TO STUDY THE HR POLICIES OF

KRANTI AUTOMOBILES LIMITED

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 CHAPTER 1
INTRODUCTION

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 INTRODUCTION

Human Resource Policies refers to principles and rules of conduct which “formulate,
redefine, break into details and decide a number of actions” that govern the relationship
with employees in the attainment of the organization objectives.

HR Policies cover the following:

1. Policy of hiring people with due respect to factors like reservations, sex, marital
status, and the like.
2. Policy on terms and conditions of employment-compensation policy and methods,
hours of work, overtime, promotion, transfer, lay-off and the like.
3. Policy with regard medical assistance-sickness benefits, ESI and company
medical benefits.
4. Policy regarding housing, transport, uniform and allowances.
5. Policy regarding training and development-need for, methods of, and frequency of
training and development.
6. Policy regarding industrial relations, trade-union recognition, collective
bargaining, grievance procedure, participative management and communication
with workers.

FORMULATING POLICIES

There are five principal sources for determining the content and meaning of policies:

1. Past practice in the organization.

2. Prevailing practice in rival companies.

3. Attitudes and philosophy of founders of the company as also its directors and the
top management.

4. Attitudes and philosophy of middle and lower management.

5. The knowledge and experience gained from handling countless personnel

problems on day to day basis.

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BENEFITS OF HR POLICIES

Organizations should have personnel policies as they ensure the following benefits:

a. The work involved in formulating policies requires that the management give
deep thought to the basic needs of both the organization and the employees. The
management must examine its basic convictions as well as give full consideration
to the prevailing practices in other organizations.

b. Established policies ensure consistent treatment of all personnel throughout the

organization. Favoritism and discrimination are, thereby, minimized.

c. Continuity of action is assured even though top management personnel change.

The CEO of a company may possess a very sound personnel management
philosophy. He/she may carry the policies of the organization in his/her head, and
he she may apply them in an entirely fair manner. But what happens when he/she
retires? The tenure of office of nay manager is finite. But the organization
continues. Policies promote stability.

d. Policies serve as a standard of performance. Actual results can be compared with

the policy to determine how well the members of the organization are living upto
the professional intentions.

e. Sound policies help build employee motivation and loyalty. This is especially true
where the policies reflect established principles of fair play and justice and where
they help people grow within the organization.

f. Sound policies help resolve intrapersonal, interpersonal and intergroup conflicts.

PRINCIPLES OF HR POLICY

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1. Principle of individual development to offer full and equal opportunities to
every employee to realize his/her full potential.

2. Principle of scientific selection to select the right person for the right job.

3. Principle of free flow of communication to keep all channels of communication

open and encourage upward, downward, horizontal, formal and informal
communication.

4. Principle of participation to associate employee representatives at every level of

decision-making.

5. Principle of fair remuneration to pay fair and equitable wages and salaries
commensurating with jobs.

6. Principle of incentive to recognize and reward good performance.

7. Principle of dignity of labour to treat every job and every job holder with
dignity and respect.

8. Principle of labour management co-operation to promote cordial industrial

relations.

9. Principle of team spirit to promote co-operation and team spirit among

employees.

10. Principle of contribution to national prosperity to provide a higher purpose of

work to all employees and to contribute to national prosperity.

HR POLICIES IN KRANTI AUTOMOBILES LIMITED

OBJECTIVES

In reviewing the purpose of HR Policies at Kranti Automobiles Limited, the organization

stated that the HR Policies has been a key part of the management process for the
effective utilization of human resource. The company aims to fulfill the following
objectives through its HR Policies:

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 Ensure a high degree of selectivity in recruitment so as to secure super achievers
and nurture them to excel in their performance.

 Impart such induction, orientation and training as to match the individual to the
task and inculcate a high sense of organizational loyalty.

 Provide facilities for all round of growth of individual by training in and outside
the organization, reorientation, lateral mobility and self-development through self-
motivation.

 Groom every individual to realize his potential in all facets while contributing to
attain higher organizational and personal goals.

 Build teams and foster team-work as the primary instrument in all activities.

 Recognize worthy contributions in time and appropriately, so as to maintain a

high level of employee motivation and morale. Appraisals and promotions shall
be ethical and impartial.

 Implement equitable, scientific and objective system of rewards, incentives and

control.

 Contribute towards health and welfare of employees.

MANAGEMENT REVIEW:

Management review meeting is held every six months at the Group Review. Meet is
conducted from time to time to ensure the suitability, adequacy and effectiveness of the
HR Policies.

CORRECTIVE ACTION FOR NON CONFORMANCE:

 Non conformance to the policies mentioned is reviewed by the Group HR Cell,

respective CEO and HR Head of the company. The review will suggest remedial
measures to avoid repetition of the non conformance through elimination of the
root causes for the same.

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 Board of Directors is kept informed of the review and action plans decided to
avoid the non conformance in the ensuing monthly meeting.

DOCUMENT AND DATA CONTROL:

 Documents and data are generated by the Corp. HR in the form of hard copies or
electronic medium.

 Documents are reviewed and approved for adequacy by Corp. HR prior to issue.

The various procedures that form the HR Policy of the Organization are:

1. Recruitment and selection of manpower

2. Induction and Placement

3. Job Rotation

4. Performance appraisal

5. Counseling

6. Career Planning

7. Succession planning

8. Employee training and Development

9. Human Resource Information Management System

10. Retirement Planning

11. Job Enrichment

12. Exit Interviews

A brief preview of the above mentioned policies and the various objectives that these
policies aim to achieve are given in the subsequent chapters.

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Due to high level of secrecy maintained in the organization, the policies given below are
according to my understanding and interpretation of the subject.

1. RECRUITMENT POLICY

 In Kranti Automobiles Limited, recruitment and selection of personnel is

explicitly based on the criteria of their knowledge, skills and attitudes, so as to
secure super achievers and nurture them to excel in their performance.

 All fresh candidates are absorbed only after satisfactory completion of appropriate
training.

 All direct recruitment is through the HR department.

 Detailed selection procedures as decided from time to time are adhered to without
any compromise.

 Above procedures shall undergo continuous refinement through evaluation and

feedback.

2. INDUCTION AND PLACEMENT POLICY

 At Kranti Automobiles Limited, new recruits imparted such induction,

orientation, training and placement so as to individuals to the task and inculcate a
high sense of organizational loyalty.

 The HRD Department and the concerned heads of parent departments prepare a
well-structured Induction Program to acquaint the new recruits with the people,
organizational structure, and interface between different departments, functions
and culture of the organization.

 The Induction Program is formulated to suit the position of the candidate and
necessary to be provided to him.

3. JOB ROTATION POLICY

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 At Kranti Automobiles Limited, facilities are provided for all-round growth of
individuals through lateral mobility. This shall enhance their employability as
well as equip them to shoulder higher responsibilities.

 Systematic Job Rotation from time to time shall have a revitalizing effect on the
individual as well as the organization.

 All promotions to the level of HODs will be considered only when an individual
has undergone rotation through at least 2 sections.

4. PERFORMANCE APPRAISAL POLICY

 Performance Appraisal grooms every individual to realize his potential in all

facets by helping to identify and achieve his personal goals within the framework
of organizational objectives.

 Appraisals shall be ethical and impartial so as to recognize worthy contributions

appropriately and in time in order to maintain a high level of employee motivation
and morale.

 The Performance Appraisal Systems aims at integration of individual and

organizational goals.

5. COUNSELLING

Counseling sessions, which are conducted by HR Department OR Professional Counselor

OR Performance Appraiser, are available to all the employees in order to fulfill the
following objectives:

 To enhance employees’ competence and job satisfaction.

 To prepare employees for future responsibilities.

 To establish a better working relationship between the superior and subordinate.

 To enable employees to cope with personal problems.

6. CAREER PLANNING POLICY

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 Career Planning system in Kranti Automobiles Limited is aimed at developing
people of the right caliber to meet present and future needs of the organization. It
shall be an essential ingredient for Succession Planning.

 The mandatory factors to be considered prior to career planning shall be:

a. The organization’s long and short term plans.

b. Manpower skills required towards implementing these plans.

c. Attrition rate of people with high potential, above average and average
caliber.

d. Recruitment through internal and external sources at all levels and its ratio
as appropriate to the organization.

e. The number of people recruited and trained every year.

f. The number of high flyers that the organization requires or can

accommodate within the organization at different levels for smooth
succession.

7. SUCCESSION PLANNING POLICY

HODs and above identify successors, primary and secondary, to his position at the time
of annual appraisal. This is reviewed every year along with the annual appraisal.

8. TRAINING AND DEVELOPMENT POLICY

 At Kranti Automobiles Limited, training and development activities strive to

ensure continuous growth of organization by nurturing the strengths of the
employees and providing the environment and opportunity for every individual to
realize his/her potential.

 The policy aims at broadening the outlook of the individuals and bridging the gap
between actual performance and the performance necessary to deliver results.

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 Facilities are provided to all individuals towards self development and all round
growth through training.

 HR Department identifies average performers and provide special training.

9. HUMAN RESOURCE INFORMATION MANAGEMENT SYSTEM

 Human Resource Information Management Systems (HRIMS) aims at:

a. Providing accurate information about employees to management for

decision making.

b. Eliminating duplication of efforts.

c. Offering quick and easy access to human resource information at random

as well as in regular report form.

 The system has two layers of security. Access to the system is through keying in
the valid combination of username and password. Permission to access certain
programs is restricted to identify key personnel.

 An integrated employee database is maintained and continuously updated with

information from personnel at regular intervals regarding biographical data, work
experience, qualifications, appraisal, training and career paths.

10. RETIREMENT PLANNING

 At Kranti Automobiles Limited, retirement of all individuals is aided through

planned programs by HR Department so as to lessen the associated misgivings
and anxiety.

11. JOB ENRICHMENT

 Kranti Automobiles Limited follows a people centered approach to job

enrichment with a view to enhance the performance of the employee, leading to
higher job satisfaction.

12. EXIT INTERVIEWS

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 The organization has a regular turnover of employees due to various reasons such
as retirement, voluntary retirement, and resignation etc. from time to time.
Feedback is obtained from the employee on occasions of separation from the
organization. Such feedback on matters that effect well being of the people is
useful in improving the organization in respect of HR Policies and practices.

The HR Policy Manual (or Managerial Service condition Manual) was designed in order
to facilitate the mangers in gathering the information regarding the various service
conditions that are offered by the organization. This manual includes the service
conditions which are most frequently asked for. The various services conditions included
are:

1. Provident Fund

2. Gratuity

3. Privilege Leave

4. Superannuation Scheme

5. Medical Reimbursement & Hospitalization

6. Dental Policy

7. Group Accident Insurance Scheme

8. Housing Loan Scheme

9. Vehicle Loan Scheme

10. Phone Policy

11. Leave Travel Assistance (LTA)

12. Local Conveyance Rules

13. Transfer Policy

14. HRR Policy for Area Office Managers

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15. Canteen Service

16. Cash Payments & Advance Settlements

17. Performance Excellence Scheme

18. Performance excellence Form

19. Parivar Suraksha Yojna

20. Policy for Get Together of Employees

21. Notice Period for Managerial Employees

22. Conveyance Reimbursement for Interview Candidates

23. Car Policy

24. Post Retrial Benefits

25. Inland Travel Rules

26. Foreign Travel Rules

27. Application for Housing Loan

28. Application for Car Loan

29. Application for 2-wheeler Loan

30. Application for 2-wheeler (wards) Loan

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1.2 OBJECTIVES OF THE STUDY

 To study the HR Policies of the company.

 To study the amendments made in the HR Policies of Kranti Automobiles Limited

since the time of incorporation.

 To incorporate the amendments in the base policy and prepare a final policy.

 To design a HR Policy manual for the company with special emphasis on the
“Managerial Service Conditions”.

1.3 SCOPE OF THE STUDY

In any organization human resource is the most important asset. In today’s current
scenario, Kranti Automobiles Limited is a very large manufacturer and marketer of
chemical.

As most of the company’s overall performance depends on its employee’s performance

which depends largely on the HR POLICIES of the organization.

So the project has wide scope to help the company to perform well in today’s global
competition.

The core of the project lies in analyzing and assessing the organization and to design an
HR POLICY manual for the organization.

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CHAPTER 2
REVIEW OF
LITERATURE

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Human Resource Management (HRM) is a strategic lever in the improvement of the
performance of organisations (Bowen & Ostroff, 2004; Lawler, 2005). So as to meet this
challenge, the management here made determined efforts to develop new HR policies
(pay- for-performance plans, variable compensation systems, pay-for-skill tools, etc.)
which are supposed to favour the involvement of staff, their motivation, their
effectiveness, etc. The work developed on these policies shows that that they are effective
(Heneman, Ledford & Gresham, 2000) but that their dynamic effect is often short-lived.
Different explanations for this phenomenon have already been given. It would thus seem
that the policies adopted in imitation (Di Maggio & Powell, 1983) of the managerial
fashion (Midler, 1986) run out of steam particularly rapidly because they do not always
correspond to a real need within the firm. In the same way, those policies which do not
respect the criteria of procedural justice and which are therefore perceived by the staff as
unfair on the remuneration level would seem to lose their effectiveness very quickly
(Peffer, 1998).

This article will develop a complementary explanation in a attempt to explain these

difficulties and proposes to look with more attention at the place that the management
tools take up in this set of dynamics. The review of the literature on the subject indeed
shows that, in an analysis of the dynamics of HR policies, two major approaches may be
distinguished: the universalist approach and the contingent approach (Delery & Doty,
1996; Dewar & Werbel, 1979). By detailing their content, it is possible to affirm that they
make the management tools play an important- but badly known- role. After having
shown that in fact they are mobilised fairly strongly to impulse and maintain the
dynamics of the HR policies proposed, it may be asked: whether an analysis of the
dynamics of the conception and use of management tools may not provide a key for the
analysis of the dynamics of the development ofHR policies in a given enterprise or firm?

After having presented and analysed the work which today enables this question to be
dealt with, elements drawn from an exploratory case study over ten years, of the design
and use of a tool for the management of skills in a firm will be provided. Even if these are
once again nothing but points of reference which need to be confirmed or denied, the data
collected in the context of this case study enable the phases in the dynamics of this tool to

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be identified, the content and the nature to be specified and the initial elements providing
a key to the analysis of the dynamics of the remuneration and career management policies
in this firm to be presented. This article will use this initial data so as to finally propose
ideas for improvement so as to provide a response to be made to the blockages and loss
of steam that have been observed in the HR policies in this enterprise.

The universalist approach posits that some HR practices are always better than others,
whatever the firm considered. This approach therefore has the objective of identifying the
best practices, those which provide systematically to organisations an increased
competitiveness and effectiveness, and ensures the diffusion of it in the univers of
managers (Delery & Doty, 1996). These authors quote as particularly representative
examples of this approach the work of Preffer (1994) and Osterman (1994). Some very
recent work, as is the case of Moneyball (Wolfe, Wright & Smart, 2006), also report
relatively clearly on the logic ofthis approach. Through this latest case study, the affirmed
objective of your authors.

In fact to propose a new vision of HRM in various types of organization and co. (Wright
& Smart, 2006), that is to say to propose competitive solutions to respond to challenges
which would seem to exist in an identical way in all organisations or, at least, in a large
number of them. The logic of your authors is clear here: this case study would seem
intereting to them for it responds to the problems the majority of managers are supposed
to encounter.

Even if this analysis is less frequent, it would seem particularly important to look with
precision at the place that the management tools take up in this universalist approach. The
most often, they are defined by examples rather than by strictly built definitions. Thus,
Delery & Doty (1996) evoke «seven practices that are consistently considered strategic
HR practices internal carrier opportunities, formal training systems, appraisal measures,
profit sharing, employment security, voice mechanism, and job definition" without
specifiying whether these practices may be considered as being management tools and
without defining exactly one or other of these terms. In another article which covers
explicitly management tools, Rigby (2001) also starts with a presentation of examples of
management tools such as Strategic planning, benchmarking, pay for performance,

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outsourcing, etc. He only very rapidly mentions a conceptual definition which would
consider that management tools are a set of concepts, processes, exercices and analytic
frameworks» (Rigby, 2001, p.139). Even if it is usual that the definitions of management
tools are particulalrly broad (for they effectively have to cover a vast range of systems), it
would seem preferable to retain a definition which englobes these elements by specifying
that management tools are a formalisation of organised action (Moisdon, 1997, p.12) but
which specifies also that the aim of this formalisation is to «transform the behaviour of
the players» involved in this organised action (Reynaud, 1993, p.237).

If the universalist approach is analysed in detail, it would appear then that its objective -
proposing viable solutions for all firms - is made achievable thanks to two types of
generalisation. The first - has been mentioned above - is the generalisation of problems.
In this approach, all managers are supposed to encounter the same difficulties, such as of
employees or «providing a competitive advantage» to the firm (Wolfe, Wright & Smart,
2006). The second generalisation is that of the tools. These are the central element which
supposedly provides an effective response to these difficulties whatever the firm, or its
national or social context. It is because a management tool is considered as producing the
same effects in front of a difficulty in every case where it is implemented that the
universalist approach may envisage providing effective responses for all firms (Brabet,
1993). The essence of the responses proposed by the universalist approach corresponds in
fact to tools. It is the «formal training system», the «appraisal measures» or the «v01ce
mechanism» which are supposed to be effective and necessary in all firms, whatever they
are (Delery & Doty, 1996). Whereas often under-estimated, management tools play a
fundamental role in the diffusion of managerial «best practices». They make it possible
and they also favour it as a result of the identical formating that they impose (Thevenot,
1984). The place of computer software in the homogenisation of managerial practices is
thus, for example, not to be under-estimated here (Pichault, 2000). Even if their effect is
less clear, the introduction of individualised assessment systems or formalised training
systems (as an alternative to assessment and training systems which could be more
collective and more informal, for example) play the same supporting role in the diffusion
of managerial.

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So as to highlight the central place that management tools take in this universalist
approach, certain authors have even proposed renaming this universalist logic: (Brabet,
1993). In fact, it would appear that this approach makes the implicit hypothesis that the
management tools that it proposes to diffuse embody universal principles - such as those
for example which govern mechanics or physics - and that problems that may be
encountered during their use are necessarily linked to the poor implementation of these
principles or their insufficient specification. It is for this reason that the main objective of
this approach is most often to progress towards the perfecting of the management tools
that may be proposed to managers. The case of Moneyball which makes a plea for giving
a larger place to the statistical method in management once again reports this logic
relatively clearly (Wolfe, Wright & Smart, 2006).

Given the strategic relevance of Human Resources Management (HRM) in

organizations and the lack of scientific instruments to measure employees’
perceptions about policies and practices of HRM, the objective of this study is to
develop and validate a Human Resource Management Policies and Practices Scale,
called HRMPPS.

According to Huselid (1995), work on the measurement of HRM policies and

practices is extremely limited and this is still true today. Besides some indexes of
HRM practices identified by advocates of the high commitment approach (Guest,
1998; Pfeffer, 2005), the only scales found in the literature were the High-Performance
Work Practices developed and validated by Huselid (1995), with 13 items and a .67
Cronbach’s alpha, and the Perception of Personnel Management Policies Scale
(PPMPS), developed and validated by Demo (2008), with 19 items distributed
across 4 factors and presenting Cronbach’s alpha above .70.

The PPMPS includes only four HRM policies: involvement; training,

development and education; work conditions; and compensation and rewards.
Considering the shortage of scientific validated scales to measure employee’s
perceptions about HRM policies, the PPMPS is a good option to be used so far (e.g.
Rubino, Demo, & Traldi, 2011). However comprehensive instruments with higher
reliability for measuring HRM policies and practices are demanded.

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 Thereafter, this paper attempted to answer the following question: is it possible
to develop and validate a comprehensive and highly-reliable scale, validated through
both exploratory and confirmatory factor analysis?

The HRMPPS presented here sought to improve the completeness and the scope
of the previous scales validated in the literature by adding policies for recruitment and
selection, competency-based performance appraisal, also often cited by classic
authors of the area, such as Bohlander and Snell (2009), Dessler (2002), Guest
(1987), Sisson (1994) and Storey (1995).

Furthermore, if the HRMPPS presents good psychometric parameters,

remaining stable in other samples, it would be a reliable and more comprehensive
instrument than the existing ones for use in relational studies in the Human Resources,
Management and Organizations fields. Additionally, it can be used in managerial
practice as well, as a diagnosis to improve employee’s well-being at work and
optimize organizational results.

First, a literature review is presented about human resources management, its

strategic role in organizations, and human resources management policies, including
their constitutive definitions. The methods used are then described, detailing the
procedures to develop the scale, the exploratory validation, the validation in a
different sample in order to test the scale generalizability and the confirmatory factor
validation through structural equation modeling. Construct validity is provided
through convergent and discriminant analysis. Finally, the results are presented and
discussed and conclusions are made, focusing on the study contributions and proposal
of a research agenda.

Theoretical
Background

Many authors understand HRM’s current role in the organizations as being

strategic. One of the distinctive features of HRM is that better performance is
achieved through the people in the organization (AlDamoe, Yazam, & Ahmid, 2012).
Ulrich, Halbrook, Meder, Stuchlik, and Thorpe (1991) stated that the competitive

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panorama is constantly being changed and has been demanding new models of
competitiveness which in turn require organizational capacities that will enable the
companies to better serve their customers and distinguish them from their
competitors. These organizational capacities come from the redefinition and
redistribution of HRM practices, functions and professionals.

By summarizing what authors such as Guest (1987), Storey (1995), Legge

(2006) and Bohlander and Snell (2009) say, it is possible to observe that people
have been assuming a strategic and relevant role in organizations, and therefore
cohesive and coherent theories - aligned to both planning and organizational strategy -
must properly sustain HRM.

In this meaning, HRM policies and practices may vary among organizations and
should be aligned with business strategy (Chênevert & Tremblay, 2009). Boxall and
Purcell (2000) add that the effects of individual HRM practices depend on both the
nature of the effects of other HRM practices and the business strategy. Also, Lim
(2012) argues that external business environment has a strong influence on HRM
activities.

From the perspective of Strategic HRM, policies and practices can be mutually
reinforced and create a strong impact on organizational goals (Morris & Snell, 2010).
Moreover, HRM policies are guided by the logic of skills developed in accordance
to the requirements of business processes (Serpell & Ferrada, 2007). Thus, they
provide tools to capture and communicate the strategic vision and objectives of the
organization in clear terms that can be more easily understood and requested
(Vakola, Soderquist, & Pratascos, 2007).

Within this context, the development of scales that allow an estimation of

the perception of HRM policies aims to identify to what extent they are applicable to
various organizations and aligned with an organization’s strategy. In addition, a
scale can translate how HRM policies are associated with business strategy, because
only then can they be effective (Legge, 2006).

HRM must also not be relegated to a traditional supporting role anymore, but

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instead must constitute an essential competence in reaching the organizational and
individual objectives and results, since human resources are valuable and constitute
a source of competitive advantage. Uysal (2012) indeed found strong, positive and
significant correlations among the main HRM policies cited in the literature, such as
staffing, training, performance evaluation and compensation. These results are
important for understanding the inter-relationships between HRM practices in order
to enhance the effect HR systems have on employee-based organizational outcomes.

In this context, organizations have turned to the perspective of creating

competitive advantage. Consequently, themes related to the areas of organizational
strategy and theory converge, spawning comprehensive implications for HRM and
putting its primary function under discussion. According to the Resourced Based View
by Barney (1991), the creation of competitive advantage depends on prerequisites that
may be closely related to the HRM area, since resources must be valuable and rare to
the organization, may never be imitated or replaced, and the organization must be able
to exploit them. Beauvallet and Houy (2010) support that the key mechanism and
decisive variable that would justify the competitive advantages of companies alleged
as being lean enterprises, or the ones practicing a lean management, are directly
related to HRM.

The term organizational policy can be defined as: principles established for
leading a company, a general course of action in which some practices are developed
collectively, in a constructive way, aiming to reach certain objectives (Singar &
Ramsden, 1972). HRM policies define the attitude, expectations and values of the
organization concerning how individuals are treated, and still serve as point of
reference for the development of organizational practices and for decisions made by
people, besides resulting in equal treatment among individuals (Armstrong, 2009).

In this study the term HRM policy means an organizationally articulated

proposal, with theoretical and practical constructions within human relations aiming to
reach the desired results. Thereby, HRM policies define theoretical and practical
referential built to make possible the reaching of an organization’s objectives and
purposes, operating as thinking and acting guides for the HRM area.

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 Some research results have pointed out positives relationships between HRM
policies and variables like commitment, productivity, profitability and quality, among
others (Guest, 1987; Schneider & Bowen, 1985; Ulrich, Halbrook, Meder, Stuchlik,
& Thorpe, 1991). In the meta-analysis performed, Combs, Liu, Hall, and Ketchen
(2006), found that relationships between Human Resources practices and
organizational outcomes are stronger in manufacturing companies than in
service companies.

Studies have also been conducted in cultures other than the American and
European ones. Majumder (2012) verified strong relationships between HRM
practices and employee satisfaction in Bangladeshi private banks, and Kim and Lee
(2012) found evidence that HRM policies and practices improve strategic capabilities
and firm performance in management consultant firms in South Korea. The study by
Demo (2010) showed positive and strong relationship between HRM policies and
organizational justice in both private and public Brazilian organizations.

Similarly, other researches have shown that HRM policies and practices
favorably affect organizational performance (Boselie, Dietz, & Boon, 2005;
Menezes, Wood, & Geladi, 2010; Subramony, 2009). Guest and Conway (2011)
confirmed the association between both more HRM practices and higher HR
effectiveness and a range of performance outcomes.

Besides, ALDamoe, Yazam and Ahmid (2012) concluded that employee

retention is likely to mediate in the relationship between HRM practices and
organizational performance. Employee perceptions of HRM policies and practices
also influence discretionary work effort and co-worker assistance (Frenkel, Restubog,
& Bednall, 2012). On the other hand, the effectiveness and acceptance of HRM
policies are related to organizational values and culture (Stone, Stone-Romero, &
Lukaszewski, 2007).

There is indeed a consensus that HRM practices produce higher

organizational performance when integrated into business strategy (Ezzamel,
Lilley, & Willmott, 1996; Guest & Hoque, 1994). This is also true for small firms.

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The study conducted by Katou (2012) showed that HRM policies have a positive
effect on organizational performance through employee attitudes (satisfaction,
commitment, motivation) and employee behaviors (absences, turnover, disputes).

In summary, HRM policies assume special connotation in development,

appreciation and retention of talents. They also promote employee commitment and,
as a result, goodwill on their part to act in a flexible and adaptive manner towards
excellence in organizations (Legge, 2006). An entrepreneurial strategy aiming at
production and supply of added-value products and services must concern the
development and the implementation of HRM policies resulting in well-qualified
employees (Legge, 2006).

As set by Pasquali (2008), and Kerlinger and Lee (2008), the development of a
scale includes qualitative analysis. First of all, interviews are required for the
definition of critical incidents that will subsidize the elaboration of the scale items.
In a second step, theoretical analysis of the items should be performed, comprising
the semantic analysis and analysis of judges. All participants were chosen by non-
probabilistic convenience sampling.

Regarding the interviews, Bardin (2011) states that the group of participants
should be diverse and representative. For this reason, respondents who answered
the interviews work in organizations from various industries, such as banking,
entertainment, consulting, education, telecommunications, engineering, healthcare,
retail, food, beverages, beauty and fitness services. According to Bardin (2011),
repetition in the response patterns indicates sufficiency of sample. Thus, in this step,
the initial sample consisted of 30 participants.

Participants were interviewed and answered basically two questions: In your

opinion, what is considered relevant in terms of HRM policies development for you
to feel valued by the organization you work for? Which HRM practices would help
promote your well-being at work as well as your commitment to achieve
organizational goals? For analysis of the responses, we performed a
categorical thematic content analysis as proposed by Bardin (2011).

24
 As to the theoretical analysis of the items, they were first submitted to semantic
analysis so that their understandability by the population members could be verified
and doubts could be resolved. The analysis focused on a sample of 27 people,
different from the 30 person initial sample, who work for organizations from different
activities and industries, such as retail, education, public service, and banking. This
sample was selected from the lowest (operational function) to the highest stratum of
the target population (management function) to ensure the broadest possible
understanding of the items. Then, the subjects were divided into small groups (5 or 6)
and asked to explain the items in their own words to the other groups. If such
explanation did not leave any doubt, the item was correctly understood. Otherwise, it
would probably be a problematic item and likely excluded from the scale.

Next, after the semantic analysis, a judges’ analysis was performed in late
August of 2010, in order to check item consistency. Twelve (12) experts HRM
(professors, HRM researchers and HRM managers) judged if the items were or were
not referring to the factor (one of the 6 HRM policies) in question.

Scale validation

After the qualitative steps for the scale development, the questionnaire
was ready for application. The 50 items were randomized in order to avoid bias
(Kerlinger & Lee, 2008). A specialized website, namely Google Docs, was used in
order to make it available online. The link was spread across the researchers' contact
lists. Hard copies were also given to colleagues, students and acquaintances. People
current employed, 18 year-old or older and having completed at least a high- school
education level were eligible to answer the questionnaire. The data collection returned
851 questionnaires. Using the criteria for sample sizes proposed by leading
authors in Statistics (e.g., Byrne, 2009; Field, 2009; Hair, Black, Babi, Anderson, &
Tatham, 2009; Kline, 2011; Pasquali, 2008; Tabachnick & Fidell, 2007), that is,
between 5 or 10 subjects per item for EFA, or a minimum of 300 individuals, and a
minimum of 400 subjects for CFA in case of complex models as ours, we
determined we would need about 600 individuals. Thus, 851 subjects should be
considered sufficient for the purposes of the present study, keeping in mind that

25
data screening normally reduces sample size.

Data were examined and the assumptions for multivariate analysis were
checked, following the procedures recommended by Myers (1990), Menard (2002),
Tabachnick and Fidell (2007) and Hair, Black, Babi, Anderson, and Tatham (2009).
Data was found to be very precise, with no registration errors or discrepancies in
average and standard deviation measures. Also, there wasn’t any case of
multicollinearity or singularity as tolerance values were above 0.2 (Menard, 2002)
and variance inflation factor (VIF) values were less than 5.0 (Myers, 1990).
Analyses of outliers, normality and linearity were conducted as well, and 219
individuals from the original sample (851) were deleted by using the Mahalanobis
distance criterion (D2 = 66.76; p<0.001). The percentage of missing data was lower
than 5%, which were excluded by the Listwise Deletion method (Hair et al., 2009;
Tabachnick & Fidell, 2007). The final sample was thus 632 participants, still enough
to run the intended analysis. As previously mentioned, the sample diversity indicates
sampling variability and representativeness.

For the exploratory factor analysis, an initial sample composed of 304

individuals was randomly selected from the final sample (632). The criterion
recommended by Hair et al. (2009), says that for an adequate sample size, it is
necessary to have between 5 and 10 individuals for each instrument item. To
Tabachnick and Fidell (2007), factor analysis validity is compromised with less than
300 individuals. Similarly, Comrey and Lee recommend 300 as a good sample
size. HRMPPS had 50 items in its application version, which would require a
minimum sample size of 250 people, according to Hair et al. (2009) criterion. Three
hundred and four (304) people composed a sample that attended to both criteria,
allowing the exploratory and confirmatory validations to have different samples.

As to the psychometric validation, we first performed an Exploratory Factor

Analysis (EFA). The correlation matrix, the matrix determinant and the results of the
Kaiser-Meyer-Olkin (KMO) sampling adequacy test were analyzed regarding
factorability. For factor extraction, Principal Components Analysis (PCA) was used.
Once the matrix was considered factorable, the eigenvalues, percentage of explained

26
variance of each factor, scree plot graphic and parallel analysis were then
examined in order to determine the quantity of factors to be extracted.

After defining the quantity of factors, we ran a Principal Axis Factoring (PAF)
analysis using Promax rotation - since correlation among factors is expected in
behavioral phenomena. Conbrach’s alpha was used to check the consistency, precision
or reliability of each factor. The statistic software used in these analyses was the
Statistical Package for the Social Sciences (SPSS), version 18.0.

Next, a new validation of the structure obtained by the exploratory study was
made with an independent sample, denominated the second sample, which was
composed of an independent sample of the remaining 328 individuals. As this
structure remained stable, the procedure continued using the total sample for the
model’s confirmatory factor validation. According to Kline (2011), complex
models require larger samples. Hair et al. (2009), state that complex models, with
more than 5 factors, require minimum sample sizes of 400 to 500. To determine
which factors’ structure adjusts better to HRMPPS, its fit was evaluated by using
AMOS 18 through the following indexes: NC (normatized chi-square or chi-square
value divided by the model’s degrees of freedom = CMIN/DF), CFI (Comparative Fit
Index) and RMSEA (Root Mean Square Error of Approximation), as recommended by
Kline (2011). The internal consistency or reliability was measured through
composite reliability (also known as Dillon-Goldstein’s rho or Jöreskog’s) as
proposed by Chin (1998). Dillon-Goldstein’s rho is a better reliability measure than
Cronbach’s alpha in Structural Equation Modeling, since it is based on the loadings
rather than the correlations observed between the observed variables.

27
 CHAPTER 3
RESEARCH
METHODOLOGY

28
 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

“Research Methodology” is a term made up of two words, research & methodology.

‘Research’ means ‘search for knowledge’. It is a scientific and systematic search for
potential information on a specific topic. It is an art of scientific investigation. It is
careful investigation or inquiry especially for search of new fact in any branch of
knowledge.

METHOD OF DATA COLLECTION

Data can be of two type’s primary and secondary data. Primary data are those which are
collected afresh and for the first time, and it is in original form. Primary data can be
collected either through experiment or through survey. The researcher has chosen the
survey method for data collection. In case of survey, data can be collected by any one or
more of the following ways:

 Observation

 Questionnaire

 Personal or Group Interview

 Telephone survey

 Communication with respondents

 Analysis of documents and historical records

 Case study

 Small group study of random behavior

The researcher has chosen the questionnaire methods of data collection due to limited
time in hand. While designing data-collection procedure, adequate safeguards against

29
bias and unreliability must be ensured. Whichever method is selected, questions must be
well examined and be made unambiguous. Researcher has examined the collected data
for completeness, comprehensibility, consistently and reliability.

Researcher has also gathered secondary data which have already been collected and
analyzed by someone else. He got various information from journals, historical
documents, magazines and reports prepared by the other researchers. For the present
piece of research the investigator has used the following methods:

 Questionnaire

 Interview

 Observation

SAMPLE OF THE STUDY

 A sample design is a definite plan for obtaining a sample from the sampling
frame. It refers to the technique or the procedure the researcher would adopt in
selecting some sampling units from which inferences about the population is
drawn. Sampling design is determined before any data are actually collected for
obtaining a sample from a given population. The researchers must decide the way
of selecting a sample.

 There are various methods o sampling like systematic sampling, random

sampling, deliberate sampling, mixed sampling, cluster sampling, etc. Among
these methods of sampling researcher has used random sampling so that bias can
be eliminated and sampling error can be estimated. Designing samples should be
made in such a fashion that the samples may yield accurate information with
minimum amount of research effort.

SAMPLING

30
 Sampling may be defined as the selection of some part of an aggregate or totality
on the basis of which a judgment or inference about an entire population by
examining only a part of it.

 The items so selected constitute what is technically called a sample, their

selection process or technique is called sample design and the survey conducted in
the basis of sample is described as sample survey.

SAMPLE SIZE

In sampling design the most complicated question is: what should be the size of the
sample. If the sample size is too small, it may not serve to achieve the objectives and if it
is too large, we may incur huge cost and waste resources. So sample must be of an
optimum size that is, it should neither be excessively large nor too small. Here, researcher
has taken 30 as the sample size.

ABOUT THE QUESTIONNAIRE

In this method a questionnaire is sent to the HR Manager concerned with a request to

answer the questions and return the questionnaire. The questionnaire consisted of a
number of questions printed or typed in a definite order. The HR Manager has to answer
the questions on their own. The researcher has chosen this method of data collection due
to low cost incurred, it is free from bias of the interviewer and respondent have adequate
time.

31
 CHAPTER 4
DATA REDUCTION,
PRESENTATION &
ANALYSIS

32
A. RECRUITMENT AND SELECTION

1. Are you satisfied with the external recruitment sources performed in your
organization.

External recruitment sources

18%

agree
disagree

82%

 Regarding external recruitment sources 82% employees are satisfied or agree whereas
18% are not satisfied which is performed in the organization. Therefore, the
employees are satisfied by recruitment process.

33
2. Are you satisfied with the monetary reward given on bringing a candidate on
board?

Monetary reward

26%

agree
disagree

74%

 Regarding monetary reward given on bringing on board 74% of employees are

satisfied and 26% are not satisfied.

34
35
3. Are you satisfied with the background checks conduct for employees.

Backgroud checks

22%

Agree
Disagree

78%

 Regarding background checks which is conduct for employees 78% employees

are satisfied whereas 22% employees are not satisfied.

36
4. Are you satisfied with the monetary limits given to you for the expenses?

Expenses

21%

Agree
Disagree

79%

 Regarding monetary limits provided to employees for their expenses 79% of the
employees are satisfied and 21% of the employees are not satisfied.

37
B. INDUCTION

5. The induction programme of your organization is informal type.

Induction programme

18%

Agree
Disagree

82%

 Regarding induction programme which is conducted in the organization, 82% of

the employees are satisfied whereas 18% of the employees are not satisfied.

38
6. The induction of your organization covers organizational structure and policies.

Induction
10%

Agree
Disagree

90%

 Regarding induction of organization, 90% of the employees are satisfied and 10%
of the employees are not satisfied. It means that most of the employees are
benefited.

39
C. TRAINING AND DEVELPOMENT

7. For Employee performance is the training need analyzed in your organization

Employee performance

24%

Agree
Disagree

76%

 Regarding employee performance, 76% of employees are satisfied whereas 24%

of employees are not satisfied. It means that most of the employees get affected
from this evaluation.

40
8. Are you satisfied with the Classroom method adopted by your organization to
train the employees?

Classroom method

27%

Agree
Disagree

73%

 Regarding Classroom method, 73% of the employees are satisfied whereas 27%
of the employees are not satisfied. It means most of the employees get affected
but some of the employees want training and development programmes to train
employees.

41
9. Effectiveness of training program in your Organization is evaluated by observing
the post training performance of employees.

Effectiveness of Training program

32%

Agree
Disagree

68%

 Regarding effectiveness of training program, 68% of the employees are satisfied

whereas 32% of the employees are not satisfied. It means that some of the
employees want that evaluation of effectiveness of training program should be
done with some other method.

42
D. PERFORMANCE APPRAISAL

10. Are you satisfied with the Balanced Scorecard method?

Balance scorecard method

8%

Agree
Disagree

92%

 Regarding Balance scorecard method, 92% of the employees are satisfied whereas
only 8% of the employees are not satisfied. It means that most of the employees
are benefited from this evaluation method.

43
11. Are you satisfied with the feedback given to you by organization?

Feedback

28%

Agree
Disagree

72%

 Regarding feedback 72% of the employees are satisfied whereas 28% of the
employees are not satisfied. It means that some of the employees get benefited but
some are not.

44
E. CAREER PROGRESSION

12. Are you satisfied with the mentor system followed for career progression?

Mentor system

16%

Agree
Disagree

84%

 Regarding mentor system followed for career progression, 84% of the employees
get benefited and only 16% of the employees are exempted.

45
13. Are you satisfied with the competence analysis and feedback from manager?

Competence analysis and feedback

22%

Agree
Disagree

78%

 Regarding competence analysis and feedback from manager 78% of the

employees are satisfied whereas 22% are not satisfied. It means that some of the
employees want feedback from other source.

46
F. LEAVE POLICY

14. Are you satisfied with the privilege leave provided to you?

Privilege leave

17%

Agree
Disagree

83%

 Regarding privilege leave provided to employees, 83% of the employees are

satisfied whereas 17% of the employees are not satisfied.

47
G. COMMUNICATION AND DECISION MAKING PROCESS

15. Are you satisfied with the informal communication pattern?

Informal communication pattern

13%

Agree
Disagree

87%

 Regarding informal communication pattern, 87% of the employees are satisfied

and 13% of the employees are not satisfied. It means most of the employees are
comfortable with this communication process.

48
16. Are you satisfied with the opinion survey and Department meeting?

Opinion survey and Department meeting

24%

Agree
Disagree

76%

 Regarding opinion survey and department meeting, 76% of the employees are
satisfied and 24% of the employees are not satisfied.

49
H. REWARDS AND RECOGNITION

17. Are you satisfied with the monetary rewards?

Monetary Rewards

33%
Agree
Disagree

67%

 Regarding monetary rewards, 67% of the employees are satisfied whereas 33% of
the employees are not satisfied. It means that some of the employees want to
implement non-monetary rewards in the organization.

50
I. PERSONAL ACCIDENT INSURANCE POLICY

18. Are you satisfied with contingencies cover under Personal Accident Insurance
policy?

Contingencies

24%

Agree
Disagree

76%

 Regarding contingencies provided under this policy,76% of the employees are

satisfied and 24% of the employees are not satisfied.

51
J. MEDICLAIM POLICY

19. Are you satisfied with the services covered under Mediclaim policy?

Services

11%

Agree
Disagree

89%

 Regarding services provided under Mediclaim policy, 89% of the employees are
satisfied and 11% of the employees are not satisfied.

52
 CHAPTER 5
SUMMARY AND
CONCLUSION

53
 SUMMARY AND CONCLUSION
RESULTS OF THE STUDY:
The Policy of the company provides facilities for all round growth of individuals
by training in-house and outside the organization, reorientation, lateral mobility and self-
development through self-motivation. The Policy grooms every individual to realize his
potential in all facets while contributing to attain higher organizational and personal
goals. The Policy builds teams and foster team-work as the primary instrument in all
activities. The Policy implements equitable, scientific and objective system of rewards,
incentives and control. The Policy recognizes worth contributions in time and
appropriately, so as to maintain a high level of employee motivation and morale. The
employees agree on the part of their performance that they know what is expected from
them. The employees understand how their work goals relate to company’s goals.

Company inspires the employees to do their best work every day. The employees
are not satisfied with the communication and decision-making process as it leaks the
information related to organization. The employees do not receive the appropriate
recognition and rewards for their contributions and accomplishments. The employees feel
that they are not paid fairly for the contributions they make to company’s success.

LIMITATIONS
 The survey is subjected to the bias and prejudices of the respondents. Hence
100% accuracy can’t be assured.

 The research was carried out in a short span of time, where in the researcher could
not widen the study.

 The study could not be generalized due to the fact that researcher adapted
questionnaire method.

 The sample consisted only of employees in the day shift. Employees of the night
shift were not considered for the purpose of study.

54
 The response of the respondents may not be accurate thinking that the
management might misuse the data.

 Sensitive company information cannot be displayed in the project report.

 Most respondents might be influenced by their peers in answering the questions.

SUGGESTIONS

 The Performance Appraisal of employee is evaluated on the basis of 360 degree

feedback or 180 degree feedback.

 The Organization should focus on mentor system intend to help employees in

their career progression.

 The Organization should conduct Psychometric tests for employees.

 The Training should be mandatory for all level of employees.

 The Departments should develop constructive attitude towards each other.

 The company should give the appropriate recognition for the contributions and
accomplishments made by employees. A flexible reward system should be
adopted by organization to improve employee motivation.

 A more transparent and full proof communication system developed in the

organization.

 Replacing the lacuna in the current system.

 Wages and salary administration process should have a more scientific approach
laying stress on equal wages for equal work done.

55
 ANNEXURE
QUESTIONNAIRE

Name of Employee: ------------------------------------------------------------------

Designation: ----------------------------------------------------------------------

A. Recruitment and Selection

1. Are you satisfied with the external recruitment sources

performed in your organization.

1. Agree 2. Disagree

2. Are you satisfied with the monetary reward given on bringing a

candidate on board?

1. Agree 2. Disagree

3. Are you satisfied with the background checks conduct for

employees.

1. Agree 2. Disagree

4. Are you satisfied with the monetary limits given to you for the
expenses?

1. Agree 2. Disagree

B. Induction

5. The induction programme of your organization is informal type.

1. Agree 2. Disagree

56
6. The induction of your organization covers organizational
structure and policies.

1. Agree 2. Disagree

C. Training and Development

7. For Employee performance is the training need analyzed in

your organization.

1. Agree 2. Disagree

8. Are you satisfied with the Classroom method adopted by tour

organization to train the employees?

1. Agree 2. Disagree

9. Effectiveness of training program in your Organization is

evaluated by observing the post training performance of employees.

1. Agree 2. Disagree

D. Performance Appraisal

10. Are you satisfied with the Balanced Scorecard method?

1. Agree 2. Disagree

11. Are you satisfied with the feedback given to you by

organization?

1. Agree 2. Disagree

57
E. Career Progression

12. Are you satisfied with the mentor system followed for career
progression?

1. Agree 2. Disagree

13. Are you satisfied with the competence analysis and feedback
from manager?

1. Agree 2. Disagree

F. Leave Policy

14. Are you satisfied with the privilege leave provided to you?

1. Agree 2. Disagree

G. Communication and Decision making process

15. Are you satisfied with the informal communication pattern?

1. Agree 2. Disagree

16. Are you satisfied with the opinion survey and Department
meeting?

1. Agree 2. Disagree

H. Rewards and Recognition

17. Are you satisfied with the monetary rewards?

1. Agree 2. Disagree

58
I. Personal Accident Insurance Policy

18. Are you satisfied contingencies cover under this policy?

1. Agree 2. Disagree

J. Mediclaim Policy

19. Are you satisfied with the services covered under this policy?

1. Agree 2. Disagree

59