Project on Human Resource Management. by Sanjay Gupta

Project on Human Resource Management.

Index Sr. no 1

CONTENT

Page no 3

Introduction Importance of Manpower Planning

Advantages of Manpower Planning

Steps in Manpower planning

Downsizing of Manpower

Downsizing in Today's Corporate

7 8 9

Implementation of Downsizing Strategy Drawback of Downsizing in India

10 12 14

Job Retention Steps in Budget and Manpower Planning

Strategic Man Power Planning

TCS shows door to 500 employees

13 14 15

20 P&G plans to reduce their employee by 9600 jobs FIAT INDIA has plans to cut workforce by 20% -25% Conclusion

21 22

Introduction Man power planning in Human Resource Management is a core factor. Here the penalties for not being correctly staffed are costly. Understaffing loses the business economies of scale and specialization, orders, customers and profits. Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business. . Effective human resources planning give optimal productivity in terms of timelines and quality of deliverables." It will not only improve people competency, but will also ensure that people grow with the company.

Importance of Manpower Planning: Planning is nothing but using the available assets for the effective implementation of the production plans. After the preparing the plans, people are grouped together to achieve organizational objectives. Planning is concerned with coordinating, motivating and controlling of the various activities within the organization. Time required for acquiring the material, capital and machinery should be taken into account. Manager has to reasonably predict future events and plan out the production. The basic purpose of the management is to increase the production, so that the profit margin can be increased. Manager has to guess the future business and to take timely and correct decisions in respect of company objectives, policies and cost performances. The plans need to be supported by all the members of the organization. Planning is making a decision in advance what is to be done. It is the willpower of course of action to achieve the desired results. It 3

is a kind of future picture where events are sketched. It can be defined as a mental process requiring the use of intellectual faculty, imagination, foresight and sound judgment. It involves problem solving and decision making. Management has to prepare for short term strategy and measure the achievements, while the long term plans are prepared to develop the better and new products, services, expansion to keep the interest of the owners

Advantages of Manpower Planning: Manpower planning ensures optimum use of available human resources. 1. It is useful both for organization and nation. 2. It generates facilities to educate people in the organization. 3. It brings about fast economic developments. 4. It boosts the geographical mobility of labor. 5. It provides smooth working even after expansion of the organization. 6. It opens possibility for workers for future promotions, thus providing incentive. 7. It creates healthy atmosphere of encouragement and motivation in the organization. 8. Training becomes effective. 9. It provides help for career development of the employees.

Steps in Manpower planning 1. Predict manpower plans 2. Design job description and the job requirements 3. Find adequate sources of recruitment. 4. Give boost to youngsters by appointment to higher posts. 5. Best motivation for internal promotion. 6. Look after the expected losses due to retirement, transfer and other issues. 7. See for replacement due to accident, death, dismissals and promotion.

Factors which affect the efficiency of labor: Inheritance: Persons from good collection are bound to work professionally. The quality and rate of physical as well as mental development, which is dissimilar in case of different individuals is the result of genetic differences. Climate: Climatic location has a definite effect on the efficiency of the workers. Health of worker: workerâ&#x20AC;&#x2122;s physical condition plays a very important part in performing the work. Good health means the sound mind, in the sound body. General and technical education: education provides a definite impact n the working ability and efficiency of the worker. Personal qualities: persons with dissimilar personal qualities bound to have definite differences in their behavior and methods of working. The personal qualities influence the quality of work. Wages: proper wages guarantees certain reasons in standard of living, such as cheerfulness, discipline etc. and keep workers satisfy. This provides incentive to work. Hours of work: long and tiring hours of work exercise have bad effect on the competence of the workers

Downsizing of Manpower: Downsizing plan Where there is surplus workforce, trimming of labor force will be necessary. The trimming or downsizing plan shall be indicate 1. Who is to be made redundant and where and when 2. plans for redevelopment or retraining where these has not been covered in the redevelopment plan 3. Steps to be taken to help redundant employees find new jobs 4. Policy for declaring redundancies and making redundancy payments 5. Programs for consulting with unions or staff associations and informing those effected Another method of dealing with surplus labor is to retain all employees but reduce the work hour, perhaps to a four day, 32 hours work with .In this way the company can spread a 20% decrease in demand equitably across the whole workforce, rather than keep 80% of the employees full time and lay off 20% of them . Depending on the nature of the surplus, a firm may be able to transfer or reassign employees to jobs in parts of the organization that are still experiencing demand. Or if the form expects the surplus to be short live and can afford to keep excess workforce on the pay role, the company can use the slack time to provide cross training in related jobs to enhance workforce skills and flexibility. Alternatively, the surplus workers can perform equipment maintenance overhaul and engage themselves in other activities that where postpone when demand was high. Offering incentives for the early retirement is another way of handling surplus labor euphemistically called as voluntary retirement scheme , these 6

method is widely practiced .but H.R planners and Trainers may be forced to scramble to deal with a sudden short fall of experienced staff, particularly when VRS is accepted by a large number of employees. Laying off is another strategy for dealing with surplus staff. These action detrimental to both employees and employers, for employees lay-off means joblessness and for employees, it means loss of reputation notwithstanding this, several firms are laying off their surplus employees.

Downsizing in Today's Corporate

The major concern for managers in the organizations these days is the effective utilization of work force. The issue has become increasingly important because of the pressure to reduce the labor costs. The issue deals with the shortage as well as surplus of employees in an organization. Where there is surplus of work force, trimming of manpower becomes necessary. Downsizing is opted by most of the organizations in an effort to right size their human resources. Downsizing literally means to reduce the size of the organization by cutting down the number of employees presently working in the company. Downsizing strategies enable a company to rightsize its manpower. The unproductive workers should be eliminated while retaining the most effective personnel, thereby optimizing the performance of the workforce. Downsizings were clearly regrettable but understandable as they helped firms survive during recession period. Such a large number of workers were certainly unnecessary for a firm doing a smaller volume of sales, so the workers were released over short intervals of time in large numbers. Downsizing involves several implications for the short-term profitability and even the long-term growth of the company. It is a decision on the part of the Management to reduce the overall workforce. The reasons that force the company to opt for downsizing may be any of the following 1) Intense competition

One of the reasons for the companies to downsize their manpower may be seen as the intense competition that cuts into the company's revenues. Lower revenues lead to efforts to quickly cut down the costs and some employees are laid off as a result. The Management of a company adopts downsizing strategy when less work is done by more number of employees and the potential of employees is not utilized to the full extent.

2) Technology advancement The factors that lead to downsizing are the developments in the technology, automation and outsourcing one or more processes in an organization. The technological change has been a catalyst to an expanded view of work in many companies. Technological advances have allowed for the expansion of many jobs by combining multiple functions into a single operation. Workers are presented with a broadened scope of activities that challenge their skills. The employees who are ready to adapt to the changes in the environment and as a result, in the organization culture and who moulds themselves according to the environmental requirements should be retained. As the technology advances, the skills of the employees become obsolete. Skill obsolescence can be eliminated or at least minimized so that experienced employees are retained. 3) Automation Automation or the replacement of man by machine also is one of the major reasons behind downsizing. The work done by a group of people, say 5 or 6 workers is done by a machine, which can be operated by a single person. Thus this has initiated the need to reduce the number of employees in the organization. Companies have opted for downsizing its manpower following the computerization and automation of several operations. 4) Outsourcing Outsourcing a department or a particular process is another reason that forces companies to conduct layoffs in an effort to downsize its human

resources. In an organization where an entire department or a particular process is outsourced by an agency, the employees who belong to that particular department or those who are involved in the operations of that particular process are laid off. Consider that an organization has offered its recruitment and selection to an outsourcing agency; the employees involved in it are to be laid off.

5) Strategic alliances Another reason is the strategic alliance of two or more companies. The joint venture necessitates the downsizing of the manpower in the companies involved in the venture. The term downsizing was coined to describe the action of dismissing a large portion of a firm's workforce in a very short period of time, particularly when the firm was highly profitable. In a standard downsizing story, a profitable firm well poised for growth would announce that it was firing a large percentage of its workforce. The equity market would get excited and initiate a buying frenzy of the firm's stock. This goes counter to a standard micro-economic analysis, in which weak firm anticipate a slump in the demand for its products, and lays off workers, while strong firm foresees a jump in the demand for its products, and hires more workers to increase production. 6) Elimination of costs Investors care about downsizing, since it contains severe implications for the short-term profitability and even the long-term growth of a company. Downsizing is quite unlike a traditional layoff- in a layoff, a worker is asked to temporarily leave during periods of weak demand. In downsizing, the separation between a worker and a firm is permanent. Downsizing is not a dismissal for individual incompetence but rather a decision on the part of the Management to reduce the overall workforce. 7) Improve profitability The other reasons being intended to improve profitability eliminate obsolete functions and reduce the overstaffed areas of an organization. As the organizations move towards more strategic workforce management, 9

downsizing will remain part of the work force landscape, but the catalyst for it will change. Downsizing began as the strategy of sick companies shedding workers in the face of weak demand, but soon strong firms looking to boost shareholder value also adopted the policy. Downsizing can be used as a strategic option that Management can exercise in order to boost the equity value. It can be perceived as a planned change involving the elimination of the positions, operations or jobs. To quote an example, the position of secretaries to executives in the organizations have been replaced by the computers thereby reducing the number of employees which leads to reduction in the labor costs.

Implementation of Downsizing Strategy The implementation of downsizing strategy should be carefully planned and performed by the organizations. To begin with, a clear and careful analysis of the effects of the layoffs in the long run as well as in the short run is to be carried out. If a company performs layoffs in response to the short-term losses, its long-term survivability may be endangered. Thus before conducting layoffs, the companies should seek an appropriate balance between short-term and long-term demands. The companies should be well prepared for downsizing. Anticipating the kinds of human resource problems that crop up subsequently, help the companies to cope up with this change to some extent. The employees should be informed well in advance about the layoffs. Prior warning or informing about the layoffs creates a chance for the employees to revolt against the Management, cause damage or sabotage to the machinery and valuable assets of the company. This impact can be reduced by providing the employees with retraining and offering them adequate compensation and benefits. The major techniques of adopting downsizing strategy are listed below: 1) Layoff Layoff is a temporary measure to reduce the workforce in case the organization faces problems like shortage of fuel or power, accumulation of raw material and finished stock due to recession, shortage of working capital, breakdown of machinery or natural calamity. Layoffs were declared illegal by the Labor Department. Hindustan Motors, one of the key players 10

in the automobiles, in the recent past entered into a legal course against the order of refusal of permission of layoffs. Another US-based company Texas Instruments adopted a different strategy to cope up with a recession. It terminated the jobs of thousands of employees and had to rehire, retrain and motivate the employees when things improved. 2) Retrenchment Under the Industrial Dispute Act, 1947, an organization can retrench employees for any reason other than termination of employment due to disciplinary action. The employees can prune the workforce using this method and pay them the retrenchment compensation as stipulated in the Act. Retrenchment should be often based on the Last In First Out (LIFO) principle wherein junior-most employees would be retrenched, even if they were competent. Retrenchment involves a tricky and complex a process for identifying the non-performers, who are required to be separated from the organization permanently. A thorough performance appraisal is to be carried out in order to identify the non-performers and remove them thereby enhancing the profitability as well as productivity. Performance appraisal system should be well designed so as to identify the most efficient employees so that they can be retained while conducting the layoffs. Companies must be aware that even their short-term problems may not be solved by downsizing because of the loss of skills resulting from the departure of the experienced employees who were offered Early Retirement Schemes and VRS. 3) Closure An employer can close down the whole or part of a unit if the circumstances that lead to closure are beyond the control of the employer. In the case of closure on account of unavoidable circumstances beyond the control of employer, the maximum compensation payable to a worker is his three months salary. 4) Voluntary retirement Companies have been downsizing through the process of a compensation package based on Voluntary Retirement Scheme or VRS. VRS is viewed as one of the methods for the turnaround of the company when business cycle 11

is on a declining curve. In many large sized organizations, there is no more lifetime employment. The symptoms of such decline in the business cycle are seen in gradual decline in profits, reduction of market shares, loss of monopoly, fast emergence of new technology and the like. When these symptoms are round the corner, Management must initiate action thorough strategic planning.

Drawback of Downsizing in India One of the most important drawbacks of these methods of downsizing is that they cannot be used at the discretion of the employer in case of large organizations. Approval of government before layoff, retrenchment and closure is compulsory. In a country like India, where unemployment is one of the major problems, the government is very reluctant to give permission for cutting jobs even if the reasons are genuine. Trade unions also offer stiff resistance. Having identified the reasons for the present downtrend of the organization and also having decided the probable actions required for the rectification, the company must compare its vital data for all the factors with the best company in the same or similar trade. Such benchmarking helps in understanding the level of efficiency at which the company is presently working. After implementing one of the downsizing methods and reducing the manpower, the main issue for the Management is to handle the survivors or the employees who remained in the company after downsizing.  It is important to maintain the morale of the retained staff.  It is therefore necessary to maintain close communication with them and dispel rumors, which are generally rampant in such conditions.  Efforts should be made to build a good deal of counseling services. Counseling should be used as a process to communicate effectively with the organizational members  The retained employees shall also need advice not only on investment but also on income-tax implications.

ď&#x192;&#x2DC; Create an healthy environment so that the employee will not tend to develop a sense of job insecurity and search for job offers outside. The companies can reduce the impact of downsizing by retraining or redeployment policies. These help employees to acquire more than one skill. Also potential employees should be involved in planning the downsizing process thereby creating awareness among the employees that downsizing is inevitable in that particular situation facing the organization. Providing good and attractive compensations and severance packages can soften the impact of downsizing. Downsizing is also aimed at increasing profitability by reducing the costs as well as enhancing and improving the productivity of the retained employees. But the fear arises here that the performance of the retained employees might be reduced because of the job stress they experience due to the additional workload on them. In fact there is a danger of productivity level going down. In order to ensure that performance level of the survivors do not go down, they should be motivated and made to feel that the organization needs them and values them.

Job Retention Another method of dealing with surplus labor is to retain all employees but reduce the work hour, perhaps to a four day, 32 hours work. the workforce development world, the term "retention" typically refers to the amount of time a worker stays on a job. Sometimes it refers to the amount of time someone stays in the labor market, even if he or she has moved from one job to another. Long-term job retention results in a steady income and fewer disruptions to a worker's daily life. Steady work can also demonstrate to an employer that the person is capable of maintaining a work schedule and is reliable; therefore, retention can sometimes lead to greater job opportunities and can result in job promotions. Research shows that most people who have barriers to steady work lose their jobs in the first three months. Of course, this may be true of exoffenders as well. Fortunately, several strategies can help increase your clientsâ&#x20AC;&#x2122; job retention potential.

Steps in Budget and Manpower Planning Seven major phases involved in planning, are as follows: 1. Identification

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2. Formulation and control

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3. Appraisal and selection

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4. Negotiations

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5. Implementation

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6. Monitoring

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7. Evaluation

Policy, programme or project monitoring and evaluation activities feed information into new designs, generating potentials for improvement in formulation, implementation and impact. In practice, however, courses of action identified often proceed little further than the formulation stage. If implemented, they are rarely monitored or evaluated. Feedback relevant to the design of new projects, programmes or policies is therefore either scant or non-existent and reports on causes of "success" or "failure" tend to be vague. It is at the formulation stage and during monitoring that an understanding of the principles of budget and manpower planning becomes critical. Poor formulation and/or monitoring of budget and manpower needs can, for example, result in the following problems:  The rejection of projects, programmes or policies because of over-stated budget and manpower requirements at the formulation stage.  Non- or incomplete implementation of projects due to understated costs and manpower needs, leading to chronic shortages of human and physical resources.  A tendency for personnel costs to rise with time, "squeezing out" other important project cost items and preventing effective implementation.

The need for careful budget and manpower planning is, therefore, crucial to the success of any project, programme or policy.

Strategic Man Power Planning The strategic manpower planning system recognizes that people display varying degrees of talent and leadership potential and that, for every organization, there is an optimal mix of leaders and followers that best served its business objectives. For some organizations, the division of talents could be even more refined; for instance, a further distinction could be made between a leader of leaders and a leader of followers. Regardless of the number of talent categories, the important point is that the careers of people from different talent pools would progress at different pace and terminating at different levels of competency. In short, the strategic 17

manpower planning system explicitly captures the different talent pools that exist in an organization and determines the most appropriate sets of personnel policies to groom and retain the right mix of people to achieve the business goals.

While strategic planning system helps the HR managers to devise organizational wide personnel policies, the tactical planning system addresses the peculiarities and specific career needs of professions within the organization. As such, the key output of tactical model is a career plan that systematically grooms the right number of individuals to hold the various jobs. The career plan will spell out the sequence of jobs to assume and the trainings to attend so that the individuals going through the pace will gain the necessary exposure and experience to discharge the duties professionally. Finally, the operational planning system assists the HR managers to formulate optimal personnel posting/deployment plan for the employees. With the exceptions of very small companies, where job changes (promotion or lateral move) are generally opportunistic in nature, most companies (especially the more structured institutions like the Armed Forces) can orchestrate job changes to ensure that both the individuals? Aspirations and the organizationâ&#x20AC;&#x2122;s objectives (as represented by the strategic and tactical In a nutshell, the suite of HRM planning systems produces results that are mutually consistent so that the employees would receive clear and unambiguous career recommendations.

How To Implement Strategic Workforce Planning

1. Build on previous successes, such as succession planning, or try a pilot program in a specific business unit. 2. Seek functional partners within the company, for example, HR collaborating with finance or IT. 3. Establish definitive and consistent data. 4. Create a common language to describe competencies, jobs and other workforce data. 5. Regularly update skills and competency data. 6. Adapt workforce planning to different needs and dynamics. 7. Make the process and tools simple and user-friendly. 8. Develop HR's capabilities to make it an effective partner. 9. Focus on the most critical, high-impact jobs and talent 10.Use strategic workforce planning to leverage internal talent. 11.Integrate strategic workforce planning with business planning. 12.Hold business units accountable.

TCS shows door to 500 employees

The largest software exporter TCS said about 500 members of its staff have “voluntarily resigned” after an annual performance check. “Employees with experience of two years and above across the company who were unable to meet performance requirements have been asked to look for other jobs commensurate with their abilities”.

“This is not an exceptional thing, it happens every year and it’s part of our annual performance exercise. In TCS, everyone has to go through an appraisal cycle where they are rated between 1-5 depending on their performance. If in one appraisal cycle anyone is rated below 2, we put them on PIP (performance improvement plan). Under this they are given extra training. Even after this if their rating is below 2, then they are asked to look for other jobs,”

P&G plans to reduce their employee by 9600 jobs

P&G plans to cut 9% of its workforce 20

The consumer products group Procter & Gamble plans to cut 9,600 jobs worldwide. The company has been struggling with rising costs and slow sales growth for the past two years. Sales increased just over 4% in fiscal 2000 and fell 4% in the first six months of fiscal 2001. P&G makes Crest toothpaste, Tide detergent and Pampers nappies. The 9,600 cuts within a workforce of 110,000 amounts to 9% of the company's employees. US jobs under threat About 40% of the job losses will be in the US. One-third of the cuts will come from manufacturing projects. This will also involve plant closures. The remaining two-thirds of the reductions will affect non-manufacturing positions at all levels. The job cuts extend a previous cost-cutting programme from 1999 called "Organization 2005", which involved 15,000 job losses. The company still had 7,800 jobs to cut under that programme. With this the total job losses will be about 17,400. FIAT INDIA has plans to cut workforce by 20% -25% Fiat India is considering a plan to reduce its workforce by around 20-25 per cent soon. The company will soon launch a voluntary retirement scheme to trim excess workforce at its Kurla facility reports in Mumbai The companyâ&#x20AC;&#x2122;s decision to reduce manpower which has become necessary given the dwindling sales volumes of Fiat India. Fiat India, which manufactures the Uno, Siena and the recently launched Siena Weekend, now has 2,030 workers. In October â&#x20AC;&#x2122;98 the company had reduced its 21

workforce by 1,050 through a similar VRS. Fiat has surplus staff, and hence is planning a fresh VRS. “It is a part of the company restructuring plan to trim excess workforce. Until the scheme is finalized, it would be difficult to quantify the possible reduction in manpower, Sales of its small car Uno have shrunk to an average 600 units per month this year, approximately one third of the monthly sales in ’99. The Uno’s sales volumes have fallen behind others in the compact segment, with Hyundai Santro, Daewoo Matiz, Maruti Zen and Tata Indica moving up the sales charts The Siena, Fiat’s mid-size offering, has also been slipping in volumes with Fiat India selling around 150 units per month, as against 450-500 units in ’99. Sales of the Siena Weekend, the Station wagon version of the mid-size car, have also not picked up The restructuring is already evident. The local arm of the Italian auto major is believed to have recently asked around 70 officials at the middle-to-lower management levels to ‘discontinue’ their services with effect from January 01.

Conclusion Many organizations have been downsizing their manpower over the years for the cost effectiveness on the manpower planning. It is just not sufficient to plan downsizing well but the coping strategies should also be designed properly to handle the implementation of downsizing. Over the past decade, downsizing has been in full swing and reductions in the workforce became a fact of life in the world of work. The downsizing strategies adopted by many Indian companies recently, support the above statement:

* The downsizing strategy of AIR INDIA was to cut almost 1000 jobs by launching VRS. * As a part of its downsizing strategy, Bajaj Auto will reduce its work force by 4000 by the end of 2003. * Downsizing was planned at MTNL, Mahanagar Telephone Nigam (Public Sector Telecom Major) in order to enhance productivity. Over 10,000 employees are eligible to opt for the scheme announced. This is the largest VRS announced by a Public Sector company.