Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Emerging
HORIZONS IN
HRM
FALL WINTER 2010-2012
SECTION-FP5
Serial
Names
number
1.
Jasmeen Kaur
Roll number
2.
Jaya Sachwani
11
3.
Karavi Sonowal
14
4.
Arpita Das
05
10
ACKNOWLEDGEMENT
TABLE OF CONTENTS
CHAPT
ER
1.
2.
3.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
TOPIC
PAGE NO.
Executive Summary
Human Resource Management(HRM)
HistoryAntecedents
Birth and evolution
HRM In Nature
HRM In Scope
HRM In Beliefs
HRM In Objectives
HRM In Functions
Major Influencing Factors
HRM Management Futuristic Vision
4.
5.
6.
6.1
6.2
6.3
7.
7.1
7.2
7.3
7.4
8.
7,8
9
10
10
10
11
11
12
12
13
14
14
16
18
20
20
20
21
22
27
27
30
30
32
8.1
8.2
8.3
9.
10.
11.
11.1
11.2
11.3
11.4
11.5
Rationale Downsizing
Downsizing-The Long term Effect
Role Of HR in Downsizing
Voluntary Retirement Scheme(VRS)
Changing Role Of HRM
Case Studies
BSNL
SBI
LAYOFFS IN CITIBANK
YAHOO
JET AIRWAYS
12.
13.
14.
15.
33
34
40
41
42
54
54
58
61
63
66
69
71
73
74
1. Executive Summary
Emerging Trends in Human Resource Management
Human resource management, if we see it from definition perspective it is a process of bringing
people and organizations together so that the goals of each others are met.
If we see in practical situation the above definition its just one side of a coin which has limited
HRM involvement but HRM today is a different story, it have changed the way we work, and
also it helps an organization to survive in recessionary period. Managing and attracting the
human resource in todays time is very difficult task. The role of HR manager has changed a lot
(Dancing differently on changing tunes of life) from being protector and screener to the role of
Savior who acts as planner and change agent affecting bottom of the pyramid where it is blue
collar workers & at the Top & Middle level executives.
The trends in human resource industry are dynamic in nature which contributes towards to
achievement of organization goals. Over the years, highly skilled and knowledge based jobs have
increased while low skilled jobs are decreasing. This calls for skill mapping through proper HR
initiatives.
Change is inevitable as said and thats what Indian organizations are witnessing in management
cultures, systems and working style. Alignment with global companies has forced Indian
organization accept and incorporate change in everyday life which makes role of HRM all the
more important.
Some of the recent changes are as follows:
The policies of many companies have become people centric, traditionally the policies
mainly focused on achievement of organizational goals showing negligence towards the
human resource.
Attracting and retaining of human resource has become difficult as loyalty factor is losing
its shine, today HR personnel have to motivate and design healthy career road map to
make them stay in the company.
Human Resource Outsourcing is the new name in the industry to replace the redundant
traditional HR department. Many HR outsourcing companies in India are already
established and some are coming up to support increasing demand of corporate India.
With the increase of global job mobility, recruiting competent people is also increasingly
becoming difficult, especially in India. Therefore organizations are also required to work
out
retention
strategy
for
the
existing
skilled
manpower.
HR managers today are focusing on policies (trust, openness & equality), Motivation,
Relations. Due to new trends in HR the manager should treat people as resources, reward
them equitably and integrate their goals with that of the organizational goals through
suitable HR Policies.
employees, while also overseeing organizational leadership and culture, and ensuring compliance
with employment and labor laws. In circumstances where employees desire and are legally
authorized to hold a collective bargaining agreement, HR will typically also serve as the
company's primary liaison with the employees' representatives (usually a labor union).HR is a
product of the human relations movement of the early 20th century, when researchers began
documenting ways of creating business value through the strategic management of the
workforce.
The
function
was
initially
but
dominated
due
by
transactional
to globalization,
company
work
such
consolidation,
3. History
3.1 Antecedent Theoretical Developments
10
HR spawned from the human relations movement, which began in the early 20th century due to
work by Frederick Taylor in lean manufacturing. Taylor explored what he termed "scientific
management (later referred to by others as "Taylorism"), striving to improve economic
efficiency in manufacturing jobs. He eventually keyed in on one of the principal inputs into the
manufacturing processlaborsparking inquiry into workforce productiviThe movement was
formalized following the research of Elton Mayo, whose Hawthorne studies serendipitously
documented how stimuli unrelated to financial compensation and working conditionsattention
and engagementyielded more productive workers. Contemporaneous work by Abraham
Maslow, Kurt Lewin, Max Weber, Frederick Herzberg, and David McClelland formed the basis
for studies in organizational behavior and organizational theory, giving room for an applied
discipline.
11
Human Resource Management is a process of bringing people and organizations together so that
the goals of each are met. The various features of HRM include:
12
Human resource is the most important asset in the organization and can be developed and
increased to an unlimited extent.
A healthy climate with values of openness, enthusiasm, trust, mutuality and collaboration is
essential for developing human resource.
HRM can be planned and monitored in ways that are beneficial both to the individuals and the
organization.
Employees feel committed to their work and the organization, if the organization perpetuates a
feeling of belongingness.
Employees feel highly motivated if the organization provides for satisfaction of their basic and
higher level needs.
Employee commitment is increased with the opportunity to discover and use one's capabilities
and potential in one's work.
It is every manager's responsibility to ensure the development and utilization of the capabilities
of subordinates.
13
In order to achieve the above objectives, Human Resource Management undertakes the
following activities:
14
On the basis of the various issues and challenges the following suggestions will be of much help
to the philosophy of HRM with regard to its futuristic vision:
1. There should be a properly defined recruitment policy in the organization that should give its
focus on professional aspect and merit based selection.
2. In every decision-making process there should be given proper weight age to the aspect that
employees are involved wherever possible. It will ultimately lead to sense of team spirit, teamwork and inter-team collaboration.
3. Opportunity and comprehensive framework should be provided for full expression of
employees' talents and manifest potentialities.
4. Networking skills of the organizations should be developed internally and externally as well as
horizontally and vertically.
5. For performance appraisal of the employees emphasis should be given to 360 degree
feedback which is based on the review by superiors, peers, subordinates as well as self-review.
6. 360 degree feedback will further lead to increased focus on customer services, creating of
highly involved workforce, decreased hierarchies, avoiding discrimination and biases and
identifying performance threshold.
7. More emphasis should be given to Total Quality Management. TQM will cover all employees
at all levels; it will conform to customer's needs and expectations; it will ensure effective
15
utilization of resources and will lead towards continuous improvement in all spheres and
activities of the organization.
8. There should be focus on job rotation so that vision and knowledge of the employees are
broadened as well as potentialities of the employees are increased for future job prospects.
9. For proper utilization of manpower in the organization the concept of six sigma of improving
productivity should be intermingled in the HRM strategy.
10. The capacities of the employees should be assessed through potential appraisal for
performing new roles and responsibilities. It should not be confined to organizational aspects
only but the environmental changes of political, economic and social considerations should also
be taken into account.
11. The career of the employees should be planned in such a way that individualizing process and
socializing process come together for fusion process and career planning should constitute the
part of human resource planning.
To conclude Human Resource Management should be linked with strategic goals and objectives
in order to improve business performance and develop organizational cultures that foster
innovation and flexibility. All the above futuristic visions coupled with strategic goals and
objectives should be based on 3 H's of Heart, Head and Hand i.e., we should feel by Heart, think
by Head and implement by Hand.
16
invest considerable time and amount, to learn the changing scenario of the HR department in the
21st century. In order to survive the competition and be in the race, HR department should
consciously update itself with the transformation in HR and be aware of the HR issues cropping
up. With high attrition rates, poaching strategies of competitors, there is a huge shortage of
skilled employees and hence, a company's HR activities play a vital role in combating this crisis.
Suitable HR policies that would lead to the achievement of the Organization as well as the
individual's goals should be formulated. HR managers have to manage all the challenges that
they would face from recruiting employees, to training them, and then developing strategies for
retaining them and building up an effective career management system for them. Just taking care
of employees would not be enough; new HR initiatives should also focus on the quality needs,
customer-orientation, productivity and stress, team work and leadership building. This book is
divided into two sections that throw light on the emerging HR trends and discusses HR issues in
various industries like financial services, IT, Power, Healthcare, to name a few. This book should
be valuable for practicing HR managers of every organization and also for those who have a
significant interest in the area of Human Resource Management, to realize the growing
importance of human resources and understand the need to build up effective HR strategies to
combat HR issues arising in the 21st century.
Economic Liberalization and Globalization in India since 1991 is having a major impact on
human resource management. In their efforts to integrate themselves into the global economy,
companies in India are using human resources as a strategic tool for competitive advantage. A
large pool of qualified manpower is making India an outsourcing hub for the developed nations.
One survey of opportunities and challenges facing human resource management under
liberalization reported the following:
I.
Virtually all companies are putting emphasis on the up gradation of managerial and
professional skills.
II.
17
III.
Middle level managers are becoming more participative and result oriented. Decision
making is being increasingly handled at the group level.
IV.
There is increasing emphasis on training and retaining talent. Companies have started
paying greater attention to career planning and career growth for employees.
V.
VI.
VII.
VIII.
Networking of various functions and divisions is being adopted with a view to create a
responsive, global oriented and competitive organization.
Introduction
Human Resource Management has evolved considerably over the past century, and
experienced a major transformation in form and function primarily within the past two
decades. Driven by a number of significant internal and external environmental forces,
HRM has progressed from a largely maintenance function, with little if any bottom line
impact, to what many scholars and practitioners today regard as the source of sustained
competitive advantage for organizations operating in a global economy.
Training and development extends beyond information and orientation training to include
sensitivity training and field experiences that will enable the manager to understand
cultural differences better. Managers need to be protected from career development risks,
re-entry problems and culture shock.
18
To balance the pros and cons of home country and host country evaluations, performance
evaluations should combine the two sources of appraisal information.
Compensation systems should support the overall strategic intent of the organization but
should be customized for local conditions.
Use workforce skills and abilities in order to exploit environmental opportunities and
neutralize threats.
Employ innovative reward plans that recognize employee contributions and grant
enhancements.
Lay off workers in a smooth way explaining facts to unions, workers and other affected
groups e.g. IBM, Kodak, Xerox, etc.
HR Managers today are focusing attention on the followinga) Policies- HR policies based on trust, openness, equity and consensus.
b) Motivation- Create conditions in which people are willing to work with zeal, initiative and
enthusiasm; make people feel like winners.
19
c) Relations- Fair treatment of people and prompt redress of grievances would pave the way for
healthy work-place relations.
d) Change agent- Prepare workers to accept technological changes by clarifying doubts.
e) Quality Consciousness- Commitment to quality in all aspects of personnel administration will
ensure success.
Due to the new trends in HR, in a nutshell the HR Manager, should treat people as resources,
reward them equitably, and integrate their aspirations with corporate goals through suitable HR
policies.
20
21
effectively with its people and providing the right opportunities to the right people is
another challenge before IT industry.
22
23
24
core business processes with the aim of achieving dramatic improvements in critical performance
measures, such as cost, quality, service, and speed.
Re-engineering recognizes that an organization's business processes are usually fragmented into
sub processes and tasks that are carried out by several specialized functional areas within the
organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that optimizing the performance of sub processes can result in some
benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient
and outmoded. For that reason, re-engineering focuses on re-designing the process as a whole in
order to achieve the greatest possible benefits to the organization and their customers. This drive
for realizing dramatic improvements by fundamentally re-thinking how the organization's work
should be done distinguishes re-engineering from process improvement efforts that focus on
functional or incremental improvement.
FUNDAMENTAL RETHINKING:
In BPR, an organization must ask the most basic question about its business and
how does it operate. Why does it do what it does and why does it do the way it
does? These questions force people to look at the tactic rules and assumptions that
underlie the way business is audited. Re-engineering first determines what
company must do, then how to do it. It takes nothing for granted. It ignores what
is and concentrates on what should be. At the heart of BPR lies the notion of
discontinuous thinking identifying and abandoning the outdated rules and
fundamental assumptions that underlie the current business operations.
II.
RADICAL REDESIGN:
It means getting to the roots of the things. It involves disregarding all existing
structures and procedures and inventing completely new ways of accomplishing
work. Re-engineering is about business re invention not business improvement,
modification or enhancement. This means that companies and their employees
must unlearn the principles and techniques that brought them success for so long.
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DRAMATIC IMPROVEMENTS:
The main purpose of BPR is to secure quantum leap in performance rather than
marginal improvements. The old ways of doing business need to be replaced by
new ways due to more demanding customers, growing competition and changing
environment. Three types of companies undertake re-engineering. First are the
companies that are in deep trouble and must re-engineer to survive. Second are
companies which forces trouble ahead. Third are companies are in peak condition
and are ambitious and aggressive.
IV.
KEY PROCESSES:
Under division of work principle, managers focus on individual tasks (eg,
receiving the order forms, picking up the goods from the warehouse etc) and lose
sight from the other objective (e.g., to get goods in the hands of the customer).a
business process is a collection of activities that takes one or more inputs and
creates an output valuable to the customer.
26
Re-designing the key business processes to improve quality and reduce cost
Flattening the organization and encouraging teamwork.
Applying a holistic approach to principles and processes of business.
Training and developing human resource.
Improving information technology.
Identifying core competencies and managing environmental changes to develop
competitive strength with a clear focus on the goals to be achieved.
Leading Indian companies like TELCO, TISCO, L&T, RANBAXY, ASHOK
LEYLAND, CROMPTRON GREAVES, ETC are adopting BPR to face the
challenges of liberalization and globalization.
Business processes mean the way the work gets done. Processes determine jobs
and structure. The way in which work is performed determines true nature of jobs
and how people who perform these jobs are grouped. The fragmented processes
found in traditional firms lead to narrow specialization and functional
27
departments. On the other hand integrated processes give rise to multidimensional jobs organized into process teams.
People who perform multidimensional jobs and who are organized into teams
must be recruited, evaluated and compensated by means of appropriate
management systems. Management systems in turn shape the values and beliefs
of a company, the regaining values and beliefs in an organization must support the
performance of its process design. For example, an order fulfillment process
designed to operate quickly and accurately can work only when the people
performing it believe in speed and accuracy.
Business Processes
Management and
Measurement
Systems
28
The Four Elements of the business systems Diamond are interrelated. Therefore, BPR practically
changes everything.
When a company re-engineers its business processes, the following types of changing take
place:i.
Work units change from functional departments, to process teams. Key processes are
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
satisfying.
People are empowered and not merely controlled.
Education to improve understanding of task and training to increase skills. Constant
learning is encouraged.
Focus of appraisal and compensation shifts from activity to results.
Values change from protective to productive.
Managers act as coaches and mentors rather than superiors.
Organization structures changes from hierarchical to flat.
Checks and balances are reduced.
engineering effort.
8. Allowing existing corporate cultures and management attitudes to prevent re-engineering
from getting started.
9. Trying to make re-engineering from the bottom-up.
10. Assigning someone who does not understand re-engineering to lead the effort.
11. Skimping on the resources devoted to re-engineering.
12. Bringing re-engineering in the middle of corporate agenda.
13. Dissipating energy across too many re-engineering efforts.
14. Attempt to re-engineer when the chief executive is two years from retirement.
29
i.
Clarity of Purpose:-First of all, the strategic purpose should be clearly defined. It means
understanding what business you want to be in and how you want me going to gain
competitive advantage in it.
ii.
Top Management Support:-BPR must begin from the top. The leader must develop a
core team competent people from different departments and divisions to plan and
implement the re-engineering programmed.
iii.
Choice of right processes:-Appropriate business processes should be chosen for reengineering. Process should be chosen on three criteria:
a. Dysfunctional or most troublesome processes.
b. Process having the maximum impact on customers.
c. Processes most susceptible to successful redesign.
iv.
v.
Sense of urgency:-A time frame should be developed for achieving results through reengineering.
vi.
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8. DOWNSIZING
Downsizing means reducing the size of the organization. It is a restructuring process in which the
organization disposes off its non- core activities. In the context of human resource management,
downsizing involves elimination of certain jobs with a view to improve work efficiency. The
organization reduces staff which is excess of its needs. As a result some of the employees get
separated from the organization.
Downsizing is a commonly used euphemism which refers to reducing the overall size
and operating costs of a company, most directly through a reduction in the total
number of employees. When the market is tight, downsizing is extremely common, as
companies fight to survive in a hostile climate while competing with other companies
in the same sector. For employees, downsizing can be very unnerving and upsetting.
There are several reasons to engage in downsizing. The primary reason is to make the
daily operations of a business more efficient. For example, a company may be able to
replace assembly line employees with machines which will be quicker and less prone
31
32
Downsizing may become necessary due to the following reasons:1. An organization might suffer from over staffing due to faulty human resource
planning. At the same time, steel authority of India (SAIL) had 1, 70,000
employees as against its actual requirement of 1, 00,000 employees.
2. A change in man-machine ratio may occur due to technological advances.
3. An organization may start outsourcing some of its business functions. As
result people employed in these functions become surplus.
Downsizing may, however, lead to following adverse consequences:
1. Downsizing may create a feeling of insecurity causing low morale and high stress
among employees. Employees may feel that they are paying the price for
mismanagement.
2. When competent employees leave the organization, downsizing may erode the skill
base.
3. Implementation of performance improvement practices become difficult due to a
feeling of job insecurity created by downsizing.
33
rather than those that remain. This also holds true for central training and consulting
agencies who are asked to support the laid off employees with career development
help, counseling, and other supports. There is no question that lay off employees
deserve and need these kinds of supports and services. Unfortunately, there is a
tendency to forget that after the laid-off workers are gone, the "survivors" must soldier
on, and the manager must deal with the long-term effects on the remaining
organization.
We are now seeing the effects of downsizing on those that remain. One of the most
telling comments is often put forth by employees a year or two after downsizing, and
it goes like this: "Sometimes I think that the ones who were laid off are the lucky
ones". They usually go on to describe a workplace where employees feel:
. A lack of executive commitment to their functions
. Confusion about the priorities of their organization
. Increased workloads
. Confusion about their mandate
. A sense of being betrayed by executives and managers
. A profound sense of distrust
. A sense of futility with respect to long-term planning
. Undervalued and unappreciated
In operational terms, this translates into a number of problems.
. The organization moves towards less risk-taking and innovation
. Destructive conflict tends to increase
.Internal competition for resources increases
.Individual staff members devote less effort to working together and more attention to
doing things that will protect themselves.
. General listlessness and lethargy
. Decreases service levels and increased public hostility
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Dealing with downsizing: The right way to manage your workforce during a recession
Theres no doubt about itits a tough time to be in business. Whether you
own your company, hold a position in senior management or work in human
resources, there is a lot of pressure on you to ensure that your organization makes it
through the recession with the fewest battle scars possible.
One of the key factors to your success will be how you handle the people who work
for youespecially if you are considering laying off staff.
Holding on to the employees you need
Its tempting to assume that your employees are grateful just to have a job and would
never dream of leaving during a recession, but that would be a costly mistake. A 2008
study published by the University of WisconsinMadison found that downsizing can
actually lead to a higher rate of turnover, which can leave organizations without the
critical people they need to keep operating through the tough times. Although they
may not be actively looking, unhappy employees are usually open to new
opportunities if they present themselves.
So how do you keep your employees from wanting to leave? Make a concerted effort
to keep morale up; low morale leads to job dissatisfaction and poor productivity. It
can be challenging in a recession, but it is possible. Heres how.
1. Increase Communication. One of the worst things you can do during a recession
is to leave your employees in the dark. People tend to know when layoffs are coming
they smell it on the wind. But leaving your employees to guess at whats a coming
only lead to rumors and low morale. Be open and honest with your employeesshare
both what you know and what you dont know about how the economy is affecting
your business. Whatever you do, dont rely on email for communicating difficult
news. It lacks tonality and can seem very cold and uncaring. Have regular staff
meetings so employees have an opportunity to ask questions. And if you dont know
the answer to a question, its okay to say so.
35
2. Invest in Training. Investing in anything during a recession may seem counterintuitive, but now is an excellent time to invest a little time and money in your
employees. Continuing to plan for the future and showing your employees they are an
important part of the company go a long way toward maintaining morale. It doesnt
have to be expensive. Take advantage of e-learning opportunities, plan a Lunch &
Learn session, encourage employees to join trade associations that offer inexpensive
training sessions, organize a mentoring program or arrange for employees who
participate in off-site training to share what theyve learned when they return to the
office.
3. Involve Your Employees in Decision-Making. As much as possible, involve your
employees in major decisions like layoffs or salary cuts. Since they work in the
trenches, they may have ideas that will surprise you, such as innovative ways to cut
costs or get rid of inefficient processes. You may also find out how far employees are
willing to go to avoid job losses. If you are facing dire circumstances, your employees
might suggest alternatives to layoffs such as a pay cut, closing at noon on Fridays or
other cost-saving measures. Most importantly, you will increase the amount of
employee buy-in if they feel they are part of the decision-making process and not
simply at the mercy of unseen faces working behind closed doors.
4. Stay positive. A good attitude is infectious. Try to maintain a positive outlook and
remember to share good news widely.
5. Try to keep the little things. When budgets get tight, the first impulse is to cut
everything that seems non-essential. If you can, try to keep the small perks that dont
cost very much but that really boost morale.
Avoiding layoffs altogether
Programs like the federal governments Work-Sharing program may help you avoid
permanent layoffs. Work-Sharing is an Employment Insurance (EI) program that
36
enables companies whose business activities have been reduced due to circumstances
beyond their control to cut back staff hours anywhere from one to three days a week.
This helps companies reduce salary costs without resorting to layoffs.
With Work-Sharing, workers whose employers are participating in the program can
draw EI benefits to help compensate for the loss of income. The program helps both
the worker and the employer: employers retain the experienced staff they will need
once the economy starts to improve and employees protect their income and maintain
their skills.
The last resort: handling layoffs
Laying people off is easily one of the hardest roles that a manager faces, but it is
almost inevitable that at some point in your career you will need to do it.
Although it may sound odd, laying people off and retaining people actually go hand in
hand. How you conduct layoffsand how you deal with those who remainwill
directly impact your bottom line. Mishandle either of those two things and you will be
facing productivity and morale problems.
Why is it so important to carry out layoffs properly? For one thing, we now live in the
age of social media and greater personal disclosure, which means there is a good
chance some of your former employees will share their experiences (good, bad or
ugly) on YouTube, Twitter, Facebook or a blog. If the comments are negative, they
can seriously harm your companys reputation and your ability to attract new clients
or employees.
Be aware the employees who remain will be watching your actions very closely. Treat
laid-off workers with respect and dignity and you will retain the respect of your
employees. Show a lack of compassion or march a popular and well-respected
employee to the door like a criminal and you will quickly find yourself facing a crisis
in employee morale and a reduction in company loyalty.
37
Another reason why layoffs need to be handled with care is that the business world is
becoming increasingly interconnected. Social media have moved into the business
world with networks like LinkedIn, where there is rarely more than a few degrees of
separation between you and a previous employee. And never forget that todays
former employee may be tomorrows client.
So, how do you make sure that you conduct layoffs in a manner that reflects well on
you and your company? It comes down to four basic principles.
1. Plan layoffs carefully. If you find yourself in a position where you need to let
people go, dont act indiscriminately. Take the time to ensure your layoff plan and
your business plans are in sync. Look at your current projectsparticularly those that
are critical to the businessand dont forget to plan for the future. Make sure you
have a clear idea of the projects that will get underway once the crisis is over. The last
thing you want is to suddenly realize that a mission-critical project is in jeopardy
because you let the wrong people go and now dont have the talent and resources to
proceed.
2. Be prepared. You will make things easier both for yourself and the people you are
laying off if you are well prepared. If you need to, write a script and practice it in
front of a mirror until you can do it without sounding forced. Make a list of questions
that might be asked and have answers ready. Be confident and get to the pointdont
make small talk. Keep in mind that much of what is said in a layoff meeting will not
be retained, so have resources available for affected employees, such as information
on benefits, separation terms, important contacts and other written information. Also,
make sure you have fully planned the necessary post-layoff logistics. Will employees
be allowed to say goodbye to colleagues? Will they be permitted some time to gather
their belongings? Will you offer to pack up their things and have the boxes delivered
to their home address?
3. Know the law. One thing you really dont needin a recession or at any timeis
a costly court battle, so make sure you know your responsibilities as an employer. The
38
law stipulates that employees must get either some notice prior to dismissal or be
compensated instead, although the particulars vary depending on the province or
territory. There are also certain rules that apply when laying off groups of individuals,
but again, the laws are different depending on the province. Speak to a lawyer or
contact your provincial labor board to make sure that you are meeting your
obligations in accordance with the law.
4. Treat people with dignity and respect. It is human nature to shy away from
uncomfortable situations, but as a manager you dont have that luxury. Distancing
yourself because you feel bad wont make anyone feel better. Remember, this is not
your fault, and avoiding people will not minimize feelings of guilt or hurt. In fact, it
will make them worse. Be kind and compassionate. Losing your job can be a
humiliating experience, so give people the respect they need.
Remember, the recession will end eventually, but what you do between now and then
could have a direct impact on whether your business thrivesor nosedives. When the
recession is finally over and business starts to return to normal, make sure that you
and your employees are ready.
39
In India downsizing its generally implemented through voluntary retirement scheme. Under this
scheme the organization and its employees enter into mutual agreement. Under this agreement
employees agree to voluntarily retire on payment of agreed compensation by the employer. In the
present globalized scenario, right sizing of the manpower employed in an organization has
become an important management strategy in order to meet the increased competition. The
voluntary retirement scheme (VRS) is the most humane technique to provide overall reduction in
the existing strength of the employees. It is a technique used by companies for trimming the
workforce employed in the industrial unit. It is now a commonly method used to dispense off the
excess manpower and thus improve the performance of the organization. It is a generous, taxfree severance payment to persuade the employees to voluntarily retire from the company. It is
also known as 'Golden Handshake' as it is the golden route to retrenchment.
In India, the Industrial Disputes Act, 1947 puts restrictions on employers in the matter of
reducing excess staff by retrenchment, by closures of establishment and the retrenchment process
involved lot of legalities and complex procedures. Also, any plans of retrenchment and reduction
40
of staff and workforce are subjected to strong opposition by trade unions. Hence, VRS was
introduced as an alternative legal solution to solve this problem. It allowed employers including
those in the government undertakings, to offer voluntary retirement schemes to off-load the
surplus manpower and no pressure is put on any employee to exit. The voluntary retirement
schemes were also not subjected to not vehement opposition by the Unions, because the very
nature of its being voluntary and not using any compulsion. It was introduced in both the public
and private sectors. Public sector undertakings, however, have to obtain prior approval of the
government before offering and implementing the VRS. India is a large country with large
population. She is facing many problems at the same time. One of its biggest problems, which
India is facing, is that of Unemployment. It demands an immediate solution because it threatens
the peace, prosperity and stability of free India.
VRS or voluntary retirement schemes are being implanted across almost all sectors in India to
prevent the situation of Unemployment. The employees in banks and public sector undertakings
have been given the option to retire with handsome benefits. It is also known as "Golden
handshake". The Nationalized banks took the lead and the bank officers grabbed the opportunity.
They got 12 to 20 lakhs cash to start life afresh. A tough estimate of the number of VRS
separations in the year 2001 is in excess of the two lakh. The scheme enabled to over-staffed
units to get rid of surplus hands and thus to make long-term gains. It was designed to improve
their competitiveness and efficiency.
As the scheme is implemented to prevent the unemployment but in fact VRS has actually
increased the problem of unemployment. After getting the voluntary retirement they could not sit
idle for long period. After all it is difficult for anybody to sit idle. A large number of skilled
workers from VRS separation have created a new set of problems. The workers who have retired
at an early age are still good enough to work. They accept jobs in private sector not for monetary
gain so much as for keeping themselves busy. As a result, they have snatched the employment
opportunities of the fresh job seekers. Secondly, the old hands agree to work for a smaller pay
packet, which suits the employer.
Unemployment means forced idleness, it a young man or woman willing to work for his living is
denied a job, he is unemployed. In the capitalist system there is very little scope for the working
class. They kept them at starvation level. Now with the wide use of computers, they have been
41
able to cut down the workforce by nearly 80 percent. What is the future of millions of jobless
young men and women in such a situation? The unemployed have come to realize that only thing
worse' than being exploited is the state of being idle and penniless.
Employment opportunities in India today are almost nil. Even the Government, which used to be
the largest employer, has stopped all recruitments, Industrial growth also has been negative over
the last several years. As a result the unemployment rate is increased to 7.3 percent of the
working population is the highest of the last decade.
A major cause of growing unemployment is global recession or the economic slowdown all over
the world. Information Technology sector no more offers a bright career. There is general slump.
The invasion of cheap Chinese goods in Indian market is another deathblow to Indian industries.
One of our richest resources is human being, which is means as-well-as end of the production.
Therefore this manpower should be utilized in proper way so that it becomes productive. It is a
well-known fact that the very institution of democracy becomes weak if the number of
unemployed people abnormally increases in a country. Apart from it if the manpower in our
country is not utilized there are no chances of developing the economy of India. Unemployment
cannot be more disastrous to any other country than to ours.
What is therefore required is a growth strategy that seeks to get the bulk of additional agricultural
output from the states, which have yet to benefit from Green Revolution. They account 80% of
the poor and 70% of the unemployed. Furthermore, if employment is to become the primary
objective of developmental planning, a major part of additional output is the nineties and
thereafter will have to be derived from the village and smalls scale industry sector which account
80% of industrial employment. A shift in the pattern of investment, the sources of employment
generation and the development strategy all over will be required to avoid the payment of dole.
So the way to tackle the problem of unemployment is to curb the causes behind it.
42
A business firm may opt for a voluntary retirement scheme under the following
circumstances:
Though the eligibility criteria for VRS varies from company to company, but usually, employees
who have attained 40 years of age or completed 10 years of service are eligible for voluntary
retirement. The scheme applies to all employees including workers and executives, except the
directors of a company. The employee who opts for voluntary retirement is entitled to get forty
five days emoluments for each completed year of service or monthly emoluments at the time of
retirement multiplied by the remaining months of service before the normal date of service,
whichever is less. Along with these benefits, the employees also get their provident fund and
gratuity dues. Compensation received at the time of voluntary retirement is exempt from tax
under section 10 (10C) of the Income Tax Act, 1961 up to the prescribed amount upon fulfilling
43
certain stipulated conditions. However, the retiring employee should not be employed in another
company or concern belonging to the same management.
The companies can frame different schemes of voluntary retirement for different classes of their
employees. However, these schemes have to conform to the guidelines prescribed in rule 2BA of
the Income-tax Rules. The guidelines for the purposes of section 10( 10C ) of the Income-tax Act
have been laid down in the rule 2BA of the Income-tax Rules. The guidelines provide that the
scheme of voluntary retirement framed by a company should be in accordance with the following
requirements, namely:
It applies to an employee of the company who has completed ten years of service or
completed 40 years of age
It applies to all employees (by whatever name called), including workers and executives
of the company excepting Directors of the company
The scheme of voluntary retirement has been drawn to result in overall reduction in the
existing strength of the employees of the company
The vacancy caused by voluntary retirement is not to be filled up, nor the retiring
employee is to be employed in another company or concern belonging to the same
management
The amount receivable on account of voluntary retirement of the employees does not
exceed the amount equivalent to one and one-half months salary for each completed year
of service or monthly emoluments at the time of retirement multiplied by the balance
months of service left before the date of his retirement on superannuation. In any case,
the amount should not exceed rupees five lakhs in case of each employee, and
44
The employee has not availed in the past the benefit of any other voluntary retirement
scheme.
Some companies offers very attractive package of benefits to the employees who opt for VRS.
For example, the VRS scheme may also include providing counseling to employees about their
future; managing of funds received under the scheme; offering rehabilitation facilities to them,
etc.
A company may make the following announcements while implementing a voluntary
retirement scheme:
The age limit and the minimum service period of employees who can apply for the
scheme.
The benefits that are offered to the employees who offer to retire voluntarily.
The rights of the employer to accept or reject any application for voluntary retirement.
The income tax benefits and income tax incidence related to the scheme.
It should also indicate that the employees who opt for voluntary retirement and accept the
benefits under such scheme shall not be eligible in future for employment in the
organization.
45
Voluntary Retirement Schemes have been legally found to be giving no problem to employers,
employees and their unions. But, the retrenchment plans of an organization must be compatible
to its strategic plans. Its procedure and reasons for introduction must be discussed with all
management staff including top management. One need to identify departments or employees to
whom VRS is applicable and thereby formulate its terms and conditions and also state the
benefits that would be available to those who took VRS. Such information should be made
available to every employee of the organization, mentioning the period during which the scheme
will be open. Also, existing employees might face insecurity because of fear of losing their job
too. One of the possible drawbacks of the VRS is that the efficient employees would leave the
company while the inefficient may stay back. Thus it is the /responsibility of the employer to
motivate them and remove their apprehensions and fears. During 1991 India adopted of
economic liberalization, globalization and privatization. Since then several organization in both
public sector and private sector have downsized in order to reduce the surplus staff.VRS has
been used to reduce the wage bill by offering one time compensation. VRS has come to known
as GOLDEN HAND SHAKE in view of its benefits for both employees and employers.
In initial stage VRS appeared attractive and many organizations successfully implemented it,
but in many cases VRS attempts have failed. Various issues involved in VRS need to be tackled
effectively in order to make the scheme successful. The main issue in VRS is as follows:
46
5. Rehabilitating Employees.
A firm or an association of firms may design a rehabilitation package for the concerned
employees. Such a package includes redeployment through further training. When
employees know that they have alternative means of earning livelihood. They will opt for
VRS. Government of India has set up five employees assistance centers at Mumbai,
Kolkata, Ahmadabad and Indore to provide training to displaced workers.
In the present globalised scenario, right sizing of the manpower employed in an organization has
become an important management strategy in order to meet the increased competition. The
voluntary retirement scheme (VRS) is the most humane technique to provide overall reduction in
the existing strength of the employees. It is a technique used by companies for trimming the
workforce employed in the industrial unit. It is now a commonly method used to dispense off the
excess manpower and thus improve the performance of the organization. It is a generous, taxfree severance payment to persuade the employees to voluntarily retire from the company. It is
also known as 'Golden Handshake' as it is the golden route to retrenchment.
In India, the Industrial Disputes Act,1947 puts restrictions on employers in the matter of
reducing excess staff by retrenchment, by closures of establishment and the retrenchment process
47
involved lot of legalities and complex procedures. Also, any plans of retrenchment and reduction
of staff and workforce are subjected to strong opposition by trade unions. Hence, VRS was
introduced as an alternative legal solution to solve this problem. It allowed employers including
those in the government undertakings, to offer voluntary retirement schemes to off-load the
surplus manpower and no pressure is put on any employee to exit. The voluntary retirement
schemes were also not subjected to not vehement opposition by the Unions, because the very
nature of its being voluntary and not using any compulsion. It was introduced in both the public
and private sectors. Public sector undertakings, however, have to obtain prior approval of the
government before offering and implementing the VRS.
A business firm may opt for a voluntary retirement scheme under the following
circumstances:
Though the eligibility criteria for VRS varies from company to company, but usually, employees
who have attained 40 years of age or completed 10 years of service are eligible for voluntary
retirement. The scheme applies to all employees including workers and executives, except the
directors of a company. The employee who opts for voluntary retirement is entitled to get forty
five days emoluments for each completed year of service or monthly emoluments at the time of
retirement multiplied by the remaining months of service before the normal date of service,
whichever is less. Along with these benefits, the employees also get their provident fund and
gratuity dues. Compensation received at the time of voluntary retirement is exempt from tax
under section 10 (10C) of the Income Tax Act, 1961 up to the prescribed amount upon fulfilling
certain stipulated conditions. However, the retiring employee should not be employed in another
company or concern belonging to the same management.
48
The companies can frame different schemes of voluntary retirement for different classes of their
employees. However, these schemes have to conform to the guidelines prescribed in rule 2BA of
the Income-tax Rules. The guidelines for the purposes of section 10( 10C ) of the Income-tax Act
have been laid down in the rule 2BA of the Income-tax Rules. The guidelines provide that the
scheme of voluntary retirement framed by a company should be in accordance with the following
requirements, namely:
It applies to an employee of the company who has completed ten years of service or
completed 40 years of age
It applies to all employees (by whatever name called), including workers and executives
of the company excepting Directors of the company
The scheme of voluntary retirement has been drawn to result in overall reduction in the
existing strength of the employees of the company
The vacancy caused by voluntary retirement is not to be filled up, nor the retiring
employee is to be employed in another company or concern belonging to the same
management
The amount receivable on account of voluntary retirement of the employees does not
exceed the amount equivalent to one and one-half months salary for each completed year
of service or monthly emoluments at the time of retirement multiplied by the balance
months of service left before the date of his retirement on superannuation. In any case,
the amount should not exceed rupees five lakhs in case of each employee, and
The employee has not availed in the past the benefit of any other voluntary retirement
scheme.
Some companies offers very attractive package of benefits to the employees who opt for VRS.
For example, the VRS scheme may also include providing counseling to employees about their
future; managing of funds received under the scheme; offering rehabilitation facilities to them,
etc.
A company may make the following announcements while implementing a voluntary
retirement scheme:-
49
The age limit and the minimum service period of employees who can apply for the
scheme.
The benefits that are offered to the employees who offer to retire voluntarily.
The rights of the employer to accept or reject any application for voluntary retirement.
The income tax benefits and income tax incidence related to the scheme.
It should also indicate that the employees who opt for voluntary retirement and accept the
benefits under such scheme shall not be eligible in future for employment in the
organization.
Voluntary Retirement Schemes have been legally found to be giving no problem to employers,
employees and their unions. But, the retrenchment plans of an organization must be compatible
to its strategic plans. Its procedure and reasons for introduction must be discussed with all
management staff including top management. One need to identify departments or employees to
whom VRS is applicable and thereby formulate its terms and conditions and also state the
benefits that would be available to those who took VRS. Such information should be made
available to every employee of the organization, mentioning the period during which the scheme
will be open. Also, existing employees might face insecurity because of fear of losing their job
too. One of the possible drawbacks of the VRS is that the efficient employees would leave the
company while the inefficient may stay back. Thus it is the /responsibility of the employer to
motivate them and remove their apprehensions and fears
50
Along with the environment of human resource management, the role of HRM is also changing.
In todays Flattened, downsized and responsive organizations highly trained and committed
workforce rather than machinery is the best competitive edge.
Some examples of the new role of Human Resource Management are given below:
1. Productivity Improvement.
In the globally competitive environment boosting productivity is of crucial importance.
Human resource management plays a vital role in boosting productivity and reducing
labor costs. Screening tests used to select high potential employees, training programmers
for increasing labor productivity etc. are designed by the HR department. In downsizing
programmers, human resource experts help employees learn to prioritize tasks and
reduce job stress.
2. Employee commitment.
Only involved and committed employees can make a difference. Building employee
commitment through two way communications, grievance handling, fair treatment,
opportunities for full use of skills, career oriented performance appraisal , open job
postings, etc. it is necessary to convince employees that the company and all its managers
care about them.
3. Responsiveness.
Organizations need to be more responsive to technological change and product
innovations. Downsizing, employee empowerment, flattened structure, and team work
are all designed to enable the organization to respond quickly to customers needs to
competitors challenges. Human resource management plays a crucial role in team
building through group incentives and flexible work hours. HR will have proactive rather
reactive.
4. Service sector.
Success in service organizations such as banks, airlines, hotels and other depends largely
on employee behavior. Human resource management can improve attitudes, motivation
and behavior of staff. Progressive practices such as career advancement, orientation and
socialization, employee counseling help improve employee behavior towards customers.
Human resources practices build employee commitment and morale which in turn
improve customer service and generate profits.
5. Corporate Strategy.
51
52
BSNL submits VRS proposal to Telecom Ministry/BSNL seeks 12000 cr for VRS
Abstract
Kapil Sibal asks BSNL to submit plans to become profitable. In order to run profitable, BSNL
has prepared several plans which also include a VRS plan to employees
Issues
BSNL Staff VRS : BSNL staff to go on one-day strike against proposed VRS
State-run BSNL has submitted the details of the proposed voluntary retirement scheme
(VRS) to the Telecom Ministry for employees who have completed the age of 45 years and have
served on a regular basis for 15 years, Parliament was informed today.
The employees, who will avail the VRS, would get an ex-gratia amount of 60 days salary (basic
+ dearness allowance) for each completed year of service, or salary for the number of months left
in the service, whichever is less.
However, the compensation would be subject to the maximum of 60 months salary, Minister of
State for Communications and IT Milind Dora said in Lok Sabha.
Further, he said the ex-gratia amount will be in addition to the normal retirement benefits.
The likely expenditure on ex-gratia for approximately 1 lakh employees is estimated to be about
Rs 11,276 crore. In addition there will be expenditure on normal retirement benefits, including
gratuity, pension, leave encashment and transfer grant.
53
BSNL had consultations with its executive association and staff union in this regard. BSNL has
reported that the majority of associations have opposed the scheme or expressed their
reservations, he added.
"The proposal is under examination in the Department of Telecom," Deora said.
BSNL had registered a net loss of Rs 1,823 crore during 2009-10. BSNL had reported the highest
net profit of over Rs 10,000 crore in 2005-06, but since then its profits have been falling and in
2009-10 it reported net losses.
The VRS has been under discussion since 2009 when a panel headed by Sam Pitroda, advisor to
the Prime Minister on Public Information Infrastructure and Innovations, advocated that BSNL
take the VRS route to prune its nearly 2.77 lakh strong workforce by a third.
Besides, BSNL has Rs 5,475.73 crore as the outstanding dues from the customers at the end of
three years and for the current year as on September 30, 2011 in respect of wired and wireless
mobile services and circuits, Deora said.
State-owned telecom service operator Bharat Sanchar Nigam Limited (BSNL) is seeking Rs
12,000 crore from the central government towards one-time compensation package to the
employees opting for its voluntary retirement scheme (VRS), according to RK Upadhyay,
chairman and managing director.
The total cost of the VRS, designed to revive the loss-making company, works out to Rs 16,000
crore if 100,000 employees opt for it. I think approximately Rs 12,000 crore is required to be
given by the government and the remaining Rs 4,000-odd crore will be borne by the company
Employee costs account for 48 per cent of the public sector undertaking (PSU). The VRS will
not only help in saving 15-16 per cent of the companys revenues but will also give the flexibility
of recruiting young workforce who can adopt to new technologies or outsource some of its
services, he said.
Upadhyay said the company had charted out plans to wipe out its losses in the next two to three
years. This year, we hope to keep our losses at least at the same level as last year's if not less,
he added.
BSNLs losses have more than tripled to about Rs 6,000 crore during 2010-11, primarily on
account of hefty outgo for employees salaries and expenses borne by the PSU for procuring 3G
and BWA spectrum. The company had registered a net loss of Rs 1,823 crore during 2009-10.
He said the zero-debt company paid in excess of Rs 19,000 crore to the government by way of
spectrum charges and it was expecting around Rs 6,000 crore from the government in return to
the spectrum surrender.
54
BSNL, which for the last three years had received Rs 2,000 crore per year from the government
under the Universal Service Obligation Fund towards its commercially non-viable operations, is
also looking at requesting the Centre to continue the same.
The Rs 2,000-crore government contribution ended in July 2011. We have taken up the case and
the government is considering. We do expect that pretty soon ... and it is not a bailout package,
Upadhyay said while ruling out any possibility of seeking a bailout scheme from the
government.
To achieve a turnaround, Upadhyay said, BSNL was looking at new revenue streams, which
include commercializing its idle lands across the country in a public-private-partnership mode.
We have enormous land bank, which came under the BSNL fold through a memorandum of
understanding with the Centre in 2001. Now, the government is evaluating options on how to
formally hand over this land to us. This land has been given to us for a specific purpose of
offering telecom and IT services. So, we will go in for giving the land or buildings that are idle to
KPOs, BPOs and call centers, he said.
On the litigations surrounding the orders for GSM lines, Upadhyay said the tender for 14.7
million GSM lines had already been opened through an e-tendering process and that both
technical and financial bids had been submitted to the government.
Technical bids have been opened and we hope to complete the technical evaluation in about 710 days from now. Then, we will be in a position to go for the financial bids, which probably will
come to a conclusion within the next three-four weeks. We estimate the cost of the singlequantity tender to be around Rs 5,000 crore, funds for which will be raised from banks, he
added.
Issues
Bangalore: A union of state-run telecom major BSNL Tuesday said its workers, executives and
non-executives plan to go on a one-day strike on December 15 against the "proposed
retrenchment of workers" through Voluntary Retirement Scheme (VRS) and withdrawal of
existing benefits.
"Over 92 million mobile users and about 29 million fixed line users could expect disrupted
telecom services (on Dec 15)," BSNL Joint Action Committee (JAC, Karnataka) Conveyor C K
Gundanna told reporters here.
Parliament was informed on Nov 30 that state-run BSNL had submitted the details of the
proposed VRS to the Telecom Ministry for employees who had completed the age of 45 years
and had served on a regular basis for 15 years.
"It is only due to the pro-private and anti-PSU policies of the government and mismanagement
that the financial viability of the company has been adversely affected," he alleged.
55
BSNL had registered a net loss of Rs 1,823 crore during 2009-10. BSNL had reported the highest
net profit of over Rs 10,000 crore in 2005-06, but since then its profits have been falling and in
2009-10 it reported net losses.
CASE STUDY:11. 2
THE STATE BANK OF INDIA:VRS
56
ABSTRACT
The case 'The State Bank of India VRS' is intended to provide a detailed insight into the
developments after leading Indian public sector bank SBI decided to implement a VRS. The case
examines in detail the reasons for SBI's employees protesting against the VRS and the post-VRS
scenario.
Issues:
How poor manpower planning led to problems with the banks VRS
Contents:
VRS troubles
Background note
The protests
The post VRS days
57
In February 2001, India's largest public sector bank (PSB), the State Bank of India (SBI) faced
severe opposition from its employees over a Voluntary Retirement Scheme (VRS). The VRS,
which was approved by SBI board in December 2000, was in response to Federation of Indian
Chambers of Commerce and Industry's (FICCI) report on the banking industry. The report stated
that the Indian banking industry was overstaffed by 35%. In order to trim the workforce and
reduce staff cost, the Government announced that it would be reducing its manpower.
Following this, the Indian Banks Association (IBA)2 formulated a VRS package for the PSBs,
which was approved by the Finance ministry.
Though SBI promoted the VRS as a 'Golden Handshake,' its employee unions perceived it to be
a retrenchment scheme. They said that the VRS was completely unnecessary, and that the real
problem, which plagued the bank were NPAs3. The unions argued that the VRS might force the
closure of rural branches due to acute manpower shortage. This was expected to affect SBI's aim
to improve economic conditions by providing necessary financial assistance to rural areas. The
unions also alleged that the VRS decision was taken without proper manpower planning. In
February 2001, the SBI issued a directive altering the eligibility criteria for VRS for the officers
by stating that only those officers who had crossed the age of 55 would be granted VRS.
Consequently, applications of around 12,000 officers were rejected. The officers who were
denied the chance to opt for the VRS formed an association - SBIVRS opted Officers'
Association to oppose this SBI directive. The association claimed that the management was
adopting discriminatory policies in granting the VRS...
Background note
The SBI was formed through an Act of Parliament in 1955 by taking over the Imperial Bank. The
SBI group consisted of seven associate banks:
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
State Bank of Bikaner & Jaipur.
The SBI was the largest bank in India in terms of network of branches, revenues and workforce.
It offered a wide range of services for both personal and corporate banking. The personal
banking services included credit cards, housing loans, consumer loans, and insurance. For
corporate banking, SBI offered infrastructure finance, cash management and loan syndication...
58
The protest
The SBI was shocked to see the unprecedented outcry against the VRS from its employees. The
unions claimed that the move would lead to acute shortage of manpower in the bank and that the
bank's decision was taken in haste with no proper manpower planning undertaken.
They added that the VRS would not be feasible as there was an acute shortage of officers
(estimated at about 10000) in the rural and semi-urban areas where the branches were not yet
computerized. Moreover, the unions alleged that the management was compelling employees to
opt for the VRS. They said that the threat of bringing down the retirement age from 60 years to
58 years was putting a lot of pressure on senior bank officials to opt for the scheme.
59
Abstract
Global banking giant Citibank is likely to lay off more employees in India in the next few weeks,
while several senior managers have already been shown the door, company sources say
Issues
Cutting down employees
US banking giant Citigroup, led by Indian-American Chief Executive Vikram Pandit, is
set to lay off about 4,500 employees over the next few months to cut costs amid tough economic
times.
Some of the job cuts, representing 1.7 percent of the group's total global headcount of 267000 as
at the end of September, would be from the firm's proprietary-trading operations as regulators
seek to restrict banks from betting shareholder cash, Pandit said Tuesday.
As a result, Citi will book a charge of approximately $400 million in the fourth quarter of this
year due to severance payments and other expenses associated with the layoffs, he said speaking
at the Goldman Sachs Financial Services Conference in New York.
"Financial services faces an extremely challenging operating environment with an unprecedented
combination of market uncertainty, sustained economic weakness in the developed economies
and the most substantial regulatory changes we have seen in our lifetimes," Pandit said.
"These trends will likely significantly affect the competitive landscape in the coming years."
Citigroup posted a 74 percent increase in third-quarter profit, aided by a $1.9 billion accounting
gain that softened the impact of lower trading and investment-banking revenue. Excluding the
accounting figure, the bank's revenue for the period fell 8 percent to $18.9 billion.
Most of that accounting gain stemmed from a credit- valuation adjustment, or CVA. This
required Citigroup to write down the value of its debts amid a widening of the bank's credit
spreads, the extra yield investors demand to own a corporate bond rather than US Treasuries.
The spreads have tightened this quarter, Pandit said. If the fourth quarter ended yesterday, the
60
bank would post a $200 million negative CVA, compared with a $1.9 billion gain in the previous
quarter.
Citigroup's lending business in its securities and banking operation also would record a loss of
about $300 million tied to hedges if the quarter ended yesterday, Pandit said.
61
Yahoo announced plans to dump some 1,400 employees after reporting in October that the weak
economy had cut deeply into the California Internet pioneer's third-quarter profits.
Layoffs of most US Yahoo workers were happening Wednesday and were already underway in
other parts of the world, Yahoo's beleaguered co-founder and outgoing chief executive Jerry
Yang wrote in an email to employees.
"This is a tough time for all of us," Yang wrote. "The reductions we're making are very hard, but
they are also very necessary as we focus on the long-term health of our business."
Yahoo has been losing ground on the Internet to companies such as Google, MySpace and Face
book and the economic slowdown has hurt the firm particularly hard as advertisers cut back on
62
spending.
"My impression is that this will be the first of several layoffs Yahoo will have to do," said analyst
Rob Ederle of Ederle Group in Silicon Valley.
Yang announced last month he is stepping down as chief executive, and Yahoo is currently
seeking a successor to turn the company around.
Among the supposed contenders is Arun Sarin, recently retired head of British mobile telephone
powerhouse Vodafone Group PLC.
"Clearly, Yahoo is hunting for a turn-around guy," Enderle said. "And those guys trim the
company to its core to get it growing again or package it for sale."
Turn-around executives are notoriously merciless when it comes to getting rid of employees or
divisions not considered key to a company's success.
"Right now, Yahoo is simply too bloated and unable to move," Enderle said. "They lack agility
and a turn-around manager would be the one to get it agile."
Ivory Investment Management maintained that Yahoo could get 15 billion dollars up front for its
search business from Microsoft, which is eager to better compete against Google in the lucrative
arena.
Such a deal would let Microsoft bear the cost of operating online search at Yahoo websites while
Yahoo gets a share of advertising revenues that could bolster its annual cash flow by as much as
500 million dollars, Ivory argued.
"This deal would offer Microsoft the unique opportunity to immediately gain critical mass to
better level the playing field with Google," Ivory managing partner Curtis Macnguyen wrote in a
letter to Yahoo's board of directors.
"It would simultaneously allow Yahoo to both receive a sizable upfront cash payment and
increase its prospective cash flow."
Microsoft chief executive Steve Ballmer said last week that the software giant remains interested
in acquiring Yahoo's search business.
Yang and Yahoo's board earlier this year rejected a 47.5-billion-dollar bid by Microsoft for the
company, earning the disapproval of many shareholders.
"Getting rid of search might be a wise thing for Yahoo," Enderle said. "They can't afford a battle
with Google right now."
Yahoo would be better off leveraging its hundreds of millions of users worldwide into a colossal
social-networking community, according to the analyst.
63
"Yahoo is much better funded and bigger than Facebook or MySpace. That is more of a battle
that Yahoo could probably win."
64
HR Problems at Jet Airways: Coping with Turbulent Times in the Indian Aviation Industry
Introduction
In October 2008, Jet Airways (India) Limited (Jet), one of India's leading domestic airlines,
decided to lay off more than 1,000 employees to streamline its operations. The retrenchment was
the second phase of its trimming operations.
The first phase, which took place a day earlier, saw the airline showing the door to 850 cabin
crew members6. The second phase of retrenchment included employees from all operations cabin crew, pilots, ground staff, airport services staff, and employees from management
departments. The sudden decision not only took the employees by surprise but also caused alarm
in the Indian aviation sector. Amidst great furor and opposition by various organizations and
political parties, Naresh Goyal (Goyal), chairman of Jet, reinstated the employees a day later
amidst great emotional drama. He was quoted as saying he had been appalled by the
retrenchments of his employees, which he claimed, he had come to know only through media
reports.
He added that he would "not be able to live as long as he lives" with the tough decision his
management had taken and clarified that he was taking back the employees as they were "family
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to him and as head of the family he would take care of them. A month later - in November 2008,
Jet announced that it would consider serious salary cuts for its staff to handle the aviation crisis.
While many industry analysts were surprised by the turn of events that had led to the
reinstatement of the sacked employees, they opined that Jet had been forced to take drastic
decisions such as laying off employees or initiating pay cuts because of the turbulent phase
through
which
the
aviation
industry
was
passing.
In September 2008, the International Air Transport Association 8 (IATA) had predicted that world
over the aviation industry would lose about US$5.2 billion based on an average jet fuel price of
US$ 140 . The rise in fuel prices had pushed the fuel bills of the aviation industry to US$186
billion by the end of the year 2008.
Excerpts
Background Note
Jet, with its headquarters in Mumbai, India, began as an air taxi operator in April 1992 and started its
commercial operations a year later, in 1993. It operated with just 24 flights across 12 destinations initially,
but showed exceptional growth with more than 357 daily flights to about 62 domestic and international
destinations in 2008. It was first listed in the National Stock Exchange (NSE) in the year 2005. As of June
2008, it operated over 370 daily flights to about 68 destinations both in India and abroad including San
Francisco, New York, Toronto, Singapore, Brussels, London (Heathrow), Hong Kong, Shanghai, Kuala
Lumpur, Colombo, Bangkok, Kathmandu, Dhaka, Kuwait, Bahrain, Muscat, Abu Dhabi, Dubai, etc..
HR Issues, Management and Decision Making at Jet
According to the company, Jet paid the utmost importance to the composition of its senior management and
its human resources with emphasis on teamwork as a key success factor. Being in the service-based industry,
Jet gave priority to high quality, professional service to its customers...
The retrenchment drama unfolded on October 16, 2008, when Jet announced that it would lay off nearly
1,100 of its staff a day after it had already laid off around 800 of its cabin crew members.
The second phase of 1,100 employees included those from departments like management, flight
attendants, and the cockpit crew.
The company decided to lay off these employees with no prior notice but offered them a month's
remuneration... Excerpts Contd...
Reasons for Retrenchment
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The growing challenges in the Indian aviation industry were the main reason for the lay offs at Jet,
according to the company and other industry analysts.
Turbulent Times for the Indian Aviation Industry
The Indian aviation industry was one of the fastest growing aviation industries in the world. The Air
Corporations (Transfer of Undertakings and Repeal) Act 1994 opened the Indian skies up to private
operators. Apart from government-owned airlines, the aviation industry was flooded with private operators
and low cost carriers...
The retrenchment drama unfolded on October 16, 2008, when Jet announced that it would lay off nearly
1,100 of its staff a day after it had already laid off around 800 of its cabin crew members.
The second phase of 1,100 employees included those from departments like management, flight
attendants, and the cockpit crew.
The company decided to lay off these employees with no prior notice but offered them a month's
remuneration...
Reasons for Retrenchment
The growing challenges in the Indian aviation industry were the main reason for the lay offs at
Jet, according to the company and other industry analysts.
Turbulent Times for the Indian Aviation Industry
The Indian aviation industry was one of the fastest growing aviation industries in the world. The
Air Corporations (Transfer of Undertakings and Repeal) Act 1994 opened the Indian skies up to
private operators. Apart from government-owned airlines, the aviation industry was flooded
with private operators and low cost carriers...
Jet received criticism from several quarters for retrenching its employees. Many of its
employees protested against the decision to oust them without prior notice. Most of them had
paid substantial amounts to receive training at major Aviation Training institutes...
Massive Salary Cuts Follow
In the last week of November 2008, Jet decided on a 20% cut in the salaries of its pilots,
engineers, and some other staff. The company planned a 5 percent to 10 percent cut in the salary
of top officials who drew a salary above Rs. 75,000...
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12. A Review
Asia showed signs of growth despite uncertainty looming in the United States coupled with the
Euro zone crisis. Companies continued seeking HR professionals across varying job functions
and were keen to groom their employees and keep them engaged in this turbulent economic
climate.
Conservative appetite for financial services
Singapore and Hong Kong serve as the financial hubs of Asia and consequently the financial
services sector was impacted by global market volatility. In Singapore, financial services
organisations sought HR professionals with specific investment banking experience, preferring
candidates with prior front office banking experience.
In Hong Kong, we observed new hiring trends for banks in Hong Kong, with these banks keen to
hire junior generalists with 3-5 years experience to strengthen their middle management. Banks
previously sought generalists at the AVP level with 5-7 years' experience.
Growth within commerce and industrial sectors
The commerce and industrial sectors remained strong with constant demand for HR talents in
Singapore, Hong Kong, China, Malaysia and Thailand across a spectrum of job functions such as
HR generalists, business partners as well as compensation and benefit professionals.
Within Singapore, the healthcare, IT & telecommunications, shipping and logistics, chemicals,
manufacturing, automation and aerospace sectors saw strong demand for HR professionals. HR
professionals with specialist experience in compensation and benefits as well as learning and
development were highly sought-after.
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With more companies seeking to reduce the administrative aspect of HR business partners, many
embarked on HR transformation projects such as moving transactional activities to shared
services. Hence, candidates with specific HR shared services experience were highly soughtafter.
The FMCG and retail sectors also hired actively in Malaysia, seeking talent and development
and compensation and benefits specialists, as well as HR business partners. Malaysia has been
positioning itself as the shared services hub for HR activities. Therefore professionals
specialising in HR shared services were in demand.
The growth for commercial businesses in Hong Kong saw steady demand for HR generalists at
the senior management level. Business partners and compensation and benefits professionals
were in demand throughout the year.
What lies ahead for 2012
We anticipate hiring levels for HR professionals to be softer within the financial services sector
compared to the commerce and Industry sectors. We however foresee Asian financial institutions
with strong balance sheets to take opportunity to keep their eye out for strong HR talents to upskill their existing HR capabilities. We expect junior candidates with shared services experience
to remain in demand as turnover in this area is usually higher than other functions.
While HR business partners and compensation and benefits specialists will continue to remain in
demand in 2012, candidates with regional experience have to be realistic and anticipate that their
regional portfolio may shrink from Asia Pacific to Southeast Asia as companies will be keen on
greater organizational efficiency. We anticipate the demand for HR contractors across all sectors
to increase as companies may struggle to secure permanent headcounts.
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13. Conclusion:
Trends in Human resource management have changed the way we work, as organizations are
more depended on HRM to increase the success ratio in todays competitive global environment.
Human resource management is a process of bringing people and organizations together so that
the goals of each other are met. The role of HR manager is shifting from that of a protector and
screener to the role of a planner and change agent. Personnel directors are the new corporate
heroes. The name of the game today in business is personnel . Nowadays it is not possible to
show a good financial or operating report unless your personnel relations are in order.
Over the years, highly skilled and knowledge based jobs are increasing while low skilled jobs are
decreasing. This calls for future skill mapping through proper HRM initiatives.
Indian organizations are also witnessing a change in systems, management cultures and
philosophy due to the global alignment of Indian organizations. There is a need for multi skill
development. Role of HRM is becoming all the more important.
Some of the recent trends that are being observed are as follows:
The recent quality management standards ISO 9001 and ISO 9004 of 2000 focus more
on people centric organizations. Organizations now need to prepare themselves in order
to address people centered issues with commitment from the top management, with
renewed thrust on HR issues, more particularly on training.
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improve organizational values and helps in creating defect free product or services at
minimum cost.
With the increase of global job mobility, recruiting competent people is also increasingly
becoming difficult, especially in India. Therefore by creating an enabling culture,
organizations are also required to work out a retention strategy for the existing
skilled manpower
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Advanced Micro Devices, one of the worlds two makers of microprocessors for personal
computers, laid off 500 people effective November 5, 2008. It announced that this reduction is
unfortunate but necessary part. This process helps align their people with the focused programs
to achieve organizations objectives, for eliminating duplication of efforts and it allows operating
more effectively.
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15. Bibliography
ICMR
HR Journal
Google.com
C.B Gupta (Essentials of HRM)