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

ii

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)

Department of Business Administration THE UNIVERSITY OF BURDWAN

Golapbag, Burdwan-713104, West Bengal,

Website: www.buruniv.ac.in

Dr.Pradyumna Tripathy. Assistant Professor

iii

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

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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.

\

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LIST OF TABLES

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

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

4.1 HRD mechanisms in various countries 83

4.2 HRD mechanisms in various organizations 83

4.3 The training process 93

4.4 Different TOTO modules 101

4.5 Training programmes for Executives 105

4.6 Training Statistics (eaxecutives) 117

4.7 Training Statistics (non-eaxecutives) 117

4.8 training cum competency enhancement 118

4.9 Training in special areas. 118

5.1 HRD Climate- overall pic\ture 174

5.2 General HRD climate 177

5.3 OCTAPAC culture 179

5.4 HRD Mechanism 181

6.4.1 Correlation between Labor productivity and Profit 192

6.4.2 Correlation between Labor productivity and Production 194

6.4.3 Correlation between Labor productivity and Manpower 195

6.4.4 Correlation between Manpower and Profit 197

6.4.5 Correlation between Manpower and Production 198

6.4.6 Correlation between Training and Labor productivity 200

6.4.7 Correlation between Training and Lost time 201

6.4.9Combined Correlation between all the variables-SAIL 203

6.4.10 Multiple regression Profit- Training & Productivity 204

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6.4.11 Multiple regression Profit- Manpower, Productivity 205

6.4.12 Multiple regression Production- Manpower, productivity 206

6.4.11 Multiple regression Production- Training, productivity 207

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CONTENTS

CHAPTERS

1. INTRODUCTION 1-12

1.1. Introduction to the study 2

1.2 Research Objectives 5

1.3 Conceptualization of model 6

1.4 Research design 7

1.5 Research Methodology 8

1.6 Statistical tools and software 11

1.7 Cauterization and presentation 11

1.8 Scope of the study 12

1.9 Conclusion 12

2. LITERATURE REVIEW 13-47

2.1 Introduction 14

2.2 Literature Review of relation between HRD practices and firm performance. 15

2.3 Literature Review of relation between HRD practices and financial performance. 26

2.4 Literature Review of HRD practices in firms all over the world.. 31

2.5 Literature Review of HRD practices - Indian context 34

2.6 Literature Review of relation between labour productivity and financial

performance. 38

2.7 Literature Review of relation between HRD Climate and firm performance. 43.

2.8 Conclusion 46

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3. INDUSTRY PROFILE 48-79

3.1 Indian iron and steel Industry 49

3.2 Profile of SAIL 49

3.3Profile of DSP 73

4. HRD PRACTICES IN DURGAPUR STEEL PLANT 80-160

4.1 Introduction 81

4.3 HRD policy of Durgapur Steel Plant 83

4.3 Training and development 85

4.4 Performance Appraisal 126.

4.5 6Career Planning & Promotion Policy 150

4.6 Potential Appraisal 157

5. HRD CLIMATE 161-184

5.1 Introduction 162

5.2 What is HRD Climate? 165

5.3 About the Instrument 173

5.5 Interpretation of Result 174

6. DATA ANALYSIS AND INTERPRETATION 185-209

6.1 Introduction 186

6.2 Chart wise Interpretation 186

6.3. Graph wise Interpretation 188

6.4 Statistical Interpretation 192

6.4.1 Correlation between Labor productivity and Profit 192

6.4.2 Correlation between Labor productivity and Production 194

6.4.3 Correlation between Labor productivity and Manpower 195

6.4.4 Correlation between Manpower and Profit 197

6.4.5 Correlation between Manpower and Production 198

6.4.6 Correlation between Training and Labor productivity 200

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6.4.7 Correlation between Training and Lost time 201

6.4.9Combined Correlation between all the variables-SAIL 203

6.4.10 Multiple regression Profit- Training & Productivity 204

6.4.11 Multiple regression Profit- Manpower, Productivity 205

6.4.12 Multiple regression Production- Manpower, productivity 206

6.4.11 Multiple regression Production- Training, productivity 207

7. FINDINGS AND CONCLUSION 210-218

7.1.1 Findings 211

7.1.2 Conclusion 215

7.1.3.2 Limitation 217

7.1.4 Scope for future research 217

REFERENCES 219-236

APPENDIX

1

CHAPTER I

INTRODUCTION

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1.1 Introduction:

Human Resources Development (HRD) 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. HRD develops the key

competencies that enable individuals in organizations to perform current and future jobs

through planned learning activities. Groups within organizations use HRD to initiate and

manage change. Also, HRD ensures a match between individual and organizational

needs.

According to Nadler who coined the term” HRD 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 HRD 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 HRD given by Patricia McLagan of ASTD is “HRD is the

integrated use of training and development to improve individual, group and

organizational effectiveness.”

According to Rao and Pareek’ “HRD 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;

3

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.”

HRD 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.

HRD 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 HRD system and processes in order to evolve need based

pragmatic HRD agenda for the future. The increasing global level competition forced

Indian organizations too to give top priority to the issues of human resource development

(HRD). Currently, HRD 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 HRD 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 HRD strategies

keeping them well aligned with the overall corporate strategies. HRD 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, HRD

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 HRD policies and strategies and must

ensure the effective functioning of various sub-systems at pragmatic level. In the process

of HRD, competence and commitment development of human resources must be focused

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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 HRD,

mutual relationships and team spirit & team work among the people and groups in

organization should be emphasized. Finally, in the process of HRD, designing / re-

designing of various sub-systems and maintenance and ongoing improvement in

organization’s overall health & self renewing capabilities should also be taken care of. In

order to facilitate such a process of HRD, 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 HRD professionals are required but

such professionals need to develop and maintain high concern for HRD 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 HRD policies &

strategies as well as to ensure effective functioning of HRD subsystems. Ultimately,

HRD policies & strategies and HRD sub-systems need to be well aligned & integrated

with overall organization’s system, policies and strategies and such a well aligned and

integrated HRD system policies and strategies must make significant and measurable

contribution to the overall organization’s performance / effectiveness.

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1.2 Research Objectives:

An integrated HRD system makes significant and visible contribution to the

organization’s performance. However, there is dearth of empirical evidences regarding

what constitute HRD practices and how HRD 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 HRD practices,

HRD 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 HRD practices being followed in Durgapur Steel Plant.

b) Measurement of HRD climate prevailing in Durgapur Steel Plant which is but the

reflection of effectiveness of HRD 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 HRD practices, HRD Climate and

outcome.

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1.3 Conceptual Model:

The researcher has conceptualized the following simple model that rests on the

assumption that adoption, patronage and implemention of HRD practices improves HRD

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.

Labor

Productivity

Production

Profit

Labor Turnover

Loss time

Meeting of

target

General climate

Openness

Confrontation

Trust

Authenticity

Proactive

Agreeableness

Team Work

Motivation

Commitment

Positive Synergy

Enthusiasm

Belongingness

Performance appraisal

Potential appraisal

Career planning and

Promotion policy

Training and

development

Job Rotation

HRD PRACTICE ORG

OUTCOME

EMPLOYEE

OUTCOME HRD CLIMATE

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1.4 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 HRD 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 HRD practices/mechanisms that are being

followed in the Durgapur Steel Plant and measurement of HRD 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 HRD practices followed in the plant and measurement

of HRD 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.

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1.5 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 HRD

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 HRD mechanisms.

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

Abraham has been used to study the HRD 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 CHRD 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

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risk taking, top management commitment to HRD, 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 HRD climate

2= Poor HRD climate

3= average HRD Climate

4= good HRD Climate, where most employees have positive attitude to HRD

policies and practices.

5= extraordinarily good HRD 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

CHRD office. The questionnaires were given to 47 line managers and 22 HR personnel

from across the departments and hierarchy.

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About the instrument : The instrument consists of 25 items on five-point scale to

measure various dimensions of training function’s 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 HRD climate

2= Poor HRD climate

3= average HRD Climate

4= good HRD Climate, where most employees have positive attitude to HRD

policies and practices.

5= extraordinarily good HRD 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.

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1.6 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 HRD climate questionnaire:

Descriptive statistics - Arithmetic Mean. Standard Deviation, Range

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

• Karl Perason’s 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

1.7 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.

12

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

CHAPTER 4: HRD practices at Durgapur Steel Plant.

CHAPTER 5: HRD climate survey at Durgapur Steel Plant

CHAPTER 6: Data Analysis and interpretation.

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

1.8 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 HRD 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.

1.9 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.

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CHAPTER II

LITERATURE REVIEW

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2.1 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 HRD practices and firm performance.

• Literature Review of relation between HRD practices and financial performance.

• Literature Review of relation between HRD practices and HRD Climate.

• Literature Review of relation between HRD 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

15

2.2 Literature Review of relation between HRD 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 HRD activities with

outcomes or corporate performance. A plethora of research exists examining the

relationship between HRD 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

16

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

17

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

18

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.

19

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 / firm’s performance. Better strategic

HRD 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 Wyatt”s (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.

20

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 Katzell’s (1985) meta analysis demonstrated that training

and goal setting had significant and positive effects on productivity. Brown and

Medoff’s 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.

21

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.

22

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 HRD 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 HRD practices on employees’

turnover intentions. The results showed that HRD practices had a significant effect on

23

employees’ turnover intentions. However, no statistical evidence was found regarding the

effects of other HR practices on employees’ turnover intentions.

Wright and McMahan’s 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 & Rozell’s 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.

24

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

Ananthraman’s (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.

25

(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.

26

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 firm’s 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.

2.3 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. Tobin’s 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

27

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).

Huselid’s 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 firm’s 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 firm’s 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.

28

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 firm’s performance. The

29

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, Tobin’s 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.

30

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

31

19 % of variation between companies in change in profitability and 18 % of variation

between companies in change of productivity.

2.4 Literature Review of relation between HRD 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,

HRD 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).

32

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; Africa’s youngest and poorest country. They reported

that successful implementation of HR practices is strongly and positively related to

organizational p[erformance.

33

(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).

Tsai’s 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 Taiwan’s Firms,’ International Journal Of Human Resource

Management ,17,9,1512-1530).

Findings obtained from Huang’s (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 O’Neil (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., O’Neil,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).

34

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

2.5 Literature Review of relation between HRD 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 HRD practices in India in I975 .The survey of 53 public

and private sectors revealed that 30 % of the companies had HR Department, a proper

HRD 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

35

trainer programmes etc. are some of the OD interventions being used by those

organizations.

In a HRD 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 HRD processes and sixty eight per cent organizations were found to have

specifically designated manager to look after HRD function.

In his study of Indian Organizations, Abraham (1989) concluded that forty three percent

cases of the organizational performance could be explained by the HRD profile and its

components; HRD 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 HRD 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 HRD process has a

positive effect on perceived HRD 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.

36

In an another recent study conducted by Purang (2008), it was found that there exists a

positive relationship between the dimensions of HRD and the organizational commitment

of the managers; the results of the study showed that four dimensions of HRD, 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 HRD 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 organization’s plans and strategies.

Further, Kandulla (2001) developed “Strategic HRD Framework” which may be

perceived as a modified / enlarged version of the Rao’s Schematic presentation.

Paul and Ananthraman (2003) found that each and every HRD practice has an indirect

influence (not having direct casual connection) on the operational and financial

performance of the organization; further, HRD 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 HRD department does

follow up work on training needs as identified through PAS. In the study of Jain and

Chatterjee (2006), “HRD oriented institutional climate across the selected eighty eight

37

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

38

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)

2.6 Literature Review on HRD 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

39

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 today’s 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 firm’s 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 HRD practices

can lead to a firm’s 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 (HRD)

practices that make best use of its employees. The practices of the HRD heavily affect

40

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 firm’s 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 firm’s 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

41

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 firm’s 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 firm’s 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

42

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 HRD 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 HRD 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)

43

2.7 Literature Review on HRD Climate and firm performance:

A number of research studies have been conducted to determine the level of HRD

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 HRD

climate on job satisfaction as an organizational performance measure in selected public

sector organizations. The findings indicate that HRD climate has a definite impact on job

satisfaction which in turn leads to the increased organizational performance.

Riyaz Rainayee,(2000) in a study on HRD 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 HRD climate: A

case study of Navaratna Public sector organization” found a positive relationship between

value institutionalization and HRD climate, meaning there by a better and more ethical

environment of the organization shall lead to a better HRD climate for the organization.

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

NFL and concluded that the HRD climate is mainly a function of the effectiveness

variables including individual efficiency, organizational efficiency and productivity and

HRD variables including management policy on HRD, Organizational development , role

analysis and training.

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

in BHEL and found that HRD 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

44

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

organization’s strategy and developing high potential people to form an integrated

people’s 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 HRD 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 HRD climate, organizational

effectiveness and productivity.

The researchers conducted studies to know the influence of the HRD climate on the

individual’s 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),

45

Kumar and Patnaik (2002) , Locke (1976) conducted similar studies and found the impact

of HRD climate.

Centre for HRD, Xavier Labour Relations Institute (XLRI) developed a 38-item HRD

climate questionnaire to survey the extent to which development climate exists in

organisations. Using this instrument the first survey of HRD climate in Indian

organisations was carried out by Rao and Abraham (1986). They found that the general

HRD 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 HRD climate is a powerful intervening variable in

translating HRD practices into profit.

Venkateswaran (1997) found that, to a large extent, a favourable HRD climate was

prevalent in a public sector undertaking in India.

Srimannarayana (2001) identified below average level of HRD climate in a software

organisation in India. However, Agarwala (2002) found that the HRD climate was

significantly more developmental in IT industry when compared to the automobile

industry.

Mishra & Bhardwaj (2002) concluded that the HRD climate in a private sector

undertaking in India was good.

Rodrigues's (2004) study in the engineering institutes in India found the HRD climate

highly satisfactory. Pillai's (2008) study identified that HRD climate existing in banks as

moderate. This study further found that a supportive HRD climate in banks stimulated the

learning orientation of the employees.

46

CONCLUSION:

An exhaustive review indicates that while a direct relation and exact degree of relation

between the two variables under study (Independent HRD 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 HRD practices results in higher organizational performance. Enhancement of

effectiveness of HRD practices is likely to result in an increase in the organization’s

productivity and also in the reduction of employees’ turnover. It also points out the

significance of the intervening variable HRD climate. Thus it could be hypothesized that

various HRD practices if applied in it its true sense as a religion rather than mere rituals

do impact directly the HRD climate of the organization concerned. This better HRD

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

47

ultimate effect is on the productivity that harbingers production, profit, reduced labor

turnover, reduced loss time, more congruence between plan and actuality.

48

CHAPTER III

Organization Profile

49

3.1 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.

3.2 Steel Authority of India Limited:

Set-up on 19th January, 1954 as Hindustan Steel Limited for managing the Rourkela Steel

Plant, 3 other integrated steel plants came under it and SAIL was formed on 24th

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 India’s largest steel manufacturer with assets worth Rs. 6000

crores, Turnover of over Rs. 19000 crores and the employees exceeding 250000. SAIL is

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. It‘s 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

to SAIL through a memorandum issued on 19th

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.

51

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

52

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.

53

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,

54

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

55

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.

56

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

57

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.

58

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

59

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

60

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 India’s largest and world’s 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 company’s iron ore, limestone

and dolomite mines. The company has the distinction of being India’s largest producer

of iron ore and having the country’s 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.

SAIL’s vast portfolio of long, flat and tubular products is marketed within and outside

India by its Central Marketing Organization (CMO). SAIL’s Raw Materials Division’s

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.

61

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.

62

- 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.

63

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

64

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.

-

65

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.

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- 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

67

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).

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- 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.

69

- 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

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- -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)

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

memorandum issued on 19th

May, 2010.

The following statements depict net profit, turnover, and manpower and labor

productivity of SAIL in the last 20 years:

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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

73

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.

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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

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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

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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:

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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.

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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 CHRD 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 PM’S SHRAM VEER award.

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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

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CHAPTER IV

HRD PRACTICES IN

DURGAPUR STEEL PLANT

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4.1 Introduction:

Human Resources Development (HRD) 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. HRD develops the key

competencies that enable individuals in organizations to perform current and future jobs

through planned learning activities. Groups within organizations use HRD to initiate and

manage change. Also, HRD ensures a match between individual and organizational

needs.

According to Nadler who coined the term” HRD 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 HRD 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 HRD given by Patricia McLagan of ASTD is “HRD is the

integrated use of training and development to improve individual, group and

organizational effectiveness.”

According to Rao and Pareek’ “HRD in the organizational context is a process by which

the employees of an organization are helped in a continuous planned way, to:

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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.”

HRD 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, HRD 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 HRD mechanisms

CHINA

Training and development, Performance Appraisal, Career

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 HRD MECHANISMS

BEML

Training and development, Performance Appraisal, Career

planning, OD

BHEL OD interventions, problem solving workshops, Team building

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exercises, survey feedback

BOB performance appraisal, training, skill inventory

COL

Role Analysis exercise, Performance appraisal, potential

appraisal, counseling

JYOTI LTD. Performance appraisal, OD

IOC Role Analysis, Performance appraisal, Counseling

L & T Performance appraisal, training, OD, Counseling

SAIL

Performance Appraisal, Training, potential appraisal, career

planning

SBI

Performance appraisal, counseling, Training, OD, Job rotation,

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.

4.2 HRD 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 HRD

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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:

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• 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.

4.3 Training:

HRD 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 HRD

which through the provision of learning, development and training opportunities improve

individual, team and organizational performance. HRD is brought about through a bunch

of sub-systems like Training and Development, Performance and Potential Appraisal,

Organization Development and Career planning etc.

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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

HRD. 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 person’s 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.

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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 HRD

• MTI and

• Plant Training Centers

These together embody the total HRD set up of SAIL.

The Following are the boards, councils and committees in existence in relation to CHRD

functions::

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1) Training Advisory Board (TAB) : It is the apex body of SAIL to guide the HRD

initiatives for the organization. TAB comprises of Chairman, Functional Directors

& MDs of Plants. ED (HRD) is the convener of TAB. Chief Executives of

Plants/Units is special invitees depending upon Agenda Points. TAB generally

meets annually to assess the HRD achievements and gives directions for future

concerning HRD 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, HRD activities of SAIL

are planned, implemented in Plants/Units and reviewed. In this meeting ED

(HRD) 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

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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 HRD 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.

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• 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. ‘

• Achieve market leadership and prosper in business through satisfaction of

customers needs by continual improvement in quality, cost and delivery of

products and services.

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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

people’s 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.

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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

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Table 4.3

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

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

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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\

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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

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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.

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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 today’s 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 today’s 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.

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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

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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

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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 institute’s 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)”.

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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

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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

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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:

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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:

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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.

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• 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.

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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: CHRD

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.

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• Action plan.

• Duration: 4 DAYS

• Venue: CHRD

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 - CHRD

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.

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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.

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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

* Industrial Hydraulics * Vulcanizing/ Repair of conveyor belt

Target Population:

Technicians/ Sr. Technicians working in the maintenance area

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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

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• 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 team’s 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.

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• 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: CHRD

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

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• 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.

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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 CHRD. 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.

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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 CHRD-

• 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 .

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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

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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

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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.

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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 constituent’s 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 HRD 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.

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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

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• 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.

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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

organization.

5 5

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

newcomers to learn comprehensively about the organization.

5 5

5 The norms and values are clearly explained to the new

employees during induction.

5 5

6 Senior management takes interest and spends time with the

new staff during induction training.

4 4

7 The new recruits find induction training very useful in your

organization.

4 4

8 The induction training is periodically evaluated and

improved.

4 4

9 The employees are helped to acquire technical knowledge and

skills through training.

4 4

10 There is adequate emphasis on developing managerial

capabilities of the managerial staff through training.

5 4

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11 Human relation competencies are adequately developed in

your organization through training in human skills.

5 3

12 Training of workers is given adequate importance in your

organization.

5 5

13 Employees are sponsored for training programmes on the

basis of careful identified developmental needs.

4 4

14 Those who are sponsored for the training programs take the

training seriously.

4 4

15 Employees in this organization participate in determining the

training they need.

4 3

16 Employees sponsored for training go with a clear

understanding of the skills and knowledge they are expected

to acquire from the training.

3 4

17 The HR department conducts briefing and debriefing sessions

for employees sponsored for training.

3 3

18 In-company programmes are handled by competent faculty. 4 4

19 The quality of in-company programs in your organization is

excellent.

4 4

20 Senior line managers are eager to help their juniors develop

through training.

4 4

21 Employees returning from training are given adequate free

time to reflect and plan improvements in the organization.

4 3

22 Line managers provide right kind of climate to implement

new ideas and methods acquired by their juniors during

training.

4 4

23 Line managers utilize and benefit from the training programs. 4 4

24 External training programs are carefully chosen after

collecting enough information about their quality and

suitability.

4 4

25 There is well designed and widely shared training policy in

the company.

5 5

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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.

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4.4 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

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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.

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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:

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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

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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 HRD departments by appointing HRD 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 HRD 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.

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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

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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

HRD 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 HRD 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 HRD 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

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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 management’s 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

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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.

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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,

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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

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• 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.

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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 appraisee’s 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

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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

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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

20-51 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:

Development of executives is envisaged through training, job rotation/enrichment and

counseling/coaching. The training need identification and plan for fulfillment of the same

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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

appraisee’s 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 executive’s 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

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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.

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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 one’s 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.

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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.

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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?

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• 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 bird’s eye view on the effectiveness of performance management system in the

Durgapur Steel Plant a mini questionnaire was administered.

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Questionnaire:

B.PERFORMANCE 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.

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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.

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• 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.

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• 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.

4.5 CAREER PLANNING and PROMOTION POLICY

Hope and advancement in one’s 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 HRD philosophy is that people perform

better when they feel trusted and see meaning in what they are doing. In the HRD 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.

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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

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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 Company’s 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.

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• 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

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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

EARNED FOR THE YEAR

APPROXIMATE % OF

EXECUTIVES

CREDIT POINTS

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.

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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.

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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.

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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.

4.6 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

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initiated by Crompton Greaves Limited and currently is practiced by many companies

including Dr. Reddy’s, 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.

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• 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

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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 HRD.

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.

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CHAPTER V

HRD CLIMATE:

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5.1 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 (HRD) 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

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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

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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 HRD 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

HRD. This positive HRD climate renders the existing systems more effective and makes

the organizations more receptive to the introduction of relevant additional system

(Athreya 1988). A healthy HRD climate certainly bolsters the overall internal

environment of the organization, fosters employee commitment, involvement and

satisfaction with the job.

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Human resources being one of the important factors of production, HRD is needed to

develop competencies of individual employees through its various interventions.

Perception about an organization’s 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.

5.2 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 member’s 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)

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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

system’s 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

system’s 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 system’s practices and

procedures, people in the system tend to agree less on their satisfaction than on their

description of the system’s 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.

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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 individual’s

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 member’s 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 organization’s

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.

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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

organization’s strategy and developing high potential people to form an integrated

people’s 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

HRD 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 HRD department which has to provide a

proper climate in the organization conducive for employee development, termed as the

HRD climate.

HRD 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

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satisfied in an organization. Most researchers agree that a congenial HRD 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 organization’s 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

HRD 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 HRD climate can be created using appropriate HRD systems and leadership styles of

top management. The HRD climate is both a mean to an end as well as an end in itself.

HRD 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 HRD practices. An optimal level of Development

Climate is essential for facilitating HRD. 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.

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• 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.

HRD 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 HRD 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 HRD 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 HRD

climate in various organizations like public and private sector organizations, banks,

educational institutions etc.

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On the basis of research studies and contributions by several researchers, the following

have been categorized as the contributory factors of HRD 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 HRD 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.

• HRD Instruments and Systems: A number of HRD instruments have been found

to generate a good HRD climate. Particularly open systems of appraisal with

emphasis of counseling, career development systems, informal training

mechanisms, potential development systems etc. contribute to HRD climate.

• Self-renewal Mechanisms: Organizations that have built in self-renewal

mechanisms are likely to generate a positive HRD climate.

• Attitudes of Personnel and URD Staff : A helpful and supportive attitude on the

part of HRD and personnel people plays a very critical role in generating the HRD

climate. If the personal behavior of any of these agents is not supportive, the HRD

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 HRD 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 HRD 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 HRD

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climate in various organizations like public and private sector organizations, banks,

educational institutions etc.

The literature on HRD climate provides a clear picture on the nature of the work

undertaken in this field. Most of the researchers have followed the typology, ‘HRD

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 HRD 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 HRD

climate, organizational effectiveness and productivity.

The researchers conducted studies to know the influence of the HRD climate on the

individual’s 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 HRD climate.

Centre for HRD, Xavier Labour Relations Institute (XLRI) developed a 38-item HRD

climate questionnaire to survey the extent to which development climate exists in

organisations. Using this instrument the first survey of HRD climate in Indian

organisations was carried out by Rao and Abraham (1986). They found that the general

HRD 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

HRD climate is a powerful intervening variable in translating HRD practices into profit.

Venkateswaran (1997) found that, to a large extent, a favourable HRD climate was

prevalent in a public sector undertaking in India. Srimannarayana (2001) identified below

average level of HRD climate in a software organisation in India. However, Agarwala

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(2002) found that the HRD climate was significantly more developmental in IT industry

when compared to the automobile industry. Mishra & Bhardwaj (2002) concluded that

the HRD climate in a private sector undertaking in India was good. Rodrigues's (2004)

study in the engineering institutes in India found the HRD climate highly satisfactory.

Srimannarayana (2007) found that a moderate HRD climate was prevailing in Dubai

organisations. Pillai's (2008) study identified that HRD climate existing in banks as

moderate. This study further found that a supportive HRD climate in banks stimulated the

learning orientation of the employee

5.3 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 HRD

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 HRD 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

Cronbach's Alpha Based on

Standardized Items N of Items

.749 .776 38

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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 HRD 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 HRD mechanisms measure the extent to which HRD 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

175

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

176

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-HRD-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 HRD initiatives. In order to assess general HRD

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 HRD 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 HRD 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.

177

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

178

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 HRD. 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.

179

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

HRD-Mechanisms

Successful implementation of HRD 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

180

planning, employee welfare, and job rotation are some of the HRD 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 HRD mechanisms seriously. The analysis of the responses

indicates that a high degree of implementation of HRD 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

181

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

HRD 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

182

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

183

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

184

5.4 Conclusion

The analysis leads to the conclusion that excellent HRD climate is prevailing in the

organization. Category wise, it is observed that that OCTAPAC culture –the essence of

HRD Climate was more prevalent than HRD mechanisms and general HRD 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 one’s 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.

185

CHAPTER VI

DATA ANALYSIS

&

INTERPRETATION

186

6.1 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.

6.2 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.

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 HRD policies in the Durgapur steel Plant.

188

6.3 FINDINGS & INTERPRETATION (GRAPH-WISE):

DURGAPUR STEEL PLANT:

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

HRD policy of the plant. The objective of HRD 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 LABOUR PRODUCTIVITY

79.37

89.2

100.21108.27

119.47

131.15140.96 143.38

195.88

210.67 213

226.2

0

50

100

150

200

250

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

L

A

B

O

U

R

P

R

O

D

U

C

T

I

V

I

T

Y

189

DSP NO. EXECUTIVE

18341776

1913

1815

1689

1582 1549

1679 16751625

1676 1655

0

500

1000

1500

2000

2500

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

D

S

P

N

O

.

E

X

E

C

U

T

I

V

E

DSP EXECUTIVE

DSP NO. OF NON EXCUTIVE

19073 1872617728

1611315168

14629 1425213468 13068

1260811906 11852

0

5000

10000

15000

20000

25000

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

N

O

.

O

F

N

O

N

E

X

C

U

T

I

V

E

DSP NON EXCUTIVE

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

190

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

20907 2050219641

1792816857

16211 1580115147 14743 14233

13582 13507

0

5000

10000

15000

20000

25000

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

M

A

N

P

O

W

E

R

DSP MAN POWER

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.

191

DSP TOTAL PRODUCTION

7488

80278470

8763.129000.15 9170.615 8986.64

9212.18

9917.81 10023.0410462.95 10614.2

0

2000

4000

6000

8000

10000

12000

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

T

O

T

A

L

P

R

O

D

U

C

T

I

O

N

DSP TOTAL PRODUCTION

DSP PROFIT

-1720

-729

-1696

-304

2512

6817

4013

6202

7537

6175

6754

4905

-4000

-2000

0

2000

4000

6000

8000

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

P

R

O

F

I

T

DSP PROFIT

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 (HRD) practices. The result has

been elaborated and strengthened with the help of statistical relationship between training

and productivity, productivity and production or profit.

192

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.

r2 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 : ρ = 0; i.e. there is no relation between Profit and Productivity.

H1 : ρ = 0 i.e. there is relation between Profit and Productivity

Test statistic is

t = r [n-2/1-r2]1/2

which has a t distribution with n-2 degrees of freedom.

For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.82]1/2

= 4.16

and the degrees of freedom 12-2=10. From the t distribution table, the critical value of t

193

for a two-tailed test and ά= 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 HRD policy

improves the HRD 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

194

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

r2 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 : ρ = 0; i.e. there is no relation between Profit and Labor Productivity.

H1 : ρ = 0 i.e. there is relation between Profit and Labor Productivity

Test statistic is

t = r [n-2/1-r2]1/2

which has a t distribution with n-2 degrees of freedom.

.

For the correlation coefficient calculated based on the data, t= 0.967 [12-2/1-0.9672]1/2 =

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 ά= 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

195

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 HRD 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 HRD Climate improves Labor Productivity which enhances the production

anytime, anywhere.”

C. TRAINING-PRODUCTIVITY

DSP

Correlations

PRODUCTIVITY TRAINING

PRODUCTIVITY Pearson Correlation 1 .476

196

Sig. (2-tailed) .118

N 12 12

TRAINING Pearson Correlation .476 1

Sig. (2-tailed) .118

N 12 12

r= 0.467

r2 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 : ρ = 0; i.e. there is no relation between Training and Productivity.

H1 : ρ = 0 i.e. there is relation between Training and Productivity

Test statistic is

t = r [n-2/1-r2]1/2 which has a t distribution with n-2 degrees of freedom.

.

For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.82]1/2

=

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 ά= 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 HRD 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

HRD 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

197

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.

r2 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 : ρ = 0; i.e. there is no relation between Lost time and Training.

H1 : ρ = 0 i.e. there is relation between Lost time and Training .

Test statistic is

t = r [n-2/1-r2]1/2 which has a t distribution with n-2 degrees of freedom.

.

198

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 ά= 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.

r2 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 : ρ = 0; i.e. there is no relation between Profit and Production.

H1 : ρ = 0 i.e. there is relation between Profit and Production.

199

Test statistic is

t = r [n-2/1-r2]1/2

which has a t distribution with n-2 degrees of freedom.

For the correlation coefficient calculated based on the data, t= 0.815 [12-2/1-0.8152]

1/2 =

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 ά= 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-à-vis the other plants of the

organization and care need to be given.

200

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.

r2 is 0.819 which signifies that 81.9 % of variation in profit is explained by manpower,

keeping other factors constant.

201

Further the statistical significance of the relationship between two variables measured by

using r can also be tested. The hypotheses are:

H0 : ρ = 0; i.e. there is no relation between Profit and Manpower.

H1 : ρ = 0 i.e. there is relation between Profit and Manpower.

Test statistic is

t = r [n-2/1-r2]1/2

which has a t distribution with n-2 degrees of freedom.

For the correlation coefficient calculated based on the data, t= 0.905 [12-2/1-0.9052]1/2 =

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 ά= 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

r2 is 0.912 which signifies that 91.2 % of variation in production is explained by

manpower, keeping other factors constant.

202

Further the statistical significance of the relationship between two variables measured by

using r can also be tested. The hypotheses are:

H0 : ρ = 0; i.e. there is no relation between manpower and Production.

H1 : ρ = 0 i.e. there is relation between manpower and Production.

test statistic is

t = r [n-2/1-r2]1/2

which has a t distribution with n-2 degrees of freedom.

For the correlation coefficient calculated based on the data, t= 0.8 [12-2/1-0.82]1/2 = 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 ά= 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; -

203

.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

company’s 160000-strong workforce alone accounted for 16.69% of the company’s 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

Correlation 1 .800

** .815

** .621

* -.905

**

Sig. (1-

tailed)

.001 .001 .016 .000

N 12 12 12 12 12

PRODUCTIVITY Pearson

Correlation .800

** 1 .967

** .476 -.926

**

Sig. (1-

tailed) .001

.000 .059 .000

204

N 12 12 12 12 12

PRODUCTION Pearson

Correlation .815

** .967

** 1 .623

* -.955

**

Sig. (1-

tailed) .001 .000

.015 .000

N 12 12 12 12 12

TRAINING Pearson

Correlation .621

* .476 .623

* 1 -.718

**

Sig. (1-

tailed) .016 .059 .015

.004

N 12 12 12 12 12

MANPOWER Pearson

Correlation -.905

** -.926

** -.955

** -.718

** 1

Sig. (1-

tailed) .000 .000 .000 .004

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

Correlation 1 -.858** -.882** -.810**

Sig. (1-

tailed)

.000 .000 .001

N 12 12 12 12

PRODUCTION Pearson

Correlation -.858** 1 .970** .908**

Sig. (1-

tailed) .000

.000 .000

N 12 12 12 12

205

PRODUCTIVITY Pearson

Correlation -.882** .970** 1 .839**

Sig. (1-

tailed) .000 .000

.000

N 12 12 12 12

PROFIT Pearson

Correlation -.810** .908** .839** 1

Sig. (1-

tailed) .001 .000 .000

N 12 12 12 12

**. Correlation is significant at the 0.01 level (1-tailed).

MULTIPLE REGRESSION ANALYSIS (PROFIT- ---TRAINING,

PRODUCTIVITY)

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

Correlations

B

Std.

Error Beta

Zero-

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

Model R R Square

Adjusted

R Square

Std. Error of

the Estimate

Change Statistics

R Square

Change F Change df1 df2 Sig. F Change

1 .985a .969 .963 183.35583 .969 142.721 2 9 .000

206

Model Summary

Model R R Square

Adjusted

R Square

Std. Error of

the Estimate

Change Statistics

R Square

Change F Change df1 df2 Sig. F Change

1 .985a .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)

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

Correlations

B

Std.

Error Beta

Zero-

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

207

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

Model R R Square

Adjusted

R Square

Std. Error of

the Estimate

Change Statistics

R Square

Change F Change df1 df2 Sig. F Change

1 .852a .726 .665 2079.29229 .726 11.918 2 9 .003

a. Predictors: (Constant), PRODUCTIVITY,

MANPOWER

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

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)

208

Variables Entered/Removedb

Model Variables Entered Variables Removed Method

1 M, L, Pa . Enter

a. All requested variables entered.

b. Dependent Variable: Z

Model Summary

Model R

R

Square

Adjusted

R

Square

Std. Error of

the Estimate

Change Statistics

R Square

Change

F

Change df1 df2

Sig. F

Change

1 .922a .850 .793 1632.777 .850 15.084 3 8 .001

a. Predictors: (Constant), M, L, P

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

Correlations

B Std. Error Beta

Zero-

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.

209

Variables Entered/Removedb

Model Variables Entered Variables Removed Method

1 G, E, L, Pa . Enter

a. All requested variables entered.

b. Dependent Variable: Z

Model Summary

Model R R Square

Adjusted

R Square

Std. Error of

the Estimate

Change Statistics

R Square

Change F Change df1 df2 Sig. F Change

1 .935a .874 .801 1601.026 .874 12.096 4 7 .003

a. Predictors: (Constant), G, E, L, P

Coefficientsa

Model

Unstandardized Coefficients Standardized Coefficients

t Sig. B Std. Error Beta

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 HRD 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.

210

CHAPTER VII

FINDINGS, CONCLUSION AND

SCOPE FOR FUTURE

RESEARCH:

211

With reference to the objectives laid down as below

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

b) Measurement of HRD climate prevailing in Durgapur Steel Plant which is but the

reflection of effectiveness of HRD 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 HRD practices, HRD Climate and

outcome.

7.1 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.

212

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 HRD policies in the Durgapur steel Plant.

Major findings of the research can be jotted down as below:

Regarding objective “Critical study of different HRD 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 (CHRD) 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

HRD 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 HRD

policy of DSP) that has resulted in better financial performance (turnover and

profit) and better fulfillment of plan.

• HRD in Durgapur Steel Plant is gaining consistent support from managers

working at various levels. They formulate the HRD policies keeping

organizational requirements in mind and implement these wholeheartedly.

213

• 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 HRD 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 HRD have been introduced in a gradual way, after a thorough review of the

organization’s 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 HRD climate prevailing in Durgapur Steel

Plant which is but the reflection of effectiveness of HRD practices followed in the

plant.”

• It has been found that excellent HRD climate is prevailing in the

organization. Category wise, it is observed that that OCTAPAC culture –

the essence of HRD Climate was more prevalent than HRD mechanisms

and general HRD 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

214

participative approach to decision making. There is enough autonomy to

perform one’s 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.

215

Regarding objective “Establishing a model showing linkage between HRD practices,

HRD 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 people’s commitment and capacity to learn at all levels in an

organization.”

7.2 Conclusion:

While a direct relation and exact degree of relation between the two variables under study

(Independent HRD practices and Dependence Organizational Outcomes) is not so visible,

nevertheless the impact is there. It also points out the significance of the intervening

variable HRD 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 HRD practices if applied in it its true sense as a

religion rather than mere rituals do impact directly the HRD climate of the organization

concerned. This better HRD 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.

216

The findings can be schematically presented as below:

HRD practices HRD climate Employee outcome Otherfactors

Organizatio

Org. output

Financial outcome

Other factor

• Performance

appraisal

• Potential

development

exercises

• Training

• Job rotation

• Career Planning

programs

• Role clarity

• Collaboration

• Openness

• Trust

• Authenticity

• Pro activity

• Team work

• Autonomy

• Personnel policies

• Line Managers’

interest

• Technological up

gradation

• Rationalized man

power

• Increased Profit

• More competent

People

• Better Developed

Roles

• Better utilization

of Human

Resources

• More teamwork

• Positive synergy

• Satisfaction

• Commitment

• Reduced loss of

Org. output

• Higher Production

• Increased labour

productivity

217

7.3 Limitations:

• The sample unit consists of executives only.

• The sample size could have been larger.

• Labor turnover is an important indicator of successful HRD 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

HRD practices such as technological up gradation. Those factors have not been

accounted for in the present study.

• The timing of data collection regarding HRD Climate in the organization is very

significant. As such a time-series research would have been better predictor.

• The linkage between HRD 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.

7.4 SCOPE FOR FUTURE RESEARCH:

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 it’s 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 HRD Climate- organizational

performance; a quantitative analysis would be icing on the cake.

219

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220

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ORGANIZATIONAL CLIMATE (EXECUTIVES)

A number of statements are given below describing the HRD Climate of an organization. Please give your assessment

of the HRD 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. 5 4 3 2 1

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 organization’s 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.