ALLAMA IQBAL OPEN UNIVERSITY

ASSIGNMENT NO.2
Management Theory and Practice
MBA-5531

SUBMITTED BY Nabeel
Ahmad Roll No
AD513710
Semester 1st
Submitted to:
Mr.
Nadeem Babar
TABLE OF CONTENTS:

ACKNOWLEDGEMENT
03

INTRODUCTION TO ISSUE
04

SELECTED ORGANIZATION
04

VISION
04

MISSION STATEMENT
05

PRACTICLE STUDY OF ORGANIZATION

05

IMPORTANCE OF ORGANIZATION BEHAVIOUR

06

HUMAN RESOURCE MANAGEMENT AT PEL

07

ORGANOGRAM OF HR DEPARTMENT
08

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HUMAN RESOURCE MANAGMENT
08

RECRUITMENT
09

SELECTION 10

SWOT ANALYSIS 13

CONCLUSION 19

SUGGESTIONS AND RECOMMENDATIONS 19

REFERENCE 19

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 Acknowledgement
I am grateful to ALLAH ALMIGHTY, for enabling me to fulfill
this tiring, but interesting job for the completion of my report.

The present project is submitted to Mr. Nadeem Babar. I

express my deep sense of indebtedness to him for his
invaluable advice and encouragement and for giving me very
useful information that helped me a lot in completing this
project.

I also want to pay a bundle of thanks to each and every

person how has put indeed effort to make this project possible.
It is also our duty to pay thanks to my parents for the moral
and financial support.

Last but not the least I also feel please to thanks to the
whole management of Pak Elektron Limitted (PEL) in
general for their cooperation in the formulating of this project.

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ISSUE: SINCE PEOPLE MUST OCCUPY ORGANIZATIONAL POSITIONS AND AN

EFFECTIVE ORGANIZATION ARISES WHEN A MANAGER HIRES GOOD PEOPLE AND LET THEM DO THE

JOB IN THEIR OWN WAY.

INTRODUCTION TO THE ISSUE :

My topic typically belongs to the second function of

management that is organizing which means developing an organizational
structure with jobs that must be staffed or one may call it “HUMAN RESOURCE
MANAGEMENT”.

“The United States have done one thing; they have invented
and established Management Science, which is an attempt to
organize the ignorance of the workforce, and to elevate it to
the dignity of a rat hole.”
“ Oscar Wilde on Human Resources
Management”
Selected Organization:

Vision

“To excel in providing engineering goods and services

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 through continuous improvement.”

Mission Statement
• To provide quality products & services to the complete satisfaction of our customers
and maximize returns for all stakeholders through optimal use of resources
• To focus on personal development of our Human Resource to meet future
challenges
• To promote good governance, corporate values and a safe working environment
with a strong sense of social responsibility

Practice Study of the

Organization
HIERARECHY OF PEL

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EMPLOYEES AT PEL ARE ALLOWED TO WORK IN THEIR OWN STYLE AND WITH EASE REGARDING

THEIR PERSONAL LIKES AND DISLIKES WHICH ENSURES PEL’S GOOD ORGANIZATIONAL BEHAVIOR.

IMPORTANCE OF ORGANIZATIONAL BEHAVIOR:

Organizational behavior is the new concept. Many organizations are now
focusing on this new concept Organizational Behavior. Organizational Behavior is
important because it scientifically enhanced the productivity of the employees. It
studies the behavior of the employee and tries to change their behavior for the
benefit of the organization.

“A field of study that investigates the impact that individual, groups

and structure has on behavior within organization, for the purpose of
applying such knowledge toward improving an organization’s
effectiveness”

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MANAGING WORK FORCE DIVERSITY:

The concept that organizations are becoming more heterogeneous in

terms of gender, race, ethnicity, sexual orientation, and inclusion of other
diverse group is called work force diversity.

There are number of work force diversities some of them are given below:

• Disabled Persons
• Gender Issues
• Age Factors
• Temporary Casual Contractors
• Other Back Word Castes
The same thing is happening at PEL (PVT) Ltd. Employees at PEL (PVT) Ltd
belongs to different areas, different values and background55s. For example
most of the labor belongs to Sheikhu Pura, ?, where as higher level managers
belong to Lahore, Islamabad, Faisalabad and even from America. Therefore it is
often difficult to communicate with each other at plant or at higher level
meetings. But employees at PEL have over come these communication barriers
and they work as the one unit in organization.

Human Resource Management at PEL

Organizational behavior studies the human behavior and helps the

managers to understand the human’s behavior in different situations.
Therefore we can say that organizational behavior has the
strong link with the “Human Resource Management”. Therefore we often
discuss “O.B” under the umbrella of “Human Resource Management”.
From now on word, we will discuss O.B” as Human Resource Management

HUMAN RESOURCE POLICIES AND PRACTICIES AT PEL,

PAKISTAN

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 As a Chinese proverb suggests,

“If you wish to grow something for a season, grow mangoes.

If you wish to grow something for a year grows rice. But, if
you wish to grow something for a life time grow man
power.”

Human Resource Management is the future of organizations all over

the world. Without a developed HR system, no country can compete in the
global arena, and a country like Pakistan is no different, it needs Human
Resource Management for its future growth. Today, therefore in truly
world-class corporations the HRM function has assumed a greater
significance and plays a comprehensive role in organizational
management. In the 1980’s and early 1990’s the term HRM came into
academic horizons and gradually used by the practitioners and
researchers worldwide. The last two decades have seen a marked change
in HRM particularly in those activities, which involve acquiring, developing
motivating and utilizing human resources actively in the business.
The major purpose of HRM is to increase and improve the
productive contribution of personnel to the organization in more ethical,
social, and administratively responsible way. This purpose emerged from
commonly called industrial relations, personnel administration, industrial
psychology and personal.

Note that some people distinguish a difference between HRM (a

major management activity) and HRD (Human Resource Development, a
profession). Those people might include HRM in HRD, explaining that HRD
includes the broader range of activities to develop personnel inside of
organizations, including, e.g., career development, training, organization
development, etc.

The main elements we are going to discuss are

• Recruitment & Selection

Head of
• Training & Development
Dept.
• Appraisal Process
ORGANOGRAM OF HUMAN RESOURCE
DEPARTMENT
PMDP R&S T&D
Asst

Manage
r Asst Asst Asst Asst Asst

Ma== Manager Manager Manager Manager Manager

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Manage
r
HUMAN RESOURCE MANAGMENT
RECRUITMENT AND SELECTION

This section examines current practices and decision-making in

recruitment and selection. They are critical elements of effective human
resource management. We cannot discuss how recruitment and selection
take place without asking why certain techniques are used in preference
to others. Within the HRM paradigm, they are not simply mechanisms for
filling vacancies. Recruitment and redundancy can be viewed as key
'push' and 'pull' levers for organizational change.

Once the organization’s human resource needs have been determine,

they necessarily have to be filled. These staffing activities include the
following.

 Recruiting job candidates

 Selecting the most appropriate job applicants for the
available jobs

Both procedures must be done in accordance with Equal Employment

opportunity (EEO) guidelines. Recruitment is one of the core activities of
any personnel department. Before the personnel department can proceed
with the recruitment, two further documents are necessary.

 The Job specification

 A person specification

The line manager should draw these up and it may be necessary for a
member of personnel department to assist. Specifying the job and the
type of person required is a line management responsibility.

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RECRUITMENT
They start by getting the request by related department.
Departments fill the slip named Man Recognition Slip in which they
mention all their requirements about employee needed like age, when
and why employee require, experienced or fresh employee, insurance and
car etc. Then Head of Department (HR) send the slip to chairman and
Managing Director. From their approval further procedure start.

INTERNAL SOURCES

Organizations with a strong culture are likely to seek malleable new

employees at school-leaving or graduate levels. More senior jobs are filled
from the internal job market.

JOB POSTING
These methods of prominently displaying current job openings extend
and open invitation to all employees in the PEL Job posting serve the
following purposes

 Provide opportunity for employee growth and development

 Provide equal opportunity for advancement to all employees
 Communicate organization goals and objectives and allow each
individual the opportunity to help find a personal fit in the
organizations job structure.

PROMOTE THE EMPLOYEES WITH IN THE COMPANY

It includes the Personnel replacement charts which the company

record is showing present performance and promotion ability of inside
candidates for the most important positions. Usually this option is for
firm’s top positions. The management creates a card for each position,
showing possible replacements as well as their present performance,
promotion potential, and training

EXTERNAL SOURCES
Companies looking for the 'right' (best fit for the job) person
however may rule out internal applicants because they do not match the
personnel specification prepared for the job.

PEL does not always produce enough qualified applicants internally so

it needs external sources including bringing in people with new ideas. The
external method includes media such as newspaper.

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GIVING ADVERTISEMENT IN NEWS PAPERS

The purpose of the ad is to attract those applicants who are suitable

for the job. The body of the advertisement contains a brief description of
the job, a brief description of the person required, including the essential
requirements of the person specification.

EMPLOYEE REFERRAL PROGRAMS

Word-of-mouth applicants are likely to stay longer and may be more

suitable than recruits obtained by advertising. But word-of-mouth is
discriminatory, since it restricts applications to established communities
and excludes recently arrived minority groups who have not had time to
become part of informal networks.

Selection
This section looks at the early stages of the selection process - often
called pre-selection. The recruitment campaign should have attracted a
pool of applicants from which selectors can make their choice. If a job
analysis has been conducted, the criteria or competences which are
deemed necessary have been identified. These may be well defined and
focused on experience and skills, as in the 'right person' approach; or
general and related to education, intellect and personality for the 'cultural
fit' and 'flexible person' models After the candidates have been identified,
they must be selected. In PEL common procedures use in selection include

 Obtaining completed application forms or resume

 Checking education, background, experience and references
 Taking Tests & Interviewing the candidates
 The selection procedure result in a match between a candidates
ability and the skills required by the job

TESTS
PEL test only the external employees not the internal employees,
because they have the complete data of internal candidates. Tests
provide use full back-up information and are an aid to selection but they
cannot entirely replace the interviewer. It tests the candidates only for
specific positions not for all the vacancies.

INTERVIEW
PEL conduct behavioral interviews to screen out the candidates.
Behavioral interview is a series of job related questions that focus on how
they reacted to actual situations in the past.

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 They also conduct individuals’ multiple interviews. The HR
management conducts the interview. Also the related department
conduct interview. Their main purpose for the interviewer to ascertain if
the candidate is suitable for the vacancy, and for the candidate to
determine whether the job is suitable for him or her.

PROBATION PERIOD
PURPOSE

PEL set probation policy regarding the serving of a

probationary period for staff members covered by a collective bargaining
agreement who are newly hired. Probation is for newly appointed
employees only.
RESPONSIBILITY
The Head of Department Human resources is to ensure
compliance with this policy.

DURATION

Probation period in PEL is six months for Managers and three

months for executive. Probation periods may be extended, with reason,
where the employer is not convinced with employee performance to the
required standard, and some time if employee do not achieve the desired
result the company will terminate the employee.

 Employment Letter is attached

 Confirmation Letter is attached
 Letter showing Different Allowances and Benefits is attached.

DESCRIPTION OF SOME OF THE BENEFITS

All of these benefits, allowances and salary vary proportionately from
grade to grade.

SALARY STRUCTURE
Salary is based upon the market practices. They attract their
employees from market pay levels. The basic salary structure is as:

Basic salary

House rent allowance @ 45% of basic salary

Utilities @ 10% of basic salary

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PROVIDENT FUND

Employee’s contribution @ 10% of basic salary after confirmation of

service. The company will also contribute an equal amount for credits to
the PF account of the employee.

GRATUITY

It is one gross salary (last drawn), for each completed year of service,
which is payable on leaving the company.

MEDICAL OUTPATIENT ALLOWANCE

It is per month allowance in addition to the gross salary. But it

doesn’t form the part of the salary for any other benefits e.g. Provident
fund, bonus.

ANNUAL BONUS

Bonus on salary is provided annually to the employees.

TRAINING & DEVELOPMENT

At the organizational level, enterprises need people with appropriate
skills, abilities and experience. These qualities can be bought from outside
the organization through recruitment, consultancy and subcontracting, or
grown by training and developing existing employees. This section
focuses on the second approach.

Training at PEL
Training in PEL. is basically of two types.

 Training to new employees

 Training to existing employees

TRAINING TO NEW EMPLOYEES

PEL basically has a general induction-training plan for newly
employed people

INDUCTION TRAIING
Induction training is regarded as an important of the overall training
policy applying to all personnel joining the Company. Department training
over an initial period of one to six months shall follow this.

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 WHO SUPERVISES THE TRAINING PROGRAM

Internal management supervise orientation program. This job has

been given to their Manager Training and Development who made the
panel of people to supervise orientation according to the nature of job.

PROCEDURE OF ORIENTATION
According to Managers the new employee has been rotated almost
in every department in his orientation so he is able to practically see the
things happening in the organization. It helps reduce the new employees
jitters and the Reality shock he or he/ she might otherwise experience
(the discrepancy between what the new employee expected form his or
her new job, and the realities of it).

DEPARTMENTAL TRAINING
After induction training the employee has been shifted to the department
he was employed for, to go through departmental training and
the training of other relevant departments whom he has to
interact in his day-to-day activities. This basically is the start of
his probation period.

SWOT ANALYSIS
The strengths, weaknesses, opportunities and threats of PEL are
discussed below:

• STRENGTHS:
PEL has the following strengths.

 Brand Name
 Strong Dealer Network
 Quality Products
 Best Sales Services
 Market leader in WRAC
 Number 2 in Refrigerators in Pakistan
 Strong Management Team
 Distribution of Authority

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  Research and Development Department
 Free Customer Service

BRAND NAME:
PEL has created a strong brand image in the mind of the
customers through higher quality and low prices. The customers of PEL
always prefer its home appliances like Window AC, split AC and
refrigerators, during the time of purchase. PEL is a popular company in
Pakistan and every one knows about the PEL products and its brand
name. That’s why PEL is a market leader when it comes to Window AC.

STRONG DEALER NETWORK:

It is also the plus point for PEL that it has developed a strong dealer
network in the market. The dealers always try to sell the PEL products to
the customers because, the company for its products, gives them a high
margin. The management of PEL also provides more incentives to their
dealers than their competitors. Dealers are very conscious about the PEL
products and always guide the customer in buying the PEL products.

QUALITY PRODUCTS:
PEL is also in a strong position because it provides superior quality
products to customers. So it gives an edge to company over its
competitors. Due to best quality, guarantee of products of PEL is more
than its competitors.

BEST SALES SERVICES:

PEL provides the after sale service to customers which increases the
customers satisfaction. The biggest strength of services department is
that it handles a complaint within 24 hours in any part of the country, that
helps in increasing the satisfaction level of customers.

MARKET LEADER IN WRAC (WINDOW ROOM AIR

CONDITIONER):

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 It is also strength of PEL that it is a market leader in WRAC.
Costumer always gives preference to PEL in window AC market because of
low price, high quality and durability.

NUMBER TWO IN REFRIGERATORS IN PAKISTAN:

After the Dawlance refrigerators, PEL has the second position in the
refrigerators market. PEL is gradually coming up in refrigerator market
and increasing its market share. Due to improved quality, innovative
features and good sales services PEL is becoming the first choice for
customers.

STRONG MANAGEMENT TEAM:

It is another plus point that PEL has a strong management. Its
employees are competent, efficient, skilled and knowledge. They always
cooperate with the top management in achieving of goals that are
assigned to them. Employees are well aware about the company
objectives and are committed to the development of company.

DISTRIBUTION OF AUTHORITY:
Top management of PEL delegates the power to the subordinates
for achieving the marketing objectives in a specified time period. So every
manager has an authority to take decisions to achieve the goals of
company. In this way they save the time and react quickly.

RESEARCH AND DEVELOPMENT DEPARTMENT:

PEL has a strong research and development department that is
continuously trying to develop new features for the products. R&D
department spends huge amount of money for the development of new
products.

FREE CUSTOMER SERVICE:

PEL provides free customer service for one year to its customers.
The customers who buy the PEL products become brand loyal due to this
facility.

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• WEAKNESSES OF PEL:
Like other companies PEL has some weaknesses. If PEL overcomes these
weaknesses then it can become a market leader in home appliances. PEL
looses some competitive edge in the following areas:

 Financial Problems
 Lack of advertisement
 System variations
 Lack of Product range
 Less Utilization of capacity

FINANCIAL PROBLEMS:

Sometimes PEL faces the financial problems because its stocks are
so much piled up in the stores that creates problem of cash flow because
when the stocks are not sold and the production is in process for 24 hours
a day then the company faces such problems.

LACK OF ADVERTISEMENT:

It is a second major weakness of PEL that it is not a vigorous

advertiser. Only recently has PEL invested a considerable amount in
advertisement, but when we look at its competitors, PEL still has to do a
lot in this sector.

SYSTEM VARIATIONS:

It is also the main weakness of PEL that there is a rapid change in

polices of selling the products. That creates problems for the selling team
to sell the products to the dealers because the top management requires
urgent amount of money. Thus the products are sometimes sold on hard
cash that reduces the prices of products that creates problems for the
management.

LACK OF PRODUCT RANGE:

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 PEL has introduced more products of consumer items but there are
more needs to develop new consumer items like PEL washing Machines,
Vacuum cleaner and other items.

LESS UTILIZATION OF CAPACITY:

Due to lack of finance a company cannot utilize all its resources on

its full capacity. It increases the cost of products per unit that decreases
the profit margin of each consumer item. Sometimes, the company cannot
allocate the resources according to the requirements of the production
department, which later on becomes a problem for the complete
utilization of resources.

OPPORTUNITIES FOR PEL:

For PEL, there are more opportunities for expansion in business. Following
are the opportunities for the PEL.

 Exploration of market in Pakistan

 Increase in product range
 Export opportunity
 Increase in production capacity

EXPLORATION OF MARKET IN PAKISTAN:

PEL has the opportunity to explore the market in all over the
Pakistan. Even though PEL has introduced its products in many cities of
Pakistan but there are so many places that are yet to be exploited.

INCREASE IN PRODUCT RANGE:

PEL can increase its product range that will be more profitable for
the company. There are more needs to develop new consumer items like
PEL washing Machines, Vacuum cleaner and other items.

EXPORT OPPORTUNITY :

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 PEL has also the opportunity to export their products in other
international countries like UAE, SAUDI ARABIA, and other Arabic and
African countries.

INCREASE IN PRODUCTION LINE:

Company can also increase its production line at the maximum level
that will increase the efficiency of the employees and will also reduce the
total cost.

• THREATS FOR PEL:

Following are the main threats for the PEL:

Strong competition
China’s product introduction in the market
Price war
Slow growth rate in Pakistan
Instability of government
Tax department
World Trade Organization

STRONG COMPETITION:

There is very strong competition in the home appliance division.

Every company adopts different strategies for selling of the products. It
reduces the profit margin of each company and increases the bargaining
power of the buyers who will demand higher quality of products at lower
cost.

CHINA’S PRODUCT:

China’s products are another threat for the Pakistani companies

because these products are cheaper than the Pakistani products. China
products stress the indigenous companies to lower the quality and prices
that will not be profitable in the long run.

PRICE WAR:

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As there is stiff competition in the home appliance market that will cause
the price war.

SLOW GROWTH RATE IN PAKISTAN:

There is also slow growth rate of home appliance in Pakistan that
will increase the stocks of the company. Although, this industry is in the
growth phase, but the speed of the growth is very slow.

INSTABILITY OF GOVERNMENT:
The rapid changes in governments will become a threat for the
companies because every government adopts new policies for the
industries. So it increasesthe uncertainty for the investors who want to
invest heavy amounts in their new projects.

TAX DEPARTMENT:

Tax department is another major threat for the company that will
restrain the business expansion. There is a most complicated tax
procedure operating in the country that creates hurdle in the production
and smooth functioning of different companies in Pakistan.

WORLD TRADE ORGANIZATION:

World trade organization will give the permission in 2005 to each

company of home appliance to export their products after paying less
duties or duty free products. That will increase the pressures for the
indigenous companies to reduce the prices and increase the quality. It will
increase the competition among the foreign companies and indigenous
companies.

Conclusion:
HRM is a scientific process of continuously enabling the employees
of an organization both in their individual capacities and as members of
groups, both as managers or other ranks, to improve their competence
and capability to perform their present as well as future expected roles so

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that the roles of the organization are achieved more fully and at the same
time the needs of the employees are also met to an adequate extent. It is
seen as getting the employees in the organization to add value to the
organizational processes and to contribute to the organizational
development. HRM is very important for future development of a nation,
and a future development of a country depends a lot on its Human
Resources.

Suggestions & Recommendations

After the visit of the PEL Company and check the complete management
functions I suggested to the PEL Company to do

1. More aggressive advertisement

2. To manufacture the split units in their own company

References
Site references:

www.pel.com.pk

www.scribd.com

Men references:

M. ASIF BUTT (Faisalabad PEL Agency Manager)

Personal discussion with other managers of different PEL oputlets were

conducted.

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