Impact of Financial Globalization on Employee Productivity of LIC
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Transcript of Impact of Financial Globalization on Employee Productivity of LIC
IMPACT OF FINANCIAL GLOBALIZATION ON EMPLOYEE
PRODUCTIVITY OF LIC
A Dissertation submitted for the degree of Master in Business Administration
2016
Submitted By:
Miss K. Renuka Patnaik
Roll No. PC14MBA002
Under the Guidance of:
Sri Sisir Ranjan Dash
Department of Professional Courses
Gangadhar Meher University,
Sambalpur – 768004
Odisha
DECLARATION
I, K.Renuka Patnaik, do hereby declare that the work incorporated in the dissertation
is original and dissertation entitled “Impact Of Financial Globalization On Employee
Productivity Of LIC” submitted by me for the MBA degree is the record of work carried out
by me during the period from January to April 2016 under the guidance of Sri Sisir Ranjan
Dash, Department of Professional Courses, Gangadhar Meher University, Sambalpur –
768004 and has not been formed the basis for the award of any degree in this or any other
University.
I further declare that the material obtained from other sources has been duly
acknowledged in the dissertation.
(Miss K.Renuka Patnaik)
Signature of the Candidate
Sri Sisir Ranjan Dash
MA (Economics), MBA, Ph. D. (Cont.), NET
Sr. Lecturer
Department of Professional Courses
Gangadhar Meher University, Sambalpur – 768004, Odisha
Phone: 0663 2522543, 9439213351(M),
email: [email protected]
CERTIFICATE
This is to certify that dissertation titled “Impact Of Financial Globalization On
Employee Productivity Of LIC” submitted by Miss K. Renuka Patnaik bearing Roll No.
PC14MBA002 to Department of Professional Courses, Gangadhar Meher University,
Sambalpur – 768004, Odisha for a Master in Business Administration degree, is the product
of an authentic research work undertaken by the candidate under my supervision and
guidance.
As far as I know, the materials in this work have not been submitted previously to any
University for obtaining any degree/ diploma. I am satisfied that this dissertation adequately
meets the academic standards for a MBA Degree.
Sri Sisir Ranjan Dash
Supervisor
This project has been published in the website of Golden Research Thought. The
project was submitted on 10th March 2016 and was published online on 18th march 2016.
Below are the certificates issued by the publication team.
ACKNOWLEDGEMENT
Behind every study there stands myriad of people whose help and contribution make it
successful.
At the very outset, I would like to thank to my esteemed Faculty Dr. Srinibash Dash
(Head of the Department of Professional Courses) and Mr.Sisir Ranjan Dash (Sr. Lecturer)
respectively their constant support continued and invaluable guidance at each step of this
project.
Also, thankful to all other Professors and Lectures of our Department for their kind help
rendered me.
There are several employees at LIC who contributed significantly to my successful journey of
project work that, I would like to thank my deepest gratitude to each of them. My special
thanks to my family members and friends who contributed towards this achievement.
Thanks everyone......
K.Renuka Patnaik
G.M.University,
Department of Professional courses
Sambalpur
PREFACE
The conceptual knowledge acquired by management students is best
manifested in the projects. As a part of curriculum of MBA, I have got a
chance to prepare a report on “Impact of Financial Globalization on
Employee productivity of LIC”. The present project gives a perfect vent to my
understanding of the insurance sector.
The project report entitled ― Impact of Financial Globalization on
Employee productivity of LIC.
The report will provide all the information regarding the impact of
globalization on the employee productivity after the nationalization of the
Life Insurance Corporation and their impact on employees after globalization
of insurance sector.
I also hope that this report will be beneficial for my next batches and for
those who are related to this topic.
LIST OF CONTENTS
TOPIC NO. TITLES PAGE NO.
CHAPTER 1.
Introduction
1.1- History of Life Insurance In INDIA
1.2- Nationalization of LIC
1.3- LPG of Insurance Sector
1.4- Current Scenario of LIC
2
3
4
12
CHAPTER 2.
Review of Literature
2.1- Research Question
2.2- Significance of the Study
2.3- Scope of the Study
2.4- Limitations of the Study
16
16
16
17
CHAPTER 3.
Research Design
3.1- Research Methodology
3.2- Type of Research
3.3- Source of Data
3.4- Sampling Technique
3.5- Scaling Technique
3.6- Statistical Method
18
18
18
19
19
20
CHAPTER 4.
Analysis & Findings
4.1- Graphical Representation
4.2- Tabular Representation
21
22
CHAPTER 5. Conclusion & Suggestion 25
References 26
APPENDIX I (Questionnaire)
APPENDIX II (Journal)
27
30
1
ABSTRACT
In 1956, LIC (Life Insurance Corporation) got nationalised with the objective
to bring the sector under direct control of public as well as to increase the employee
productivity and efficiency. In August 2000, the insurance sector was liberalised and
opened up for the private sector with the constitution of IRDA. Now after more than
one and half decade of liberalisation been completed in the year 2015, the insurance
sector is worth going through an assessment of its productivity. The purpose of this
study is to measure the employee productivity of Insurance sector after globalisation.
To measure the employee productivity, we have gone for a survey of the employees in
this sector (LIC) by collecting primary data. In this connection, we have used a non-
parametric test i.e. chi square test to detect whether there is any impact of sample
characteristics like gender and age on the overall productivity of employees in the post
globalization era. The test results revealed that irrespective of gender and age, the
employee productivity has increased due to financial globalization in the insurance
sector.
Keyword: Financial Globalisation, Insurance Sector, Chi-Square test, Employee
Productivity.
2
1. INTRODUCTION
Insurance is a promise of compensation for potential future losses in exchange
for periodic payments. It is a contract in which an individual or an entity receives
financial security or reimbursement against losses form an insurance company. It has a
deep-rooted history in Indian. The writings of Manusmrithi, Dharmasastra and
Arthasastra talks in terms of pooling the resources that could be again distributed in
times of calamities such as floods, famine, fire etc.
1.1 HISTORY OF LIFE INSURANCE IN INDIA:
Life Insurance came to India from England in the year 1818, with the
establishment of Oriental Life Insurance Company, started by Europeans in Calcutta.
It was the first life insurance company on Indian Soil. However it failed in the year
1834. Soon in 1829, Madras Equitable had begun transacting its life insurance
business in Madras Presidency. In 1870 the British Insurance Act was enacted and the
Bombay Mutual in 1871 was the first Indian life insurance company which covered
Indian lives at normal rates, Oriental in 1874 and Empire of India in 1897 were started
in the Bombay Residency, in the last three decades of 19th century. The main motive
of these companies were to insure the Indian lives and provide social security by
insuring various sectors of the society, these companies were highly patriotic.
However, this era was dominated by the foreign insurance offices such as Royal
Insurance, Albert Life Assurance, London Globe and Liverpool, which did a good
business in India. Insurance and the Indian offices had hard competition from these
foreign companies. At that period of time, all the foreign insurance companies were
established only to look after the needs of European communities and not to insure the
Indian natives. However, later on, with the efforts of renowned people like Babu
Muttylal Seal, these foreign life insurance companies started to insure the Indian lives,
but instead they were charged with heavy extra premium. Then, in 1896, Bharat
Insurance Company was established, which was one of such companies inspired by
nationalism. Many more insurance companies came up during the Swadeshi
movement of 1905-1907, some of them are United India in Madras, Co-operative
Assurance at Lahore and National Insurance and National India in Kolkata were
CHAPTER: 1- INTRODUCTION TO FINANCIAL GLOBALIZATION & THE
RESTRUCTURING OF INSURANCE SECTOR IN INDIAIN LIC
3
established in 1906, Hindustan Co-operative Insurance Company in Calcutta, in the
year 1907, Indian Mercantile, Swadeshi Life (later on Bombay Life) and General
Assurance etc.
Prior to 1912, there was no legislation in India to regulate insurance business.
The Life Insurance Companies Act and the Provision Fund Act were passed in the
year 1912. This Life Insurance Companies Act made it necessary, that the premium
rate tables and periodic valuation of companies should be verified and certified by an
actuary. But this act discriminated between Indian and foreign companies in many
accounts, thus putting the Indian companies in a negative aspect.
In the year 1928, Indian Insurance Companies act enabled the Government to
collect statistical data on both life and non-life business transacted in India by both
Indian as well as foreign companies. In the year 1938, with a view to protect the public
interest, the earlier legislation was consolidated and the Insurance Act 1938 was
amended, with provisions having better control over the activities of insurers. The first
two decades of 20th century saw a tremendous growth of insurance business. In 1938,
from 44 companies it rose to 176 companies, with a total business-in-force of Rs.
22.44 crore.
1.2 NATIONALISATION OF LIC:
The Insurance Amendment Act 1950 abolished principal agencies, but still
there were a large number of insurance companies and the level of competition was
also very high, along with it there was also an allegation of unfair trade practices. Thus
the government of India decided to nationalise the insurance business. The
nationalisation of Life Insurance got its momentum in1944, however, much later in
19th June 1956, the Life Insurance in India got nationalized. At the time of
nationalisation nearly 154 Indian, 16 non- Indian insurance companies and 75
provident were operating in India. Nationalisation was accomplished in two stages: at
first the management of the companies were taken over by means of an ordinance and
then the ownership by means of a comprehensive bill. The main objective of
nationalisation was ‘to bring the insurance sector under direct ownership and control
of the public.’ This decision coincided with the second five year plan as well as the
announcement of the Industrial Policy Resolution 1956, which replaced the 1948
resolution. The Parliament of India passed the Life Insurance Corporation Act on the
4
19th June 1956 and the Life Insurance Corporation of India started operating from 1st
September 1956, with an objective to ‘spread Life Insurance much more widely and in
particular to the rural areas with a view to insure all the person in the country and
providing them adequate financial cover at a reasonable price.’
The LIC commanded a monopoly till the late 90s, creating a huge surplus and
contributing about 7% of India’s GDP by 2006.
1.3 LIBERALISATION, PRIVATISATION AND GLOBALISATION (LPG) OF
INSURANCE SECTOR IN INDIA:
In the year 1999, after Malhotra committee submitted a report (in 1994),
Insurance Regulatory and Development Authority (IRDA), an autonomous body was
constituted to regulate and develop insurance industry. The Malhotra committee’s
recommendations were as follows:-
1. Raise the capital base of LIC up to Rs. 200 crores, half retained by the
government and rest sold to the public at large with suitable reservations for its
employees.
2. Granting private sector to enter insurance industry with a minimum paid up
capital of Rs. 100 crores.
3. Foreign insurance be allowed to enter by floating an Indian company
preferably a joint venture with Indian partners.
4. Steps are initiated to set up a strong and effective insurance regulatory in the
form of a statutory autonomous board on the lines of SEBI.
5. Limited number of private companies to be allowed in the sector. But no firm
is allowed in the sector and no firm is allowed to operate in both lines of
insurance (life or non-life).
6. Tariff Advisory Committee (TAC) is delinked form GIC to function as a
separate statuary body under necessary supervision by the insurance regulatory
authority.
7. All insurance companies be treated on equal footing and governed by the
provisions of insurance Act. No special dispensation is given to government
companies.
5
8. Setting up of a strong and effective regulatory body with independent source
for financing before allowing private companies into sector.[1]
In April 2000, IRDA was incorporated as a statutory body. Section 14 of IRDA
Act, lays down the duties, powers and functions of the authority which includes:-
1. Issue to the applicant a certificate of registration, to renew, modify withdraw,
suspend or cancel such registration.
2. To protect the interest of policy holders in all matters concerning nomination
of policy, surrender value f policy, insurable interest, settlement of insurance
claims, other terms and conditions of contract of insurance.
3. Specifying requisite qualification and practical training for insurance
intermediates and agents.
4. Specifying code of conduct for surveyors and loss assessors.
5. Promoting efficiency in the conduct of insurance business
6. Promoting and regulating professional regulators connected with the insurance
and reinsurance business.
7. Specifying the form and manner in which books of accounts will be maintained
and statement of accounts rendered by insurers and insurance intermediaries.
8. Adjudication of disputes between insurers and intermediates.
9. Specifying the percentage of life insurance and general and general business to
be undertaken by the insurers in rural or social sectors etc. [2]
In August 2000, the insurance sector was liberalised and opened up to the
private sector by the IRDA, with an invitation for application for registration. It is the
phase when India opened up its boundaries for the rest of the world, which allowed
free flow of goods, services, labour and money.
1.3.1. Impact of LPG
The introduction of private players has added value to the Insurance industry as
well as, they have given tough competition to the one time monopoly of LIC. With the
advent of the private players, the market has seen new and innovative steps taken by
the players. With the increasing competition because of new players, the service
[1] https://licindia300.wordpress.com/tag/liberalisation/ [2] https://licindia300.wordpress.com/tag/liberalisation/
6
quality of Insurance also improved. The LPG has opened up various opportunities for
this insurance sector.
Some of these opportunities are:-
1. Privatization eliminated the monopolistic business of LIC of India. It
may help in reducing wide range of risk in LIC and also will help in
introducing new range of products.
2. It would result in providing better customer services and also would
help in improving the price and variety of insurance products.
3. It would speed up the spread and availability of life insurance. It will
boost the insurance saturation and measure of density.
4. It can ensure the mobilization of funds which can be utilized for the
infrastructure development.
5. It will help in mobilizing the funds from various rural and urban areas
due to the availability of multiple players.
6. Most important but not the least is that, tremendous employment
opportunities will be generated in the field of insurance.
After opening up of insurance to private sector, various private companies as
well as joint ventures have entered the fields of insurance both life and non-life
business, few of them are: Birla Sun life, Reliance General Insurance, HDFC standard
life Insurance, SBI Life Insurance, Bajaj Allianz Life Insurance Company etc.
Table 1.1: List of Life Insurance Companies in India after privatisation
Sl.
No. Company Name
Public/Private
Sector
Joint Venture
Between
Establishment
year
1. LIC Public NA 1956
2.
Bajaj Allianz Life
Insurance
Company Limited
Private
Bajaj Finserv
Limited and Allianz
SE
2001
3.
Birla Sun-Life
Insurance
Company Ltd
Private
Aditya Birla Group
and Sun Life
Financial Inc.
2000
4.
HDFC Standard
Life Insurance Co.
Ltd.
Private
Housing
Development
Finance
Corporation Ltd
and Standard Life
plc.
2000
5. ICICI Prudential
Life Insurance Co. Private
ICICI Bank and
Prudential plc 2000
7
Ltd
6.
Exide Life
Insurance
Company Limited
Private NA 2001
7.
Max New York
Life Insurance Co.
Ltd.
Private
Max Financial
Services Ltd. and
Mitsui Sumitomo
Insurance Co. Ltd.
2000
8.
PNB MetLife
Insurance
Company Ltd.
Private MetLife and PNB. 2001
9.
Kotak Mahindra
Old Mutual Life
Ins. Co. Ltd.
Private
Kotak Mahindra
Bank Ltd and Old
Mutual.
2001
10. SBI Life Insurance
Company Limited Private
State Bank of India
& BNP Paribas
Cardif.
2001
11. TATA AIA Life
Insurance Co. Ltd. Private
Tata Sons and the
AIA Group 2001
12. Reliance Life
Insurance Co. Ltd. Private NA 2001
13.
Aviva Life
Insurance Co. Pvt.
Ltd.
Private Dabur Invest Corp
and Aviva Group. 2002
14. Sahara India Life
Insurance Co. Ltd. Private NA 2004
15. Shriram Life
Insurance Co. Ltd. Private NA 2005
16. Bharti AXA Life
Insurance Co. Ltd. Private
AXA Group and
Bharti Enterprises 2006
17.
Future Generali
India Life
Insurance Co.Ltd.
Private
Future Group,
Generali group and
Industrial
Investment Trust
Limited (IITL).
2007
18. IDBI Fortis Life
Insurance Co. Ltd. Private
IDBI Bank,
Federal Bank and
Ageas. 2008
19. Private
20.
AEGON Religare
Life Insurance
Company Ltd
Private
Aegon, Religare
and Bennett,
Coleman and
Company
2008
21.
Canara HSBC
Oriental Bank of
Commernce Life
Insurance
Corp.ltd.
Private
Canara Bank,
HSBC Insurance
Holding Ltd and
Oriental Bank of
Commerce.
2008
22. DHFL Pramerica Private Dewan Housing 2013
8
Life Insurance
Co.ltd.
Finance
Corporation Ltd.
(DHFL) and
Prudential
International
Insurance Holdings,
Ltd.
23.
Star Union Dai-
ichi Life Insurance
Co.ltd.
Private
Bank of India,
Union Bank of
India and Dai-ichi
Life
2009
24.
India First Life
Insurance
Company Limited
Private
Bank of Baroda and
Andhra Bank and
Legal & General.
2009
25.
Edelweiss Tokio
Life Insurance
Company Limited
Private
Edelweiss Group of
India, and Tokio
Marine Holdings of
Japan.
2011
1.3.2. BIRLA SUN LIFE
It was established in 2000, after the insurance sector was liberalised in India. It is a
joint venture between the Aditya Birla Group and Sun Life Financial Inc. from
Canada. The combination of local knowledge of Aditya Birla and expertise knowledge
of Sun Life Financial Inc. helped in offering a formidable protection to its customer’s
future. It has significant contribution towards the growth and development of India,
today it ranks amongst the top 7 private insurance companies in the country.
It was the first insurance company in India to introduce “Free Look Period”,
which was made mandatory by the IRDA for all other life insurance companies. It also
pioneered the launch of new strategies and plans like unit linked Life Insurance plans
among the various private players in India.
Investment Philosophy - “Our goal is to assist you in ensuring a more comfortable
and secure tomorrow. To this effect, our endeavour is to build a quality investment
portfolio
(Within defined guidelines) which offers both – liquidity and long-term wealth
creation.”[3]
[3] http://insurance.birlasunlife.com/Pages/Individual/About-Us/Know-Our-
Funds.aspx
9
1.3.3. RELIANCE GENERAL INSURANCE
It was incorporated in 17th August 2000 and got its license for conducting
insurance business in India from IRDA on 23rd October 2000. There are nearly 139
offices and more than 12,000 intermediaries across India. It provides various insurance
solutions regarding to motor, health, home, travel etc. Through its various products
and services, it tries to provide customers with customized plans. It always tries to
come up with innovative ideas like home insurance policies, Over The Counter health
etc.
Vision
We want to score perfectly for world standard services & products, and want to be
your first choice in domestic as well as global markets. [4]
Mission
Satisfy your need of insurance cover in that crucial hour
Offer incomparable customer service
Provide innovative products
Better reach through presence across India and abroad. [5]
Goals
Make affordable insurance accessible to all
Keeping you, our customers, as focal point in all our operations
Protect policy holders’ interests
Be the most innovative in product development. [6]
1.3.4.HDFC STANDARD LIFE INSURANCE
It was constructed in 1999 as an independent body in the insurance industry. In
the year 2000, IRDA opened up the Indian market for HDFC. It was the first private
sector Life Insurance Company in India. It is a joint venture between India's leading
[5] [6] https://www.reliancegeneral.co.in/Insurance/About-Us/Reliance-General-
Insurance.aspx [7] http://www.hdfclife.com/about-us
10
housing finance institution i.e. Housing Development Finance Corporation Limited
(HDFC) and the leading provider of financial services in the United Kingdom,
i.e.Standard Life plc. In the joint venture HDFC Ltd. holds 70.65% where as Standard
Life holds 26% , while the rest is held by others.
By 2001, company gained its position in the market and strengthen its
employee force. In 2005, it launched its first advertising campaign ‘Sar Utha k jiyo’.
At present the company has 27 retail, 8 group product and 10 optional rider benefits in
its portfolio for saving, retirement, protection and investment needs of the customers.
Vision
‘The most successful and admired life insurance company, which means that we are
the most trusted company, the easiest to deal with, offer the best value for money and
set the standards in the industry.’[7]
'The most obvious choice for all'.
Values
Our vision and values that we observe at work:-
1. Excellence
2. People Engagement
3. Integrity
4. Customer Centricity
5. Collaboration [8]
1.3.5.SBI LIFE INSURANCE
It is a joint venture, formed in 2001, between State Bank of India, which is
India’s largest bank and BNP Paribas Cardif, which is French’s banking and financial
service provider. In the joint venture, SBI holds 74% of the total capital where as BNP
holds the remaining 26%.
Vision:
[8][8] http://www.hdfclife.com/about-us
11
"To be the most trusted and preferred life insurance provider."[9]
Mission:
"To emerge as the leading company offering a comprehensive range of life insurance
and pension products at competitive prices, ensuring high standards of customer
satisfaction and world class operating efficiency thereby becoming a model life
insurance company in India in the post liberalization period ". [10]
Values:
• Trustworthiness
• Ambition
• Innovation
• Dynamism
• Excellence [11]
1.3.6.BAJAJ ALLIANZ LIFE INSURANCE COMPANY
It was founded in 2001 and its headquarter is in Pune. It is a joint venture
between Bajaj Finserv Limited , formally known as Bujaj Auto Limited and Allianz
SE, an Europian financial services provider. Both these companies enjoy a reputation
of stability, expertise and strength. The technical experience and expertise of Allianz
and in-depth market knowledge of Bajaj combined to provide better and innovative
solutions.
Vision
'To be the BEST Life Insurance Company, To Buy From, Work For & Invest
In'[12]
Culture @ Bajaj Allianz
[10][11] https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp
[11] http://www.sbilife.co.in/sbilife/content/8_2881 [13] [14][15] https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp
12
Bajaj Allianz will be
A winning team
Have a passion for excellence & hate bureaucracy
Be empowered, have the confidence to take decisions quickly & be
accountable
Be driven to achieve results, to deliver
Be professional & socially committed
Be open to ideas, sharing, transparent & trust
Focus everything we do on our customers
Make BALIC a 'great place to work'
Have a sense of humour. [13]
The Bajaj Allianz Philosophy
Invest in people - Pay / develop / career planning
Dominate your market - Be decisive / communicate clear goals
Never sit still - change continually / revolutionize
Think service; service; service - continuous improvement
Learn & Lead - Be prepared to listen
Tell the facts are they are - clear communication
Kill bureaucracy - boundary less / idea non management layers / informality
/speed
Manage the business like a corner shop - customer satisfaction / cash flow[14]
From the above discussion it is clear that the privatisation of insurance
business is justifiable in order to achieve greater density and enhance the efficiency of
operations, greater mobilization of funds, insurance coverage in the country and for a
long term savings and utilisation in infrastructure development. The new players can
supplement in achieving the objectives of insurance business in India.
1.4 CURRENT SCENARIO OF LIC
13
Headquarter of LIC is in Mumbai. Today LIC functions in 2048 fully
computerized branch offices, 113 divisional offices, 8 zonal offices and the corporate
office at Mumbai.
LIC's slogan ‘yogakshemam vahamyaham’ is in Sanskrit language which can
be translated in English as "Your welfare is our responsibility". This is derived from
the Bhagavad Gita's 9th chapter, 22nd verse. This slogan is written in Devanagari
Script on the LIC’s logo. LIC offers its customers a variety of insurance products such
as pension plans, insurance plans, group schemes and special plans.
Mission – “Ensure and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with competitive
returns, and by rendering resources for economic development.”[15]
Vision – “A trans-nationally competitive financial conglomerate of
significance to societies and Pride of India.”[16]
OBJECTIVES OF LIC
Some of the objectives of LIC are as follows:-
1. Spreading Life Insurance widely and in particular to the rural areas and to
the socially and economically backward classes with the view to reach all
insurable persons in the country and providing them adequate financial
cover against death at a reasonable cost.
2. Maximize mobilization of people’s saving by making insurance linked
savings adequately attractive.
3. Bear in mind, in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without loosing sight of the
interest of the community as a whole; the funds to be deployed to the best
advantage of the investors as well as the community as a whole, keeping in
view national priorities and obligations of attractive return.
4. Conduct business with utmost economy and with the full realization that the
money belong to the policyholder.
[15][17] http://www.licindia.in
14
5. Act as trustee of the insured public in their individual and collective
capacities.
6. Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.
7. Involve all people working in the corporation to the best of their capability
in furthering the interests of the insured public by providing efficient service
with courtesy.
8. Promote among all agents and employees of the corporation a sense of
participation, pride and job satisfaction through discharge of their duties
with dedication of their duties with dedication towards achievement of
corporate objectives.[17]
The above objectives are framed by the LIC at the time of its establishment and it is
trying to materialize its objectives over the subsequent years. However, the Indian Life
Insurance industry is facing several challenges and issues throughout its career and is
establishing meaningful strategies to overcome these challenges and issues from time
to time. Since its establishment it has earmarked a steady growth, but many factors
affected its abnormal growth and progress, few of them are:-
1. The mega illiteracy percentage.
2. Improper awareness among the general public regarding the policies and
schemes.
3. Least percentage of employment opportunities.
4. Lowest wage and salary pattern.
When compared with the developed foreign countries, the Indian Life Insurance
Industry has achieved only a little because of:-
- Lack of quality strategies adopted by LIC.
- Lack of standard education.
- Awareness about savings etc.
But after introduction of LPG, the Indian Insurance Industry has geared up and thus
many private players entered into this industry, who poses challenges and threat to its
[17] http://www.licindia.in
15
competitors and these new challenges forced the industry to establish colourful
strategies and plan for its survival and strategy growth.
A well-developed insurance sector is an advantage for economic development
as well as, at the same time strengthens the risk taking ability of the country.
• Balasubramaniam,T.S. and S.P.Gupta.(2000) in their book on “Insurance
Environment” explained at length, the global and Indian pictures of
Insurance system. The impact of Globalization on the Insurance business
environment is also discussed analytically to have a clear understanding of
the industry. [18]
• Srivastava and D.C. (2001) in their book on “Indian Insurance Industry-
Transition and prospects” discuss analytically the financial significance of
insurance industry, its contribution to Indian economy and also the
transitory prospects and challenges of insurance industry due to
liberalization and the opening up of the sector to private players.[19]
• Chakraborty (2007), examined that the Indian insurance industry
underwent a drastic transformation with the entry of private players who
captured a significant market share (26.6%) during 2005-06.[20]
• Rajendran and Natarajan, 2009 found that the acceptance and adaptation of
LPG has brought about remarkable improvement in Indian Life Insurance
industry, specifically to LIC of India. They first compared the overall
performance of LIC of India between pre and post LPG era and secondly
examined the current status, volume of competitions and challenges faced
[18][21][22][23] http://www.slideshare.net/Somnath143/sip-report-44409688 [19]https://www.researchgate.net/publication/268341520_The_impact_of_liberalization_privatization_and_globalization_LPG_on_life_insurance_corporation_of_India_LIC
CHAPTER: 2- REVIEW OF LITERATURE
16
by LIC of India. The growth of LIC was compared in terms of
performance indicators such as annual business, 50 business in force,
group business in force and life fund between the period 1957 and 2007.
For this, they have taken the secondary data from the annual reports of LIC
of India. Their analysis concluded that LPG was incorporating a positive
influence on the performance of LIC of India showing that the business in
India and the business outside India as well as the total businesses of LIC
are always in an increasing trend.[21]
• Kshetrimayum Sobita Devi (2011) in her thesis on “A study of the impact
of Liberalization on the Indian Life Insurance Industry”, Ph.D thesis
submitted to the department of Economics, University of the Maharaja
Sayajirao university of Baroda, Vadodara, 2011. Confirms a general
opinion that innovativeness in every activity alone rules and dominates the
industry. But, at the same time, the practicality and economic justification
of that innovativeness are also to be analyzed.[22]
2.1 RESEARCH QUESTIONS
From many decades LIC has been operating in India and thus it has
experienced both pre and post globalization era. Thus the main research questions
explored in this study are:-
– Is there any impact of globalization on the employees productivity of
LIC ?
– After about two decades of liberalization in insurance sector, has the
productivity of employees in this sector increased ?
– Is there any impact of sample characteristics such as gender and age on
perception of employees regarding productivity in the post
globalization era?
2.2 SIGNIFICANCE OF THE STUDY
Indian economy is consistently growing along with the increasing need for life
insurance. With the liberalization of insurance sector, LIC lost its monopoly and had
17
to compete with many private players. Liberalization gave tremendous opportunity to
the new players even though, till now LIC has maintained its position in the market.
Hence, productivity of employees in LIC has become an all time concern.
2.3 SCOPE OF THE STUDY
The scope of the study is very wide as it includes:
– Personal aspects such as training and development, performance
appraisal, management’s strategy, employee’s productivity etc
– Competitiveness among the insurance players, survival of LIC in the
competitive market etc
2.4 LIMITATIONS OF THE STUDY
Like the other social research work, present study equally suffers from some
limitations.
– Sometimes management is reluctant to show some records as it is
confidential.
– The employees are not able to spare much time for interview and
discussion due to their professional engagement.
– Moreover, the study is conducted within a short duration of time only in
the district of Sambalpur.
18
3.1.RESEARCH METHODOLOGY
To conduct the research, first of all it is necessary to create a research design.
A research design is basically a blue print of how a research is to be conducted. It is
the conceptual structure within which research is conducted.
3.2.Types of Research:
Basically there are 3 types of approaches used during any research:
1. Exploratory
Exploratory research is research conducted for a problem that has not been
clearly defined. It often occurs before we know enough to make conceptual
distinctions or posit an explanatory relationship. Exploratory research helps determine
the best research design, data collection method and selection of subjects.
2. Descriptive
Descriptive research is a study designed to depict the participants in an
accurate way. More simply, descriptive research is all about describing people who
take part in the study. Descriptive research is used to describe characteristics of a
population or phenomenon being studied. It does not answer questions about
how/when/why the characteristics occurred. Rather it addresses the "what" question
3. Hypothesis testing.
CHAPTER: 3- RESEARCH DESIGN
19
A hypothesis test is a statistical test that is used to determine whether there is
enough evidence in a sample of data to infer that a certain condition is true for the
entire population. A hypothesis test examines two opposing hypotheses about a
population: the null hypothesis and the alternative hypothesis.
During this study, exploratory research has been taken into consideration.
3.3.Source of Data :
Primary data:
The primary sources of data refer to the first hand Information. Primary data is
collected during the survey with the help of Questionnaires.
Secondary data:
Secondary data is one which already exists and is collected from the published
sources. The source from which secondary data was collected Internet.
Primary data has been collected during the study with the help of Quantitative
Questionnaires
3.4.Sampling Techniques:
Sampling Methods can be classified into one of two categories:
– Probability Sampling: Sample has a known probability of being
selected.
– Non-probability Sampling: Sample does not have known probability of
being selected as in convenience or voluntary response surveys.
- Here, Quota sampling technique has been used. Nearly 50% of the samples are
above 47 years of age and 50% are below 48 years of age.
3.5.Scaling Techniques:
o Nominal Scale
The nominal type differentiates between items or subjects based only on
their names or categories and other qualitative classifications they belong
to. Numbers may be used to represent the variables but the numbers do
not have numerical value or relationship.
o Ordinal scale
20
The ordinal type allows for rank order (1st, 2nd, 3rd, etc.) by which data
can be sorted, but still does not allow for relative degree of difference
between them.
o Interval scale
The interval type allows for the degree of difference between items, but
not the ratio between them. Examples include temperature with the
Celsius scale, which has two defined points (the freezing and boiling
point of water at specific conditions) and then separated into 100
intervals, date when measured from an arbitrary epoch (such as AD),
percentage such as a percentage return on a stock, location in Cartesian
coordinates, and direction measured in degrees from true or magnetic
north. Ratios are not meaningful since 20 °C cannot be said to be "twice
as hot" as 10 °C, nor can multiplication/division be carried out between
any two dates directly.
o Ratio scale
The ratio type takes its name from the fact that measurement is the
estimation of the ratio between a magnitude of a continuous quantity and
a unit magnitude of the same kind (Michell, 1997, 1999). A ratio scale
possesses a meaningful (unique and non-arbitrary) zero value.
The study has used both Nominal and Interval scales.
3.6.Statistical Method :
There are two types of statistical Methods-
- Parametric statistics is a branch of statistics which assumes that sample data
comes from a population that follows a probability distribution based on a
fixed set of parameters.
A non-parametric model differs precisely in that the parameter set is not fixed
and can increase, or even decrease if new relevant information is collected. Non
parametric test is mainly used on small sample size. It is distribution free method, do
not relay on assumptions that the data are drawn from given probability distribution.
In this study, Non-parametric test i.e. chi square test has been used to detect
whether there is any impact of sample characteristics like gender and age on
21
perception of employees. Generally chi square test is used to investigate
whether distribution of categorical variable differ from one another.
22
4.1 Graphical Representation of Demographic Profile of the Sample
Total Respondents = 64
4.1.1. Sample Characteristic (Gender).
LIC of India provides equal opportunities for both the genders. After
globalization, employment opportunities have increased in all the sectors and so in the
insurance sector. Chart 1 shows the percentage of male and female respondents of the
sample.
Source: Primary Data
INFERENCE
This chart clearly shows that majority of
the respondents were male. Only 21% of
the samples were female. This
proportion in the sample has been fixed
basis the underlying proportion of male
and female in the population. Thus, there
is a huge opportunity for the female
employees in insurance sector. Women empowerment has given tremendous
opportunity to the female employees, they must explore it.
4.1.2. Sample Characteristic (Age).
LIC comprises of employees of all the
generation, it reduces the generation gap
among the employees. This study has
found adequate data due to the presence
of respondents from different age groups
as they have experienced both pre and
post liberalization era. Chart 2 shows the
percentage of respondents above 47 years
of age and below 48 years of age.
Source: Primary Data
INFERENCE
This chart clarifies that there is no generation gap among the samples. Equal number
of respondents are present in the sample distribution (quota sampling has been used).
CHAPTER: 4- ANALYSIS & FINDINGS
23
Thus the perception of the respondents on the impact of globalization can be identified
on the basis of age.
4.2 Tabular Representations
4.2.1 Chi- Square Test on the basis of Gender (Top box).
H0 = Impact of Globalization on Male (Top Box) = Impact of Globalization on
female (Top Box) .
H1 = Impact of Globalization on Male (Top Box) ≠ Impact of Globalization on
female (Top Box) .
X2 = ∑(O−E)2
E = 6.22
Degree of Freedom (d.f) = (7-1)*(2-1) = 6
Tabulated value of X2 = d.f at 5% level of significance= 12.592
P value= 0.97
Since, calculated value is less than tabulated value, the null hypothesis is accepted.
That means there is uniform impact of globalization on employee’s productivity of
both males and females, when top box is considered.
4.2.2 Chi- Square Test on the basis of Gender (Top 2 box) .
H0 = Impact of Globalization on Male (Top 2 Box) = Impact of Globalization on
female (Top 2 Box) .
24
H1 = Impact of Globalization on Male (Top 2 Box) ≠ Impact of Globalization on
female (Top 2 Box) .
X2 = ∑(O−E)2
E = 1.91
Degree of Freedom (d.f) = (7-1)*(2-1) = 6
Tabulated value of X2 = d.f at 5% level of significance= 12.592
P value= 0.99
Since, calculated value is less than tabulated value, the null hypothesis is accepted.
That means there is uniform impact of globalization on employee’s productivity of
both males and females, even when top 2 boxes are considered.
4.2.3 Chi- Square Test on the basis of Age (Top box) .
H0 = Impact of Globalization on employees of age below 48 (Top Box) = Impact of
Globalization on employees of age above 47 (Top Box) .
H1 = Impact of Globalization on employees of age below 48 (Top Box) ≠ Impact of
Globalization on employees of age above 47 (Top Box) .
25
X2 = ∑(O−E)2
E = 1.98
Degree of Freedom (d.f)= (7-1)*(2-1) = 6
Tabulated value of X2 = d.f at 5% level of significance= 12.592
P value= 0.98
Since, calculated value is less then tabulated value, the null hypothesis is accepted.
That means there is uniform impact of globalization on employee’s productivity
irrespective of employee’s age, when top box is considered.
4.2.4 Chi- Square Test on the basis of Age (Top 2 box) .
H0 = Impact of Globalization on employees of age below 48 (Top 2 Box) = Impact of
Globalization on employees of age above 47 (Top 2 Box) .
H1 = Impact of Globalization on employees of age below 48 (Top 2 Box) ≠ Impact of
Globalization on employees of age above 47 (Top 2 Box) .
X2 = ∑(O−E)2
E = 0.20
Degree of Freedom (d.f)= (7-1)*(2-1) = 6
Tabulated value of X2 = d.f at 5% level of significance= 12.592
P value= 0.99
Since, calculated value is less then tabulated value, the null hypothesis is accepted.
That means there is uniform impact of globalization on employee’s productivity
irrespective of employee’s age, even when top 2 boxes are considered.
26
5. CONCLUSION
Thus, from the study, the following conclusions can be drawn:-
– The employee’s productivity has increased after globalization as majority
of respondents agree with top box as well as top two 2 box irrespective of
their gender and age.
– Liberalization of insurance sector and the consequent increment in
competition has got a significant impact on productivity of employees in
this sector.
– The impact of liberalization on employee productivity in insurance sector
does not vary on the basis of gender or age.
– The management is also highly interested to increase the productivity and
performance of it’s employees.
– After globalization, insurance sector has experienced technological
advancement in its processes and strategies.
– The employees have successfully adopted themselves with the changes
after globalization.
– Even after loosing monopoly status in the insurance sector and facing
tough competition from many new private players, after globalization,
LIC has succeeded in maintaining a stable position in the market.
– At present LIC is having less number of female employees as compared
to the male employees. Female candidates are provided adequate
employment opportunities, they must explore it.
6. SUGGESTIONS
LIC is hereby recommended to follow the following process:-
– LIC should focus on increasing productivity of its employees through
training and development programmes so that they can beat the increased
competition.
– LIC should also launch programmes to manage the increased stress levels
of its employees caused due to increased competition in the insurance
sector.
– LIC should also emphasize on continuous performance appraisal so that
it can retain its existing employees.
CHAPTER: 5- CONCLUSION & SUGGESTIONS
27
REFERENCES
http://www.licindia.in/history.htm
https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4
&mid=2
http://shailajaramanallic.blogspot.in/2012/11/introduction-to-lic-of-india.html
https://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo89
&flag=1
https://licindia300.wordpress.com/tag/liberalisation/
http://www.jstor.org/stable/4376358?seq=1#page_scan_tab_contents
http://insurance.birlasunlife.com/Pages/Individual/About-Us/Company-Profile.aspx
https://www.reliancegeneral.co.in/Insurance/About-Us/Reliance-General-
Insurance.aspx
http://www.hdfclife.com/about-us
http://www.sbilife.co.in/sbilife/content/8_2881
https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp
http://policytiger.com
http://www.yourarticlelibrary.com/insurance/the-overview-of-insurance-sector-in-
india-defined/7544/
http://www.policybazaar.com/insurance-companies/life-insurance/
https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo1
29&mid=3.1.9
http://vassarstats.net/textbook/parametric.html
28
APPENDIX I
Questionnaire
Hello, I’m K.Renuka Patnaik from G.M University , Sambalpur a leading college of western
Odisha . I am conducting a study on the employee productivity of LIC after globalisation
among employee like you. This is for the partial fulfilment of my MBA degree and I assure
you that the information to be provided by you will be used purely for academic purposes.
Would you please give us 15 minutes of your time for asking some questions?
Screener
Q- Are you a fulltime employee of LIC?
01. Yes 02. No
Personal Particulars
Name : Designation :
Age : Gender :
(Note: Tick ( √ ) the option of your choice.)
Q1. How do you find the business environment for life insurance sector after privatization?
5 4 3 2 1
Highly Competitive Competitiv
e No Change Low Competitive No Competition
Q2. Who are mainly your Competitors in life insurance sector in the era of privatization?
5 4 3 2 1
Public Sector Insurance Banks like SBI, PNB etc.
Private Sector Insurance Banks like
ICICI, HDFC etc.
Private Insurance Companies like Bajaj
Allianze, Birla Sunlife etc.
All the above
None of the above
Q3. Does your life insurance company find difficult to survive?
5 4 3 2 1
Most difficult Very difficult Neither difficult nor
easy Difficult Not Difficult
Q4. What strategy your life insurance company has adopted to do insurance business effectively in competitive situation in market?
5 4 3 2 1
Use of advance
technology
Reducing manpower
Change in working process
Improving organizational performance
More focus on customer service
Q5. According to importance, rank the resources being used in your organization for business activities.
5 4 3 2 1
Manpower Machines Money Materials Methods
Q6. What are the advantages of higher employee’s performance to your organization?
5 4 3 2 1
Quality and quantity improve
Higher employees productivity
Employee’s Satisfaction
Higher profitability All the above
Q7. Does your management is interested to manage performance of employees consistently?
5 4 3 2 1
Highly interested
Interested Neither Interested nor
disinterested Little bit Interested Not interested
29
Q8. What are the functions being performed by performance management in your organization?
5 4 3 2 1
Setting Goals and performance standards
Communication, Coaching, feedback
Performance appraisal
Development planning for future
All the above
Q9. What are the benefits from performance management to your organization?
4 3 2 1
Financial gains Non-financial gains Effective Management Control All the above
Q10. Who does play important role in performance management process in your organization?
4 3 2 1
Managers Supervisors Reviewers or experts All the above
Q11. Is management interested to improve productivity of every employee in your organization?
5 4 3 2 1
Highly interested
Interested Neither interested nor
disinterested Little bit
interested Not interested
Q12. Does the performance appraisal is regularly carried by the responsible manger or supervisor?
4 3 2 1
Yes No Sometimes Cannot Say
Q13. Which method is being used for performance appraisal?
4 3 2 1
Traditional methods Modern methods No idea Both (a) and (b)
Q14. Do you feel performance appraisal is beneficial for whole organisation?
4 3 2 1
Yes No Sometimes Cannot Say
Q15. What are the objectives of measuring productivity of employees?
5 4 3 2 1
Search of suitable
technology
Improve working efficiency
Reducing operation costs
Improve overall profitable and goodwill
All the above
Q16. Which factors do affect the employee’s productivity in your organisation?
6 5 4 3 2 1
Physical working conditions
Use of technology
Training and Development opportunity
Adequate Compensation
Favourable All of the Management above. attitude
Q17. How is productivity improved in your organisation?
6 5 4 3 2 1
Setting missions, goals
and performance
standards
Motivating Employees
Training and development
Performance appraisal
Future All of the Performance above. development plan
Q18. Do employees play very crucial role in getting competitive edge over completions in insuring?
5 4 3 2 1
Very Crucial Crucial Cannot say Moderate effect Does not affect
Q19. Do you agree the employees providing life insurance service to customers are the service providers, organisation for customers, brand and marketers?
5 4 3 2 1
Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree
Q20. The future of life insurance with higher productivity and performance of employees would be bright in highly competitive situation in future.
30
5 4 3 2 1
Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree
Q21. Which sector in life insurance is more conscious about higher productivity and performance of employees?
5 4 3 2 1
Public sector Insurance Banks
Private sector Insurance Banks
Private Insurance Companies Foreign Insurance Companies
All the above
31
APPENDIX II
32
33