing of crops.
There is evidence to suggest that organizational climate can influence both job
performance and employee satisfaction (Lawler, Hall, and Oldham, 1974). Unlike the
weather, which is unable to be controlled, some organizational climates can be promoted
to facilitate the achievement of organizational goals (Muchinsky, 1987). This makes
organizational climate a worthwhile concept to study in industrial and organizational
psychology, despite difficulties with its definition.

Because climate is best described as employee perceptions of the organization, it follows

that the measurement of climate will be a function of employee attitudes and values. If
the measurement of climate is considered to be a barometer, then the measures that the
"barometer" yields will depend on the typ of barometer used. So far as weather is
concerned, barometers can give a reasonably valid measure of the climate by measuring
atmospheric pressure. However atmospheric pressure is only one measure of climate.
Unfortunately organizational climate measures do not have this high degree of validity.
An early definition of organizational climate is Forehand and Gilmer's (1964) suggestion
that organizational climate is a set of descriptive characteristics of an organization that
are relatively enduring over a period ...

An optimal level of development climate is essential for facilitating HR activities (Rao &
Abraham 1986). The top management subscribing to these values is a starting point. When
a critical mass internalized these values, there emerges a conducive climate for HR. This
positive HR climate renders the existing systems more effective and makes the
organizations more receptive to the introduction of relevant additional system (Athreya
1988). A healthy HR climate certainly bolsters the overall internal environment of the
organization, fosters employee commitment, involvement and satisfaction with the job.
Human resources being one of the important factors of production, HR is needed to
develop competencies of individual employees through its various interventions.
Perception about an organizations goals and about decisions that a manager should take to
achieve these goals come not only from formal control systems but also through informal
organization. Both the formal and informal structure combine to create what is called
organizational climate.

What Is Climate:

The term climate is used to designate the quality of the internal environment which
conditions in turn the quality of cooperation, the development of the individual, the
extent of members dedication or commitment to organizational purpose, and the
efficiency with which that purpose becomes translated into results. Climate is the
atmosphere in which individuals help, judge, and reward, constrain, and find out about
each other. It influences morale and the attitudes of the individual toward his work and
his environment. Organizational climate has been a popular concept in theory and
research for sometime and has received a great deal of attention in the past 25 years.
Guion (1973) has stated that The construct implied by the term organizational climate
may be one of the most important to enter the thinking of industrial psychologists in
many years.

Twelve reviews of climate literature have appeared since the mid-1960s. Though these
reviews had been critical of the conceptualization and measurement of the climate
construct, they have resulted in a significant understanding of the concept.
Hellriegel and Slocum (1974) define organizational climate as a set of attributes which
can be perceived about a particular organization and/or its sub-systems, and that may be
induced in the way that organization and/or its sub-systems deal with their members and
environment. This definition implied that in the measurement of organizational-climate:
a) perceptual responses sought are primarily descriptive rather than evaluative; b) the
level of inclusiveness of the items, scales and constructs are macro rather than micro; c)
the units of analysis tend to be attributes of the organization or specific sub-systems
rather than the individual; d) the perceptions have potential behavioral consequences.

Schneider (1975) has prepared a working definition of climate: Climate perceptions are
psychologically meaningful molar descriptions that people can agree characterize a
systems practices and procedures. By its practices and procedures a system may create
many climates. People perceive climates because the molar perceptions function as
frames of reference for the attainment of some congruity between behavior and the
systems practices and procedures. However, if the climate is one which rewards and
supports individual differences, people in the same system will not behave similarly.
Further, because satisfaction is a personal evaluation of a systems practices and
procedures, people in the system tend to agree less on their satisfaction than on their
description of the systems climate. By its very nature, climate cannot be described
concretely. Some alternative characteristics are as follows:

Focus on results versus focus on following work

Individual accomplishment versus being a member of the team
Initiative and risk-taking versus not rocking the boat
Individual gains versus enhancement of organisation objectives
Tough mindedness versus dealing with people vs avoidance of unpleasant actions
The relative importance of participating management versus authoritarian
management

Schneider and Reichers (1983) outline a four-fold progress made in climate research.
The climate approach to understanding how work contexts affect behavior and attitudes is
grounded in perception. It provides a much needed alternative to motivation theories as
explanations for just about everything that happens to people at work. What
motivationists, whether of the content (need) or process (instrumentality) persuasion fail
to recognize is the key role that perceptions play in operationalizing these approaches.
A second advance in climate research has its focus on multiple level of analysis. While
motivationists tend to concentrate on the explanations of phenomena from an individuals
perspective, climate research tends to focus on aggregated or group level data to discover
relationships between clusters of perceptions and organizationally relevant outcomes.

A third advance has been the clarification of the distinction between psychological
climates and organizational climates. This distinction, first proposed by James and Jones
(1974), and further clarified by Jones and James (1979), has gained general acceptance.
Briefly, psychological climates are the summated, averaged meanings that people attach
to a particular feature of the setting. The fourth advance follows from the idea that people
attach meaning to, or makes sense of clusters of psychologically related events. People in
organizations encounter thousands of events, practices and procedures and they perceive
these events in related sets.

It can, thus, be concluded that the term climate is used to designate the quality of the
internal environment which conditions in turn the quality of the cooperation, the
development of the individual, the extent of members dedication or commitment to
organizational purpose, and the efficiency with which that purpose becomes translated
into results. Climate is the atmosphere in which individuals help, judge, and reward,
constrain, and find out about each other. It influences morale and the attitudes of the
individual towards his work and his environment.

Moran and Volkwein (1992) have given a newer approach to organisational climate
besides the previous structural, perceptual, interactive approaches. This new approach is
the cultural approach, which proposes that organizational climate arises from inter-
subjectivity of members as they interact within a context established by an organizations
culture. A definition of organizational climate then can mean that it is the way in
organization by which deep structures of culture are manifested in the interplay between
situational contingencies, interacting group members, and ultimately culture itself. They
state that climate operates at levels of attitudes and values, while culture operates at these
levels as well as at the level of basic assumptions.
Gonzalez (1999) states that companies must realize that the "Health of the organizational
climate will determine their ability to sustain high performance". Research has identified
statistical correlations between specific elements in the organizational climate and four
performance measures, profitability, customer loyalty, productivity and employee
retention. Climate works with key performance levers like clear understanding of
organizations strategy and developing high potential people to form an integrated
peoples strategy. These levers shift the performance and climate sustains the shift
(Gonzalez, 1999).

Various studies have looked into the congruence between individual needs,
organizational climate, job satisfaction and performance. Studies indicate job satisfaction
as a function of the interaction between personality characteristics of the individual and
the perception of the environment by the employee (Downey, Hellriegel & Slocum Jr.,
1975). The interaction effects of personality and climate dimensions were less related to
pay and promotion satisfaction, instead they were more so to co-worker and supervisory
satisfaction

HR climate is an integral part of organizational climate. It can be defined as perceptions

the employees can have on the developmental environment of an organization. In order to
be developed, the individual should perceive that there is a climate favorable for their
development. This responsibility lies with the HR department which has to provide a
proper climate in the organization conducive for employee development, termed as the HR
climate.

HR climate plays a very important role in ensuring the competency, motivation and
development of its employees.

Organizations face problems like high employee turnover rates, absenteeism,

increasing the motivational level enhancing employee commitment, etc. which
reflect the employee's satisfaction and morale. Various organizational policies,
procedures, structures and systems decide the extent to which employees are
 satisfied in an organization. Most researchers agree that a congenial HR Climate is
extremely important for the ultimate achievement of the business goals. It is a
phenomenon experienced by employees and often referred to by expressions like
'environment', 'atmosphere and so on. The traditions, practices and culture,
characteristic of each organization, all put together, make up the time for its
members and profoundly influences their outlook, well being, attitudes and their
overall performance. Climate at the individual level is a summary perception of
the organizations work environment that is descriptive rather than evaluative in
nature (Joyce and Slocum Jr., 1984).

Many researchers have stressed the relevance of Climate. Pattanayak (1998) states that HR
Climate affects performance in three ways:

by defining the stimuli that confronts the individual

placing constraints on the individual's freedom of choice

providing source of reward and punishment

The HR climate can be created using appropriate HR systems and leadership styles of top
management. The HR climate is both a mean to an end as well as an end in itself. HR
climate is characterized by the tendencies such as treating employees as the most important
resources, perceiving that developing employees is the job of every manager, believing in
the capability of employees, communicating openly, encouraging risk taking and
experimentation, making efforts to help employees recognize their strengths and
weaknesses, creating a general climate of trust, collaboration and autonomy, supportive
personnel policies, and supportive HR practices. An optimal level of Development Climate
is essential for facilitating HR. Such a climate is characterized as consisting of following
tendencies on the part of the organization:
 A tendency at all levels and specially the top management to treat people as the
most important resource.
 A perception that developing the competencies in the employee is the job of every
manager/supervisor.
Faith in the capability of people to change and acquire new competencies at any
stage of life.
A tendency to be open in communications.
A tendency to encourage risk-taking.
A tendency to help employees recognize their strengths and weaknesses.
A general climate of trust.
A tendency on the part of employees to be generally helpful to each other and
collaborate.
Team spirit.
A tendency to discourage favoritism and biases.
A Supportive personnel policy.
Development-oriented appraisals, training, rewards, job-rotation, career
planning and potential appraisal.

HR encompasses the development oriented activities of the organization. For an individual

to perform productively, the climate prevailing in the organization needs to be conducive
for his development. Various research studies have been taken up to determine and analyze
the factors affecting the HR climate prevailing in the organizations. Jain, Singha and Singh
(1997), Rohmetra (1998), Alphonsa (2000), Kumar and Patnaik (2002), and Mishra and
Bhardwaj (2002) etc. have conducted studies on the factors to be considered for analyzing
the HR Climate in various organizations. In these studies, corporate philosophy, superior-
subordinate relationship, training and employee development practices, OCTAPACE
culture etc. were considered to determine the HR climate in various organizations like
public and private sector organizations, banks, educational institutions etc.

170
On the basis of research studies and contributions by several researchers, the following
have been categorized as the contributory factors of HR climate:
Top Management Style and Philosophy: A developmental style a belief in the
capability of people a participative approach openness and receptivity to
suggestions from the subordinates are some of the dimensions that contribute to
the creation of a positive HR climate.
Personnel Policies: Personnel policies that show high concern for employees, that
emphasize equity and objectivity in appraisals policies that emphasize sufficient
resource allocation for welfare and developmental activities, policies that
emphasize a collaborative attitude and trust among the people go a long way in
creating the HR climate.
HR Instruments and Systems: A number of HR instruments have been found to
generate a good HR climate. Particularly open systems of appraisal with emphasis
of counseling, career development systems, informal training mechanisms,
potential development systems etc. contribute to HR climate.
Self-renewal Mechanisms: Organizations that have built in self-renewal
mechanisms are likely to generate a positive HR climate.
Attitudes of Personnel and URD Staff : A helpful and supportive attitude on the
part of HR and personnel people plays a very critical role in generating the HR
climate. If the personal behavior of any of these agents is not supportive, the HR
climate is likely to be vitiated.
Commitment or Line Managers: The commitment of line managers to the
development of their subordinates is a very important determiner of HR climate. If
line managers are willing to spend a part of their time for their subordinates, it is
likely to have a positive impact.

Jain, Singha and Singh (1997), Rohmetra (1998), Alphonsa (2000), Kumar and Patnaik
(2002), and Mishra and Bhardwaj (2002) etc. have conducted studies on the factors to be
considered for analyzing the HR Climate in various organizations. In these studies,
corporate philosophy, superior-subordinate relationship, training and employee
development practices, OCTAPACE culture etc. were considered to determine the HR
climate in various organizations like public and private sector organizations, banks,
educational institutions etc.

The literature on HR climate provides a clear picture on the nature of the work undertaken
in this field. Most of the researchers have followed the typology, HR climate
questionnaire as developed by Rao and Abraham (1986).Researchers have studied the
effect that the climate had on the effectiveness of the organization. The impact of HR
practices on organizational level outcomes gained importance as a research issue. The
study conducted (Jain, Singhal and Singh,1997) had shown encouraging results, that there
exists a significant and positive relationship between HR climate, organizational
effectiveness and productivity.

The researchers conducted studies to know the influence of the HR climate on the
individuals attitudes and behaviors. Eisenberger, Fasolo and David-LaMastro (1990)
found that increased performance and positive work attitudes came from those employees
who perceived that the HR department is concerned about them. Rohmetra (1998),
Kumar and Patnaik (2002) , Locke (1976) conducted similar studies and found the impact
of HR climate.

Centre for HR, Xavier Labour Relations Institute (XLRI) developed a 38-item HR climate
questionnaire to survey the extent to which development climate exists in organisations.
Using this instrument the first survey of HR climate in Indian organisations was carried out
by Rao and Abraham (1986). They found that the general HR climate in the organizations
appears to be at an average level (54%). The most important factor contributing to this
seems to be a general indifference on the part of the employees on their own development.
In another study, Abraham (1989) observed that HR climate is a powerful intervening
variable in translating HR practices into profit. Venkateswaran (1997) found that, to a large
extent, a favourable HR climate was prevalent in a public sector undertaking in India.
Srimannarayana (2001) identified below average level of HR climate in a software
organisation in India. However, Agarwala
(2002) found that the HR climate was significantly more developmental in IT industry
when compared to the automobile industry. Mishra & Bhardwaj (2002) concluded that
the HR climate in a private sector undertaking in India was good. Rodrigues's (2004) study
in the engineering institutes in India found the HR climate highly satisfactory.
Srimannarayana (2007) found that a moderate HR climate was prevailing in Dubai
organisations. Pillai's (2008) study identified that HR climate existing in banks as
moderate. This study further found that a supportive HR climate in banks stimulated the
learning orientation of the employee

About The Instrument: Using the questionnaire developed by XLRI, the

present study was conducted in Durgapur Steel Plant, Durgapur to find out the
extent of HR climate prevailing in the organization. The information was
collected from 93 respondents working in DSP.

Reliability and Internal Consistency:

To establish the reliability of this HR climate questionnaire, the internal consistency (that
is, homogeneity of items) is tested using Cronbach Alpha. An alpha value of at least
0.70 indicates high consistency or internal agreement between an item and the entire set
of all the items in the questionnaire (Guy et. al 1987). Since each alpha is large (greater
than 0.70) it can be concluded that the internal consistency of this questionnaire is
acceptable and that all the items proposed to be included in the questionnaire are
necessary and dropping any one of them does not improve the internal consistency of the
questionnaire.

Reliability Statistics

Cronbach's Alpha Based on

Cronbach's Alpha Standardized Items N of Items

.749 .776 38
5.4 Analysis and Interpretation:

The 38 items included in the questionnaire can be grouped into three categories such as
general climate, OCTAPAC culture and HR mechanisms. The OCTAPAC items deal with
the extent to which openness, confrontation, trust, autonomy, proactivity, authenticity and
collaboration are valued and promoted in the organization. The items dealing with HR
mechanisms measure the extent to which HR mechanisms are implemented seriously.
Since the questionnaire used a five-point scale (almost always true, mostly true, some
times true, rarely true and not at all true), average scores of 3 and around indicate a
moderate tendency on that dimension existing in that organization. Scores around 4
indicate a fairly good degree of that dimension existing in the organization. In order to
make interpretations easy the mean scores can be converted into percentage scores using
the formula percentage score = (Mean Score--1) X 25. This assumes that a score of 1
represents 0 per cent, 2 represents 25 per cent, 3 represents 50 per cent, 4 represents 75 per
cent and 5 represents 100 per cent. Thus, percentage scores indicate the degree to which
the particular dimension exists in that company out of the ideal 100 (Rao & Abraham
1986).

The item wise mean, standard deviation using SPSS 16.0 is given below:
Table 5.1
Descriptive Statistics

Mean Std. Deviation N

VAR00001 3.6237 .83294 93

VAR00002 4.2043 .65207 93

VAR00003 4.3441 .52117 93

VAR00004 4.3441 .52117 93

VAR00005 4.3011 .58579 93

VAR00006 4.2151 .60522 93

VAR00007 4.3763 .52985 93

VAR00008 4.4301 .51915 93

VAR00009 4.7849 .41309 93

VAR00010 3.3978 .66168 93

VAR00011 4.2366 .61499 93

VAR00012 4.2151 .60522 93

VAR00013 3.7097 .76016 93

VAR00014 4.4624 .56259 93

VAR00015 4.4624 .56259 93

VAR00016 3.9892 .66748 93

VAR00017 4.4839 .52363 93

VAR00018 4.4409 .61613 93

VAR00019 3.9140 .78927 93

VAR00020 3.9462 .63186 93

VAR00021 4.0323 .61594 93

VAR00022 4.4301 .53968 93

VAR00023 4.1935 .63001 93

VAR00024 4.2796 .66538 93

VAR00025 4.3441 .59881 93

VAR00026 4.5161 .52363 93

VAR00027 4.7849 .41309 93

VAR00028 4.1075 .68306 93

VAR00029 4.4839 .54400 93

VAR00030 3.9032 .69258 93

VAR00031 4.0538 .66538 93

VAR00032 4.2796 .66538 93

VAR00033 4.7849 .41309 93

VAR00034 4.6882 .48853 93

VAR00035 4.3441 .52117 93

VAR00036 4.3871 .53227 93

VAR00037 4.2043 .65207 93

VAR00038 4.1075 .68306 93

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 38 .41 .83 .5975 .09594

means 38 3.40 4.78 4.2581 .30467

Valid N (listwise) 38

General-HR-Climate

The general climate deals with the importance given to human resources development in
general by the top management and line managers. It is the supportive climate that is
essential for proper implementation of HR initiatives. In order to assess general HR
climate prevailing in the organization, 14 items are identified from the questionnaire and
the responses of the sampled employees in the organization was calculated. The overall
mean score for these 14 items put together is 4.1874 on a 5-point scale. Therefore, it can
be stated that the general HR climate prevailing in the units understudy is quite above
average .The highest mean score (4.78) was recorded on the item, namely, people in this
organization are helpful to each other.(62.96%). This was followed by people do not
have any fixed mental impression about each other. Interestingly, none of the items that
aimed at assessing the general HR climate did get a mean score of less than 3.4 (57.08%).
But among them, the item relating to Employees are very informal and do not hesitate to discuss their

personal problems with their supervisors secured the lowest score.3.6.

Table 5.2

Descriptive Statistics

N Sum Mean Std. Deviation

Statistic Statistic Statistic Std. Error Statistic

VAR00001 93 337.00 3.6237 .08637 .83294

VAR00002 93 391.00 4.2043 .06762 .65207

VAR00003 93 404.00 4.3441 .05404 .52117

VAR00004 93 404.00 4.3441 .05404 .52117

VAR00005 93 400.00 4.3011 .06074 .58579

VAR00006 93 392.00 4.2151 .06276 .60522

VAR00007 93 407.00 4.3763 .05494 .52985

VAR00008 93 412.00 4.4301 .05383 .51915

VAR00009 93 445.00 4.7849 .04284 .41309

VAR00010 93 316.00 3.3978 .06861 .66168

VAR00011 93 394.00 4.2366 .06377 .61499

VAR00012 93 392.00 4.2151 .06276 .60522

VAR00013 93 345.00 3.7097 .07882 .76016

VAR00018 93 413.00 4.4409 .06389 .61613

Valid N (listwise) 93

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 14 .41 .83 .6028 .10593
means 14 3.40 4.78 4.1874 .36706
 Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 14 .41 .83 .6028 .10593

means 14 3.40 4.78 4.1874 .36706

Valid N (listwise) 14

OCTAPAC-CULTURE

Openness, confrontation, trust, autonomy, pro-activity, authenticity, and collaboration

(OCTAPAC) culture is essential for facilitating HR. Openness is present when employees
feel free to discuss their ideas, activities, and feelings with each other. By confrontation
problems and issues are brought out into the open with a view to solving them rather than
hiding them for fear of hurting or getting hurt. Trust is taking people at their face value and
believing what they say. Autonomy is giving freedom to let people work independently
with responsibility. Proactivity is encouraging employees to take initiative and risk.
Authenticity is the tendency on the part of the people to do what they say. Collaboration is
to accept interdependencies, to be helpful to each other, and work as teams (Rao &
Abraham 1986).

The overall OCTAPAC culture in the organizations under study seems to be above average
with 60.06% (mean score: 4.3369). Among the dimensions of OCTAPAC culture,
collaboration occupied first place with 62.45%. This is followed by authenticity, autonomy,
trust, pro-activity, openness and confrontation. When compared among the dimensions of
OCTAPAC culture confrontation secured the lowest score.
Table 5.3

Descriptive Statistics

N Sum Mean Std. Deviation

Statistic Statistic Statistic Std. Error Statistic

VAR00028 93 382.00 4.1075 .07083 .68306

VAR00029 93 417.00 4.4839 .05641 .54400

VAR00030 93 363.00 3.9032 .07182 .69258

VAR00031 93 377.00 4.0538 .06900 .66538

VAR00032 93 398.00 4.2796 .06900 .66538

VAR00033 93 445.00 4.7849 .04284 .41309

VAR00034 93 436.00 4.6882 .05066 .48853

VAR00035 93 404.00 4.3441 .05404 .52117

VAR00036 93 408.00 4.3871 .05519 .53227

Valid N (listwise) 93

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 9 .41 .69 .5784 .10069

means 9 3.90 4.78 4.3369 .28992

Valid N (listwise) 9

HR-Mechanisms
Successful implementation of HR involves taking an integral look and making efforts to
use as many mechanisms as possible (Rao & Abraham 1986). Training, performance
appraisal, feedback and counseling, performance rewards, potential appraisal, career
planning, employee welfare, and job rotation are some of the HR mechanisms.
Implementation of these mechanisms was examined in the units understudy. The items in
the questionnaire that were administered among the employees aimed at measuring the
extent of implementing HR mechanisms seriously. The analysis of the responses indicates
that a high degree of implementation of HR mechanisms (mean score: 4.29; 59.18%) was
prevalent in the organization understudy. But when the employees are sponsored for
training, they take it seriously and try to learn from the programmes they attend (64.50%);
when employees do good work their supervisors take special care to appreciate them
(61.08%%); there are mechanisms in the organization to reward good work done (60.94%);
seniors guide juniors and prepare them for future responsibilities they are likely to take up
(60.88%); and they are sponsored for training programmes on the basis of genuine
training needs (60.88%). However, encouragement for taking initiative is a concern.

Table 5.4

Descriptive Statistics

N Sum Mean Std. Deviation

Statistic Statistic Statistic Std. Error Statistic

VAR00014 93 415.00 4.4624 .05834 .56259

VAR00015 93 415.00 4.4624 .05834 .56259

VAR00016 93 371.00 3.9892 .06921 .66748

VAR00017 93 417.00 4.4839 .05430 .52363

VAR00019 93 364.00 3.9140 .08184 .78927

VAR00020 93 367.00 3.9462 .06552 .63186

VAR00032 93 398.00 4.2796 .06900 .66538

VAR00033 93 445.00 4.7849 .04284 .41309

VAR00034 93 436.00 4.6882 .05066 .48853

VAR00035 93 404.00 4.3441 .05404 .52117

180
VAR00036 93 408.00 4.3871 .05519 .53227

VAR00037 93 391.00 4.2043 .06762 .65207

VAR00038 93 382.00 4.1075 .07083 .68306

VAR00029 93 417.00 4.4839 .05641 .54400

VAR00030 93 363.00 3.9032 .07182 .69258

Valid N (listwise) 93

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 15 .41 .79 .5953 .09763

means 15 3.90 4.78 4.2961 .27907

Valid N (list wise) 15

Overall-Picture

On the whole, putting together all the three sectors of business, it is evident that excellent
HR climate was prevailing in the organization understudy (59.61%). The most important
factors contributing to this situation seems to be: job rotation that is not much helpful for
employee development; indifference on the part of employees to find out their strengths
and weaknesses from others and make use of them for their development; dissatisfaction of
the employees on the basis of promotion decisions; lack of readiness on the part of the top
management to invest considerable part of time and resources for employee development;
personnel policies; and lack of enough information to employees on career opportunities in
organization. On the positive side, the study found that people in the organization
understudy are helpful to each other; juniors see opportunity for development when
seniors delegate authority to them; employees learn seriously from
training programmes whenever they are nominated; top management's belief about the
importance of human resources and team spirit prevailing among employees

Descriptive Statistics

N Sum Mean Std. Deviation

Statistic Statistic Statistic Std. Error Statistic

VAR00001 93 337.00 3.6237 .08637 .83294

VAR00002 93 391.00 4.2043 .06762 .65207

VAR00003 93 404.00 4.3441 .05404 .52117

VAR00004 93 404.00 4.3441 .05404 .52117

VAR00005 93 400.00 4.3011 .06074 .58579

VAR00006 93 392.00 4.2151 .06276 .60522

VAR00007 93 407.00 4.3763 .05494 .52985

VAR00008 93 412.00 4.4301 .05383 .51915

VAR00009 93 445.00 4.7849 .04284 .41309

VAR00010 93 316.00 3.3978 .06861 .66168

VAR00011 93 394.00 4.2366 .06377 .61499

VAR00012 93 392.00 4.2151 .06276 .60522

VAR00013 93 345.00 3.7097 .07882 .76016

VAR00014 93 415.00 4.4624 .05834 .56259

VAR00015 93 415.00 4.4624 .05834 .56259

VAR00016 93 371.00 3.9892 .06921 .66748

VAR00017 93 417.00 4.4839 .05430 .52363

VAR00018 93 413.00 4.4409 .06389 .61613

VAR00019 93 364.00 3.9140 .08184 .78927

VAR00020 93 367.00 3.9462 .06552 .63186

VAR00021 93 375.00 4.0323 .06387 .61594

VAR00022 93 412.00 4.4301 .05596 .53968

VAR00023 93 390.00 4.1935 .06533 .63001

VAR00024 93 398.00 4.2796 .06900 .66538

VAR00025 93 404.00 4.3441 .06209 .59881

VAR00026 93 420.00 4.5161 .05430 .52363

VAR00027 93 445.00 4.7849 .04284 .41309

VAR00028 93 382.00 4.1075 .07083 .68306

VAR00029 93 417.00 4.4839 .05641 .54400

VAR00030 93 363.00 3.9032 .07182 .69258

VAR00031 93 377.00 4.0538 .06900 .66538

VAR00032 93 398.00 4.2796 .06900 .66538

VAR00033 93 445.00 4.7849 .04284 .41309

VAR00034 93 436.00 4.6882 .05066 .48853

VAR00035 93 404.00 4.3441 .05404 .52117

VAR00036 93 408.00 4.3871 .05519 .53227

VAR00037 93 391.00 4.2043 .06762 .65207

VAR00038 93 382.00 4.1075 .07083 .68306

Valid N (listwise) 93

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

sd 38 .41 .83 .5975 .09594

means 38 3.40 4.78 4.2581 .30467

Valid N (listwise) 38
5.4 Conclusion

The analysis leads to the conclusion that excellent HR climate is prevailing in the
organization. Category wise, it is observed that that OCTAPAC culture the essence of HR
Climate was more prevalent than HR mechanisms and general HR climate. The
organization has a pool of professionals which are working for a larger cause and meeting
their professional satisfaction. The organization shows great degree of transparency in
decision making and shares information across levels. The management believes in
having a participative approach to decision making. There is enough autonomy to
perform ones job. Also the organization offers enough scope for personal and
professional growth. The leadership of the organization is approachable and is sensitive
to the needs of the employees. There is a great emphasis on capacity building and skill
enhancement of the employees.

Overall, the organizational climate is conducive to develop potential and competencies of

the employees and provide opportunities for fulfillment. The positive motivational work
culture has ensured optimum utilization of the capabilities of the team members leading
to increased productivity and organizational effectiveness.
 CHAPTER VI

DATA ANALYSIS
&
INTERPRETATION

185
 Introduction: this chapter presents the results of the research findings with the
interpretation of the same, outlining the vatious forms of analysis utilized to find
the degree and nature of relationship between independent variables and
dependent variables like training- labour productivity, training- lost time, labour
productivity- production, labour productivity- profit, manpower- production etc. a
schematic presentation involving the relation between all variables has been
presented in the end.

FINDINGS & INTERPRETATION (CHART-WISE):

DURGAPUR STEEL PLANT:

Table 6.1

YEAR L.P EXECUTIVES NON EXE MANPOWER PRODUCTION PROFIT

1999-00 79.37 1834 19073 20907 7488 -1720
2000-01 89.2 1776 18726 20502 8027 -729
2001-02 100.21 1913 17728 19641 8470 -1696
2002-03 108.27 1815 16113 17928 8763.12 -304
2003-04 119.47 1689 15168 16857 9000.15 2512
2004-05 131.15 1582 14629 16211 9170.615 6817
2005-06 140.96 1549 14252 15801 8986.64 4013
2006-07 143.38 1679 13468 15147 9212.18 6202
2007-08 195.88 1675 13068 14743 9917.81 7537
2008-09 210.67 1625 12608 14233 10023.04 6175
2009-10 213 1676 11906 13582 10462.95 6754
2010-11 226.2 1655 11852 13507 10614.2 4905

Labour productivity has been given in MT per personper year.

Profit is in Rs. Crores
Production is in tonnes.

186
Finding: As the years have passed, the impact of Human Resource Development
Practices have spread throught the organization, resulting in higher productivity, turnover
and profit. Production and profit are undoubtedly the financial output that needs to be

187
achieved by the synchronized efforts of all the resources. Human Resources in this
endeavor are pivotal as only they can activate other resources. Thus the policies of an
organization must centre on the development of human recourses. The parameter of
development is labor productivity that depends on (1) physical-organic, location, and
technological factors; (2) cultural belief-value and individual attitudinal, motivational and
behavioral factors; (3) levels of innovativeness and efficiency on the part of the owners
and managers of inward investing foreign companies; (4) managerial-organizational and
wider economic and political-legal environments; (5) individual rewards and payment
systems, and the effectiveness of personnel managers and others in recruiting, training,
communicating with, and performance-motivating employees on the basis of pay and
other incentives.

These factors are nothing but the indicator of effective and efficient Human resource
Development policies of an organization.

The increased labor productivity as depicted and described above thus signifies the
patronage and promotion of HR policies in the Durgapur steel Plant.
FINDINGS & INTERPRETATION (GRAPH-WISE):

DURGAPUR STEEL PLANT:

DSP LABOUR PRODUCTIVITY

250
226.2
210.67213
P 195.88
R O 200
L D
U
C 143.38
140.96
O T 150 131.15
U I 119.47
R VITY 108.27
100.21
100 89.2
79.37

50

0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

YEAR

The graph above shows that labor productivity has continuously increased over the years
from a moderate 79.37 MT per person per year (MT/P/Y) in 1999-2000 to a massive
226.2 MT per person per year (MT/P/Y) in 2010-11. The labor increased labor
productivity is a reflection of the proactive, open, experimenting, trustworthy, authentic
HR policy of the plant. The objective of HR at Durgapur Steel Plant is categorically
specific: to increase the labor productivity. While every sub systems contribute
indirectly to increase labor productivity; training has the direct impact. Training alters the
work culture, enhances the flexibility, reduces lost time and collectively increases the
labor productivity. Identification, harnessing and utilization of potential appraisal,
charting out the career plan and laying out the promotion policy coupled with an
appropriate unbiased performance appraisal and rationalized manpower had been
instrumental in this phantom growth.
 DSP NO. EXECUTIVE
2500

D
SP
2000 1913
1834 1815
1776
N 1689 16791675 1676 1655
1582 1625
O 1549
. E X E C U T1500
IVE

DSP EXECUTIVE
1000

500

0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

YEARS

DSP NO. OF NON EXCUTIVE

25000

20000 19073 18726

N
17728
O E
. X 16113
15168 14629
C 15000 14252
13468 13068 12608
O U
F TI 11906 11852
V
DSP NON EXCUTIVE
EN 10000

5000

1999-00 02000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

YEARS

A rationalized manpower is the key to financial success of any organizations. Most of the
Public Sector Undertakings in general and Durgapur Steel Plant in specific had been
infected with massive manpower at all positions. The result had been a series of losses as
shown in the graph till 2002-03. The McKinsy Consultancy, appointed by the
Government of India, emphasized on the urgent need of rationalized manpower that lead
the management of Durgapur Steel plant to initiate a series of programme including
sabbatical leave scheme, Voluntary Retirement Scheme etc. The schemes were initiated
and encouraged at all level-executives as well as non-executives. The graphs depicted
 above clearly portray the incessant steep decline in manpower at all levels. The
corresponding graphs of production, profit and labor productivity depicts the positive
impact on each of the rationalization in manpower.

DSP MANPOWER
25000
20907 20502
19641
M 20000
17928
AN 16857 16211
15801 15147
14743 14233
15000 13582 13507
P
OWER DSP MAN POWER
10000

5000

0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

YEARS

A rationalized manpower is the key to financial success of any organizations. Most of

the Public Sector Undertakings in general and Durgapur Steel Plant in specific had been
infected with massive manpower at all positions. The result had been a series of losses as
shown in the graph till 2002-03. The McKinsy Consultancy, appointed by the
Government of India, emphasized on the urgent need of rationalized manpower that lead
the management of Durgapur Steel plant to initiate a series of programme including
sabbatical leave scheme, Voluntary Retirement Scheme etc. The schemes were initiated
and encouraged at all level-executives as well as non-executives. The graphs depicted
above clearly portray the incessant steep decline in manpower at all levels. The
corresponding graphs of production, profit and labor productivity depicts the positive
impact on each of the rationalization in manpower.

190
 DSP TOTAL PRODUCTION
12000
10462.95 10614.2
9917.81 10023.04
P 10000 9170.6158986.649212.18
8763.12 9000.15
RO 8470
8027
8000 7488
T D
O U
T C 6000
A T
DSP TOTAL PRODUCTION
L I
O N 4000

2000

0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

YEARS

DSP PROFIT
8000 7537
68176754
62026175

6000
4905

4013
4000
P
ROFIT 2512

2000
DSP PROFIT

0
1999-00 2000-01 2001-02 20-30024-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
-729
-2000 -1720 -1696

-4000
YEARS

As explained above the plant suffered massive losses till 2002-03 and was on the verge of
closure before the turnaround happened. While the impact of organizational
restructuring, financial package, surging demand, technological up gradation can not be
ignored; it goes without saying that the most dominant factor had been an improved work
culture born out of excellent Human Resource Development Climate that was the result
of effective and efficient Human Resource Development (HR) practices. The result has
been elaborated and strengthened with the help of statistical relationship between training
and productivity, productivity and production or profit.
6.4 FINDINGS & INTERPRETATION (STATISTICAL):

A. PROFIT-PRODUCTIVITY:

DSP

Correlations
PRODUCTIVITY PROFIT
**
PRODUCTIVITY Pearson Correlation 1 .800
Sig. (2-tailed) .002
N 12 12
**
PROFIT Pearson Correlation .800 1
Sig. (2-tailed) .002
N 12 12
**. Correlation is significant at the 0.01 level (2-tailed).

r= 0.8.

2
r is 0.64 which signifies that 64 % of variation in profit is explained by productivity,
keeping other factors constant.
The result of relation between the two variables could be spurious owing to the small
sample size (12 in this case). Hence it is imperative to test the statistical significance of
the relationship between two variables measured by using r. The hypotheses are:
H0 : = 0; i.e. there is no relation between Profit and Productivity.
H1 : = 0 i.e. there is relation between Profit and Productivity

Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.
 2 1/2
For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.8 ] = 4.16
and the degrees of freedom 12-2=10. From the t distribution table, the critical value of t
for a two-tailed test and = 0.05 is 2.228. Since the null hypothesis of no relation between
Profit and productivity is rejected. This along with the positive sign of r, indicates that
productivity is positively related to the profit. Moreover, the high value of r indicated that
the relationship is very strong.

SAIL

Correlations
PROFIT PRODUCTIVITY
**
PROFIT Pearson Correlation 1 .839
Sig. (1-tailed) .000
N 12 12
**
PRODUCTIVITY Pearson Correlation .839 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

Interpretation: It is evident that there exists a strong dicer and positive relation between
Labor Productivity (organizational outcome) and Profit. (Financial outcome) (0.80). The
statistical finding signifies the premise that an effective and efficient HR policy improves
the HR climate in an organization which in turn has an impact on the increased labor
productivity. This increased productivity harbingers financial success in terms of increased
profit.
However, if we compare the coefficient of correlation between Labor Productivity and
Profit of Durgapur Steel Plant with that of the parent organization Steel Authority Of
India Limited (0.839), it is marginally less. The reason could be better technological up
gradation in other plants, rationalized manpower etc. i.e. the factors that as has been
schematically shown as the moderating variables between individual outcomes and
organizational financial outcomes
B. PRODUCTION-LABOR PRODUCTIVITY:

DSP

Correlations
PRODUCTIVITY PRODUCTION
**
PRODUCTIVITY Pearson Correlation 1 .967
Sig. (2-tailed) .000
N 12 12
**
PRODUCTION Pearson Correlation .967 1
Sig. (2-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (2-tailed).

r= 0.967

2
r is 0.935 which signifies that 93.5 % of variation in production is explained by labor
productivity, keeping other factors constant.

Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between Profit and Labor Productivity.
H1 : = 0 i.e. there is relation between Profit and Labor Productivity
Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.
.

2 1/2
For the correlation coefficient calculated based on the data, t= 0.967 [12-2/1-0.967 ] =
14.4 and the degrees of freedom 12-2=10. From the t distribution table, the critical value
of t for a two-tailed test and = 0.05 is 2.228. Since the null hypothesis of no relation
between Production and labor productivity is rejected. This along with the positive sign
 of r indicates that productivity is positively related to the production. Moreover, the high
value of r indicated that the relationship is very strong.

SAIL

Correlations
PRODUCTIVITY PRODUCTION
**
PRODUCTIVITY Pearson Correlation 1 .970
Sig. (1-tailed) .000
N 12 12
**
PRODUCTION Pearson Correlation .970 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

Interpretation: The correlation coefficient between Labor Productivity and Production/

Turnover which is 0.967 is found to be strongly positively related. While the nature of the
relation is obvious, the high degree implies presence of a highly positive HR Climate. It is
also at par with the corresponding relation (0.970) at parent organization. The equal score
at both DSP and SAIL can be interpreted as, keeping other factors constant, improved HR
Climate improves Labor Productivity which enhances the production anytime, anywhere.

C. TRAINING-PRODUCTIVITY

DSP

Correlations
PRODUCTIVITY TRAINING
PRODUCTIVITY Pearson Correlation 1 .476
 Sig. (2-tailed) .118
N 12 12
TRAINING Pearson Correlation .476 1
Sig. (2-tailed) .118
N 12 12

r= 0.467

2
r is 0.218 which signifies that 21.8 % of variation in productivity is explained by
training, keeping other factors constant.

Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between Training and Productivity.
H1 : = 0 i.e. there is relation between Training and Productivity
Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.
.
2 1/2
For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.8 ] =

16.81 and the degrees of freedom 12-2=10. From the t distribution table, the critical
value of t for a two-tailed test and = 0.05 is 2.228. Hence the null hypothesis of no
relation between Training and Labor productivity is rejected. This along with the positive
sign of r indicates that labor productivity is positively related to the training.

Interpretation: An effective training system is the soul of a HR policy. A Chinese saying

goes as give a hungry man a fish, and you have given him food for a day; teach a hungry
man to fish, and you have given him the food for life time. The objective of HR at
Durgapur Steel Plant is categorically specific: to increase the labor productivity. While
every sub systems contribute indirectly to increase labor productivity; training has the
direct impact. Training alters the work culture, enhances the flexibility, reduces lost time
and collectively increases the labour productivity.As such
 the correlation between Training and Productivity was calculated. The result however
shows a moderate positive relation implying the importance of other contingent variables
such as technological up gradation, opportunity given to the trained employee, feedback
and counseling etc.

D. TRAINING-LOST TIME

DSP

Correlations
TRAINING LOSTTIME
TRAINING Pearson Correlation 1 -.539
Sig. (2-tailed) .070
N 12 12
LOSTTIME Pearson Correlation -.539 1
Sig. (2-tailed) .070
N 12 12

r= -.539.

2
r is 0.29 which signifies that 29 % of variation in lost time is explained by training,
keeping other factors constant.

Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between Lost time and Training.
H1 : = 0 i.e. there is relation between Lost time and Training .
Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.
.
For the correlation coefficient calculated based on the data, t= 4.16 and the degrees of
freedom 12-2=10. From the t distribution table, the critical value of t for a two-tailed test
and = 0.05 is 2.228. Since the null hypothesis of no relation between training and lost
time is rejected. This along with the negative sign of r, indicates that training adversely
affect lost time.
Interpretation: One of the most important benefits of training is to improve work
culture, enhances the efficiency and subsequently reduces lost time. Data was collected
regarding report of lost time. The coefficient of correlation (-0.539) establishes this fact.
The two are found to be highly negatively related, emphasizing importance of training.
E. PRDUCTION-PROFIT:

DSP

Correlations
PROFIT PRODUCTION
**
PROFIT Pearson Correlation 1 .815
Sig. (2-tailed) .001
N 12 12
**
PRODUCTION Pearson Correlation .815 1
Sig. (2-tailed) .001
N 12 12
**. Correlation is significant at the 0.01 level (2-tailed).

r= 0.815.

2
r is 0.664 which signifies that 66.4 % of variation in profit is explained by production,
keeping other factors constant.

Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between Profit and Production.
H1 : = 0 i.e. there is relation between Profit and Production.
Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.

2 1/2
For the correlation coefficient calculated based on the data, t= 0.815 [12-2/1-0.815 ] =
4.401and the degrees of freedom 12-2=10. From the t distribution table, the critical value
of t for a two-tailed test and = 0.05 is 2.228. Since the null hypothesis of no relation
between Profit and production is rejected. This along with the positive sign of r, indicates
that production is positively related to the profit. Moreover, the high value of r indicated
that the relationship is very strong.

SAIL

Correlations
PRODUCTION PROFIT
**
PRODUCTION Pearson Correlation 1 .908
Sig. (1-tailed) .000
N 12 12
**
PROFIT Pearson Correlation .908 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

However the corresponding figure of the parent organization i.e. 0.908 is much above the
DSP figure. This indicates DSP is still lacking vis--vis the other plants of the organization
and care need to be given.
F. PROFIT- MANPOWER:

DSP

Correlations
PROFIT MANPOWER
**
PROFIT Pearson Correlation 1 -.905
Sig. (1-tailed) .000
N 12 12
**
MANPOWER Pearson Correlation -.905 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

SAIL

Correlations
PROFIT MANPOWER
**
PROFIT Pearson Correlation 1 -.810
Sig. (1-tailed) .001
N 12 12
**
MANPOWER Pearson Correlation -.810 1
Sig. (1-tailed) .001
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

r= -.905.
2
r is 0.819 which signifies that 81.9 % of variation in profit is explained by manpower,
keeping other factors constant.

200
Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between Profit and Manpower.
H1 : = 0 i.e. there is relation between Profit and Manpower.
Test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.

2 1/2
For the correlation coefficient calculated based on the data, t= 0.905 [12-2/1-0.905 ] =
6.697 and the degrees of freedom 12-2=10. From the t distribution table, the critical
value of t for a two-tailed test and = 0.05 is 2.228. Hence the null hypothesis of no
relation between Profit and Manpower is rejected. This along with the negative sign of r,
indicates that profit is negatively related to the strength of manpower.

G. MANPOWER-PRODUCTION:

DSP

Correlations
MANPOWER PRODUCTION
**
MANPOWER Pearson Correlation 1 -.955
Sig. (1-tailed) .000
N 12 12
**
PRODUCTION Pearson Correlation -.955 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

r= -0.955
 2
r is 0.912 which signifies that 91.2 % of variation in production is explained by
manpower, keeping other factors constant.
Further the statistical significance of the relationship between two variables measured by
using r can also be tested. The hypotheses are:
H0 : = 0; i.e. there is no relation between manpower and Production.
H1 : = 0 i.e. there is relation between manpower and Production.
test statistic is
2 1/2
t = r [n-2/1-r ] which has a t distribution with n-2 degrees of freedom.

2 1/2
For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.8 ] = 10.21
and the degrees of freedom 12-2=10. From the t distribution table, the critical value of t
for a two-tailed test and = 0.05 is 2.228. Since the null hypothesis of no relation between
manpower and production is rejected. This along with the positive sign of r, indicates that
production is positively related to the manpower. Moreover, the high value of r indicated
that the relationship is very strong.

SAIL

Correlations
MANPOWER PRODUCTION
**
MANPOWER Pearson Correlation 1 -.858
Sig. (1-tailed) .000
N 12 12
**
PRODUCTION Pearson Correlation -.858 1
Sig. (1-tailed) .000
N 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

As per the schematic relation showing relation between, Individual outcome,

Organizational Outcomes and Financial Outcomes; financial outcome has been shown as
the direct aftermath of Organizational outcomes; albeit in the presence of other factors
such as technical up gradation and rationalized manpower. In the past 10 years, DSP has
vigorously tried to reduce and rationalize its manpower at all levels as per the suggestion
of McKinsy consultants and others. The impact has been positive. Statistically, -0.905; -
 .955 are indicators of very high negative relation between manpower and profit;
manpower and production respectively. Justifying the premise that increased manpower
does not mean increased production. Instead, a rationalized manpower is the key to
organizational success.

Interpretation: For a long long time, almost all the Public sector Undertakings in India
were infected with the belief that manpower and profit or production is positively related.
Majority of the PSUs including DSP were cursed with this belief and irrational
manpower planning. The adversity can well be understood by the figure that the
companys 160000-strong workforce alone accounted for 16.69% of the companys gross
sales in 1999-2000. The result was baffling for the management itself. The McKinsy &
company were consulted in February 2000 and the leading global management-
consulting firm suggested among other things, a rationalization of manpower. As such,
the Sabbatical Leave Scheme, Voluntary Retirement scheme was introduced in the year
2003. the result is evident from the chart and statistical relation!

COMBINED RESULT:

DURGAPUR STEEL PLANT

Correlations
PROFIT PRODUCTIVITY PRODUCTION TRAINING MANPOWER
PROFIT Pearson ** ** * **
1 .800 .815 .621 -.905
Correlation
Sig. (1-
.001 .001 .016 .000
tailed)
N 12 12 12 12 12
PRODUCTIVITY Pearson ** ** **
.800 1 .967 .476 -.926
Correlation
Sig. (1-
.001 .000 .059 .000
tailed)
 N 12 12 12 12 12
PRODUCTION Pearson ** ** * **
.815 .967 1 .623 -.955
Correlation
Sig. (1-
.001 .000 .015 .000
tailed)
N 12 12 12 12 12
TRAINING Pearson * * **
.621 .476 .623 1 -.718
Correlation
Sig. (1-
.016 .059 .015 .004
tailed)
N 12 12 12 12 12
MANPOWER Pearson ** ** ** **
-.905 -.926 -.955 -.718 1
Correlation
Sig. (1-
.000 .000 .000 .004
tailed)
N 12 12 12 12 12
**. Correlation is significant at the 0.01 level (1-tailed).
*. Correlation is significant at the 0.05 level (1-tailed).

STEEL AUTHORITY OF INDIA LIMITED

Correlations
MANPOWER PRODUCTION PRODUCTIVITY PROFIT
MANPOWER Pearson ** ** **
1 -.858 -.882 -.810
Correlation
Sig. (1-
.000 .000 .001
tailed)
N 12 12 12 12
PRODUCTION Pearson ** ** **
-.858 1 .970 .908
Correlation
Sig. (1-
.000 .000 .000
tailed)
N 12 12 12 12
 PRODUCTIVITY Pearson ** ** **
-.882 .970 1 .839
Correlation
Sig. (1-
.000 .000 .000
tailed)
N 12 12 12 12
PROFIT Pearson ** ** **
-.810 .908 .839 1
Correlation
Sig. (1-
.001 .000 .000
tailed)
N 12 12 12 12
**. Correlation is significant at the 0.01 level (1-tailed).

MULTIPLE REGRESSION ANALYSIS (PROFIT- ---TRAINING,

PRODUCTIVITY)

a
Coefficients
Unstandardized Standardized
Coefficients Coefficients Correlations
Std. Zero-
Model B Error Beta t Sig. order Partial Part
1 (Constant) -6737.463 2315.899 -2.909 .017
TRAINING .406 .265 .311 1.533 .160 .621 .455 .273
PRODUCTIVITY 45.030 14.006 .652 3.215 .011 .800 .731 .573
a. Dependent Variable:
PROFIT

Model Summary
Change Statistics

Adjusted Std. Error of R Square

Model R R Square R Square the Estimate Change F Change df1 df2 Sig. F Change
 a
1 .985 .969 .963 183.35583 .969 142.721 2 9 .000
Model Summary
Change Statistics

Adjusted Std. Error of R Square

Model R R Square R Square the Estimate Change F Change df1 df2 Sig. F Change
a
1 .985 .969 .963 183.35583 .969 142.721 2 9 .000
a. Predictors: (Constant), PRODUCTIVITY,
TRAINING

In this analysis, combined effect of training and productivity on profit has been verified.
One extra of training can increase the profit by .406 units, one increased unit of
productivity can increase the profit by 45.03 units; together they account for 96% of
profit keeping other factors constant.

The nearness in the values of R square and adjusted R squqre validate the data.

MULTIPLE REGRESSION ANALYSIS (PRODUCTION- TRAINING,

PRODUCTIVITY)

a
Coefficients
Unstandardized Standardized
Coefficients Coefficients Correlations

Std. Zero-
Model B Error Beta t Sig. order Partial Part

1 (Constant) 6232.037 199.900 31.176 .000

TRAINING .073 .023 .211 3.183 .011 .623 .728 .185

PRODUCTIVITY 15.814 1.209 .867 13.080 .000 .967 .975 .762

a. Dependent Variable: PRODUCTION

 In this analysis combined effect of training and productivity on production has been
verified. One extra of training can increase the production by 0.73 units, one increased
unit of productivity can increase the production by 15.81 units; together they account for
85% of production keeping other factors constant.

MULTIPLE REGRESSIONS (PROFIT--- MANPOWER, PRODUCTIVITY)

Model Summary
Change Statistics
Adjusted Std. Error of R Square
Model R R Square R Square the Estimate Change F Change df1 df2 Sig. F Change
a
1 .852 .726 .665 2079.29229 .726 11.918 2 9 .003
a. Predictors: (Constant), PRODUCTIVITY,
MANPOWER

a
Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 7245.599 15702.483 .461 .655
MANPOWER -.076 .089 -.317 -.854 .415
PRODUCTIVITY 38.417 25.485 .559 1.507 .166
a. Dependent Variable: PROFIT

This analyses show how profit is related to manpower and productivity. One extra of
manpower reduces the profit by 0.076 units; one extra unit of productivity increases the
profit by 38.41 units.
Multiple Regressions:

Dependent variable: Profit(Z)

Independent Variables: Labor productivity (L), Manpower (M), Production (P)
 b
Variables Entered/Removed
Model Variables Entered Variables Removed Method
a
1 M, L, P . Enter
a. All requested variables entered.
b. Dependent Variable: Z

Model Summary
Adjusted Change Statistics
R R Std. Error of R Square F Sig. F
Model R Square Square the Estimate Change Change df1 df2 Change
a
1 .922 .850 .793 1632.777 .850 15.084 3 8 .001

a. Predictors: (Constant), M, L, P

a
Coefficients
Unstandardized Standardized
Coefficients Coefficients Correlations
Zero-
Model B Std. Error Beta t Sig. order Partial Part
1 (Constant) 59306.847 29033.949 2.043 .075
L 9.158 37.492 .132 .244 .813 .799 .086 .033
P 2.646 2.624 -.699 -1.008 .343 .815 -.336 -.138
M -1.989 .635 -1.450 -3.134 .014 -.905 -.742 -.429
a. Dependent
Variable: Z
This analyses show that profit is related to each factor. One extra unit of manpower
reduces the profit by 1.989 units, one extra unit of production increases the profit by
2.646 units and one unit of increased labor productivity positively affects profit by 9.158
units.
 b
Variables Entered/Removed
Model Variables Entered Variables Removed Method
a
1 G, E, L, P . Enter
a. All requested variables entered.
b. Dependent Variable: Z

Model Summary
Change Statistics
Adjusted Std. Error of R Square
Model R R Square R Square the Estimate Change F Change df1 df2 Sig. F Change
a
1 .935 .874 .801 1601.026 .874 12.096 4 7 .003
a. Predictors: (Constant), G, E, L, P

a
Coefficients
Unstandardized Coefficients Standardized Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 46654.040 30323.316 1.539 .168
L 5.831 36.551 .084 .160 .878
E -10.924 7.803 -.328 -1.400 .204
G -1.152 .957 -.814 -1.203 .268
P -.912 2.954 -.241 -.309 .767
a. Dependent Variable: Z

The analysis when extended by segregating the manpower into executives and non
executives highlights that more rationalization is imperative.

All the results derived above justify the massive importance that HR practice have on the
financial performance of the organization. The above multiple regressions to analyze the
combined effect of training, labor productivity (L), production (P) and manpower (M) on
the profit (Z)strengthen the results found earlier through graphical analyses and
correlation between various variables.
 CHAPTER VII

FINDINGS, CONCLUSION AND

SCOPE FOR FUTURE
RESEARCH:

210
 With reference to the objectives laid down as below

a) Critical study of different HR practices being followed in Durgapur Steel Plant.

b) Measurement of HR climate prevailing in Durgapur Steel Plant which is but the
reflection of effectiveness of HR practices followed in the plant.
c) Finding the causal relationship with the help of correlation coefficient between
various independent variables and dependent variables e.g. training-labor
productivity, training-lost time, labor productivity-production, labor productivity-
profit etc.
d) Finding the nature of relation between the independent and dependent variables
using multiple regressions to study the impact of independent variables
manpower, training, labor productivity on dependent variables profit and
production.
e) Establishing a model showing linkage between HR practices, HR Climate and
outcome.

Findings:

Production and profit are undoubtedly the financial output that needs to be achieved by
the synchronized efforts of all the resources. Human Resources in this endeavor are
pivotal as only they can activate other resources. Thus the policies of an organization
must centre on the development of human recourses. The parameter of development is
labor productivity that depends on (1) physical-organic, location, and technological
factors; (2) cultural belief-value and individual attitudinal, motivational and behavioral
factors; (3) levels of innovativeness and efficiency on the part of the owners and
managers of inward investing foreign companies; (4) managerial-organizational and
wider economic and political-legal environments; (5) individual rewards and payment
systems, and the effectiveness of personnel managers and others in recruiting, training,
communicating with, and performance-motivating employees on the basis of pay and
other incentives.
211
These factors are nothing but the indicator of effective and efficient Human resource
Development policies of an organization.

The increased labor productivity as depicted and described above thus signifies the
patronage and promotion of HR policies in the Durgapur steel Plant.

Major findings of the research can be jotted down as below:

Regarding objective Critical study of different HR practices being followed in

Durgapur Steel Plant

The system has a distinct identity of its own, in the form of Centre for Human
resource Development (CHR) headed by a senior manager taking care of the
implementation process. The HR department created for this purpose has proper
linkages with outside systems as well as internal subsystems. The system is
reviewed periodically so as to find out the progress and effectiveness of the
programme.

The research finds existence of sound, inclusive, proactive, development oriented

HR practices consisting of well designed and widely shared Training policy and
appraisal mechanisms that coupled with rationalized manpower has ensured
consistently increasing labor productivity (one of the prime objective of HR policy
of DSP) that has resulted in better financial performance (turnover and profit) and
better fulfillment of plan.

HR in Durgapur Steel Plant is gaining consistent support from managers working

at various levels. They formulate the HR policies keeping organizational
requirements in mind and implement these wholeheartedly.
 The system has been designed keeping various contextual factors such as size,
technology, skill levels, support for function, in mind. It is focused on developing
human resources at various levels (problem solving capabilities leading to
increased employee productivity) and commitment which is taking the
organization forward by anticipating changes and preparing people for future
challenges. It is properly integrated with other long range functions such as
corporate planning, budgeting, etc. Line managers are actively involved in all the
above steps.

The system provides for appropriate feedback from various departments at regular
intervals. It maximizes the quantification of the various aspects of HR and arrange
for storage of data in computers. Internal experts and external consultants
judiciously use to offer training to various departments/ persons. Various aspects
of HR have been introduced in a gradual way, after a thorough review of the
organizations size, its needs and level of sophistication. Each stage has been
planned carefully, with subsequent phases built one over the other

Regarding objective Measurement of HR climate prevailing in Durgapur Steel Plant

which is but the reflection of effectiveness of HR practices followed in the plant.

It has been found that excellent HR climate is prevailing in the

organization. Category wise, it is observed that that OCTAPAC culture
the essence of HR Climate was more prevalent than HR mechanisms and
general HR climate.

The organization has a pool of professionals which are working for a

larger cause and meeting their professional satisfaction. The organization
shows great degree of transparency in decision making and shares
information across levels. The management believes in having a
 participative approach to decision making. There is enough autonomy to
perform ones job. Also the organization offers enough scope for personal
and professional growth. The leadership of the organization is
approachable and is sensitive to the needs of the employees. There is a
great emphasis on capacity building and skill enhancement of the
employees.

Overall, the organizational climate is conducive to develop potential and

competencies of the employees and provide opportunities for fulfillment.
The positive motivational work culture has ensured optimum utilization of
the capabilities of the team members leading to increased productivity and
organizational effectiveness.

Regading objective Finding the causal relationship with the help of correlation
coefficient and finding the nature of relation between the independent and dependent
variables

These findings have been strengthened by the statistical analysis. The correlation
coefficients between labor productivity - profit, labor productivity- turnover,
training-labor productivity are found to be highly positive implying strong
relation between them whereas between labor productivity and loss time is
negative.

The multiple regressions have strenthen the result by showing the impact of
training, labour productivity, manpower on organizational outcome profit and
production.

In the end a model using regression analysis has been presented to show the impact of
labor productivity, manpower on turnover and profit.
 Regarding objective Establishing a model showing linkage between HR practices, HR
Climate and outcome, the schematic finding is given in the conclusion part.

Finally, the results add to the growing empirical evidence that people are the most
important resource in achieving superior performance as said by Peter Senge As the
world becomes more interconnected and business becomes more complex and
dynamic.the organizations that will truly excel in future will be the organizations that
discover how to tap peoples commitment and capacity to learn at all levels in an
organization.

Conclusion:

While a direct relation and exact degree of relation between the two variables under study
(Independent HR practices and Dependence Organizational Outcomes) is not so visible,
nevertheless the impact is there. It also points out the significance of the intervening
variable HR climate that affects various outcomes given below:
a) Employee Outcomes: satisfaction, commitment, low absenteeism, low loss of time;
b) Organizational Outcomes: high labor productivity, higher production, better quality
c) Financial Outcomes: Profit.

Thus it could be concluded that various HR practices if applied in it its true sense as a
religion rather than mere rituals do impact directly the HR climate of the organization
concerned. This better HR climate, in turn, enthuse motivation, willingness, commitment,
belongingness among the Human Resources that coupled with effective and efficient
training and development pedagogy, an unbiased and progessive performance management
system, proactive growth policy, career planning and potential appraisal improves the
ability and skill. The ultimate effect is on the productivity that harbingers production,
profit, reduced labor turnover, reduced loss time, more congruence between plan and
actuality.
 The findings can be schematically presented as below:

HR practices HR climate Employee outcome Other factors

Performance appraisal Role clarity More competent People Technological up gradation
Potential development exercises
Collaboration Better Developed Roles Rationalized man power
Training Openness Better utilization of Human Resources
Job rotation Trust More teamwork
Career Planning Authenticity Positive synergy
Organizatio Org. output
Pro activity Satisfaction
Higher Production
Team work Commitment
Increased labour productivity
Autonomy
Org. output

Financial outcome

Increased Profit

Other factor

Personnel policies

Line Managers interest

216
 Limitations:

The sample unit consists of executives only.

The sample size could have been larger.

Labor turnover is an important indicator of successful HR that has not been

accounted for in the present study due to the unavailability of data.

Labor productivity depends on many factors besides an effective and efficient HR

practices such as technological up gradation. Those factors have not been
accounted for in the present study.

The timing of data collection regarding HR Climate in the organization is very

significant. As such a time-series research would have been better predictor.

The linkage between HR climate and Employee outcome, as shown in the model
diagram above is moderated by personnel policies as well as other factors that have
not been explored.

Similarly and more gravely, the linkage between employee outcomes and
organizational outcomes, as shown in the model diagram above is moderated by
technological up gradation and rationalized manpower that have not been
explored.

SCOPE FOR FUTURE RESEARCH:

217
The experience gained during the execution of the present research endeavor impelled
the reseracher to realize the limitations mentioned above and consequently some of the
future scopes could be realized.

218
The important ones are mentioned below:

The same type of study may be taken up in other types of organizations such as
BHEL, NALCO, IISCO, HMT etc.

The same type of study may be taken up in other plants of SAIL to have a
comparative analysis of various plants under the umbrella-SAIL.

The study may be extended for non-executive levels not included in this study
that constitute approximately 80 % of the manpower in any organization.

The study could be done in longitudinal design.

Though its a different proposition in organizational research, a better sampling

procedure that would come closest to ramdom sampling or stratified sampling and
a considerable large sample size would be highly desirable.

While the present research is qualitative regarding HR Climate- organizational

performance; a quantitative analysis would be icing on the cake.
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219
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 ORGANIZATIONAL CLIMATE (EXECUTIVES)

A number of statements are given below describing the HR Climate of an organization. Please give your assessment of
the HR climate in your organization by rating your organization on each statement using the 5 point scale, where

5= Always true.
4= Mostly true.
3= Sometimes true
2= rarely true.
1= not at all
true.

1. The top management goes out of its way to make sure that employees enjoy their work. 5 4 3 2 1

2. The top management believes that human resources are an extremely important resource 5 4 3 2 1
and they have to be treated more humanly.

3. Development of sub ordinates is seen as an important part of their job by the managers. 5 4 3 2 1

4. The personal policies facilitate employee development. 5 4 3 2 1

5. Top management is willing to invest a considerable part of their time and other 5 4 3 2 1
resources to ensure the development of employees.

6. Senior officers/executives take active interest in their juniors and help them learn their job. 5 4 3 2 1

7. People lacking competence in their jobs are helped to acquire competence rather than being 5 4 3 2 1
left unattended.

8. Managers believe that employees behavior can be changed and people can be developed at 5 4 3 2 1
any stage of their life.

9. People in this organization are helpful to each other. 5 4 3 2 1

10. Employees are very informal and do not hesitate to discuss their personal problems with 5 4 3 2 1
their supervisors.

11. The psychological climate in this organization is very conducive to any employee 5 4 3 2 1
interested in developing himself by acquiring new knowledge and skills.

12. Seniors guide their juniors and prepare them for future responsibilities / roles they are 5 4 3 2 1
likely to take up.

13. The top management makes efforts to identify and utilize the potential of the employees. 5 4 3 2 1

14. Promotion decisions are based on the suitability of the promotee rather than on favoritism. 5 4 3 2 1

15. There are mechanisms to reward any good work done or any contribution made by employees. 5 4 3 2 1

16. When an employee does not work his supervising staffs take special care to appreciate it. 5 4 3 2 1

17. Performance appraisal reports are based on objective assessment and adequate information 5 4 3 2 1
 and not on favoritism.

18. People do not have any fixed mental impressions about each other. 5 4 3 2 1

19. Employees are encouraged to experiment with new methods and try out creative ideas. 5 4 3 2 1

20. When an employee make a mistake his supervisors treat it with understanding and help him 5 4 3 2 1
to learn from such mistakes rather than punishing him or discouraging him.
21. Weakness of employees is communicated to them in non threatening way. 5 4 3 2 1

22. When behavior feedback is given to employees they take it seriously and use it for 5 4 3 2 1
development.

23. Employees take pain to find out their strengths and weaknesses from their supervising 5 4 3 2 1
officers/ colleagues.

24. When employees are sponsored for training, they take it seriously and try to learn from 5 4 3 2 1
the programme they attend.

25 .Employees returning from training programme are given opportunities to try out what 5 4 3 2 1
they have learnt.

26. Employees are sponsored for training programme on the basis of genuine training needs. 5 4 3 2 1

27. People trust each other in this organization. 5 4 3 2 1

28. Employees are not afraid to express or discuss their feelings with their supervisors. 5 4 3 2 1

29. Employees are not afraid to express or discuss their feelings with their sub ordinates. 5 4 3 2 1

30. Employees are encouraged to take initiative and do things on their own without having 5 4 3 2 1
to wait for instructions from supervisors.

31.Delegation of authority to encourage juniors to develop higher responsibilities is quite 5 4 3 2 1

common.

32.When seniors delegate authority to juniors, the juniors use it as an opportunity for 5 4 3 2 1
development.

33. Team spirit is of high order in this organization. 54321

34. When problems arise people discuss these problems openly and try to solve them 5 4 3 2 1
rather then keep accusing each other behind the back.

35. Career opportunities are pointed out to juniors by senior officers in the organization. 5 4 3 2 1

36. The organizations future plans are made known to the managerial staff to help them 5 4 3 2 1
develop their juniors and prepare them for future.

37.This organization ensures employee welfare to such an extent that the employees can 5 4 3 2 1
save a lot of their mental energy work purposes.

38. Job-rotation in this organization facilitates employee development. 5 4 3 2 1

 TRAINING EFFECTIVENESS QUESTIONNAIRE:

This questionnaire was administered with the intention to assess the effectiveness of the training function in the
DSP. Questionnaire was administered to 47 line managers and 22 HR personnel and the average score is given
alongside.

A: Not at all true

B. A little true
C. Somewhat true
D. True to a great extent.
E. very true

S.No. QUESTION 1 2 3 4 5
1 Induction training is given adequate importance in your
organization.
2 Induction training is well planned.
3 Induction training is of sufficient duration.
4 Induction training provide an excellent opportunity for newcomers
to learn comprehensively about the organization.
5 The norms and values are clearly explained to the new employees
during induction.
6 Senior management takes interest and spends time with the new
staff during induction training.
7 The new recruits find induction training very useful in your
organization.
8 The induction training is periodically evaluated and improved.
9 The employees are helped to acquire technical knowledge and
skills through training.
10 There is adequate emphasis on developing managerial capabilities
of the managerial staff through training.
11 Human relation competencies are adequately developed in your
organization through training in human skills.
12 Training of workers is given adequate importance in your
organization.
13 Employees are sponsored for training programmes on the basis of
careful identified developmental needs.
14 Those who are sponsored for the training programs take the
training seriously.
15 Employees in this organization participate in determining the
training they need.
16 Employees sponsored for training go with a clear understanding of
the skills and knowledge they are expected to acquire from the
training.
17 The HR department conducts briefing and debriefing sessions for
employees sponsored for training.
18 In-company programmes are handled by competent faculty.
19 The quality of in-company programs in your organization is
excellent.
20 Senior line managers are eager to help their juniors develop
through training.
21 Employees returning from training are given adequate free time to
reflect and plan improvements in the organization.
22 Line managers provide right kind of climate to implement new
ideas and methods acquired by their juniors during training.
23 Line managers utilize and benefit from the training programs.
24 External training programs are carefully chosen after collecting
enough information about their quality and suitability.
25 There is well designed and widely shared training policy in the
company.