Chronology of Editorial Team of ‘Management & Change’ Volume & Issue (Year)
Editor
Associate Editor
Editorial Coordinator
Vol. 1 No. 1 (1997) Vol. 1 No. 2 (1997) Vol. 2 No. 1 (1998)
Prof. Debi S. Saini Prof. Debi S. Saini Prof. Debi S. Saini
Sami A. Khan Sami A. Khan Sami A. Khan
Vol. 2 No. 2 (1998)
Prof. Debi S. Saini
Sami A. Khan
Vol. 3 No. 1 (1999) Vol. 3 No. 2 (1999)
Prof. Debi S. Saini Prof. Debi S. Saini
Sami A. Khan Sami A. Khan
Vol. 4 No. 1 (2000)
Prof. Gautam Bhattacharyya
-
Vol. 4 No. 2 (2000)
Prof. Gautam Bhattacharyya
-
Vol. 5 No. 1 (2001)
Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Dr. Irfan A. Rizvi Dr. Irfan A. Rizvi Dr. Irfan A. Rizvi Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital
-
Zafar H. Anjum Zafar H. Anjum Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Sami A. Khan Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Yusuf Siddiqui
-
Yusuf Siddiqui
-
Yusuf Siddiqui
-
Yusuf Siddiqui
Prof. M.K. Moitra Prof. M.K. Moitra Dr. Siri D. Vivek Dr. Rajesh Pilania Dr. Rajesh Pilania Khanna
Yusuf Siddiqui Yusuf Siddiqui Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Arun Thomas Arun Thomas Ms. Deepa
Vol. 5 No. 2 (2001) Vol. 6 No. 1 (2002) Vol. 6 No. 2 (2002) Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol.
7 No. 1 (2003) 7 No. 2 (2003) 8 No. 1 & 2 (2004) 9 No. 1 (2005) 9 No. 2 (2005) 10 No. 1 (2006) 10 No. 2 (2006) 11 No. 1 (2007) 11 No. 2 (2007) 12 No. 1 (2008) 12 No. 2 (2008) 13 No. 1 (2009) 13 No. 2 (2009) 14 No. 1 (2010)
Vol. 14 No. 2 (2010)
Dr. K.M.Mital
Khanna
Vol. 15 No. 1 & 2 (2011)
Dr. P. Malarvizhi
Mr. George Skaria Khanna
Vol. 16 No. 1 & 2(2012)
Ms. Shipra Jain Dr. Sangeeta Chopra
Vol. 17 No. 1 & 2 (2013)
Prof. Vandana Srivastava
-
Ms. Sarla Rawat Ms. Deepa Ms. Sarla Rawat Ms. Deepa
Ms. Aarti Sharma Ms. Shipra Jain Dr.Sangeeta Chopra Ms. Aarti Sharma Dr. Silky Kushwah
ACKNOWLEDGEMENT TO REFEREES Following management professionals acted as referees for contributions made for Management & Change, Vol. 17 No. 1 & 2 (2013). Management & Change acknowledges their valuable comments and suggestions for improving papers included in the following issue. Management & Change, Vol. 17 No. 1 & 2 Dr. Sudhir Naib
Director, Bhartiya Vidya Bhavan’s Usha & Lakshmi Mittal Institute of Management, Copernicus Lane, Kasturba Gandhi Marg, New Delhi – 110001. Former Professor, Organisational Behaviour and Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003.
Prof. Vandana Srivastava Professor, Operations and Information Technology, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003. Dr. Raman Subramanian
Professor, Finance, IILM Graduate School of Management, 16, Knowledge Park – II, Greater Noida - 201 306, Uttar Pradesh.
Dr. Anjali Malik
Professor, Marketing and Sales, IILM Institute for Business and Management, DLF Golf Course Road, Sector – 53, Gurgaon – 122003
Dr. Sanyukta Jolly
Associate Professor, Organisational Behaviour and Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003
Ms. Sonika Sharma
Dean Student Welfare, Associate Professor, Organisational Behaviour and Human Resource Management, IILM Graduate School of Management, 16, Knowledge Park – II, Greater Noida - 201 306, Uttar Pradesh.
Ms. Garima Mathur
Editor - Prestige International Journal of Information Technology and Management - Sanchayan, Associate Professor, Prestige Institute of Management, Airport Road, Opposite Deendayal Nagar, Gwalior - 474 020, Madhya Pradesh.
Dr. Bilal Mustafa Khan
Assistant Professor, Department of Business Administration, Aligarh Muslim University (AMU), Aligarh - 202002, Uttar Pradesh.
Management & Change VOLUME 17
NUMBER 1 & 2
2013
ARTICLES
Consumer Buying Behavior in the Growing Indian Used Car Market: An Exploratory Study
AshishTayal UditaTaneja Divya Verma Gakhar
Lessons in Negative Leadership: What Would Hitler Do?
Hershey H. Friedman Linda Weiser Friedman
Employees’ Ingratiation and Organizational Citizenship Behavior
Luxmi Malodia
Employment Relations in Indian Banking Industry - An Inter-sector Analysis
Javid Ahmad
Comparative Analysis of Unit Linked Insurance Products of Different Companies
Ritesh Dwivedi Anand Batra
BOOK REVIEWS Susan M. Cantrell and David Smith (2010). Workforce of One: Revolutionizing Talent Management Through Customization reviewed by Shiva Kumar Srinivasan
Contributors Ashish Tayal
Student, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka New Delhi-110078, India
Udita Taneja
Associate Professor, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka, New Delhi-110078, India. Mobile: 98 185 52305 E-mail: udita.taneja@gmail.com
Divya Verma Gakhar
Associate Professor, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka, New Delhi-110078, India. Mobile: 98 998 41851 E-mail: divya.ipu@gmail.com
Hershey H. Friedman
Professor , Business and Marketing, Brooklyn College, 2900 Bedford Avenue, Brooklyn, University of New York, New York-11210, United States. E-mail: x.friedman@att.net
Linda Weiser Friedman
Professor, Statistics and CIS, Baruch College, One Bernard Baruch Way (55 Lexington Ave at 24th St), University of New York, New York-10010, United States. E-mail: linda.friedman@baruch.cuny.edu
Luxmi Malodia
Sr. Assistant professor, University Business School, Panjab University, Sector 14, Chandigarh, U.T. - 160014, India. Mobile: +91 9463888038, E-mail: luxmimalodia@yahoo.com
Javid Ahmad
Associate Professor, Commerce & Management Department, Govt. Degree College, College Road, Bemina, Srinagar - 190010, India. E-mail: drjavidabdulla@gmail.com
Ritesh Dwivedi
Assistant Professor, Department of Rural Management, Amity Business School, Amity University , Sector 125, Noida-201303, Uttar Pradesh, India. Mobile: 0-9415576820, E-mail: ritesh_hariom@rediffmail.com
Anand Batra
Student, MBA, Amity Business School, F-3 Block, Amity University, Sector 125, Noida-201303, Uttar Pradesh, India. Mobile: 0-9729669017, Email: anandbatra2@gmail.com
ix
From the Editor’s Desk HUMAN RESOURCE MANAGEMENT: A PARADIGM SHIFT It is often said that “people” make an organization what it is. It is for this reason that we have seen increased focus on human resource management, with organizations working hard to be more people-centric. Over the years Human Resource Management has emerged as one of the most challenging aspect of governance for organizations. The change in the social, cultural and economic scenarios, emergence of the global organizations and new service models have resulted in several changes in the nature of the workforce, raising new challenges in human resource management. It was in the early 1960’s that Peter Drucker introduced the terms ‘knowledge work’ and ‘knowledge worker’ (Drucker, 1993). What was considered as radical in the 1960s has become a reality of economic relevance in the twenty first century. Globally, knowledge assets have emerged as the most important contributor to economic development and competitive advantage (Malhotra 2003). This has resulted in a workforce that comprises knowledge workers with specific skills and very different needs from that of the traditional workforce. Knowledge work is predominantly complex and ambiguous. Being more knowledge intensive, knowledge work requires different skills and mental orientation. Thus, knowledge workers are employed for their ability to think for themselves and their work involves a high degree of autonomy. Qualitatively knowledge worker are very different from less-skilled workers and even though they may be much less in numbers, they need to be treated differently. Different HRM practices are needed for the knowledge workforce: they have to be more performance-support or performance-facilitation oriented for the knowledge workers than performance-management oriented (Wicker and Andrews, 2004). Moreover, since knowledge workers come at a premium, organizations find it economically difficult to hire more than a handful of better equipped people and hence have to manage their knowledge workers for greater productivity (Drucker, 2002; Whicker and Andrews, 2004).
Management & Change, Volume 17, Number 1 & 2 (2013)
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Another change witnessed in the last two decades has been the virtualization of organizations. The global nature of operations aided by developments in information and communications technologies have resulted in new business models which are more collaborative and open; and often may be more geographically wide spread and virtual. According to Jeyavelu (2003), virtualness of organizations has resulted in the several important changes in business models: works places have become more collaborative and virtual and global business environment have has become borderless requiring a global workforce. Moreover, empowerment and awareness has resulted in a workforce that is extremely technology savvy, realizes the importance of knowledge and works to live, not lives to work (Accenture Report, 2013) !! The resulting scenario raises fresh challenges for the organizations. Management and development of virtual alliances require the development of interpersonal and team skills. This also entails developing an organizational culture of collaborative knowledge sharing and knowledge creation. The role of human resource management and organizational development has undergone tremendous changes in line with this new organizational form. According to the study by Cornell University ILR School (2010), the HR strategies of such collaborative and virtual organizations need to take care of the virtual dimensions of trust and work culture, competence and compensation management systems, and collaborative work through holistic and harmonious use of IT enabled communication channels. With the focus shifting to knowledge-based and collaborative work environments, productivity and competence of the workforce has emerged as a critical determinant of the competitiveness of the organization. According to Arnold (2010), this has resulted in a workforce comprising temporary workers, independent contractors and consultants. Such workers may connect with the company independently or through a temporary staffing company or consulting company, may stay for various lengths of time and provide services ranging from clerical assistance to highly skilled project work. Infact, studies and global trends have shown that today’s “non-employee” workforce is larger and more varied. Organizations struggle to keep up with the terminology for such workforce; while many refer to this segment as “contingent” (Arnold, 2010) others call it temp (Drucker, 2002). This Management & Change, Volume 17, Number 1 & 2 (2013)
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has also led to the development of the Professional Employee Organizations (PEO) (Drucker, 2002). The PEOs are temp suppliers for every kind of jobs and have been one of the fastest-growing business services globally. These businesses provide services that range from managing their clients’ employees to managing all administrative HR tasks of their clients’ employee relations as well. Earlier PEOs would take care of employee relations at small businesses, but over the years they have started playing the role of the co-employer for global fortune 500 companies (Drucker, 2002). Such multi-employer situation proves helpful, but has been found to give rise to issues pertaining to domain definitions and control for organizations. Moreover, apart from human resource management, PEO/vendor management emerges as an additional area of concern, thereby increasing the complexity. The global workforce of today, therefore, raises issues pertinent to diversity of culture, language, race, nationality and gender, and has become the harbinger of change in HR practices. Diversity in the socio-culture backgrounds of employees have implications for international human resource management (Choy, 2007). Moreover, technology, including social, gamification, cloud, mobile, big data and consumer applications, is transforming how people carry out their work, thereby bringing about changes in the HR practices that encourage and support them in that effort. All of the above have resulted in a sea change in the perception of Organizations. According to Losey, Mesinger and Ulrich (2005), organizations can no longer be viewed as a structure, they are a set of capabilities. Managers today are confronted with a new and uncomfortable reality. Their competitive landscape is altering not only at a rapid pace but also in unfamiliar patterns. Many organizations now lack clear boundaries and even definition and are becoming highly fluid spaces whose features are constantly morphing (Choy, 2007). Organization boundaries have blurred resulting in an extended workforce comprising global network of outside contractors, outsourcing partners, vendors, and other nontraditional employees. The trends of more technology enablement and social media would result in further democratization of work and disruption of organizational structures, hierarchy and job titles (Accenture report, 2013). The resulting scenario would require customization in management of employees wherein the workforce would be treated as workforce of one (Choy, 2007). Management & Change, Volume 17, Number 1 & 2 (2013)
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Human resource management in the twenty first century would, therefore, definitely not be straight forward and simple. For organizations the challenge lies in adopting new human resource strategies and policies which would be able to effectively convert the workforce of today, into a vibrant throbbing life-force of tomorrow. References Arnold, J.T. (2010). Managing a Nontraditional Workforce. HR Magazine. pp 75-77. Choy, W.K.W. (2007). Globalization and Workforce Diversity: HRM Implications for Multinational Corporations in Singapore. Singapore Management Review. 29(2), pp 1-19. Drucker, P.F. (1993). Post-capitalist society. New York: Harper Business. Drucker, P.F. (2002). They’re Not Employees, They’re People. Harvard Business Review. pp 71-77. HR & Collaboration: Strategies and Execution , Center for Advanced Resources Studies, Cornell University ILR School (2010), available at http://www.humanresourcesiq.com/business-strategies/articles/hrcollaboration-strategies-and-execution/, downloaded on 10.2.2014 Jeyavelu,S. (2003). Virtual Organizations - The HR Challenges. PRAGYAAN. 1(2). pp 39-47. Losey, M., Mesinger. S. & Ulrich, D. (2005). The Future Of Human Resource Management: 64 Thought Leaders Explore The Critical HR Issues Of Today And Tomorrow. John Wiley & Sons, 2008: New Delhi India Malhotra, Y. (2003). Measuring Knowledge Assets of a Nation: Knowledge Systems for Development. Keynote Presentation at United Nations Advisory Meeting of the Department of Economic and Social Affairs, New York.
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The Future of HR: Research Overview, Accenture Institute for High Performance report (2013), Available at http://www.accenture.com/ us-en/Pages/insight-future-of-hr.aspx, accessed on 8.2.2014. Whicker, L.M & Andrews, K. M. (2004). HRM in the Knowledge Economy: Realising the Potential. Asia Pacific Journal of Human Resources. 42 (2), pp 156 – 165. IILM Institute for Higher Education
Prof. Vandana Srivastava
Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 1
CONSUMER BUYING BEHAVIOR IN THE GROWING INDIAN USED CAR MARKET: AN EXPLORATORY STUDY Ashish Tayal 1
Udita Taneja2
Divya Verma Gakhar3
The car markets for both new and used cars have grown at a phenomenal rate in the past few years in India. This is attributed to the increasing middle class population with rising incomes. There have been many studies that have sought to evaluate the buying behavior of consumers for new cars. There is not much reported in the literature on the buying behavior for used cars. This research seeks to fill this gap for the used car market that is slowly shifting from being an unorganized sector to an organized one. An extensive literature survey was carried out to identify the possible factors that would affect the purchase decisions for used cars. The purpose of this exploratory study was to identify and rank these factors so that companies can focus on the more important ones from the consumers’ perspective while developing strategies to enter this fast growing market. A survey instrument was designed and tested for its validity and reliability. A cross-sectional study with a purposive sample size of 50 was conducted in the National Capital Region of New Delhi, India. The research instrument used was a structured and non-disguised questionnaire. The relative importance of different factors affecting purchase decisions for used cars was determined. Exploratory factor analysis reduced the initial 30 components to 9 factors. The top three factors that have 1 2
3
Ashish Tayal, Student, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka, New Delhi-110078, India. Udita Taneja, Associate Professor, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka, New Delhi-110078, India. Mobile: 98 185 52305, E-mail: udita.taneja@gmail.com Divya Verma Gakhar, Associate Professor, University School of Management Studies, Guru Gobind Singh Indraprastha University, Sector 16-C, Dwarka, New Delhi-110078, India. Mobile: 98 998 41851, E-mail: divya.ipu@gmail.com Management & Change, Volume 17, Number 1 & 2 (2013)
2 Consumer Buying Behavior in the Growing Indian...
emerged from this study are perceived need including price and income (affordability); running costs of the car, i.e., fuel and maintenance costs; and in third position is car attributes including brand equity. Ability to finance, information channels and dealers’ facilities were ranked fourth, fifth and sixth respectively. The last three factors were, after sales service, contingencies, and, credit card acceptance. Keywords: Consumers, buying behavior, used car market, unorganized sector, brand equity, India INTRODUCTION According to industry figures, in 2011-12 the industry produced about 20 million vehicles of which passenger vehicles were 15% i.e. approximately 3 million cars were produced during this time (SIAM, 2013). During AprilMarch 2012 the growth rate for domestic sales of passenger cars grew by 2.19%. In March 2012, the domestic sales of passenger cars grew by 19.66% over the same month in 2011. The sales growth of total passenger vehicles in the month of March 2012 was at 20.59% as compared to March 2011. For the first time in history, car sales crossed 2 million in a financial year (SIAM, 2013). The used car market in the country is witnessing a structural shift from the unorganized sector (which includes road-side garage mechanics, small brokers and car owners, among others) to the organized sector, with more automobile Original Equipment Manufacturers (OEMs) entering this business. Although no official figures are available, rough estimates suggest that the calendar year 2011 witnessed a growth of more than 40% for the Indian used car market. From word-of-mouth references, auto fairs and newspaper classifieds, the used car market is transforming into an organized and professional business. An increase in disposable incomes, rising affluence of the upper classes and a plethora of new models launched in the market every year have led to people changing their cars more frequently than ever before. This, in turn, has boosted expansion of the used car market in India. Rising aspirations of the Indian middle class, increasing urbanization and rising income levels, given the robust performance of the economy, have resulted in a distinct shift in consumer Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 3
behavior patterns over the years. Getting closer to the customer in today’s highly competitive landscape is essential for the entire industry. It requires all organizations in the auto meta-market sensing and responding rapidly to consumer demand in a coordinated manner. Given the growth of the used car market and lack of studies in the area, it became imperative that this market be studied. This research explores the various factors affecting the used car buying process by conducting a survey and analyzing the various factors which affect the pre-purchase, and purchase decisions of the customers and the relative importance they perceive towards each factor. The purpose of this study is to rank these factors so that companies can focus on the more important ones from the consumers’ perspective while developing strategies to enter this fast growing market in India. The implications of this study would be better utilization of companies’ resources in a hitherto unorganized sector. The findings of the exploratory study would also be of use to the government for transportation infrastructure planning and environment management issues. LITERATURE REVIEW Several studies are available on marketing strategies for new automobiles, however, in the case of used cars very little information can be found. The relevant literature was studied and is presented below. Chattopadhyay et al., (2010) examined the effect of various media channels towards building the brand equity for passenger cars. They conducted an exploratory research on a stratified sample of first time and repeat buyers of cars which were further differentiated on the basis of price into economy, volume and premium brands. They concluded that the media vehicles including television advertisement, press advertisement, event sponsorship, online and mobile advertisement are positively correlated to the perceived quality and brand awareness of both first time and repeat buyers. While the television and press advertising were more influential for the first time buyers, event sponsorships, and, online and mobile advertising affected the repeat buyers more. Furthermore, event sponsorships and online and mobile advertising were more effective in building the brand awareness rather than the path to perceived quality (Baltas and Saridakis, 2009). Management & Change, Volume 17, Number 1 & 2 (2013)
4 Consumer Buying Behavior in the Growing Indian...
Banerjee et al., (2012) have reported that with growing incomes more families are buying and using cars with fuel efficiency being important when buying both new and used cars. Bang and Joshi (2012) studied strategies for expanding markets for consumer products in emerging markets and have found a disconnect between what is reported in the literature and what managers actually think. Brough and Isaac (2012) in their study discuss how buyer usage intent influences the seller. While strongly attached sellers are often considered reluctant to part with their possessions the selling price is often lowered for the buyer whose usage intentions are considered appropriate. Chamon et al., (2008) have shown that there is a stable relationship between GDP per capita and car ownership. They expect the total number of cars to increase by 2.3 billion between 2005 and 2050 with an increase of 1.9 billion in the emerging markets and developing countries such as India and China. Chugh et al., (2011) report that while most Indian consumers value fuel economy there are some who are willing to forgo the potential savings of a fuel-efficient car for a preferred car. Dawar and Parker (1994) define the marketing universals across cultures to be brand name, price, physical appearance and retailer reputation as indicators of product quality. Desai and Purohit (1998) conducted a study on marketing durable goods and reported that leased cars depreciate at a lower rate than sold cars. Engers, et al., (2004) investigated whether the net beneÝt from owning a vehicle, approximated by annual miles driven, explained the price decline observed over a vehicle’s life. They found out that the decline in prices of used cars as the vehicle ages can be decomposed into three factors i.e. the direct ageing effect, the portfolio of cars a household owns, and the household demographics. They also suggested that as the vehicles become older, the annual usage of the car declines; the consumer is unlikely to take that car on longer trips, instead they opt for newer vehicles for longer trips. Fetscherin and Toncar (2010) studied the effect of country of origin of the brand (COB) and country of manufacturing (COM) of automobiles of the same brand. Data were collected from the USA and China. They Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 5
found that for cars, the COM is a greater influence on the perceived personality of a brand than the COB. Kinra (2006) reported that foreign brands in India are perceived as being better on technology, quality, status and esteem than their Indian counterparts. Marketing of foreign products should be positioned on the basis of better technology and higher quality rather than economy and value for money. Luchs et al., (2011) in their study of sustainable marketplaces discuss how they increase options and benefits for consumers. Zeithaml (1988) defined the concepts of price, quality and value from the consumer’s perspective and related these in a model. Ratchford et al., (2003), Ratchford (2009), and Singh and Ratchford (2012) examined the impact of dealer and resale websites on search in the used car market. They conducted an in-depth survey of over 250 used car buyers at various auto repair outlets to capture the product information search from different seller types. They concluded that unlike new car purchases where online search substitutes for traditional sources, in used car purchases, internet search using dealer websites is complementary to traditional sources. The used car market has two segments, the first being that of younger customers for inexpensive cars who search on resale websites and buy from individual sellers. The other segment comprises of older customers who buy expensive cars and are more likely to use dealer websites for finding dealers (Prado, 2009). Nataraj and Nagaraja (2012) studied the impact of the automobile manufacturer’s websites on increasing customer satisfaction and influencing purchase decisions in India. They developed a model with which customer satisfaction can be increased. RESEARCH METHODOLOGY A cross-sectional study was conducted based on primary data collection with a sample size of 50 respondents residing in National Capital Region of New Delhi, India. The research instrument used for the sample survey was a structured and non-disguised questionnaire and consisted of three major sections. The first section collected information about demographic factors; the second section collected the opinions about the factors affecting car purchasing decisions; and the third section consisted Management & Change, Volume 17, Number 1 & 2 (2013)
6 Consumer Buying Behavior in the Growing Indian...
of questions about the pre-purchase stages of searching for cars and dealers. A five-point Likert scale was used to capture the consumers responses ranging from strongly agree to strongly disagree. The statements regarding the factors affecting the car buying behavior of customers were generated based on a literature review as well as feedback from experts. The itemized scale asked the respondents to rank the factors in a decreasing order of importance. Data analysis was done using SPSS software. The statistical analysis method employed was factor analysis. DATA COLLECTION Data was collected by personally contacting respondents at Mahindra First Choice outlets and various used cars dealers in the area of Rohini, Pitampura, and Vikaspuri and explaining the survey in detail. A total of 76 customers from different areas were contacted and 50 correctly completed questionnaires were obtained from all the customers, the break-up of these is given in Figures 1, 2 and 3. Figure 1: Descriptive profile of respondents according to gender (N = 50).
Figure 2: Descriptive profile of respondents according to age (N = 50).
Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 7
Figure 3: Descriptive profile of respondents according to occupation (N = 50).
Results and Analysis Reliability of Data Table 1: KMO and Bartlett’s Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.769
Bartlett’s Test of Sphericity
Approx. Chi-Square
1650.000
Df
435
Sig.
.000
Kaiser-Meyer-Olkin Test This is the index for comparing the magnitudes of the observed correlation coefficient to the magnitude of the partial correlation coefficients. From Table 1, we can interpret that there is no error in 76.9% of the sample and in the remaining 23.1%, there may occur some sort of error. Bartlett’s Test of Sphericity The strength of the relationship among variables is strong; therefore, factor analysis for the data should be performed.
Management & Change, Volume 17, Number 1 & 2 (2013)
8 Consumer Buying Behavior in the Growing Indian...
Ho: There is no significant difference among the factors affecting car purchase decision H1: There is significant difference among the factors affecting car purchase decision The observed significance level is 0.0000 which is less than 0.05, which is small enough to reject thenull hypothesis. It means there is a significant difference among the factors affecting car purchasing decisions. Communality - Common Factor Variance Communality of each statement refers to the variance being shared or common with other statements. With reference to the first statement, the extraction is 0.833 which indicates that 83.3% of the variance is shared or common with other statements (Table 2). Eigen Value Indicates the amount of variance in the original variables accounted for by each component. The total components are 30. Table 2: Communalities, Extraction Method: Principal Component Analysis.
S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 S12 S13
Initial
Extraction
1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
.833 .692 .760 .800 .695 .795 .746 .731 .783 .875 .851 .782 .642
Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 9
S14 S15 S16 S17 S18 S19 S20 S21 S22 S23 S24 S25 S26 S27 S28 S29 S30
1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
.628 .674 .715 .662 .707 .653 .728 .762 .710 .642 .687 .835 .684 .803 .683 .857 .650
Table 3 shows that 30 components are reduced to 9 components contributing 73.555% of the total variance. The Screen plot in Figure 4 shows that nine factors are obtained with eigen values greater than 1.0000.
Management & Change, Volume 17, Number 1 & 2 (2013)
10 Consumer Buying Behavior in the Growing Indian...
Table 3: Total Variance Explained, Extraction Method: Principal Component Analysis. Component
Initial Eigenvalues
Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total
% of CumulVariance ative %
Total
% of CumulVariance ative %
Total
% of CumulVariance ative %
1
7.102
23.672 23.672
7.102
23.672 23.672
3.398
11.327 11.327
2
3.539
11.798 35.470
3.539
11.798 35.470
3.227
10.756 22.083
3
2.543
10.268 32.350
8.477
43.947
2.543
8.477
43.947
3.080
4
2.188
7.292
51.239
2.188
7.292
51.239
2.556
8.520
40.870
5
1.716
5.721
56.960
1.716
5.721
56.960
2.543
8.476
49.345
6
1.631
5.435
62.396
1.631
5.435
62.396
2.356
7.855
57.200
7
1.218
4.059
66.455
1.218
4.059
66.455
1.909
6.364
63.564
8
1.112
3.706
70.161
1.112
3.706
70.161
1.718
5.725
69.289
9
1.018
3.394
73.555
1.018
3.394
73.555
1.280
4.266
73.555
10
.948
3.160
76.715
11
.815
2.717
79.432
12
.683
2.278
81.710
13
.634
2.113
83.823
14
.567
1.889
85.712
15
.500
1.667
87.379
16
.489
1.631
89.010
17
.439
1.464
90.475
18
.421
1.403
91.878
19
.330
1.099
92.976
20
.297
.991
93.967
21
.277
.924
94.891
22
.271
.905
95.796
23
.226
.752
96.547
24
.209
.697
97.245
25
.194
.647
97.892
26
.183
.608
98.501
27
.161
.537
99.038
28
.129
.431
99.468
29
.089
.297
99.766
30
.070
.234
100.000
Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 11
Figure 4: Scree Plot
Thirty items were reduced to nine orthogonal factor dimensions which explained 73.555% of the overall variance (Table 4) indicating that the variance of original values was well captured by these nine factors. Table 4: Components and Cumulative Frequencies Components Component 1 Component 2 Component 3 Component 4 Component 5 Component 6 Component 7 Component 8 Component 9
Cumulative Frequency Explain a variance of 3.398, which is 11.327 % of the total variance of 30 Explain a variance of 3.327, which is 10.756 % of the total variance of 30 Explain a variance of 3.080, which is 10.268 % of the total variance of 30 Explain a variance of 2.556, which is 8.520 % of the total variance of 30 Explain a variance of 2.543, which is 8.476 % of the total variance of 30 Explain a variance of 2.356, which is 7.855 % of the total variance of 30 Explain a variance of 1.909, which is 6.364 % of the total variance of 30 Explain a variance of 1.718, which is 5.725 % of the total variance of 30 Explain a variance of 1.280, which is 4.266 % of the total variance of 30
11.327% 22.083% 32.350% 40.870% 49.345% 57.200% 63.564% 69.289% 73.555%
Management & Change, Volume 17, Number 1 & 2 (2013)
12 Consumer Buying Behavior in the Growing Indian...
Table 5 shows the factor loadings for each variable on the un-rotated components or factors. Table 5: Component Matrix, Extraction Method: Principal Component Analysis with 9 components extracted. Component
S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 S12 S13 S14 S15 S16 S17 S18 S19 S20 S21 S22 S23 S24 S25 S26 S27 S28 S29 S30
1
2
3
4
5
.377 -.166 .649 -.551 .599
.267 -.163 -.382 -.191 -.244 .751 .232 .124 -.267 .698 .808 -.211 .528 -.139 .337
.541 -.228 .347
-.333 .665 .119
.217
.388 -.265 -.138 .128 .229 -.418 -.272
.141 -.164 .223 .249 .699 .363 .132
.223 .430 -.104 -.170 .232 -.542 .177 .627 .689 .569 -.312 .481 .718 -.395 .730 .537 .484 .368 -.499 .621 -.503 .652 -.535 .459
.398 .343 -.106 -.122 -.205 -.294
.207 .112 .430 .186 .422
.188 .503 .102 -.156 -.344 .581 -.224 .129
6
.338 .115 .291 .390
-.216 -.197 .357 .427
-.103 -.220 .170 .592 .117
-.196 .254 -.139 .154 .168 .617 .187 .516 .663
-.354 .226
.251 .247 .112 .117
.279 .273 .161 -.343 -.273
.107 .116 -.108 -.252 -.288 .256
-.300
8
9
.171 -.119
-.327 .180 .121
.176 .303
-.271 .108 .131
.178 -.161 .144 .205 -.227 -.119 -.109
.227 .158 -.123
-.106 .210 .498 .306
.157 .135 -.100
-.346
-.154 -.183
.667 -.367 .245 .115 .527 -.106
-.166 -.237 .125 -.147
-.271
.628 .462 -.171 .100
7
-.145 .323 -.138
.163 .114 .470 .311 .104 .191 .186 -.278
-.225 -.153
.395 -.341 -.195 -.236
.335
Each number represents the correlation between the item and the un-rotated factor. This correlation helps to formulate an interpretation of the factors or components. This is done by looking for a common thread among the variables that have large loadings for a particular factor or component. It is possible to see items with large loadings on several of the un-rotated factors, which makes interpretation difficult. In these cases, it can be helpful to examine a rotated solution. Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 13
Factor analysis for factors affecting car purchasing decision Factor analysis was performed to identify the key dimensions affecting purchase of cars provided by different used car customers. The respondent ratings were subject to principal axis factoring with varimax rotation to reduce potential multi-co linearity among the items and to improve reliability of the data (Table 6). With the help of Table 6, we can categorize each statement depending upon the factor loadings as shown in Table 7 with the nine factors and their components.
Management & Change, Volume 17, Number 1 & 2 (2013)
14 Consumer Buying Behavior in the Growing Indian...
Table 6: Rotated Component Matrix, Extraction Method: Principal Component Analysis, Rotation Method: Varimax with Kaiser Normalization, a rotation converged in 31 iterations. Component 1
2
3
4
5
6
S1
.447
.753
S2
.191
-.765
S3
-.122
S4
.189
-.414
.591
.282
-.123
S5
-.374
.570
.295
S6
.755
-.192
.102
S7
.219
S8
.150
.821
-.308
.193
S9
.308
S10
.191
.153
8
9 .205
-.115 .194
.201 .284
-.799
-.232
-.134
-.175
.158
.158
.120
.256
.304
.114
.265
.111
.799 .131
.388
.826
S11
7
-.466
-.213
-.344
-.152
-.253
-.293
-.404
.108
.190 .180
.872
.134
S12
.210
-.138
-.329
.177
-.570
-.208
S13
.319
.221
.122
.109
.224
.643
S14
-.337
.481
.152
-.114
.371
.272
S15
-.174
.271
.385
.215
.156
.379
.302
.332
S16
-.213
.438
.566
.235
-.267
.172
S17
.113
.161
-.165
-.139
-.195 -.190
S18 S19
.429 .311
-.499
.117
.135
.225
-.591
.513
.233
.426
.136
-.238
.225
.152
.482
.269
.124
S20
-.182
S21
-.422
S22
-.151
S23
-.187
.212
S25
.885
-.160
-.120
S26
-.179
.105
.537
.391
S27
.851
.195
S28
-.289
S29
.860
S30
.141
-.205
.323
.280
.148
.226
.413
.263
S24
-.112 .178
-.821 .543
.217
-.140
-.129
.551
-.178
.187
.670
.175
.809
.143 .167
.246
-.135
.207
.215
.121
.148
-.157
-.103 .250
.636
-.151 -.290
.413
.107
.274
-.222
.461
Management & Change, Volume 17, Number 1 & 2 (2013)
-.107 .276
.281
.152
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 15
Table 7: Factors Factor 1: The Inherent Need S19 : Family needs S25 : Budget S27 : Price of the car S29 : Income level Factor 2: Running Costs S10 : Cost of running and maintenance S11 : Rising fuel prices Factor 3: The Car Attributes S3 : Mileage S5 : Power S6 : Looks S8 : Safety S15 : Car accessories S18 : Brand name of the maker S26 : Status symbol Factor 4:Financiblity S14 : Availability of loan on used cars S16 : ROI on loan S24 : Govt. policies and regulations S28 : Market value and re-saleability Factor 5: Information Channels S4 : Suggestions from family and peer group S12 : Information provided by the sales people S17 : Information provided by the internet and magazines S30 : Information by TV shows Factor 6: The Dealers’ Facilities S1 : Location of the car dealer shop S2 : Availability of variety of cars under one roof S9 : Insurance facility by the dealers S13 : Installment facility Management & Change, Volume 17, Number 1 & 2 (2013)
16 Consumer Buying Behavior in the Growing Indian...
Factor 7: After Sales Service S20 : Availability of spare parts S21 : Availability of service station Factor 8: Contingencies S22 : Festival seasons and offers S23 : Special family occasions and events Factor 9: Credit Card S7 : Credit card acceptance
From Table 8, the component score coefficient matrix, we can obtain the quantifiable data of each factor. The coefficients between the statements and the factors are taken according to the statement affecting the factor (on the basis of Table 7). Table 8: Component Score Coefficient Matrix, Extraction Method: Principal Component Analysis, Rotation Method: Varimax with Kaiser Normalization. Component 1
2
3
4
5
6
7
8
9
S1
.019
-.096
.179
-.106
-.051
.347
-.042
-.094
.209
S2
.062
.064
.164
-.069
-.018
-.386
-.001
.100
.174
S3
.051
-.113
.193
.009
-.025
-.058
.034
.119
-.033
S4
.026
-.010
.082
.079
-.386
-.084
.132
-.020
-.120
S5
.022
-.144
.202
-.001
-.010
.062
-.054
-.017
.226
S6
-.031
.226
-.105
.060
-.035
.102
-.080
.101
.149
S7
.010
.031
.009
-.035
.016
-.053
.008
.035
.627
S8
.011
.064
.400
-.185
-.120
-.091
-.054
.111
.065
S9
.119
-.112
.105
.005
.244
-.177
-.097
-.193
.122
S10
-.055
.261
.081
-.028
.029
-.074
-.163
-.101
.035
S11
.040
.282
.025
-.007
.003
-.087
.116
.059
-.023
S12
.030
-.011
-.075
.212
-.240
-.050
-.187
.164
.124
S13
.099
.022
.000
.047
.097
.282
-.100
-.043
-.010
S14
-.022
.010
-.099
.169
-.035
-.110
.175
.103
.078
Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 17
S15
.007
.080
.084
-.017
-.037
.084
.068
.150
S16
-.048
-.037
S17
-.013
.149
S18
.048
S19 S20 S21
.041
.092
.240
-.129
.031
.099
-.311
.084
.148
-.012
-.305
.020
.046
-.028
-.147
.087
.145
.057
.150
-.049
.019
-.200
-.191
-.111
-.007
-.011
-.033
.164
-.004
.054
-.026
-.087
-.080
.034
.081
.039
.056
-.001
-.563
.075
-.067
-.040
.001
.028
.042
-.054
-.130
.289
.050
-.139
S22
.037
-.002
.006
.158
.071
-.077
-.219
.358
-.196
S23
.021
.001
.076
-.179
-.028
-.022
.021
.444
.171
S24
.073
.026
-.146
.470
-.076
.010
-.068
.035
-.079
S25
.329
-.023
-.029
-.008
.116
-.040
.076
.130
-.021
S26
-.027
.055
.148
.147
-.006
.085
-.248
.079
-.225
S27
.291
.047
.067
.001
.027
-.041
.061
.013
.003
S28
-.071
-.018
-.032
.289
.000
.079
-.004
-.250
.039
S29
.295
-.042
.018
.112
-.102
.018
.125
.001
-.044
S30
.150
.153
-.061
.078
.170
-.117
.109
.201
-.132
DISCUSSION The Indian automobile market is surging ahead; people are purchasing cars as there is an increase in the income of common people as well as change in the tastes and preferences of consumers. It is important for car manufacturers and car dealers to be able to understand the different factors affecting car purchasing behavior. The factor analysis indicates that the most important factor is the underlying perceived need of the customer. The customer gives his perceived need paramount importance and explores alternatives suited to his budget. The price of the car and his income (affordability) play a key role here. The rising fuel prices and long term maintenance costs of the cars have a detrimental impact on the customers’ buying behavior and thus running costs of the car forms the second most important factor for the cost conscious consumer. Fuel economy was shown to be valued by consumers in the study by Chugh, et al., (2011) so it is consistent with past research in this area.
Management & Change, Volume 17, Number 1 & 2 (2013)
18 Consumer Buying Behavior in the Growing Indian...
The third factor is the attributes of the cars, i.e., the brand of the manufacturer, its make and model, followed by its looks, safety, horse power, and car accessories. This forms an important factor as it helps customers in determining a choice set of cars from an awareness set of cars. In the mass car market marketing universals such as brand name have emerged as being important (Dawar and Parker, 1994). Foreign brands have also been reported as being perceived as superior to local brands (Kinra, 2006), however, the country of manufacture (COM) has more influence on the perception of the brand rather than the country of origin of the brand (COB) (Fetscherin and Toncar, 2010). Chugh, et al., (2011) also reported that some Indian consumers are willing to forgo the potential savings of fuel economy for their preferred car. The fourth factor is the affordability through financing, i.e., availability and ROI on loans for financing the car. Since this is determined by the market value and age of the car, the government policies, and regulations regarding the loans, so these also form an intrinsic part of this factor. The fifth factor is the role of information and suggestions provided by the various media sources. Word of mouth publicity including the suggestions and reviews from the friends and relatives play a primary role in confirming the consumers’ decisions while the commercial sources of information like the internet, car magazines andTV shows play a significant yet secondary informational role. Of all the informational media, the sales personnel form the richest source of information which can influence customers’ decisions. Media mix elements have been shown to be important in building the brand equity of Indian cars in previous studies (Chattopadhyay et al., 2010). The sixth factor is determined by the car dealers. The location of the car dealer, availability of a variety of cars under one roof, insurance and installment facilities form the conditions according to which customers decide from whom to buy the car. The seventh factor comprises the availability of spare parts and service stations for the cars. This factor comes into play for the affluent customers who go for premium used cars of manufacturers, e.g., Audi, Volkswagen, BMW, and Mercedes. Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 19
The eighth factor is the availability of discounts at various OEM dealers like Mahindra First Choice and Maruti True Value festive seasons which aide sales promotions. Credit card acceptance is the last and ninth factor which presently is not perceived to be significant; but with the advent of online e-tailers of used cars this factor would evolve to noticeable significance in the future. The limitation of this study is that demographic variability among consumers has not been assessed and that could form the basis of future research in this area. Since the study is an exploratory study, the sample size is small. As the study has shown the used car market as an emerging area of interest, a more detailed study over a wider cross-section is desirable. CONCLUSION The top three factors that have emerged from this study are perceived need including price and income (affordability), running costs of the car, i.e., fuel and maintenance costs, and car attributes including brand equity. The recommendations that emerge from this study are that the focus of used car dealers should be on targeting the right customer segment to address their perceived need, followed by emphasis on the running costs of the car and finally targeting the appropriate brand. A confirmatory study with a larger sample size may be carried out to validate the findings of this study.This research has implications for the government to develop appropriate transportation infrastructure and proactively address environment management issues that will increase with the growth of the Indian automobile sector. REFERENCES Baltas, G. and Saridakis, C. (2009). Brand-name effects, segment differences, and product characteristics: an integrated model of the car market. Journal of Product & Brand Management. Vol. 18(2), pp. 143-151.
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20 Consumer Buying Behavior in the Growing Indian...
Banerjee, I., Kanafani, A., and Walker, J. L. (2012). Motorized vehicle purchase in Surat, India. Transportation Research Record. Vol. 2317, pp. 24-31. Bang, V. V. and Joshi, S. L. (2012). Market expansion strategy – reasons for and against: what do managers in India think?. Journal of Strategic Marketing. Vol. 20(2), pp. 85-102. Brough, A. R. and Isaac, M. S. (2012). Finding a home for products we love: how buyer usage intent affects the pricing of used goods. Journal of Marketing. Vol. 76(4), pp.78-91. Chamon, M., Mauro, P., and Okawa, Y. (2008). Mass car ownership in the emerging markets giants. Economic Policy. Vol. 23(54), pp. 243-296. Chattopadhyay, T., Dutta, R. N., and Sivani, S. (2010). Media mix elements affecting brand equity: a study of the Indian passenger car market. IIMB Management Review. Vol. 22(4), pp. 173-185. Chugh, R., Cropper, M., and Narain, U. (2011). The cost of fuel economy in the Indian passenger vehicle market. Energy Policy. Vol. 39(11), pp. 7174-7183. Dawar, N. and Parker, P. (1994). Marketing universals: consumers’ use of brand name, price, physical appearance, and retailer reputation as signals of product quality. Journal of Marketing. Vol. 58(2), pp. 81-95. Desai, P. and Purohit, D. (1998). Leasing and selling: optimal marketing strategies for a durable goods firm. Management Science. Vol. 44(11-part-2), S19-S34. Engers, M., Hartmann, M., and Stern, S. (2004). Automobile maintenance costs, used cars, and adverse selection. Manuscript, University of Virginia. Fetscherin, M. and Toncar, M. (2010). The effects of the country of brand and the country of manufacturing of automobiles: an experimental Management & Change, Volume 17, Number 1 & 2 (2013)
Ashish Tayal, Udita Taneja, Divya Verma Gakhar 21
study of consumers’ brand personality perceptions. International Marketing Review. Vol. 27(2), pp. 164-178. Kinra, N. (2006). The effect of country-of-origin on foreign brand names in the Indian market. Marketing Intelligence & Planning. Vol. 24(1), pp. 15-30. Luchs, M., et al., (2011). Toward a sustainable marketplace: expanding options and benefits for consumers. Journal of Research for Consumers. Issue (19), pp. 1-12. Nataraj, S. and Nagaraja, N. (2012). Customer satisfaction in automobile industry – an Indian online buyers’ perspective of car manufacturers’ websites. ZENITH International Journal of Multidisciplinary Research. Vol. 2(6), pp. 92-107. Prado, S. (2009). Macroeconomics of new and used car markets. Economic Bulletin. Vol. 30(3), pp. 1884-1892. Ratchford, B. T., Lee, M., and Talukdar, D. (2003). Impact of the Internet on information search for automobiles. Journal of Marketing Research. Vol. 40(2), pp. 193-209. Ratchford, B. T. (2009). Consumer search behavior and its effect on markets. Foundations and Trends in Marketing. Vol. 3(1), pp. 174 SIAM (2013). Society of Indian Automobile Manufacturers. http:// www.siamindia.com Singh, S. and Ratchford, B. T. (2012). Impact of dealer and resale websites on search in the used car market. Available at http:// www.jbs.cam.ac.uk/research/seminars/downloads/2012/ 120130_singh_full.pdf Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence. Journal of Marketing. Vol. 52(3), pp. 2-22.
Management & Change, Volume 17, Number 1 & 2 (2013)
Hershey H. Friedman, Linda Weiser Friedman 23
LESSONS IN NEGATIVE LEADERSHIP: WHAT WOULD HITLER DO? Hershey H. Friedman1
Linda Weiser Friedman2
There is a leadership crisis in the United States and the entire world. According to a recent study, only 24% of people globally believe that leaders – in business and politics – are effective. A key problem uncovered by this research is that leaders are not providing transparent, open communication. This paper examines the statements of one of the world’s most notorious leaders, Adolf Hitler, to see what can be learned about leadership. Unfortunately, many of today’s leaders are using what they refer to as the ‘corporate model of leadership’ as a fig leaf to hide behind and practice a Hitlerian form of narcissistic leadership – one that is based on selfaggrandizement. They try to build organizations that revolve around their own needs, surround themselves with sycophants, show no compassion for others, and continually cover up unwanted truths. They have no real interest in ensuring their organization lives on beyond their lifetime; all that matters is their own selfaggrandizement. It is hoped that by studying Hitler’s approach to leadership, we can learn what leaders of today ought not do and, at the same time, what they must do to build a successful organization. Keywords: Leadership, Adolf Hitler, Quotations about Leadership, Ethical Leadership, Narcissistic Leadership.
1
2
Hershey H. Friedman, Professor , Business and Marketing, Brooklyn College, 2900 Bedford Avenue, Brooklyn, University of New York, New York-11210, United States. E-mail: x.friedman@att.net Linda Weiser Friedman, Professor, Statistics and CIS, Baruch College, One Bernard Baruch Way (55 Lexington Ave at 24th St), University of New York, New York10010, United States. E-mail: linda.friedman@baruch.cuny.edu Management & Change, Volume 17, Number 1 & 2 (2013)
24 Lessons in Negative Leadership: What Would Hitler Do?
There is a leadership crisis in the United States and the entire world. According to a recent study, only 24% of people globally believe that leaders – in business and politics – are in fact providing effective leadership. The researchers found that the major cause for the lack of credibility is that leaders are not providing transparent, open communication (Ketchum, 2013). There are several websites dedicated to the worst CEOs of all time – a daunting task after the Great Recession of 2008. Some names that will not be forgotten in the corporate world include: Bernie Ebbers, Kenneth Lay, Jeffrey Skilling, Jon Corzine, Angelo Mozilo, Vikram Pandit, Carly Fiorina, Bernard Madoff, and Dick Fuld. There are also websites dedicated to the worst political leaders of all time. The names of Adolf Hitler, Josef Stalin, Pol Pot, Atilla the Hun, Ruhollah Khomeini, Idi Amin, Sadaam Hussein, Leopold II of Belgium, and Hideki Tojo are on many of these lists. One reason the public does not trust CEOs has to do with their exorbitant pay. A recent study showed that the median executive compensation at the top 200 public companies for 2012 was $15.1 million; up 16% from 2011 (Morgenson, 2013). Even executives who have been pushed out make sure to receive golden parachutes worth millions. The departing CEO at ConocoPhillips, James J. Mulva, received $115.9 million (Joshi, 2013). As far as trust for government, Moody’s Investor Service, recently released a report showing that overall the 50 states only have ‘just 48 cents for every dollar in pensions they have promised’ to their employees (Walsh, 2013). One state with huge pension problem is Illinois; it is promising retirees about three times what it collects in revenues (Walsh, 2013). Another issue that has caused a loss of credibility for both corporate and political leaders is derivatives. We now recognize that Italy and Greece used derivatives to make it appear that their deficit was smaller and thus enable them to deceive their way into the euro zone. People are now referring to derivatives such as credit default swaps as ‘weapons of mass deception’ (Buffett referred to them as ‘financial weapons of mass destruction’). A.I.G. made a great deal of money on credit default swaps (CDS) before the Great Recession of 2008. They collected billions in premiums on the CDS but did not have enough reserves to cover any defaults. With regular insurance, a company has to have sufficient reserves Management & Change, Volume 17, Number 1 & 2 (2013)
Hershey H. Friedman, Linda Weiser Friedman 25
to cover the policies if something happens. A.I.G. had no way to cover the trillions they owed when the financial instruments (consisting of subprime mortgages) they were in effect ‘insuring’ defaulted during the Great Recession. Without government intervention, A.I.G. would have gone bankrupt. The pioneer in using derivatives to deceive was Enron but numerous banks and Wall Street firms have been doing the same thing (Norris, 2013). Even after the financial debacle of 2008, a few megabanks still carry trillions in derivatives exposure. This is a huge concentration of risk that can easily cause another financial crisis. Where are our leaders? One of the most troubling statements about leadership is the one by Peter Drucker: ‘Leadership is all hype. We’ve had three great leaders in this century—Hitler, Stalin, and Mao.’ Is it possible that the most effective leaders of the twentieth century were autocrats? Unfortunately (for Peter Drucker) there is an elision in the statement as it is usually quoted (above).The full quotation by Drucker is: ‘Leadership is all hype. We’ve had three great leaders in this century —Hitler, Stalin, and Mao — and you see the devastation they left behind’ (Huey, 1994). Startlingly, the phrase ‘and you see the devastation they left behind’ is usually left out by most people quoting Drucker. This belief that the most effective leaders are vicious autocrats could very well have destroyed numerous countries and organizations. Anyone interested in leadership must first understand what is wrong with the first (incomplete) statement quoted above. In a somewhat similar vein, Adolf Hitler stated:
In the last analysis, there are only three great statesmen in the world, Stalin, I, and Mussolini. Mussolini is the weakest, for he has been unable to break the power of either the crown or the church. Stalin and I are the only ones who envisage the future and nothing but the future. Accordingly, I shall in a few weeks stretch out my hand to Stalin at the common GermanRussian frontier and undertake the redistribution of the world with him. Was Hitler actually a great leader? If that is true, we should be able to apply his leadership paradigm to success in various arenas of interest, including the corporate and academic worlds, in addition to national politics. What lessons can we learn from his approach to leadership? The current paper is an attempt to answer these questions, using Hitler’s own words.
Management & Change, Volume 17, Number 1 & 2 (2013)
26 Lessons in Negative Leadership: What Would Hitler Do?
Most of the quotations included herein are from the website All Great Quotes (http://www.allgreatquotes.com/adolf_hitler_quotes7.shtml). Burns (1978, pp. 457-462) makes a distinction between leaders and manipulators. Manipulators appeal to the vilest and most reprehensible instincts in their followers; leaders, on the other hand, elevate subordinates ‘into their better selves’. For all his rhetoric, Hitler did not really care about Germany; he almost destroyed it. Germany was a tool for his own personal aggrandizement. It was not about making Germany a prosperous nation; it was about making Hitler renowned as a world conqueror. General H. Norman Schwartzkopf understood this and averred that leadership combines strategy and character, but character is more important. CEOs who have no integrity and use their companies for self-glorification are not leaders. One of the most profound statements about leadership is from Lao Tzu, (sixth century B.C.E.), Chinese philosopher and founder of Taoism: ‘As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; the next, the people hate.’ Lao Tzu stressed that leadership is not about selfglorification, but about accomplishing things for the greater good. The superior leader gets things done with little motion. He imparts instructions not through many words but through a few deeds. He keeps informed about everything but interferes hardly at all. He is a catalyst, and though things would not get done as well if he weren’t there, when they succeed he takes no credit. And because he takes no credit, credit never leaves him. As for the leader at the very top, it is best if people barely know he exists. Because he says very little his words, have more value. And when the work is done, the people are pleased, because they think they did it themselves. Quotations from wise people are useful tools for learning. Ben Sirach said (Ecclesiasticus 8:8): ‘Despise not the discourse of the wise, but acquaint thyself with their proverbs, for of them thou shalt learn instruction.’ On the other hand, General Norman Schwarzkopf has said, ‘You learn far more from negative leadership than from positive leadership. Because you learn how not to do it. And therefore you learn how to do it.’ Management & Change, Volume 17, Number 1 & 2 (2013)
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In the sections that follow, we will examine statements made by Adolf Hitler, and by some of his subordinates, to see what lessons in leadership may be gleaned from them. HOW TO SPEAK TO SUBORDINATES Some leaders treat peers and subordinates alike with respect. Many of these subscribe to the leadership paradigm of servant-leadership. At the other end of the spectrum is Machiavelli, who felt that great leaders manipulate subordinates using deception and other dishonest means. In fact, Machiavelli said: ‘Effective leaders are power-wielders, individuals who employ cunning and subterfuge to achieve their own ends.’ In examining some interesting Hitler quotations (Figure 1) to see how he felt about dealing with subordinates, two principles emerge. First he considered everyone to be his subordinate and, secondly, we note the importance of lying in the Hitler approach to leadership. This lack of respect for people is one of the problems – and a serious one – of this approach to leadership. It certainly makes it difficult for anyone to thrive in such an environment. Figure 1: Adolf Hitler on Truth and Lies
The great masses of the people… will more easily fall victim to a big lie than to a small one. The victor will never be asked if he told the truth. By means of shrewd lies, unremittingly repeated, it is possible to make people believe that heaven is hell – and hell heaven. The greater the lie, the more readily it will be believed. The broad masses of a population are more amenable to the appeal of rhetoric than to any other force. What luck for rulers that men do not think. It is not truth that matters, but victory. Success is the sole earthly judge of right and wrong. I use emotion for the many and reserve reason for the few. But the most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly and with unflagging attention. It must confine itself to a few points and repeat them over and over. Here, as so often in this world, persistence is the first and most important requirement for success. Management & Change, Volume 17, Number 1 & 2 (2013)
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For Adolf Hitler, propaganda was a vital part of the leadership process since it is all about self-glorification, not about what is best for the country or organization. Propaganda was the main tool used by the state to inform the people. In the words of Joseph Goebbels, Hitler’s propaganda minister, ‘It would not be impossible to prove with sufficient repetition and a psychological understanding of the people concerned that a square is in fact a circle. They are mere words, and words can be molded until they clothe ideas and disguise.’ Goebbels also said: ‘Think of the press as a great keyboard on which the government can play.’ There is no way Hitler would have allowed a free press or freedom of speech. Also, there is a high probability that no one actually asked for a free press. HOW TO EMPOWER OTHERS
Great leaders surround themselves with smart advisors and empower them. These counselors are encouraged to speak up and disagree if they feel a poor decision is about to be made. Conversely, leaders who are surrounded by sycophants and flatterers will often make wrong decisions since no person has expertise in all areas. President Woodrow Wilson once said: ‘I not only use all the brains that I have, but all that I can borrow.’Great leaders do not blame subordinates when mistakes are made. After all, if slip-ups are not tolerated by leaders, subordinates will be afraid to take a chance. Leaders who are not afraid of taking the blame when things go wrong instead of looking for a scapegoat, will cultivate loyal subordinates. Catherine the Great asserted: ‘I praise loudly, I blame softly.’ Great leaders also understand the importance of delegation and empowerment. Andrew Carnegie declared: ‘No man will make a great leader who wants to do it all himself, or to get all the credit for doing it.’Leaders who do not have the ability to delegate are very likely to fail. Megalomaniacs, on the other hand, are obsessed with themselves and therefore will often not surround themselves with smart counselors. On the contrary, they often view smart people as a threat to themselves. An atmosphere of terror makes it almost impossible for subordinates to inform an autocratic leader that a mistake is being made. Hitler’s generals knew the war could not be won after the devastating defeats at Stalingrad and Kursk in 1943.
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Rudolf Hess said: Adolf Hitler’s strength as a leader is that he almost always works through the power of his persuasion; rarely does he command. He must know, however, that when he commands, or allows a command to be given that it will be followed absolutely, down to the last block warden. Notwithstanding this assessment on the part of Hitler’s deputy fuhrer, shared decision-making was not exactly a major part of the Hitlerian leadership paradigm. To Hitler, like all megalomaniacs, only he could be trusted to make correct decisions (see Figure 2). Figure 2: Adolf Hitler on Respecting Others
For there is one thing we must never forget...the majority can never replace the man. And no more than a hundred empty heads make one wise man will an heroic decision arise from a hundred cowards. The spark of a genius exists in the brain of the truly creative man from the hour of his birth. True genius is always inborn and never cultivated, let alone learned. My generals should be like bull terriers on chains, and they should want war, war, war ... But what happens now? I want to go ahead with my aggressive politics and the generals try to stop me. That’s a false situation. Sooner will a camel pass through a needle’s eye than a great man be ‘discovered’ by an election. I believe today that my conduct is in accordance with the will of the Almighty. Think Thousand times before taking a decision But - After taking decision never turn back even if you get Thousand difficulties!! From millions of men . . . one man must step forward who with apodictic force will form granite principles from the wavering idea-world of the broad masses and take up the struggle for their sole correctness, until from the shifting waves of a free thought-world there will arise a brazen cliff of solid unity in faith and will. Management & Change, Volume 17, Number 1 & 2 (2013)
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Hitler’s most brilliant general was arguably Field Marshal Erich von Manstein, who could have saved the day at Stalingrad. Manstein argued that General Paulus’s Sixth Army which was trapped in Stalingrad, should retreat westward and meet the relieving forces. Hitler refused to listen to Manstein and did not allow retreat. What this accomplished was a huge defeat in Stalingrad for the German forces. Manstein’s plan for an offensive at Kursk could have worked but Hitler did not listen. What happened instead was another huge defeat for the Germany army. After these defeats, Manstein was able to slow down the Western advance of the Russian army but found that Hitler’s refusal to allow any withdrawal made it impossible for him to stabilize the front. He had many disputes with Hitler— one of the few generals who could get away with this – but in March 1944 was relieved of his duties (Manstein, 2004). Hitler relieved a number of key commanders of their jobs including von Brauchitsch, Guderian, Bock, Hoepner, von Rundsted, and Leeb. He took over all military operations and refused to listen to anyone. In fact, he ignored unpleasant realities, anything that did not fit into his distorted way of thinking. There was little chance he could win the war given the obvious lack of a ‘sound overall strategy.’ Hitler was convinced that his own General Staff was incompetent and could not make sound decisions; he had more and more frightening episodes of ‘blind, hysterical fury towards his generals’ (Wistrich, 2013). Of course, Hitler did not have the expertise of his generals and made a large number of military blunders that resulted in defeats (Kershaw, 2000: 417). The atmosphere around Hitler, especially after the defeat at Kursk, could not have been pleasant; the generals knew the war was lost and could not speak up. Fritz Darges was an army adjutant to Adolf Hitler who got himself sent to the Eastern front for telling a joke. During a 1944 strategy meeting, Hitler was bothered by a fly that kept buzzing around him and landing on a map he was studying. Hitler told Darges to kill the fly. Darges replied to Hitler that the fly was an ‘airborne pest’ and was therefore the responsibility of the Luftwaffe (air force) adjutant, Nicolaus von Below (Hudgins, 2013). Stalin and Hitler were both megalomaniacs but Stalin had the sense to heed the advice of his best general. At first, Stalin did not want to listen Management & Change, Volume 17, Number 1 & 2 (2013)
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to Marshal Georgi Zhukov’s plan for strategic defense at Kursk. Stalin wanted to attack the German army but Zhukov advised a more conservative strategy of preparing for the German attack and destroy their tanks with extensive fortifications consisting of a million land mines and trenches, and then counterattack. Zhukov saw his plan as a tank trap for the Germans: they were drawn into an offense that destroyed a huge part of their armor and then left them vulnerable to a Russian counter-offensive. Zhukov’s plan was a huge success. Kursk is known as the largest tank battle in history. Stalin did not trust Zhukov. In January 1941, Zhukov was appointed chief of the Soviet army general staff but was dismissed a few months later after a dispute with Stalin. However, Stalin was smart enough to bring him back after the Germans invaded the Soviet Union. Zhukov was made deputy commander-in-chief of the Red Army and was placed in charge of defending Stalingrad. HOW TO DEAL WITH COMPASSION
Our strength consists in our speed and in our brutality. Genghis Khan led millions of women and children to slaughter — with premeditation and a happy heart. History sees in him solely the founder of a state. It’s a matter of indifference to me what a weak western European civilization will say about me. – Adolf Hitler Compassion has no place in the Hitler school of leadership, where it would be considered a sign of weakness. All that matters is success. Success, of course, is defined by the Hitlerian leader as self-glorification. What happens to the country or organization later on is not important. The following statement was made by Hitler in 1939 (Bardakjian, 1985). One small part of the quotation is quite well known: ‘Who, after all, speaks today of the annihilation of the Armenians?’ I have issued the command — and I’ll have anybody who utters but one word of criticism executed by a firing squad — that our war aim does not consist in reaching certain lines, but in the physical destruction of the enemy. Accordingly, I have placed my death-head formations in readiness — for the present only in the East — with orders to them to send to death mercilessly and without compassion, men, women, and children of Polish derivation and language. Only thus shall we gain the living
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space (Lebensraum) which we need. Who, after all, speaks today of the annihilation of the Armenians? Hitler enjoyed reading books by German writer, Karl May, about the American Wild West. Hitler praised American ingenuity and efficiency in solving the ‘problem’ of the red savage. In fact, the idea of concentration camps, forced marches, and genocide owed quite a bit to Hitler’s study of American history and how Native Americans were brutalized. The forced march in 1864 at gunpoint of thousands of Native Americans to a detention camp hundreds of miles from their homeland is quite similar to how Jews were treated at the hands of the Nazis. Many Native Americans died from disease and starvation during the forced march as well as in the concentration camp set up for them in Bosque Redondo in eastern New Mexico. Hitler sometimes referred to the Russians as ‘Redskins.’(Mandelbaum, 2013).Hitler also admired the camps set up by the English for the Boer prisoners in South Africa. Hitler used history to learn about ways to maltreat the weak and helpless. Figure 3 contains some well-known statements by Hitler relating to compassion. Figure 3: Adolf Hitler on Compassion
Conscience is a Jewish invention. Humanitarianism is the expression of stupidity and cowardice. Whatever goal man has reached is due to his originality plus his brutality. Sparta must be regarded as the first völkisch state. The exposure of the sick, weak, deformed children, in short, their destruction, was more decent and in truth a thousand times more human than the wretched insanity of our day which preserves the most pathological subject. If I can send the flower of the German nation into the hell of war without the smallest pity for the shedding of precious German blood, then surely I have the right to remove millions of an inferior race that breeds like vermin. I do not see why man should not be just as cruel as nature. Struggle is the father of all things. It is not by the principles of humanity that man lives or is able to preserve himself above the animal world, but solely by means of the most brutal struggle. If you do not fight, life will never be won.
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Goebbels said, ‘Man is and remains an animal. Here a beast of prey, there a house pet, but always an animal.’ When our notion of leadership is modeled in this vein, we are asked to leave our compassion and, indeed, our very humanity, at the door. Heinrich Himmler, head of the Gestapo, was quite willing to steal children from parents in the name of racial purity (United Nations War Crimes Commission, 1949): Obviously in such a mixture of peoples there will always be some racially good types. Therefore I think that it is our duty to take their children with us, to remove them from their environment, if necessary by robbing or stealing them. ... Either we win over any good blood that we can for ourselves and give it a place in our people or ... we destroy this blood. . At first blush, one may think that there is nothing to learn from Hitler, Goebbels, Himmler, or, indeed, anyone associated with the Third Reich, on the subject of compassion. However, in examining these statements in Figure 3, one message comes through loud and clear – that we should never, whether in the pursuit of success or any other goal of the organization, give up on our essential humanity, one characteristic of which is compassion for others. ABOUT THE ART OF LEADERSHIP Newer theories of leadership examine servant leaders, ethical leaders, spiritual leaders, etc. Great leaders show concern for others and their organization and are not totally focused on themselves. The last three quotations in Figure 4 show clearly why Hitler was not a leader to emulate. He was not concerned about the people of Germany if they could not win the war. Hitler was quite willing to turn Germany into one vast wasteland in the final months of the war. Some generals defied him and did not allow all their soldiers to die in the final weeks of the war. Hitler never visited any hospitals or bombed cities to give hope to the people. He took the coward’s way out and committed suicide. The war was only about his needs. He could not care less about Germany and had a good rationale to explain why Germany deserved to be totally demolished if the war was lost. When the Russians and Anglo-American armies were approaching Berlin, Hitler ordered the destruction of the little that was left of German industry. In his mind, Germany deserved to be destroyed and Management & Change, Volume 17, Number 1 & 2 (2013)
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he had no problem turning on his own people (Wistrich, 2013). Many countries are quite happy not being world powers; to Hitler, Germany did not deserve to exist if it could not be a world power. Figure 4: Adolf Hitler on Leadership
The art of leadership… consists in consolidating the attention of the people against a single adversary and taking care that nothing will split up that attention…
The leader of genius must have the ability to make different opponents appear as if they belonged to one category.
To be a leader means to be able to move masses.
The very first essential for success is a perpetually constant and regular employment of violence.
We will not capitulate - no, never! We may be destroyed, but if we are, we shall drag a world with us - a world in flames.
If the war is lost, the nation will also perish. This fate is inevitable. There is no necessity to take into consideration the basis which the people will need to continue a most primitive existence. On the contrary, it will be better to destroy things ourselves because this nation will have proved to be the weaker one and the future will belong solely to the stronger eastern nation [Russia]. Besides, those who remain after the battle are only the inferior ones, for the good ones have been killed.
Germany will either be a world power or will not be at all.
Compare Hitler’s views that ‘In starting and waging a war it is not right that matters, but victory’ and ‘It is not truth that matters, but victory’with Abraham Lincoln’s opinion that ‘I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live by the light that I have.’ It is not surprising that Lincoln saved his country and is arguably the greatest American president. Hitler, on the other hand, is unquestionably among the worst leaders of all time. THE HITLERIAN SCHOOL OF LEADERSHIP While there are many leaders in all arenas – industry, national politics, and Management & Change, Volume 17, Number 1 & 2 (2013)
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academe – who claim that they are simply following the corporate model of successful leadership, perhaps we should now know better. If a leadership model includes a narcissistic preoccupation with self-aggrandizement, a need to be surrounded by flatterers who are afraid to speak their minds, a lack of compassion for others, and a belief that subordinates must be lied to and manipulated, then we are looking at the Hitlerian model of leadership. If an executive prefers that his company go belly up if it does not succeed in making him or her famous and successful, we have an executive from the Hitlerian school of leadership. Figure 5 highlights several examples of leadership statements that are reminiscent of Hitler’s leadership style. Figure 5: Negative Leadership
You must cut costs ruthlessly by 50 to 60 percent. Depopulate. Get rid of people. They gum up the works. – Jeffrey Skilling, President of Enron
I have no regrets about … how Countrywide was run. It was a world-class company. – Angelo Mozilo, CEO of Countrywide
I’m doing God’s work.– Lloyd Blankfein, CEO of Goldman Sachs
In all my years of reporting, I had never come across an executive as manipulative, ruthless, and destructive as Al Dunlap. Until the Securities and Exchange Commission barred him from ever serving as an officer of a public corporation, Dunlap sucked the very life and soul out of companies and people. He stole dignity, purpose, and sense out of organizations and replaced those ideals with fear and intimidation.– John A. Byrne, Editor of Fast Company, about Al Dunlap
The inmates are running the asylum. – a member of the Board of Trustees of a large public university, referring to faculty governance
Jeffrey Skilling is in prison for insider trading and fraud. Thanks to him, 5,000 people lost their jobs and Enron went bankrupt. Mozilo was ranked by Portfolio Magazine as second on the list of ‘Worst American CEOs of All Time.’ He pioneered all kinds of deceptive subprime mortgages that resulted in millions of people losing their homes. The worst CEO of all time according to Portfolio Magazine was Dick Fuld, CEO of Lehman Management & Change, Volume 17, Number 1 & 2 (2013)
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Brothers (largest bankruptcy in American History). Blankfein had the gall to say that investment bankers were doing God’s work knowing that investors were defrauded by his company which hid an ugly conflict of interest by selling toxic securities it created to its own customers (Parramore, 2013). Al Dunlap was known as a downsizer and for various accounting frauds, particularly at Sunbeam-Oster. CONCLUSION Contrary to the persistent and widespread elision of the quotation about heroic leadership with which we began this paper, Peter Drucker, who left Germany for England in the 1933, knew that Hitlerian leaders leave devastation in their wakes. It is gratifying to see that many executives are moving away from the old style of authoritarian, supercilious management towards one which is more democratic, visionary, and people-oriented. The Great Recession of 2008 has made many CEOs aware of what is wrong with a narcissistic approach to leadership. In this day and age, the only kind of leadership that makes sense is one in which executives understand that a narcissistic leadership style taken to an extreme is a threat to a company. A limited amount may not be a problem (Stein, 2013). Certainly, leaders who are obsessed with making themselves the center of attention and who have an exaggerated sense of their capabilities are a threat to their organizations or countries (Stein, 2013; Hoffman, et. al., 2013; Glad, 2002). Millions of people died because of Hitler and millions of people have lost jobs and pensions because of extremely self-centered, narcissistic CEOs. Hopefully, no leader wants to be known as a ‘vampire squid.’ That phrase became famous when Matt Taibbi used this metaphor in a Rolling Stone article to describe Goldman Sachs. The full quote is: ‘a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’ King Solomon understood what leadership was all about. God asked him what he wanted shortly after he became king of ancient Israel (I Kings 3:5). God was pleased that Solomon’s request was not for such things as longevity, wealth, or the ability to conquer his enemies. Instead, he said the following to God(I Kings 3: 6-9):
You have done a great kindness with Your servant David my father, because he walked before you with truth, in righteousness, and in uprightness of heart with You; and you have kept for him this great loving Management & Change, Volume 17, Number 1 & 2 (2013)
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kindness and have given him a son who sits on the throne this day… May you grant Your servant an understanding heart to judge people and the ability to discern between good and bad… King Solomon understood that true leadership is about wisdom, truth, a passion for justice, and concern for people. Individuals engaged in true leadership are interested in building an ethical, compassionate organization that lives on beyond the lifetime of any one particular leader, rather than in their own aggrandizement. Those interested in being great leaders should ask themselves: What would Hitler do? Then, do the opposite. REFERENCES Bardakjian, K. B. (1985). Hitler and the Armenian genocide. Cambridge, MA: The Zoryan Institute. Retrieved from http://www.armeniangenocide.org/hitler.html Burns, J. M. (1978). Leadership. New York : Harper Colophon Books. Glad, B. (2002).When tyrants go too far: Malignant narcissism and absolute power. Political Psychology, 23(1), 1-37. Hoffman, B. J., Strang, S. E., Kuhnert, K. W., Campbell, W. K., Kennedy, C. L., and LoPilato, C. (2013). Leader narcissism and ethical context: Effects on ethical leadership and leader effectiveness. Journal of Leadership & Organizational Studies, 20, 25-37. Hudgins, A. (2013, June 8). The joke’s on all of us. New York Times. Retrieved from http://www.nytimes.com/2013/06/09/opinion/sunday/ the-jokes-on-all-of-us.html?_r=2& Huey, J. (1994, February 21). The leadership industry.Fortune Magazine. Retrieved from http://money.cnn.com/magazines/fortune/ fortune_archive/1994/02/21/78994/index.htm Joshi, P. (2013, June 30). Golden parachutes are still very much in style. New York Times. Sunday Business, 7. Kershaw, I. (2000). Hitler, 1936–1945: Nemesis. New York: W. W. Norton & Company. Management & Change, Volume 17, Number 1 & 2 (2013)
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Ketchum (2013).Leadership communication monitor. Retrieved from http://www.ketchum.com/leadership-communication-monitor-2013 Mandelbaum, L. (2013, June 18). Hitler’s inspiration and guide: The Native American holocaust. Jewish Journal. Retrieved from http:// w w w. j e w i s h j o u r n a l . c o m / s a c r e d i n t e n t i o n s / p r i n t / hitlers_inspiration_and_guide_the_native_american_holocaust Manstein, von Eric (2004). Lost victories. St. Paul, MN: Zenith Press. Morgenson, G. (2013, June 28). Wielding derivatives as a tool for deceit. New York Times.B1, B4. Norris, F. (2013, June 30). That unstoppable climb in C.E.O. pay. New York Times. Sunday Business, 1, 7-9. Parramore, L.S. (2013, March 5). The 6 most appalling statements of America’s biggest CEOs. Salon. Retrieved from http://www.salon.com/2013/03/05/ the_6_most_appalling_statements_of_americas_biggest_ceos_partner/ Stein, M. (2013). When does narcissistic leadership become problematic? Dick Fuld at Lehman Brothers. Journal of Management Inquiry, 22, 282-293. United Nations War Crimes Commission (1949).Law reports of trials of war criminals. Vol. XIII. Retrieved from http://www.loc.gov/rr/frd/ Military_Law/pdf/Law-Reports_Vol-13.pdf Walsh, M. W. (2013, June 28). Ratings service Moody’s finds pension shortfall. New York Times, B1, B7. Wistrich, R. S. (2013). Adolf Hitler. Jewish Virtual Library. Retrieved from http://www.jewishvirtuallibrary.org/jsource/Holocaust/hitler.html
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EMPLOYEES’ INGRATIATION AND ORGANIZATIONAL CITIZENSHIP BEHAVIOR Luxmi Malodia1 This research aimed at understanding the influence of employees’ ingratiation on organizational citizenship behavior of employees working in northern region of Power Grid Corporation of India Ltd. In today’s world of globalization and liberalization, Organizational Citizenship behavior can be extremely valuable to organizations and can contribute to performance and competitive advantage. If employees have a narrow perspective that makes them just concerned about their own career path growth, then they exhibit various impression tactics like Ingratiation. Many a time concurrence occurs between these two types of behaviors shown by them. The aim of this research project is to determine whether an interrelationship does exist between these variables. The findings of the study have real world implications on how practice of ingratiatory behavior should be discouraged in order to enhance levels of organizational citizenship behavior in employees. A primary study was conducted with employees working in northern region of Power Grid Corporation of India Ltd. The study concluded that there is a significant and negative relationship between Employees’ Ingratiation and Organizational Citizenship behavior; implying that more ingratiatory practices among employees lead to deterioration of their organizational citizenship behavior. Keywords: Employees’ Ingratiation, Organizational Citizenship Behavior, Northern Region of Power Grid Corporation of India Ltd ( PPGCIL ) 1
Luxmi Malodia, Sr. Assistant professor, University Business School, Panjab University, Sector 14, Chandigarh, U.T. – 160014, India. Mobile: +91 9463888038, E-mail: luxmimalodia@yahoo.com Management & Change, Volume 17, Number 1 & 2 (2013)
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INTRODUCTION Whether or not employees become citizens of their organizations appears to depend on many factors such as organization type, structure, climate, culture, politics and personal attributes of the individual employee such as his/her background, past and present experiences ( especially at work), personality and demographic variables. But notable among these factors is organizational politics. Among other influence processes, however, ingratiation which can be found in organizational politics appear to be diametrically opposed to organizational citizenship behavior, especially in terms of their underlying motives. Ingratiation involves giving compliments or doing favors for superiors. It is an effort by individuals to augment their attractiveness in the eyes of others and is considered as an effective tactic since most people have a difficult time rejecting the positive advances of others. Ingratiatory individual would utilize tactics moves to increase likeability or to get a raise promotion or positive evaluation. Kumar and Beyerlein (1991) identified ingratiation as a powerenhancing behavior in that it restricts the “degree of freedom” or control that the target has over the ingratiatory. Jones (1990) identified Ingratiation as a type of impression management tactics that have, as their collective aim, making the person more likeable and attractive to others. The major tactics for ingratiation are following: Other- enhancement, Opinion conformity, Self-presentation and Rendering favors. Barnard (1938) was among the first to explicitly address the need for behaviors that go beyond delineated roles. Katz and Kahn (1978) noted that not only employees must engage in role-prescribed behaviors, they also must be willing to engage in innovative and spontaneous behaviors that go beyond those role prescriptions in order to ensure organizational vitality and effectiveness. Organ (1988) originally coined the term organizational citizenship behavior (OCB) and defined them as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization.” Also, the willingness of participants to go beyond the formal requirements of their positions has been recognized as an essential component of effective organization. Thus, Organizational Citizenship Behaviours can be said to “lubricate the social machinery of Management & Change, Volume 17, Number 1 & 2 (2013)
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the organization�. Organizational Citizenship Behaviours (OCBs) are employee work behaviours such as helping others, staying late, or working weekends, performing at levels that exceed enforceable standards, tolerating impositions or inconveniences on the job, and being actively involved in company affairs (Podsakoff et al., 1990). Citizenship behaviors are often performed by employees to support the interests of the group or organization even though they may not directly lead to individual benefits. Thus, managers often find it difficult to reward good citizenship directly, as well as difficult to punish directly the absence of such citizenship. A good citizen is an employee who offers support to the organization even when no such support is or can be expressly required. Organisational citizenship behaviors are similar to prosocial organizational behavior (Brief and Motowidlo, 1986) and organizational spontaneity (George and Brief, 1992), but some important differences exist. Prosocial organizational behavior (POB) describes a broad spectrum of helping behaviors which include many organisational citizenship behaviors. However, prosocial organizational behavior also includes behaviors which might be helpful to an individual in the organization, but would be dysfunctional to the organization (i.e. an employee might help someone cover up performance problems). To date, researchers have proposed a variety of specific dimensions of organizational citizenship behavior. Organ (1988) provided a multidimensional scale of organisational citizenship behaviors. The scale consists of five dimensions that make up the organisational citizenship behaviors construct. The five dimensions are: (1) Altruism, which concerns with helping one employee in completing his or her task under unusual circumstances, (2) Conscientiousness, which refers to an employee performing his or her assigned tasks (in-role behaviors) in a manner above what is expected, (3) Sportsmanship, which refers to stressing the positive aspects of the organization instead of negative, (4) Civic virtue, which involves support for the administrative functions of the organization, and, (5) Courtesy, which includes proactive gestures that consider consulting with other workers in the organization before acting, giving advance notice, and passing along information. Other dimensions include obedience, loyalty, advocacy participation, social participation, functional participation (Van Dyne, Graham & Dienesch, 1994), helping and voice (Van Dyne and LePine, 1998), LePine and Van Das well as organization-focused and Management & Change, Volume 17, Number 1 & 2 (2013)
42 Employees’ Ingratiation and Organizational Citizenship Behavior
interpersonal-focused organizational citizenship behavior (Williams and Anderson, 1992) A review of the literature on citizenship indicates that researchers generally maintain that organisational citizenship behaviors stem from two motivational bases: (1) job attitudes and/or (2) disposition/ personality (Organ and Ryan, 1995). The relationship between organisational citizenship behaviors and job attitudes is rooted in social exchange theory-that is, employees engage in organisational citizenship behaviors in order to reciprocate the actions of their organizations. The second rationale holds that organisational citizenship behaviors reflect an individual’s predisposition to be helpful, cooperative, or conscientious. Research on citizenship has almost exclusively concerned antecedents consistent with these theoretical bases. Examples of the antecedents examined by researchers include job attitudes such as job satisfaction (Williams and Anderson, 1992), perceptions of fairness (Moorman, 1991), job cognitions (Organ and Konovsky, 1989), dispositional factors (e.g., agreeableness, conscientiousness, and equity sensitivity Konovsky and Organ, 1996), concern for others (McNeely and Meglino, 1994), organizational justice (Niehoff and Moorman, 1993), and collectivism (Moorman and Blakely, 1995). Additionally, organisational citizenship behaviour has been found to be related to task characteristics (Farh, Podsakoff & Organ, 1990; Moorman and Sayeed, 1992), and interpersonal trust (Podsakoff et al., 1990). Yun, Takeuchi & Liu(2007) examined the effects of employee selfenhancement motives on job performance behaviors (organizational citizenship behaviors and task performance) and value of these behaviors to them. The authors propose that employees display job performance behaviors in part to enhance their self-image, especially when their role is not clearly defined. They further argue that the effects of these behaviors on managerial reward recommendations decisions should be stronger when managers believe the employees to be more committed. Nguyen, Seers & Hartman, (2008) examined self-promotion and ingratiation as correlates of citizenship behavior and desired outcomes in work teams. Results of a cross-sectional study using a combination of self- and pee-report data from student work teams suggested that two dimensions of citizenship behavior, i.e., altruism and conscientiousness, were partly function of Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 43
ingratiation and self- promotion. Further, ingratiation was found to be positively associated with individual satisfaction within teams and the extent to which individual members were perceived as likeable among their peers. Peer perceptions of the motivation underlying ingratiation and selfpromotion also had a positive relationship with liking for team manner such that the more sincere motive is perceived to be, the more positive the perception of liking for team member. The above mentioned and other similar studies made the roadmap for the present study. The present study focuses on employees’ ingratiation and organizational citizenship behavior of employees in northern region of Power Grid Corporation of India Limited. OBJECTIVES OF THE STUDY The main objectives of the study are as follows: •
To study employees’ ingratiation and organizational citizenship behavior of employees of northern region of Power Grid Corporation of India limited
•
To examine the relationship between employees’ ingratiation and organizational citizenship behavior of employees of northern region of Power Grid Corporation of India.
•
To find out the influence of employees’ ingratiation on organizational citizenship behavior of employees of working in northern region of Power grid Corporation of India.
•
To examine the relationship between organizational citizenship behavior and demographic variables (age, gender and job tenure) of employees of northern region of Power Grid Corporation of India.
HYPOTHESES H1a There is significant correlation between employees’ ingratiation and organizational citizenship behavior of employees of northern region of Power Grid Corporation of India Limited
Management & Change, Volume 17, Number 1 & 2 (2013)
44 Employees’ Ingratiation and Organizational Citizenship Behavior
H2a Employees’ ingratiation has significant influence on organizational citizenship behavior of employees of Power Grid Corporation of India Limited. H3a There is relationship between organizational citizenship behavior and demographic variables (age, gender, and job tenure) of employees of Power Grid Corporation of India Limited. H3.1a There is no difference in the level of Organizational Citizenship Behavior and among different age levels of employees of Power Grid Corporation of India Limited. H3.2a There is no difference in the level of Organizational Citizenship Behavior among male and female employees of Power Grid Corporation of India Limited. H3.3a There is no difference in the level Organizational Citizenship Behavior among the different Job Tenures of employees of Power Grid Corporation of India Limited RESEARCH DESIGN The study is descriptive and empirical in nature. Out of the 240 questionnaires that were sent to the employees working in Power Grid Corporation of India Limited (PGCIL), 180 were received back fully filled. The questionnaire consists of 2 parts, one related to the employees’ Ingratiation and the second part was related to organizational citizenship behavior of employees. MEASURES Primary data was collected through preliminary interviews and followed by questionnaire. Employees’ Ingratiation questionnaire (Kumar & Beyerlein, 1991) and organizational citizenship behavior (Podsakoff et al., 1990) were used to undertake the study. The Employees’ Ingratiation questionnaire by Kumar & Beyerlein, 1991: Employees’ Ingratiation questionnaire consisted of 24 items measuring four subscales as follows: Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 45
Other Enhancement: is a method in which the ingratiator compliments the target individual. Opinion Conformity: occurs when the ingratiatory adopts and validates the attitudes and beliefs of the target individual. Self-presentation/Self-promotion: is a technique in which the ingratiatory emphasizes their own attributes in order to be seen positively in the eyes of the target individual. Rendering Favors: It is unclear whether performing favors produces attraction merely implies obligation for reciprocity. However, performing a favor without any real hope of reciprocity may be a very successful strategy. The Organizational Citizenship Behaviour questionnaire by Podsakoff et al., 1990: Organizational Citizenship Behaviour questionnaire (Podsakoff et al., 1990) is used to undertake the study. This scale is multidimensional, suggesting five subscales i.e.; Altruism: the helping of an individual coworker on a task. Courtesy: alerting others in the organization about changes that may affect their work. Conscientiousness: carrying out one’s duties beyond the minimum requirements. Sportsmanship: refraining from complaining about trivial matter. Civic virtue: participating in the governance of the organization. The cronbach alpha coefficients of the scales were found to be 0.87 and 0.76.
Management & Change, Volume 17, Number 1 & 2 (2013)
46 Employees’ Ingratiation and Organizational Citizenship Behavior
DATA ANALYSIS Table 1: Descriptive Statistics Dimensions
N
Mean
Std. Deviation
Ingratiation
180
2.7678
.60060
Opinion Conformity
180
2.6127
.65308
Other Enhancement
180
2.7492
.72319
Favour Rendering
180
2.7898
.82338
Self Promotion
180
2.9194
.87750
Organizational Citizenship Behaviour
180
3.3261
.39272
Altruism
180
3.5611
.70405
Conscientiousness
180
3.5111
.66188
Sportsmanship
180
2.4600
.98840
Courtesy
180
3.6800
.68881
Civic Virtue
180
3.4181
.69457
Descriptive statistics (Table 1) showed the level of ingratiation and organization citizenship behavior among the northern region employees’ of PGCIL. The levels of sub-categories of Ingratiation i.e. Opinion Conformity, Other Enhancement, Favour Rendering and Self Promotion along with sub-categories of organization citizenship behaviour i.e. Altruism, Conscientiousness, Sportsmanship, Courtesy and Civic Virtue among the respondents are also shown in the above table. The scale used in the questionnaire was the 5-point Likert scale for the variables and their dimensions, where 3 was the neutral value with all the values below 3(i.e. Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 47
1 and 2) being low and all values above 3(i.e. 4 and 5) being high. Ingratiation has been found near about average in the sample as the mean value is 2.7678. This shows that the Ingratiation practice amongst the respondent organization selected for the study is little less than satisfactory. Among the dimensions of ingratiation, opinion conformity has been found below average in the sample as the mean value is 2.6127. It implies that respondents rarely try to increase their attractiveness in the eyes of their superior by doing acts like giving frequent smiles to express their interest about something their superior is interested in, even if they do not like it or by expressing work attitudes that are similar to their superior’s as a way of letting their superior know that two of them are alike. Other enhancement has been found to be near to the sample average as the mean value is 2.7492. This implies that respondents compliment the target individual near about satisfactory level. They do so by telling their superior that they can learn a lot from his/her experience. Favour Rendering has been found to be below average in the sample as the mean value is 2.7898, but it is not very low than average, rather it is nearby it. It means respondents tries to do things for their superior which show their selfless generosity many a times, if not regularly. Self Promotion level is found to be almost average as the mean value is 2.9194. This means practice of this dimension of Ingratiation is prevalent at satisfactory level amongst respondents. So from the descriptive statistics it can be concluded that the value of ingratiation and its dimensions has been found to be near about average in the chosen sample from the PGCIL. Amongst all the dimensions self promotion level has been highest, this could be because everyone finds it easy to express their own attributes, strengths, virtues etc as compared to expressing about others strengths, remarkable attributes etc. So when achieving attractiveness in the eyes of superior comes as two way – one way by complimenting, praising and expressing superior’s achievements and other way by making superior acquainted with one’s own attributes, qualities, a person most of the time choose latter way. Organizational citizenship behavior has been found above average in the sample with a mean value of 3.3261 and standard deviation of 0.39272, which tells us how far from the mean the data tend to be. This shows the organization citizenship behavior amongst the respondent organization selected for the study is above satisfactory. Management & Change, Volume 17, Number 1 & 2 (2013)
48 Employees’ Ingratiation and Organizational Citizenship Behavior
Altruism has been found to be above average as the mean value is 3.5611.This shows it is above satisfactory. Conscientiousness has been found to be above average as the mean value is 3.511. This shows it is above satisfactory. Sportsmanship has been found to be quite low, as mean value is 2.4600. This shows it is not below average. Courtesy has been found to be high, as the mean value is 3.6800. It implies respondents mostly do not abuse rights of others, they are mindful of how their behaviour affects other people’s jobs. Civic virtue level is above average as mean value is 3.4181. That means behaviours which explicit civic virtue is notable in the respondent organization. HYPOTHESIS TESTING H1a: There is significant relationship between Employee’s Ingratiation and Organizational Citizenship Behavior of employees of Power Grid Corporation of India limited H2a: Ingratiation has significant influence on Organizational Citizenship Behavior of northern region employees of Power Grid Corporation of India Limited Table 2: Correlation Dimensions
Employee’s Ingratiation
Employee’s Ingratiation
Organizational Citizenship Behaviour
1
-.253**
Pearson Correlation Sig. (2-tailed) N
Organizational Citizenship Pearson Correlation Behaviour
.001 180 -.253
180 **
Sig. (2-tailed)
.001
N
180
1
180
**. Correlation is significant at the 0.01 level (2-tailed).
The results of Karl Pearson’s Correlation (Table 2) suggested that there is a significant and negative correlation between the level of ingratiation and level of organizational citizenship behavior (r = -.253, p = .001) in the Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 49
sample organization selected for the study. That means with the increase in the Ingratiation practice, the organization citizenship behaviour of employees decreases. Hence the hypothesis H1a that there is significant relationship between Ingratiation and organizational citizenship behavior among employees of northern region of PGCIL is rejected. So when people practice Ingratiation they seldom think about anyone else than themselves which is contrary to principles of organizational citizenship behavior. Therefore, with increase in Ingratiation practice, the levels of organizational citizenship behavior practice decreases. In order to examine the influence of Employee’s Ingratiation on Organizational Citizenship Behavior linear regression was used. Table 3: Model Summary Model 1
a.
R
R Square
Adjusted R Square
Std. Error of the Estimate
.253a
.064
.059
.381
Predictors: (Constant), ING
The table displays R, R square (R2) and adjusted R2, and the multiple correlation coefficient, which is defined as the linear correlation between observed and model predicted values of the independent variable. R square, the coefficient of determination which is the squared value of multiple correlation coefficients is also illustrated in Table 3. It can be seen that regression model explained 5.9% of the variance in the organization citizenship behavior. Table 4: ANOVA Model 1
Sum of Squares
Df
Mean Square
F
Sig.
Regression
1.764
1
1.764
12.148
.001a
Residual
25.844
178
.145
Total
27.607
179
a. Predictors: (Constant), INGb. Dependent Variable: OCB Management & Change, Volume 17, Number 1 & 2 (2013)
50 Employees’ Ingratiation and Organizational Citizenship Behavior
Table 4 summarizes the results of Analysis of variance. The objective of ANOVA table is to test the acceptability of the model from the statistical perspective. The sum of squares, degree of freedom and mean square are displayed for two sources of variation regression and residual. The regression row displays information about the variation accounted for by the model. The residual row displays information about variation that is not accounted for by the model i.e. error item. It was found the regression sum of squares is less than the model explained residual sum of squares, which indicated that most of the variation, is not explained by the above Ingratiation variable. The significance value of F statistic is more than 0.05, which means that the variation explained by the model is due to chance. From the results it can be concluded that the hypothesis H2a that ingratiation has significant influence on Organization Citizenship Behavior of northern region employees of PGCIL is rejected. H3a There is relationship between organizational citizenship behavior and demographic variables (age, gender, and job tenure) of employees of Power Grid Corporation of India Limited. H 3.1a: There is no difference in the level of Organizational Citizenship Behavior and among different age levels of employees of Power Grid Corporation of India Limited Table 5: ANOVA Dimensions
Sum of Squares
df
Mean Square
F
Sig.
OCB Between Groups
1.116
4
.279
1.842
.123
Within Groups
26.492
175
.151
Total
27.607
179
Between Groups
1.933
4
.483
.974
.423
Within Groups
86.795
175
.496
Total
88.728
179
ALT
Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 51 Dimensions
Sum of Squares
df
Mean Square
F
Sig.
CONS Between Groups
6.803
4
1.701
4.156
.003
Within Groups
71.615
175
.409
Total
78.418
179
9.004
4
2.251
2.375
.054
Within Groups
165.868
175
.948
Total
174.872
179
4.878
4
1.219
2.666
.034
Within Groups
80.050
175
.457
Total
84.928
179
Between Groups
2.409
4
.602
1.256
.289
Within Groups
83.945
175
.480
Total
86.354
179
SPTM Between Groups
COU Between Groups
CIV
The results of one-way ANOVA (Table 5) suggested no difference in the level of organizational citizenship behavior and the dimensions of organizational citizenship behavior (altruism, sportsmanship and civic virtue), getting p-value more than .05 (p= .423, .054 and .289) among different age groups of employees. Therefore the hypothesis H3.1a , that there no difference in the level of organizational citizenship behavior and the dimensions of organizational citizenship behavior (altruism, sportsmanship and civic virtue) among different age groups of employees of Power Grid Corporation of India Limited, is not rejected. The results of ANOVA further suggested that there is significant difference in the dimensions of organizational citizenship behavior (conscientiousness and courtesy), getting p-value less than .05 (p= .003 and .034). Hence, the results show that age has impact on courtesy and conscientiousness level of the employees. H 3.2a: There is no difference in the level of Organizational Citizenship Behavior among male and female employees of Power Grid Corporation of India Limited Management & Change, Volume 17, Number 1 & 2 (2013)
52 Employees’ Ingratiation and Organizational Citizenship Behavior
Table 6: Independent Samples test Dimensions
Organization Citizenship Behavior
Levene’s Test for Equality of Variances
Equal variances assumed
F
Sig.
T
df
Sig. (2-tailed)
.005
.945
-1.066
178
.288
-1.057
71.811
.294
-2.270
178
.024
-2.369
78.490
.020
-.186
178
.853
-.171
64.202
.865
.919
178
.359
.917
72.661
.362
-2.261
178
.025
-2.579
93.690
.011
.347
178
.729
.348
72.972
.729
Equal variances not assumed Altruism
Equal variances assumed
.738
.391
Equal variances not assumed Conscien-
Equal variances assumed
tiousness
Equal variances not assumed
Sportsmanship
Equal variances assumed
1.858
.028
.175
.868
Equal variances not assumed Courtesy
Equal variances assumed
6.728
.010
Equal variances not assumed Civic Virtue
Equal variances assumed
t-test for Equality of Means
.146
.703
Equal variances not assumed
The results of Independent t-test (Table 6) suggested that there is no significant difference in the level of organizational citizenship behavior and the dimensions of organizational citizenship behavior (conscientiousness, sportsmanship and civic virtue), getting p- value more than .05 (p equals .288, .853, .359 and .729 respectively) among male and female employees. Therefore, the hypothesis H3.2a, that there is no significant difference in the level of organizational citizenship behavior and the dimensions of organizational citizenship behavior (conscientiousness, sportsmanship and
Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 53
civic virtue) among male and female employees, is not rejected or may be accepted. The results of independent t-test further suggested that there is significant difference in the level of altruism and courtesy among male and female employees, getting p-value less than .05 ( p equals .024 and .025). Therefore, the hypothesis (H3.2a), that there is no significant difference in the level of altruism and courtesy among male and female employees, is rejected. H3.3a: There is no difference in the level Organizational Citizenship Behavior among the different Job Tenures of employees of Power Grid Corporation of India Limited Table 7: ANOVA Dimensions OCB
Altruism
Sum of Squares
Df
Mean Square
F
Sig.
Between Groups
2.161
3
.720
4.982
.002
Within Groups
25.447
176
.145
Total
27.607
179
Between Groups
5.496
3
1.832
3.874
.010
Within Groups
83.232
176
.473
Total
88.728
179
3.777
3
1.259
2.969
.033
Within Groups
74.641
176
.424
Total
78.418
179
Between Groups
6.881
3
2.294
2.403
.069
Within Groups
167.991
176
.954
Total
174.872
179
Between Groups
5.703
3
1.901
4.223
.007
Within Groups
79.225
176
.450
Total
84.928
179
Between Groups
3.076
3
1.025
2.167
.094
Within Groups
83.278
176
.473
Total
86.354
179
Conscientiousness Between Groups
Sportsmanship
Courtesy
Civic Virtue
The results of one-way ANOVA (Table 7) suggested a difference in the level of organizational citizenship behavior and the dimension of organizational citizenship behavior (courtesy), getting p-value less than
Management & Change, Volume 17, Number 1 & 2 (2013)
54 Employees’ Ingratiation and Organizational Citizenship Behavior
.05 (p= .002 and .010) among different job tenures of employees. Therefore, the hypothesis H3.3a ,that there no difference in the level of organizational citizenship behavior and the dimensions of organizational citizenship behavior (courtesy) among different job tenures of employees of Power Grid Corporation of India Limited, is rejected. The results of ANOVA further suggested that there is no significant difference in the dimensions of organizational citizenship behavior (altruism, conscientiousness, sportsmanship and civic virtue), getting p-value more than .05 (p= .010, .033, .069 and .094). Hence the results show that the job tenure has no impact in the level of altruism, conscientiousness, sportsmanship and civic virtue of the employees. CONCLUSION OF THE STUDY Ingratiation has been found near about average in the sample as the mean value is 2.7678. This shows that the Ingratiation practice amongst the respondent organization selected for the study is little less than satisfactory. Among the dimensions of Ingratiation, favour Rendering, Opinion conformity has been found below average in the sample as the mean value is 2.7898 and 2.6127. It implies that respondents rarely try to increase their attractiveness in the eyes of their superior by doing acts like giving frequent smiles to express their interest about something their superior is interested in, even if they do not like it. Other enhancement and self promotion level is found to be near to average in the sample as the mean value is 2.7492 and 2.9194. This means practice of this dimension of Ingratiation is prevalent at satisfactory level amongst respondents. Organizational Citizenship Behaviour has been found above average in the sample as the mean value is 3.3261 and standard deviation of .39272, which tells us how far from the mean the data tend to be. This shows the OCB amongst the respondent organization selected for the study is above satisfactory. Altruism, Conscientiousness, Courtesy and Civic virtue level have been found to be above average as the mean value is 3.5611, 3.511, 3.6800 and 3.4181.This shows it is above satisfactory. Sportsmanship has been found to be quite low, as mean value is 2.4600. The results of Karl Pearson’s Correlation suggest that there is a significant and negative correlation between the level of Ingratiation and Management & Change, Volume 17, Number 1 & 2 (2013)
Luxmi Malodia 55
Organizational Citizenship Behavior (r = -.253, p = .001) in the sample organization selected for the study and the regression Analysis suggests that only 5.9% of the variation in the dependent variable OCB can be explained by variation in the Independent variable Ingratiation. The results of one-way ANOVA suggests no difference in the level of OCB among different age groups of employees selected in the sample in the study, as p value more than .05 (p= .123). The results of Independent Sample test suggest no relationship between Organization Citizenship Behavior and gender (male and female), getting p value greater than .05 (p = .288, p = .294). The results show that out of five dimensions of OCB only two dimensions (Altruism and Courtesy) differ between male and female employees. Results of one way ANOVA, indicated as the value of p is less than .05 (p =.002) therefore job tenure has relationship with the Organization Citizenship Behavior that means job tenure makes the difference in the level of Organization Citizenship Behavior. Correlations can only reveal the degree of relationship between constructs. To further understand the direct and indirect effects, as well as mediating effects among the constructs, further analysis by structural equation model is required. Structural equation modeling is an especially attractive choice when testing mediating variables since all of the relevant paths are directly tested and complications, such as measurement error and feedback, are incorporated directly into the model. The same research can be carried out simultaneously both in public as well as private organization. That would give an opportunity to have more advanced knowledge about the relationship of Ingratiation and OCB by doing comparison. To get better understanding of the various aspects of the inter relationships between the variables and its various dimensions, path analysis could be carried out in the future research. LIMITATION OF THE STUDY An attempt has been made to complete the research work in best manner but still there are few obvious limitations. Management & Change, Volume 17, Number 1 & 2 (2013)
56 Employees’ Ingratiation and Organizational Citizenship Behavior
•
The limitation concerns the nature of measure used. The measures included in this research were all based upon the perceptions of the participating employees. Therefore, the potential for data inaccuracies due to item misinterpretations or predisposition to certain response on the part of the participants does exits.
•
Responses with respect to Ingratiation and Organizational Citizenship Behavior were solicited from the employees of northern region of the PGCIL. Perception of other employees from the same organization may differ.
REFERENCES Barnard, C. (1938). The Functions of the Executive. Harvard University Press: Cambridge. Brief, A. P. and Motowidlo, S. J. (1986). Prosocial Organisational Behaviours. Academy of Management Review, 11(4), 710-725. Farh, J., Podsakoff, P. M., and Organ, D. W. (1990). Accounting for organizational citizenship behavior: Leader fairness and task scope versus satisfaction. Journal of Management. 16, 705-722. George, J. M. and Brief, A. P. (1992). Feeling good-doing good: a conceptual analysis of the mood at work-organizational spontaneity relationship. Psychological Bulletin. 112, 310-329. Jones, E. E. (1990). Interpersonal Perceptions. New York: W.H. Freeman & Company. Katz, D. and Kahn, R. L. (1978). The Social Psychology of Organization. 2nd edition, Wiley: New York. Konovsky, M. A. and Organ, D. W. (1996). Dispositional and contextual determinants of organizational citizenship behavior, Journal of Organizational Behavior, 17, 253-266. Kumar, K. and Beyerlein, M. (1911). Construction and validation of an instrument for measuring ingratiatory behaviours in organizational settings, Journal of Applied Psychology. 76, 619-627 Management & Change, Volume 17, Number 1 & 2 (2013)
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LePine, J. A. and Van Dyne, L. (1998). Predicting voice behavior in work groups. Journal of Applied Psychology, 83, 853-868. McNeely, B. L. and Meglino, B. M. (1994). The role of dispositional and situational antecedents in prosocial organizational behavior: An examination of the intended beneficiaries of prosocial behavior. Journal of Applied Psychology, 79, 836-844. Moorman, R. H. (1991). Relationship between organizational justice and organizational citizenship behaviours: Do fairness perceptions influence employee citizenship? Journal of Applied Psychology. 76, 845-855 Moorman, R. H. and Blakely, G. L. (1995). Individualism- collectivism as an individual difference predictor of organization citizenship behavior. Journal of Organizational Behavior, 16, 127-142. Moorman, R. H. and Sayeed, L. (1992). Can using computers promote organizational citizenship? A study relating computer usage, task characteristics, and OCB. Unpublished manuscript, West Virginia University, Morgantown, WV. Nguyen, N. T., Seers, A. and Hartman, N. S. (2008). Putting a Good face on Impression management: team citizenship and team satisfaction. Institute of Behavioral and Applied Management. 2008, 148-168. Odom,, M (1990) Kissing Up Really Works on Boss: San Diego: Union Tribune Niehoff, B. P. and Moorman, R. H. (1993). Justice as a mediator of the relationship between methods of monitoring and organizational citizenship behavior. Academy of Management Journal. 36(3), 527-556. Organ, D. W. (1988). Organizational Citizenship Behaviour. Lexington, MA: Lexington Organ, D. W. and Konovsky, M. (1989). Cognitive versus affective determinants of organizational citizenship behavior. Journal of Applied Psychology. 74, 157-164. Management & Change, Volume 17, Number 1 & 2 (2013)
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Organ, D. W. and Ryan, K. (1995). A meta analytic review of attitudinal and dispositional predictors of organizational citizenship behavior. Personnel Psychology. 48, 775-802. Podsakoff, P. M., MacKenzie, S. B., Moorman R. H., and Fetter, R. (1990). Transformational leader behaviors and their effects on followers’ trust in leader, satisfaction, and organizational citizenship behaviors. Leadership Quarterly. 1, 107-142. Van Dyne, L., Graham, J., and Dienesch, (1994). Organizational citizenship behavior: construct redefinition, operationalization, and validation. Academy of Management Journal. 37, 765-802. Williams, L. J. and Anderson, S. E. (1992). An alternative approach to method effects using latent variable models: Applications in organizational behavior research. Paper presented at the Academy of Management Meetings. Las Vegas, NV. Yun, S., Takeuchi, R., and Liu, W. (2007). Employee Self-Enhancement motives and Job performance behaviors: investigating the moderating effects of employee role ambiguity and managerial perceptions of employee commitment. Journal of Applied Psychology. 92(3), 745756.
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Javid Ahmad 59
EMPLOYMENT RELATIONS IN INDIAN BANKING INDUSTRY - AN INTER-SECTOR ANALYSIS Javid Ahmad1 Commercial banks are an important and dominant component in the burgeoning services sector of our economy. With the process of liberalization of our economy and its integration with the global economy in early 1990s, financial sector in general and banking industry in particular have undergone a metamorphosis due to the comprehensive and radical reforms. The norms for setting up of new private sector banks have been relaxed; more foreign-sector banks and non-banking financial companies have come up and there has been disinvestment in public sector banks. Capital adequacy norms of commercial banks have been established as per international standards. There has been increasing automation of banking operations. The attitude of bank employees has been reoriented. Besides, application of more proactive management practices, the global trend of decreasing strength of trade unionism and dominating role of employers in the ‘industrial relations system have greatly affected the employment relations in the banking industry in the country. The present study seeks to examine in an empirical manner the existing employment relations in public and private sectors of our commercial banking industry in the light of vital structural changes witnessed in the last over two decades. The results of the study suggest that new private sector banks have been able to create a better employment relations environment. Key words: Employment Relations, Public Sector, Old Private Sector, New Private Sector 1
Javid Ahmad, Associate Professor, Commerce & Management Department, Govt. Degree College, College Road, Bemina, Srinagar – 190010, India. E-mail: drjavidabdulla@gmail.com Management & Change, Volume 17, Number 1 & 2 (2013)
60 Employment Relations in Indian Banking Industry - An Inter...
INTRODUCTION Relations between employers and employees have been marked by conflict from the very beginning of the industrialization (Sharma, 1986). Conflict in employment relations is widespread and inevitable (Kornhauser, Dubin & Ross,1954). Conflict is inherent in industrial enterprises because employee is a property less seller of himself lacking the power to bargain on a plane and equality with the propertied buyer of the labour (Commons and Andrews, 1936). Employer has a power advantage over the individual employee and holds the authority for decision making in the internalgovernance of the enterprise (Hoxie, 1921; Commons, 1934; Kaufman and Lewin, 1998). Employees have tended to focus on certain overt manifestations of conflict such as union organizing efforts, grievances, strikes and labour turnover as a way to reduce the power imbalance through collective bargaining and State intervention (Hoxie, 1921; Commons, 1934). However, following the structural adjustments of our economy in early 1990s and its wider integration with global economy, and opening up of economy to private sector in a big way, Indian banking sector has moved from a totally regulated environment with a strong trade union federation to a market driven competitive system. A new breed of deunionised private sector banks with state-of-the-art technology has emerged in India in the last two decades. The pace of changes gained momentum in the last few years. Banking in India is emerging as one of the fastest growing market in the world with businesses growing at a compound annual growth rate of about 20% .Globalization is expected to gain greater speed in the coming years in view of further opening up of financial services under WTO. The profiles of businesses in terms of their workforces are perpetually changing. A century ago, manual jobs made up three quarters of the workforce, while managerial and professional posts accounted for just 7.5%. But now, the movement towards more highly skilled work greatly accelerated. “Most occupations already require greater levels of skills than in the past.� Skills that were once seen as specialist and technical such as in ICT (Information and Communication Technology) have increasingly become core requirements intended for most jobs (Lamb, Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 61
2010). Today business organisations employ a sizeable quantity of casual, contractual and part-time employees and accordingly the size of permanent workforce in industries has been decreasing day by day. Automation of work processes and functions have enabled firms to outsource such processes and functions which were previously done by the permanent employees. This too has added to the squeezing size of employees in business orgnisations.The coincidence of globalisation, technology and improvements in specialised niche knowledge which all organisations need to access, have all facilitated the breaking down of a whole business process into its constituent elements. It is not unusual for these elements and their host premises to be scattered all over the world in different continents and time zones. Outsourcing, agency working, subcontracting, networking, distance working, home working, virtual employees all have one thing in common in that they change the employment dynamics and relationships for workers, trade unions and managers (Taylor, 2013). The overriding influence of the global wave of human relations management practices over the last two decades has changed the industrial relations scenario. Employers have assumed dominant role in industrial relation system (Kochan, Katz & Mc Kersie, 1986; Rojot & Tergeist, 1992). Labour union membership and influence has been declining in the last over two decades now in almost all countries with certain rare exceptions (Srivastava, 2006). This declining influence of unions has led to a simultaneous decline in their collective bargaining power. Industrial relations had moved to the single-employer level and had, to a large extent, ceased to be bilateral with trade unions. As collective bargaining had shrunk, so joint consultation had grown relatively, as had various forms of direct employee involvement at work. Where it survived, as in the private sector, collective bargaining increasingly took the form of consultation rather than negotiations and private sector trade union membership fell sharply (Millward et al., 2000; Beland , 2009).Besides owing to the proactive HR practices and dominant role of employers’, non-union enterprises have been emerging in all the countries of the world. The thinking of the management now is that their primary relation is with their employees and Management & Change, Volume 17, Number 1 & 2 (2013)
62 Employment Relations in Indian Banking Industry - An Inter...
not their unions. Their assertiveness to bargain directly with employees and marginalization of employee unions has led to individualization of industrial relations. Some employers are now increasingly choosing to consult and communicate with their employees directly but there are also clear signs of a representation gap in non-unionised workplaces (Taylor, 2013). The forces of globalization and the consequent chaotic global level competition have made both employers and governments preoccupied with competition and the survival of the organization. This reduced collective bargaining and bargaining process decentralized from industry to enterprise level (Kessler and Bayliss, 1992; Millward, 1994) Industrial relations have so for been dominated by collective action of unions and state regulation. Other aspects of employment particularly the enterprise setting and the physiological and psychological dimensions focused on individual have largely been ignored. Due to the emergence of new issues dominating employer-employee relations, the collective connotations of the term ‘industrial relations’ have got diluted substantially (Saini, 2003) The workforce employed in industries today is more diversified, heterogeneous, well qualified and knowledgeable belonging to different geographical locations having different value systems and belief. Moreover, women have entered organisations in sizeable numbers in the last three decades. The issues of common concern to bank employees, both officers and the clerical staff, such as their pay scales, allowances, grievance handling mechanism, performance evaluation and promotion policies, automation of operations and processes, employees welfare schemes, and other service conditions are settled through national level bipartite settlements between the bank trade union federations and the Indian Banks Association for public sector and old private sector banks, while the new private sector banks settle these issues on individual basis. OBJECTIVES OF THE STUDY The study seeks to examine in an empirical manner the existing employment relations in the Indian commercial banking industry in the light of various Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 63
vital changes in the economic system, the impact of forces of globalization on Indian industrial relations system and the changing management practices in the wake of the emergence of global wave of human relations management policies and practices. The study specially focuses on the following objectives. •
To make a comparative analysis of employment relations in public and private sector commercial banks in India
•
To understand the relationship between personal characteristics of employees and employment relations in banks under study.
•
To offer suggestions for developing more cordial and harmonious employment relations in commercial banking industry.
METHODOLOGY The present study is an empirical work carried in the commercial banking industry of India. The study has been confined to public and private sector banks. The foreign banks, regional rural banks and co-operative banks have been purposively excluded from the purview of the study as these are on a non-level playing field vis-à-vis the public and private sector banks as most of their business units are confined to certain selected cities and regions or areas and do not have a national net work of branches. Four commercial banks from Indian commercial banking industry were selected objectively and on a set criterion. These banks included two public sector banks namely Union Bank of India and Vijaya Bank and two banks from private sector. However, to give a better picture of private sector banks, private sector was further sub-classified as old private and new private sector. Private sector indigenous banks opened after the liberalisation of the Indian economy in 1991 are referred as new private sector banks and existing commercial banks under private ownership on 1991 are known as an old private sector banks. Among old private sector banks J&K Bank Ltd, a bank established in 1938 and from new private sector banks HDFC Bank established in 1993 have been included in the study. The data for the study has been generated through two pretested and well-drafted questionnaires (Annexure A), one for the branch heads Management & Change, Volume 17, Number 1 & 2 (2013)
64 Employment Relations in Indian Banking Industry - An Inter...
and another for the other branch staff subordinate to the branch heads (including officer-level and clerical-level staff). Since the questionnaires were qualitative in nature, therefore they were quantified on a five-point Likert-type scale with following ratings : 1= True to Almost no extent,2= True to small extent,3=True to some extent,4=True to a great extent and 5= True to a very great extent. the participants of the study were categorized into three hierarchies viz,(1) branch heads, (2)other officers including deputy managers, assistant managers, accountants, branch marketing officers, agricultural officers, system managers, or any other officer posted in the branch by whatever designation referred who is subordinate to the branch manager and (3) clerical-level employees including special assistants, clerks, cashiers, cashier-cum-clerks, typist-cum-cashier, typists, computer operators, assistant cashiers, record–keepers, etc or any other such award staff by whatever designation referred but excludes peons, watchman, and security guards(as these positions have either been outsourced or eliminated) posted in the branches of the sample organizations’ in northern India. Stratified sampling technique was used for the selection of the participants. The data so collected were supplemented with views obtained in person through personal interviews and discussions with senior bank officers, branch officers, and clericallevel employees and their trade union leaders. The questionnaires consisted of four parts- Part-I contained fifty-two statements on 26 elements of the thirteen different dimensions of employment relations, Part-II contained one statement on the dependent variable of the state of relations between respondents and the bank management and in Part- III respondents’ suggestions were sought for improving their relations with the bank management and in Part-IV background information about the respondents’ personal characteristics such as gender, age , work experience, educational qualifications, affiliation to a trade union, if any, were obtained. The sample size for the study was selected according to ready to use table developed by Bartlett, Kotrlik and Higgins (2001) for determining sample size in a survey type research for a given population. Accordingly, responses from a total of 441 bank employees belonging to the three hierarchies of branch heads, other officers and clerical cadres posted in different branches of the sample banks in the states of J&K, Punjab, Haryana, Himachal Pradesh and Chandigarh city were included in the study. This sample size included 216 respondents from public sector banks, 119 from old private sector and 106 from new private sector. Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 65
The data for the study has been collected from December, 2006 to March 2007. RELIABILITY TESTING The reliability of the questionnaires was ascertained using Cronbach’s Alpha co-efficient. George and Mallery (2003) provide the following rules of thumb for Alpha coefficient:>.9
Excellent
>.8
Good
>.7
Acceptable
>.6
Questionable
>.5
Poor
The reliability coefficients for 26 elements range between .75 (lowest) to .94(highest). Besides all correlations are positive and statistically significant, which suggests that there is adequate inter-item agreement among individuals scores for each of the 26 elements of the employment relations. The data collected were arranged in logical order and thus was tabulated using computer programmes.The primary data collected through the questionnaires were analyzed using necessary statistical tools such as Mean, Standard Deviations, Chi-Square test, ‘t’ test, ‘z’ test ANOVA test, etc. on the elements of each dimension. In order to verify the differences among sectors and designations, ‘F’ test at 95% level of confidence of significance was used. For statistical verification in the difference of scores among different groups of respondents in the three sectors and the designations (hierarchies), ANOVA test was also used. The high, moderate and low level of employment relations have been made on the basis of the percentage preference of the respondents on 5 point Likert scale. Those having preference for highest value on the Likert scale have been labeled as high, and those lowest value have been labeled Management & Change, Volume 17, Number 1 & 2 (2013)
66 Employment Relations in Indian Banking Industry - An Inter...
as low and those having median preference value have been labeled as moderate. RESULTS & DISCUSSIONS Table 1 gives comparative vital statistics about employment relations perception of the employees in the public sector, the old private and the new private sector commercial banks. Table 1: An Overview of Inter-Sector Employment Relations in Banks Unit
Public Sector
Old Pvt.Sector
New Pvt. Sector
Sample Size
216
119
106
Mean Score
162.4
172.5
217.9
Standard Deviation
30.7
26.6
13.9
Public Sector Vs Old Private
Public Sector Vs New Private
Old Pvt. Sector Vs New Private
‘t’ value
-4.10
-25.40
-19.93
Level of Sig.(p)
<.01
<.01
<.01
ANOVA(‘f’ values)
159.93
Level of Significance
<.01
The mean score scores have been obtained by multiplying the maximum ratings on 5 point Likert scale. A glance at the comparative statistics presents an overall and a broader overview of the employment relations in the three sectors of commercial banks in India. An analysis of the vital statistics reveals the following:The employees working in new private sector bank experienced overall better employment relations than those in the public and old private sector banks as they had a mean score of 217.9 compared to 172.5 and 162.4 obtained by the employees of old private sector and public sector
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 67
respectively. Similarly the employees of old private sector experienced overall better employment relations than their public sector counterparts as they a better mean score of 172.5 as compared to 162.4 obtained by public sector employees. The differences in the mean scores on overall employment relations among the three sectors were statistically significant at 99% level of confidence as confirmed by the ‘f’ value of 159.93 (p<.01) However, the difference in the mean scores between public and new private sector was more significant (-25.40) than those between the new and old private sectors (-19.93). This confirms that the overall employment relations environment in new generation private sector bank was better than that of both the old private and the public sector banks. Similarly these mean scores also reveal that the old private sector bank has comparatively better employment relations environment than the public sector banks. Thus it is established that the nature of organisation is correlated to the employment relations in the banking sector. For a deeper and further analysis of employment relations in the three sectors of commercial banks, Table 2 portrays the element-wise comparative level concentration of the employees of public sector, old private sector and new private sector commercial banks. An insight into the results given in Table 2 reveal that a majority of the employees of all the three sectors were on high level on the elements of ‘employee treatment’, ‘employee welfare’ ‘performance evaluation system’ and ‘customer service as a tool of competition’ indicating that the employees’ of commercial banks were comfortable enough on these elements vis-àvis their relations with their managements. Table 2: Inter-Sector Level Concentration Comparison on Elements of Employment Relations in Banks Public Sector(n=216) High%
Old Pvt. Sector(n=119)
New Pvt. Sector(n=106)
Moderate %
Low %
High %
Moderate %
Low %
High %
Moderate %
Low %
38
21
41
44
33
23
51
38
19
25
34
41
46
25
29
19
81
-
47
20
33
53
22
25
54
46
-
Management & Change, Volume 17, Number 1 & 2 (2013)
68 Employment Relations in Indian Banking Industry - An Inter...
41
23
33
51
29
20
49
51
-
47
23
30
48
30
22
55
45
-
48
25
27
35
27
38
38
62
-
33
38
39
36
26
38
53
37
10
23
16
61
29
32
39
27
47
26
60
11
29
9
70
21
74
26
-
73
12
15
34
53
13
58
48
-
64
22
14
62
38
-
75
25
-
47
25
28
25
55
20
65
35
-
54
30
16
56
19
15
65
35
-
17
56
27
13
47
40
61
20
19
14
82
4
38
32
30
21
24
55
15
60
25
70
-
30
30
46
24
33
45
22
57
43
-
66
34
-
14
59
27
32
68
-
32
38
30
19
23
62
38
-
71
29
-
25
26
49
25
49
26
79
21
-
37
34
29
29
46
25
1
14
86
42
25
33
43
57
-
15
51
34
15
69
16
28
72
-
91
9
-
29
59
12
27
73
-
97
3
-
67
33
—
73
27
-
97
3
-
9
81
9
17
83
-
86
14
-
58
Majority of the employees of all the three sectors of banks were concentrated either on high or moderate level on the elements of ‘trainings adequacy’, ‘effectiveness of trainings’ and ‘customer service’ which indicates that the employees of all the three sectors were satisfied with the adequacy and the effectiveness of the trainings given to them and also Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 69
considered quality customer services essential for cementing good relations with their managements. Besides this, the results data given in Table 3 also reveal that most of the employees of new private sector were concentrated either on high or moderate level on all the element of employment relations except on the elements of unionism and job security with 86% and 55% of the employees being concentrated on low level on these elements. This further corroborates that the employment relations environment in new private sector banks was quite better as compared to that in the public and the old private sector banks. However, the low level on the element of job security and unionism reflect that employees in new private sector banks were more apprehensive about the security of their job and also considered trade unions irrelevant in their employment relations. Table 3: Element-wise ANOVA on Inter-Sector ER Perception in Banks (n=441) Elements of Employment Relations
‘f ’ values
‘p’value
Salary Adequacy
13.74
0.00
Salary Comparison
67.60
0.00
Promotion Avenues
69.60
0.00
Promotion Policy
90.90
0.00
Grievance Listening
90.26
0.00
Grievance Redress
138.03
0.00
Participation
60.69
0.00
Involvement
145.28
0.00
Trainings Regularity
83.28
0.00
Training Effectiveness
46.66
0.00
Employee Treatment
55.78
0.00
Fair Postings/Transfers
163.50
0.00
Welfare Facilities
86.73
0.00
Welfare Comparison
136.88
0.00
Management & Change, Volume 17, Number 1 & 2 (2013)
70 Employment Relations in Indian Banking Industry - An Inter...
Job Security
67.04
0.00
Job Safety
8.65
0.00
Decentralization
35.09
0.00
Delegation
32.79
0.00
Performance Evaluation System
91.65
0.00
Performance Appreciation.
322.03
0.00
Trade Unionism
83.65
0.00
Unionism vs. Proactive HR
117.35
0.00
Automation vs. Employee Concerns
88.65
0.00
Automation Vs. Operational Efficiency
75.41
0.00
Customer. Service
17.85
0.00
Employees Role in Customer Service.
107.24
0.00
The employees of the old private sector bank were concentrated more between high to moderate level on all the elements of ER except the elements of ‘participation and involvement’, ‘employee welfare comparison’ and ‘performance appreciation’. This clearly indicates that the employees of old private sector bank perceived lack of involvement in decision-making process, lack of appreciation and encouragement to the performers over non-performer, and, inadequate welfare facilities in comparison to other banks as the major irritants in their employment relations. The employees of public sector banks were concentrated more between high to moderate level on the elements of promotion avenues, promotion policy, grievances handling, trainings, employees’ treatment, fair postings, employee welfare, job security, job safety, decentralization, delegation, performance evaluation system, unionism, automation and customer service. This indicates that employees of public sector banks perceive good promotion avenues and a fair promotion policy in their banks. They also perceive that there is a grievance handling system in place in their banks but were not satisfied with the redressal of their grievances. The public sector bank employees also believe that the
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 71
managements treats various categories of employees with equity and without any discrimination. These banks have also delegated sufficient authority to their branch employees to meet the challenge of intense competition in the industry. Moreover, the trade unions still play an active actor in the industrial system of public sector banks. However, a majority of public sector bank employees were concentrated on low level on the element of ‘involvement and participation in decision-making process’, ‘appreciation of performers over nonperformers’, ‘salary adequacy’ and comparative favourability of salary. This reflects that the employees of public sector bank perceived these elements as the most strong irritants and obstructions in creating and maintaining a cordial employment relation environment in their organisations. These findings further corroborate the variation in the employment relations in the three sectors of commercial banks. Analysis of the Findings of ANOVA For a deeper analysis of employment relations in the three sectors of banks, an element-wise ANOVA given in Table 3 and ‘f’ and ‘p’ values given in Table 3 reveal that the mean score differences in all the elements of employment relations of the three sectors were statistically ‘significant.’ However, the ‘f’(ANOVA) value on the elements of performance appreciation (322.03), fair postings/transfers (163.50), employees’ involvement (145.28), grievances redressal (138.03), welfare comparison (136.88), trade unionism vs. proactive HR (117.35) and employees’ role in customer services (107.24) were more glaring and significant than on other elements of ER thereby indicating that employee perception of these elements of ER had huge variations among the three sectors of the commercial banking industry. An analysis of the ‘f’ and ‘p’ values given in Table 3 reflect that the employees of public and old private sector commercial banks shared similar perception on the elements of promotion avenues, participation and involvement, employee treatment, unionism, ‘automation vs. operational efficiency’, ‘customer service as tool for competition’ and employees’ role in customer services as ‘p’ value on these elements of their employment relations were statistically non-significant (NS). Management & Change, Volume 17, Number 1 & 2 (2013)
5.6 5.3 5.8 5.8 6.1 2.8 5.2 3.5 6.6 7.2 7.0
Sal.Compari
Promo Ave.
Promo Pol.
Gre. Listening
Gre. Redress
Participation
Involvement
Trainings Adq
Trgs. Effect
Emp.Treatme
Mean
Public Sector (n=216)
Sal. Adequacy
Elements of Employment Relations
Management & Change, Volume 17, Number 1 & 2 (2013) 1.8
2.2
2.3
2.1
2.7
2.1
2.1
2.3
2.2
2.2
2.4
SD
6.9
8.2
7.8
4.8
5.5
5.6
6.5
6.5
6.3
4.8
6.3
Mean
Old Pvt. Sector (n=119)
1.8
1.8
1.8
2.6
3.3
2.4
2.1
2.1
2.3
2.3
2.0
SD
8.9
9.3
9.5
7.9
8.6
8.8
9.0
9.0
8.9
7.8
6.8
Mean
New Pvt. Sector (n=106)
1.3
1.3
0.9
1.7
1.8
1.0
1.0
1.0
1.3
1.5
2.0
SD
0.51
-5.88
-4.51
-5.89
-0.91
-3.71
-2.25
3.25
1.64
2.48
-3.76
‘t’
NS
0.0
0.0
0.0
NS
0.0
0.0
0.0
NS
0.0
0.0
‘p’
Public Sector Vs Old Pvt.Sector
-11.79
-11.23
-18.95
-21.10
-14.56
-25.85
-19.47
-19.71
-15.81
-12.70
-4.97
‘t’
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
‘p’
Public Sector Vs New Pvt. Sector
‘t’ and ‘p’ values
Table 4: An Element-wise Inter-Sector Comparison of Employment Relations in Banks
-11.1
-5.5
-13.7
-12.5
-11.0
-16.9
-15.1
-14.5
-12.5
-13.4
-1.90
‘t’
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
NS
‘p’
Old Pvt.Sector Vs New Pvt Sector
72 Employment Relations in Indian Banking Industry - An Inter...
4.7 6.6 5.6 5.8 7.5 7.7 7.6 6.5 3.7 6.0 4.0 7.9 8.3 9.3 7.4
Fair Postings
Emp. Welfare
Welfare Com.
Job Security
Job Safety
Decentralizati
Delegation
P.E. System
Perfor.Apprec
Unionism
TU vs.PHR
Auto vs Emp.
Auto vs. Effic
C.S.
Emp.Role CS
1.6
10
1.4
1.3
2.0
1.9
2.0
2.1
1.6
2.2
1.7
1.4
1.6
1.8
2.2
8.1
9.4
8.3
8.4
6.1
5.0
5.2
6.9
8.6
9.0
7.2
4.5
5.1
6.6
5.2
1.1
0.9
1.2
1.1
2.3
2.3
2.4
1.7
1.2
1.3
1.6
2.3
1.9
2.0
2.3
9.7
9.9
9.9
9.7
7.6
3.0
9.8
9.4
7.0
9.0
8.0
2.6
8.6
9.2
9.1
0.7
0.4
0.4
1.1
1.3
1.6
0.8
1.0
2.1
1.6
1.7
2.1
2.2
1.1
1.7
-1.78
-1.64
0.32
-5.60
-9.28
0.95
-7.43
-2.64
-8.44
-10.9
2.57
7.29
3.58
0.12
-2.15
NS
NS
NS
0.0
0.0
NS
0.0
0.0
0.0
0.0
0.0
0.0
0.0
NS
0.0
-19.48
- 9.00
-19.00
-13.56
-18.54
-11.91
-42.25
-18.64
2.80
-7.78
-2.33
9.86
-12.64
-16.97
-20.89
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-14.9
-6.4
-17.8
-9.26
-7.26
8.96
-24.3
-16.0
4.98
-2.31
-4.10
3.71
-13.9
-14.6
-16.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Javid Ahmad 73
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74 Employment Relations in Indian Banking Industry - An Inter...
However, the results also reveal that the employees of the public sector banks had negative‘t’ values on the elements of salary adequacy, grievances listening, grievances redressal, employee involvement, trainings effectiveness, fair postings/transfers, decentralization, delegation, performance evaluation system, performance appreciation, unionism vs. proactive HR and automation vs. employees concerns over their counterparts in the old public sector banks . This certifies that the employees of old private sector perceived better employment relations on these elements over their public sector counterparts The ‘t’ values further reveal that employees of new private sector bank were experiencing better employment relations over both the public as well as old private sector bank employees on all elements except the elements of unionism, delegation of authority and job security This shows that the employees of the new private sector were more concerned about security of their job than their counterparts in public and old private sector banks. Similarly, the employees of new private sector did not consider trade union as relevant actor in employment relations in banking sector in the contemporary economic environment. These employees also perceived a lesser degree of delegation of authority at the branch level. The above analysis leads to the conclusion that the on the whole employment relations in new generation private sector banks were comparatively better than in the public sector and the old private sector banks. Similarly the employer-employee relations in the old private sector bank under study were found to be better than that in the public sector banks. The statistical data in Tables 2, 3, 4 and 5 clearly establish that there were variations in the employment relations amongst the employees of: (a)
Public and old private sector commercial banks,
(b) Public sector and new private sector commercial banks and (c) Old private sector and new private sector commercial banks. Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 75
In order to find out the elements that were strainers and stressors on the employment relations in the three sectors of commercial banks, mean percentages on all the individual elements of employment relations in the three sectors of commercial banks and their rankings are presented in Table 5. Table 5: Element-wise Inter-Sector Comparative Rankings of ER in Banks Elements of ER
Public Sector
Old Private Sector New Private Sector
Mean %
Rank
Mean %
Rank
Mean%
Rank
Salary Adequacy
55.8
19
63.1
15
67.7
23
Salary Comparison
53.0
20
48.1
24
77.6
20
Promotion Avenues
58.4
15
62.9
16
88.7
15
Promotion Policy
58.2
16
64.6
14
89.7
13.5
Grievances Listening
61.0
13
65.2
13
91.0
11
Grievances Redressal
48.2
22
55.6
18
87.5
16
Participation
52.2
21
54.7
19
86.7
17
Involvement
35.0
26
47.6
25
78.6
19
Trainings Adequacy
65.6
11
73.7
8
94.8
6
Trainings Effectiveness
72.2
8
82.3
6
92.4
8
Fair Employee Treatment
69.8
9
69.1
11
89.7
12
Fair Postings/Transfers
47.6
23
51.8
21
91.4
10
Employee Welfare Facilities
66.4
10
66.7
12
92.2
9
Welfare facilities Compari
56.4
18
50.8
22
86.1
16
Job Security
57.8
17
45.3
26
35.8
25
Job Safety
75.4
6
71.8
9
80.1
18
Decentralization
77.0
4
89.6
2
89.7
13.5
Delegation/Work autonomy
75.6
5
85.6
3
69.9
22
Performance Eva. System
65.4
12
69.7
10
94.0
7
Management & Change, Volume 17, Number 1 & 2 (2013)
76 Employment Relations in Indian Banking Industry - An Inter... Performance Appreciation
37.2
25
51.8
20
95.8
5
Trade Unionism
60.0
14
50.5
23
40.1
24
Unionism vs. Pro HR
43.4
24
61.1
17
76.0
21
Automations vs. Empl Con
78.8
3
84.5
4
96.4
4
Automation vs. Op.efficienc
82.6
2
83.0
5
100.0
1
Customer Service
93.6
1
94.5
1
99.2
2
Employees’ Role in C/S.
74.2
7
81.1
7
97.2
3
The mean percentages and ranking order on all the elements of the employment relations in public, old private and new private sector banks reveal that employees of all the three sectors had a unanimous opinion on efficient and effective customer services and employees’ role in effective customer services on harmonizing their employment relations with their managements. The ranking order also certify that the employees of the public sector and old private sector banks now believe that automation in banks have not only increased the operational efficiency but also improved the profitability of the banks as both the elements of the dimension of ‘automation’ have been ranked in the top order by the employees of these banks. The mean percentages and rankings further reveal that bank employees of all the three sectors perceive a fair degree of work autonomy and safe working conditions as these elements have higher mean averages and ranking orders. The employees also perceive that managements of the banks give a fair treatment to various categories/cadres of employees. The low mean percentages and consequent lowest ranking order by the employees of public sector banks indicate that the following elements have the potential to cause adverse reaction to the chemistry of employment relations:i.
Involvement and participation of employees in the decision-making process (mean 35.0% & 52.2%, rank 26th & 21st respectively)
ii.
Performance Appreciation (mean 37.2% rank 25th )
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 77
iii.
Unionism vs. Proactive HR policies (mean 43.4%, rank 24th ),
iv.
Employees’ fair postings/transfers (mean 47.6% , rank 23rd ),
v.
Satisfactory redressal of employees’ grievances (mean 48.2% rank 22nd),
vi.
Comparative favourability of salaries and welfare facilities (mean 53.0% and 56.4%, ranks 20th and 18th respectively),
vii. Salary adequacy (mean 55.8%, rank 19th ) viii. Job security (mean 57.8%, rank 17th ), ix.
Promotion avenues and promotion policy (mean 58.4%and 58.2 %, ranks 15th and 16th respectively).
The employees of public sector banks were by and large satisfied on other elements of employment relations. Similarly the elements that could or were straining employment relations in the old private sector bank were:i.
Job security (mean percentage 45.3, rank 26th)
ii.
Involvement and participation in the decision-making process (mean 47.6 and 54.7, ranks 25th and 19th respectively)
iii.
Salary and welfare facilities in comparison to new private sector and foreign sector banks (48.1% & 50.8%, rank 24th & 22nd )
iv.
Employees’ fair postings transfer (mean 51.8 & rank 21st)
v.
Performance Appreciation (mean 51.8, rank 20th )and
vi.
Satisfactory redressal of employees ‘grievances (mean 55.6, rank 18th)
The employees of new private sector bank experienced overall better employment relations over their counterparts in both public sector and old Management & Change, Volume 17, Number 1 & 2 (2013)
78 Employment Relations in Indian Banking Industry - An Inter...
private sector banks, yet their relations with their management were under stress on the following elements of employment relations:i.
Job security (mean 35.8%, rank 25h),
ii.
Adequate salaries commensurate to their job responsibilities( mean 67.7%, rank 23rd ) and
iii.
Delegation of authority ( mean 69.9, rank 22nd )
Besides the ranking order reveal that the employees of new private sector bank do not perceive trade unions effective in checking the arbitrary powers of the managements today as they placed the element of trade unionism at rank number 24th in the ranking order with a mean percentage of 40.1. SUGGESTIONS The employment relations in the commercial banking industry have been improving over years as reflected by the decreasing number of employee strikes in the industry during recent years compared to the earlier decades. However, employees of public and old private sector banks perceived lack of participation in decision-making process relating to their work, their job security, appreciation and encouragement of the performers over non-performers, postings/transfers, unfavourable salaries and welfare facilities in comparison grievance redressal mechanism and inadequate salaries commensurate to employeesâ&#x20AC;&#x2122; job responsibilities as major stumbling blocks in fostering cordial employment relations. Many research studies have revealed that participation and involvement of employees in decision-making process enhances their performance and productivity (Sashkin, 1984; Lawler, 1992) Therefore, it is imperative for both the public and old private sector banks to win the confidence of all their operational level employees by sharing all work related information with them and allow them to suggest solutions for solving their day-to-day operational problems. The impact of rewarding and punishing behaviours has been studied by learning theorists. Social psychologists have studied the effects of many Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 79
of such procedures on the performance of individuals working in organizational system. Dayal and Saiyadain (1970) found that motivation of employees is related among other factors to the recognition of good work of the employees It is, therefore, essential that the managements of both public sector and old private sector banks initiate immediate steps to orient their overall management to the essentiality of appreciating and rewarding the good work of their employees by suitable incentives. The time of same salary structure for all employees seems to be irrelevant in the present competitive environment. The banks have to use various methods of rewarding the good work of their employees such as performance-linked pay and perks, fast track promotions, and other financial and or non-financial rewards. Further the salary gap between managerial and clerical staff has been widening sharply of late The wage revision negotiations between the public and old private sector bank managements’ amalgam “Indian Banks Associations” and different bank employees’ federations of these banks get prolonged thus causing bitterness in the relations between bank employees, their unions and the bank managements. Therefore, instead of industry-level salary structure, bank-level salary structure need to be encouraged to shorten the process of wage revision negotiation. Besides, the wages revision should be realistic and benefit of the revision should be fair to all cadres of employees in the organisation. REFERENCES Barlett, Kotrlik and Higgins (2001). Organisational Research- Determining Appropriate Sample Size in Survey Research. Information Technology- Learning & Performance Journal.Vol.19. Beland, D. (2009). Ideas, Institution and Policy Change. Journal of European Public Policy.16(5) pp. 701-718. Commons, J. R. (1934). Institutional Economics. New York, Macmillan. Commons and Andrews (1936). Principles of Labor Legislation. 4th ed. Harper and Brothers, New York. Management & Change, Volume 17, Number 1 & 2 (2013)
80 Employment Relations in Indian Banking Industry - An Inter...
Dayal, Ishwer and Saiyadain, Mirza (1970). M.S. Crosscultural Validation Motivation Hygiene Theory. Indian Journal of Industrial Research. New Delhi. Vol.VI pp. 171-183. George, D. and Mallery, P. (2003). SPSS for Windows step by step: A Simple guide & Hoxie, R.F.(1932). A Theory of Wages, New York , Macmillan reference 11.0 update(4th ed.), Boston: Allyn & Bacon Hoxie, R. F. (1932). A Theory of Wages. New York, Macmillan. Hoxie, R. F. (1921). Trade Unionism in the United States. AppletonCentury-Croffs, New York. Kaufman, B. E. and Lewin, D. (1998). Is the NLRA Still Relevant to Todayâ&#x20AC;&#x2122;s Economy and Workplace. Labor Law Journal. Kessler, Sd. and Bayliss, Fred (1992). Contemporary British Industrial Relations. Macmillan. Kochan, T. A., Katz, A. C. and Mc Kersie, R .B. (1986). The Transformation of American Industrial Relation. New York. Basic Books Kornhauser, A., Dubin, R. and Ross, A. M. (1954). Industrial Conflict. McGraw-Hill, New York. Lawler (1992). Quality Circles after the Fadâ&#x20AC;?, Harvard Business Review, 63(1) pp. 65-71. Millward, Neil (1994). The New Industrial Relations. Policy Studies Institute, UK. Millward, N., Bryson, A. and Forth, J. (2000). All Change at Work, London: Routledge. Rojot, J. and Tergeist, P. (1992). New Directions in Work OrgnisationsThe Industrial Relations Response, OECD Publication, France pp.933.
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 81
Saini, D. S. (2003). Labour Organisation and Labour Relations Law in India. Lucy William, Peter Robson and Absjorn Kjonstad (eds), Law and Poverty: Poverty Reduction and the Role of the Legal System, Zed Books, London. Sashkin (1984). Does Fairness Make a Difference?.Organizational Dynamics. Sharma, B. R. (1986). Not By Bread Alone. New Delhi Shri Ram Centre. Srivastava, D. K. (2006). Trade Union Response to Declining Membership Base: Best Practices from Mumbai-based Trade Unions. Indian Journal of Industrial Relations. April, 2006. pp.355-374. Taylor, John (2013). The Workplace in Transition: A Decade of Change and Challenge. Warwick Papers in Industrial Relations. No.97, May, 2013.
Management & Change, Volume 17, Number 1 & 2 (2013)
82 Employment Relations in Indian Banking Industry - An Inter...
ANNEXURE A (For Branch Heads) Part â&#x20AC;&#x201C; I Dimensions of Employment Relations Following statements describe certain important dimensions of employment relations. Please read each statement carefully and indicate by a tick mark ( â&#x20AC;&#x153; ) in the appropriate box the extent each statement is TRUE in case of your Bank. Your free, frank and spontaneous response to each statement will be highly appreciated. Scale 1 = True to Almost no extent 2 = True to a small extent 3 = True to some extent 4 = True to a great extent 5 = True to a very great extent S. No. Statement 1 1
Considering your qualifications and job responsibilities, your salary is adequate and attractive.
2
Your salary, allowances and other perks compare favourably with the salary package of branch managers in other commercial banks.
3
There are sufficient promotion avenues for you in the Bank
4
The promotion policy pursued by the Bank is fair and sound.
5
Management is always ready to listen to your grievances.
6
Your genuine grievances are redressed satisfactorily by the management.
7
Management seeks your opinions and suggestions before taking important decisions relating to the functioning of the Bank.
Management & Change, Volume 17, Number 1 & 2 (2013)
S C O R E 2 3 4
5
Javid Ahmad 83
8
Management takes you into confidence before taking important decisions relating to the functioning of your branch.
9
You are provided sufficient and regular trainings for updating your knowledge and developing your personality.
10
Trainings help you to perform your job more effectively.
11
Officers of all categories and different scales are treated fairly and impartially by the management.
12
Branch managersâ&#x20AC;&#x2122; postings/transfers are fair and impartial.
13
Welfare facilities provided to you are adequate (examples; pension, medical, housing, loan facilities, etc)
14
Your welfare facilities compare favourably with those enjoyed by officers of other commercial banks.
15
It is very difficult for the management to dismiss an officer from the services of the Bank.
16
Management safeguard your interests in a risky situation which arises for reason beyond your control( such as bank dacoities, or loans turning bad inspite of exercising all prudent norms and care)
17
You have sufficient authority for taking routine and usual decisions at the branch level.
18
You have sufficient financial powers for sanctioning loans at the branch level.
19
Bank has sound performance evaluation for identifying meritorious and better performing officers.
20
Branch Heads that perform better are duly appreciated and rewarded by the management.
21
Officersâ&#x20AC;&#x2122; associations help to check the arbitrary powers of bank management.
Management & Change, Volume 17, Number 1 & 2 (2013)
84 Employment Relations in Indian Banking Industry - An Inter... 22
Application of proactive HR policies by the management (such as unilateral hike of salaries, pensions, welfare facilities, etc) has curtailed the role of trade unions now.
23
Computerization has increased the efficiency of operations and profitability of the Bank.
24
Computerisation has not adversely effected the basic concerns such as job security, promotions, etc.
25
An efficient customer service is the most effective tool for meeting competition in the banking sector
26
You have an important role to ensure effective and efficient services to the bank customers.
27
Given your job responsibilities and work experience, Bank pays sufficient salary to you.
28.
Your salary is at par with your counterparts in other commercial banks in the country.
29.
You are satisfied with the chances of promotion in the Bank.
30.
The officers are promoted without any bias or favouritism.
31.
Whenever you have any grievance, Bank is ready to listen to it.
32.
You are satisfied with the redressal of your grievances.
33.
Bank always consults employees before initiating important decisions in the Bank.
34.
Your views are obtained by the Bank before taking decisions relating to branch business.
35.
You are satisfied with the number of trainings imparted to you in the Bank.
36.
You perform more effectively after attending a training program.
37.
Bank does not discriminate with any category of employees.
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 85
38.
Branch managers’ postings/transfers are made without any favour or bias.
39
Your pension and other welfare facilities are adequate and sufficient.
40
Your pension and other welfare facilities are at par with your counterparts in other commercial banks in the country.
41
Your job in the Bank is fully secured.
42
You are satisfied with the working conditions in the branch office.
43
Bank has given you sufficient authority in taking day-to-day decisions in the branch.
44
You grant any type of loan at the branch without prior approval from your higher authorities.
45
Your performance is measured fairly by the Bank.
46
Bank rewards you if you meet your business targets.
47
Trade union/s is/are essential for bank officers.
48
Bank unions have now no role because Bank unilaterally gives salary hikes and other benefits.
49
Profits and customer conveniences have increased in Banks after the computerisation in Banks.
50
Your job security and promotion chances have not been adversely affected due to computerisation in Bank.
51
Good customer service is the only way to beat rival banks.
52
Employees’ role is all-important in good customer services.
Part – II Please give your frank assessment of the management – employee relations in your Bank on the following scale by ticking the point that comes closest to your evaluation: Management & Change, Volume 17, Number 1 & 2 (2013)
86 Employment Relations in Indian Banking Industry - An Inter...
The relations between employees and the Bank management very poor/ poor/satisfactory/good/excellent Part III Please give your suggestions for improvement of management– employee relations in your bank. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Part – IV Background Information (Please fill in the below information) Name of the Bank
: _____________________________
Name of the Branch
: ______________________________
Designation
: ______________________________
Age
: Below 30 years / 30 – 45 years / 45 years above
Work Experience
:( a) In the present post _____________ years. : (b) Total service in the Bank 10/11-20/Above 20 years (Tick 9)
Sex
:M/F
Edu. Qualifications
: Graduation / PG (General)/PG (Professional)*
Are you a member of Trade Union/Association
: Yes / No
Name of the T.U./Association:_____________________________ Please indicate the position, if any, held in the Trade Union: ___________ MANY THANKS FOR YOUR KIND COOPERATION * PG Professional= MBA/MCA/ M.Sc(Agri), or its equivalent Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 87
(For Branch Staff Other than Branch Manager) Part â&#x20AC;&#x201C; I Dimensions of Employment Relations Following statements describe certain important dimensions of employment relations. Please read each statement carefully and indicate by a tick mark ( 9) in the appropriate box the extent each statement is TRUE in your case.. Your free, frank and spontaneous response to each statement will be highly appreciated. Scale 1 = True to Almost no extent 2 = True to a small extent 3 = True to some extent 4 = True to a great extent 5 = True to a very great extent S. No. Statement 1 1
Considering your education and job responsibilities your salary is adequate.
2
Your pay-scales and allowances compare favourably with employees of your rank in other commercial banks
3
There are many opportunities for your promotions in the Bank.
4
Employees are promoted systematically and objectively in your Bank..
5
Management is always ready to listen to your grievances.
6
Your genuine grievances are redressed satisfactorily by the Bank..
7
Before taking any important decisions, the management invite your views.
8
The management involves you in the decisionmaking process relating to your work.
S C O R E 2 3 4
5
Management & Change, Volume 17, Number 1 & 2 (2013)
88 Employment Relations in Indian Banking Industry - An Inter...
9
You are provided adequate trainings for updating your job knowledge and technical skills.
10
Trainings provided help you to perform your job more effectively.
11
Employees of all cadres and categories are treated fairly and impartially by the management.
12
Your postings/transfers are made fairly, objectively and impartially by the Bank.
13
Welfare facilities (including pension, medical, housing, and loans, etc) provided to the branch employees are adequate.
14
Your welfare facilities compare favourably with other commercial banks in the country.
15
It is very difficult for the management to dismiss an employee from the service..
16
Working conditions in the branch are safe for proper discharge of your duties.
17
You discharge your duties without any undue interference from your superiors.
18
You dispose your routine work without referring to your superiors.
19
Branch employeesâ&#x20AC;&#x2122; performance is evaluated in a way which helps to identify hard working and competent employees â&#x20AC;&#x2DC;
20
Better performers among the branch employees are duly appreciated and rewarded by the Bank
21
Trade unions are essential for checking the arbitrary powers of the management.
22
Managementâ&#x20AC;&#x2122;s proactive HR policies (such as unilateral salary or pension or welfare hikes) have curtailed the role of unions in banks..
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 89
23
Computerisation has not adversely effected your basic concerns such as job security, promotions, etc.
24
Computerisation has increased the efficiency of operations and profitability of banks.
25
An efficient and effective customer service is a tool to meet competition in the banking sector.
26
Branch employees have the most important and vital role in ensuring effective services to the bank customers.
27
Given your education, experience and job responsibilities, your salary is good.
28.
Your salary is at par with your counterparts in other commercial banks in the country.
29.
There are sufficient chances of your promotion in the Bank.
30.
The promotion policy of the Bank is without any bias or favouritism.
31.
Whenever you have any grievance, Bank is ready to listen to it.
32.
You are satisfied with the redressal of your grievances.
33.
Bank always consults employees before initiating important decisions.
34.
Your views are obtained by the Bank before taking decisions relating to branch business.
35.
You are satisfied with the number of trainings provided to you.
36.
You perform better after attending trainings.
37.
Bank does not discriminate with any categories of its employees.
Management & Change, Volume 17, Number 1 & 2 (2013)
90 Employment Relations in Indian Banking Industry - An Inter...
38.
Employeesâ&#x20AC;&#x2122; postings/transfers are made without any favour.
39
Your pension and other welfare facilities are good and sufficient.
40
Your pension and other welfare facilities are at par with your counterparts in other commercial banks in the country.
41
Your job in the Bank is fully secured.
42
You are satisfied with the working conditions in the branch.
43
Bank has given freedom to perform your day-today work without any interference from your superiors.
44
You perform your daily job without referring to your senior officers.
45
Your performance is measured objectively and fairly.
46
Bank rewards you if you perform better than others.
47
Trade union/s is/are essential for bank officers and other employees.
48
Trade unions have now no role because Bank unilaterally gives salary hikes and other benefits to employees.
49
Profits and customer conveniences have increased in Banks after the computerisation.
50
Your job security and promotion chances have notbeen adversely effected due to computerisation in Bank.
51
Good customer service is the only way to beat other banks.
52
Employeesâ&#x20AC;&#x2122; role is all-important in good customer services.
Management & Change, Volume 17, Number 1 & 2 (2013)
Javid Ahmad 91
Part – II Please give your frank assessment of the management – employee relations in your Bank on the following scale by ticking the point that comes closest to your evaluation: The relations between employees and the Bank management are very poor / poor/ satisfactory/very good /excellent Part III Please give your suggestions for improvement in employee-management –relations in your bank. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Part – IV Background Information (Please fill in the below information Name of the Bank
: _______________________
Name of the Branch
: ________________________
Designation
: _______________________
Age
: Below 30 years / 30– 45 years / Above 45
Work Experience
: (a) In the present post _______years : (b) Total service in Bank 10/11-20/Above 20
Years Sex
(Tick”) : M/F Management & Change, Volume 17, Number 1 & 2 (2013)
92 Employment Relations in Indian Banking Industry - An Inter...
Educational Qualifications : Graduation / PG (General)/PG (Professional)* Are you a member of Trade Union/Association?:
Yes / No
Name of the T.U./Association: ______________________________ MANY THANKS FOR YOUR KIND COOPERATION (*PG (Professional)=MBA/MCA/MSc.(Agri)/or its equivalent)
Management & Change, Volume 17, Number 1 & 2 (2013)
Ritesh Dwivedi, Anand Batra 93
COMPARATIVE ANALYSIS OF UNIT LINKED INSURANCE PRODUCTS OF DIFFERENT COMPANIES Ritesh Dwivedi 1
Anand Batra2
Unit Linked Insurance Plan (ULIP) commonly known as a composition of Investment and Life Insurance provides an opportunity to earn a non-taxable income and transfer the financial risk at the same time. Basically, ULIP offered by various insurance companies gives investors benefit of both insurance and investment under a single integrated plan under which initially units are allotted to the customers, and on daily basis NAV (Net Asset Value) is calculated. This insurance product always is vulnerable with ups and downs in the capital market and if there is volatility in the equity market or decline in interest rates; the NAV of the fund is impacted and may show a rise or fall. In frequently changing business environment, life insurers also have stiff competition. A high value, satisfied, profitable customer is the main objective of Life Insurers and different companies have their unique way to approach their objectives. This study attempts to gauge the perception of people upon ULIPs offered by different companies. The study aims to identify the factors that affect customerâ&#x20AC;&#x2122;s decision to buy an insurance product. As insurance is a way to manage risk whereas, ULIP are not risk free investments, so a dilemma arises whether to avoid risk or to accept risk because companies offer different risk options to manage funds. In this perspective, the study has also collected the perception of people for taking risks in ULIP. The findings of the study have identified the most trusted ULIP option according to public perception and also the 1
2
Ritesh Dwivedi, Assistant Professor, Department of Rural Management, Amity Business School, Amity University , Sector 125, Noida-201303, Uttar Pradesh, India. Mobile: 0-9415576820, E-mail: ritesh_hariom@rediffmail.com Anand Batra, Student, MBA, Amity Business School, F-3 Block, Amity University, Sector 125, Noida-201303, Uttar Pradesh, India. Mobile: 0-9729669017, Email: anandbatra2@gmail.com Management & Change, Volume 17, Number 1 & 2 (2013)
94 Comparative Analysis of Unit Linked Insurance Products of ...
first preference of customers. The study has compared and analysed wealth creation plans of four companies i.e. HDFC Life, Bajaj Allianz, Reliance Life, and ICICI Prudential. Keywords: ULIP, HDFC Life ULIPs, Customer Satisfaction, Comparative Analysis, Analysis of ULIPs INTORDUCTION A ULIP is a capital market linked product that combines the benefits of both insurance and investment. This dual benefit along with the flexibilities, make ULIPs an attractive investment. Flexibility in ULIPs refers to the flexibility in switching of funds, managed through different types of risk. The premium amount paid in ULIPs is invested in debt, equity and infrastructure bonds, which translate into substantial returns over a period of time. ULIPs are best classified on the basis of purpose they serve. First category can be ULIPs for retirement which accumulates a corpus amount and are used to get annuities after retirement. The second category comprises ULIPs for wealth creation which multiplies wealth over a period of time. Likewise third and fourth type of ULIPs can be for children’s education and health benefits respectively. A comparison of ULIPs of four different companies i.e. HDFC Life, Bajaj Allianz, ICICI Prudential, Reliance Life is provided in Annexure 1. In this study, every single point been taken for which people should ensure before purchasing any ULIP from this four company. In lieu of same comparison, only ‘wealth creation’ ULIPs have been chosen here. ULIP policy holders are also allotted units and each unit has a net asset value (NAV) that is declared on a daily basis. The NAV is the value based on which the net rate of returns on ULIPs are determined. The NAV varies from one ULIP to another based on market conditions and the fund’s performance. The current study has taken the records of four products of different companies as compared in Annexure 1. It is evident that ICICI Pinnacle Super is giving maximum returns as on Oct 8, 2013 both in case of Absolute (%) & Annualized (%). In case of Bajaj Allianz,
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they are giving least returns in comparison to all other ULIPs. HDFC Life Crest is on second position in terms of both Absolute (%) & Annualized (%) (Figures 1 & 2, Annexure 2). Capgemini Survey, 2012, (Exhibit 1, Annexure 3) shows that 69% of customers have a positive satisfaction about their insurance product. In comparison to other countries, India is far behind to achieve maximum level of positive satisfaction. Indian insurerâ&#x20AC;&#x2122;s especially private insurers should look into this matter very seriously. LITRATURE REVIEW ULIPs are largely sold as solely investment products. It has been strong positioning that a larger share of retail investors money enters the market through ULIPs than through pure investment products like mutual funds. ULIP distinguishes themselves through the multiple benefits that they provide to the consumer. These are quite similar in terms of their structure and functioning. But they are different in terms of investment, expenses ratio, risk and return characteristics (Kumar, 2013). According to Saini (2011), ULIP renders two a benefits at the same time. Hence, maximum business of life insurers are coming out by these plans now days. He has further posited that though the responsibility of insurers is very limited in these types of plans, yet transparency of functioning of this type of products is desirable. Moreover, these products may be made economical so that the people from rural background can also enjoy the benefits of ULIPS. According to Mitra & Khan (2012) the risk factor of ULIP is directly related to stock market. The NAVs are calculated on daily basis; NAVs of the units go up and down depending upon the fund performance and factors affecting capital market. ULIPs are subject to many charges like fund management charges, mortality charges, premium allocation charges etc. It also stated that the ULIPs are more risky than traditional policies. Studies have shown that private companies are showing higher growth in ULIP as compared to traditional policies. In ULIPs, risk is borne by investor not the insurer but insurer should have a transparent method of calculating charges. Like mutual funds, switching is also applicable according to risk appetite of policyholder. Management & Change, Volume 17, Number 1 & 2 (2013)
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If insurance component is excluded from ULIP, then it becomes just like mutual fund. ULIPs are potentially saving vehicles with a very small component of life insurance. ULIPs can only be differentiated on the basis of charging structure by the insurer i.e. some have less allocation charge but more administration charges or some ULIPs have more surrender charges. It has been found that insurance agents are always advised to sell ULIP to the persons who are aware of the risks of investing in capital market instruments (Rajagopalan, 2005). Prasad et al., (2009) have found that in spite of various investment opportunities, ULIPs have gained more reputation among the investors. Hence their study focused on assessing the significant relation between demographic features and ULIPâ&#x20AC;&#x2122;s feature and level of investment in ULIP. Dash et al., (2007) have tried to find out rate of return given by different insurance policies and the effect of mortality, and have found that different returns are given by different insurance policies and the mortality does not affect return. In ULIP against the component of life insurance, policyholder is charged by the insurer in different ways like allocation charges, administrative charges, mortality charges, bid-offer charges, guarantee charges. Some of these charges are deducted in complex ways like percentage of annual premium, daily basis or monthly basis. It is very difficult for buyer to understand this complex structure of charges. So, IRDA made compulsory for the insurers to give the illustration to buyers with 6 % & 10% of return. Subject to findings, mutual funds seem to offer a better death benefit, survival benefit as well as less allocation charges and surrender penalties in comparison to ULIPs (Seth, 2012). In October 2000, Insurance Regulatory & Development Authority (IRDA) issued license paper to three companies, namely, HDFC Life Standard, Sundaram Royal Alliance Insurance Company and Reliance General Insurance. At the same time â&#x20AC;&#x153;Principal approvalâ&#x20AC;? was given to Max New York Life, ICICI Prudential Life Insurance Company and IFFCO Tokio General Insurance Company. Today, a total of twenty-two life insurance companies including one public sector are successfully operating in India (Srivastava et al., 2012). Management & Change, Volume 17, Number 1 & 2 (2013)
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Khurana (2009) has shown that Indians are very clear about pension funds to fulfill their retirement needs and they find life insurance as the most suitable tool for their retirement planning followed by bank deposits. ULIP yield lower returns than a combination of life cover and basket of mutual fund of same risky profile. A conservative should take a life cover and buy debt oriented funds with surplus. Seth (2012), proposes that 70% Indians, who can afford ULIP, are still uninsured. This presents a tremendous potential market. Moreover, LIC has more than 60 products to offer in market but all are outdated. This offers tremendous potential for private companies in the form of innovative product offerings (Seth, 2012). The responsibility of the insurer is very limited in this type of insurance agreement, but lured by high growth opportunities in the investment, the customers go for them (Saini, 2011). Devasenathipathi (2007) found that the purchasing decision of the consumer depends on quality, accessibility and promptness of services, which may lead a company acquire the top rank with a huge market share. Samajpati, (2011) analyzed different ULIP provider performance on various charges such as policy administration charge, premium allocation charge, fund management charge, top up allocation charges, switching charge, surrender charge in overall terms and found that the charges of the ICICI are lowest as compared to ING Vysya and Bajaj Allianz. The analysis of the returns shows that all the three ULIPs schemes and market has given positive returns during the period. Among all the three companies scheme ING Vysya has been the best performer as its return is highest during the period. However, Bajaj Allianz return is less risky as compared to other and is best in terms of minimization of risk. METHODOLOGY This study has been conducted to analyze HDFC Life ULIP products and compare them with other competitors i.e. Bajaj Allianz, Reliance Life, and ICICI Prudential. In this study responses are taken from the people who know about ULIPs offered by different companies. This study has recorded the responses of 120 respondents. Total 160 questionnaires were administered and 18 questions related with different aspects of ULIP were
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asked. In questionnaire four questions were based on Likert scale to record the classical information and rest of the questions were objective in nature to cover the other aspects of the study. Data was also collected from various secondary sources like newspapers, articles, research papers, websites etc. Objectives to be before research methods Primary objective of study is to do comparative analysis of ULIP products of different market players. Apart from this, some of the objectives are as following: •
To explore a consistent performer among all selected companies.
•
To assess the satisfaction level of customers towards ULIP.
ANALYSIS AND INTERPRETATION Respondents’ Profile Sample had 71% of male and 29% of females. This signifies that most of the times male members in family take purchasing decision to buy an Insurance product. In this study maximum respondents are from age group of 31-35. This signifies that maximum people in age of 31-35 think for investment rather than other age groups. Maximum respondents are doing private jobs i.e. 41 per cent. This signifies that people doing private job are more concerned about ULIP for Tax saving. Factors behind Study During the survey, respondents were asked to vote for the various factors for considering an insurance product. All the factors were rated from one to five where 1 stands for highly influencing factor and 5 for least influencing factor. After analysis it appeared that Tax Saving was the most important factor towards selection of an insurance product with 1.8 rating points, followed by Returns and Savings with 1.81 & 2.03 rating points respectively (Exhibit 2, Annexure 3). Surprisingly, children’s education factor is least preferred; it means people don’t look insurance sector for investing for their children’s education. Management & Change, Volume 17, Number 1 & 2 (2013)
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Figure 1: Factors that create need for an insurance product
Many taxpaying individuals try to exhaust the investment limit of up to Rs One lakh under Section 80C to avoid excessive tax deductions from their salary. After accounting for EPF, PPF and other tax-saving investments, tax payers usually have some scope for further tax savings. Risk Factor ULIPs are associated with capital market instruments. Instead of risk of life, there is risk of investment also. So, the insurers give option to investors to choose a risk. Majorly there are three types of risk. High risk fund is invested in equity shares with a high chance of getting returns. Medium risk fund is invested in both equity shares and debt instruments and its chances of getting return are moderate. Low risk fund is majorly invested in debt instruments with fixed returns and its returns are low compared to others. Guaranteed NAV fund are having a minimum amount of NAV guaranteed in advance by insurers. Analysis of the respondents data has shown that maximum respondents have selected the option of ‘High risk with chance of high returns’ followed by ‘medium risk returns. This shows the sole motive of customers to get high returns, for that they are ready to take high risks. Even people are not considering ‘Guaranteed minimum NAV’ because of High Guarantee Charge by Life Insurers (Figure 2).
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Figure 2: Risk Associated Rajagopalan (2005) has advocated for better knowledge sharing with costumer on risks involved with ULIP before sale of product by sales agent; it will increase customers’ credibility in company definitely. Preferences of Customers before Purchasing Customers tend to analyze every product or service on different parameters before purchasing it. Insurance is important enough to be analyzed in the same manner as it remains with customer for a long period of time or sometimes needed after him/her. Respondents were offered to rate some factors they will consider before purchasing an insurance product on a scale of one (highest rank) to five (lowest rank). It was found that ‘Past records of returns’ were the major factor customer consider before purchasing an insurance product followed by ‘goodwill of company’ & ‘accessible to internet’. ‘Product range of company’ is least preferred by the respondents. So, the insurers should focus on other factors rather than increasing their product line of company. Now it is very clear that good performance towards returns on made investments always help companies to increase their market share (Figure 3). Mitra & Khan (2012) have also stressed on returns as a major criteria for ULIP investments.
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Figure 3: Factors that a customer analyzes before purchasing an insurance product
Website Information As discussed before that ‘accessible through internet’ was also an option that respondents analyze before purchasing an insurance product. On a question related to whether the company’s website having full information about their products answers, the respondents rated the various companies. 30 out 46 respondents felt that company’s (HDFC Life) website had full information about their product, 19 out of 24 people thought that company’s (Bajaj Allianz) website had full information about their product. Maximum people who have chosen Bajaj Allianz product felt that the website gave all information about their charges, followed by HDFC Life. Also, 26 out of 39 people think that company’s (ICICI Prudential) website has full information about their product. 5 out of 8 people think that company’s (Reliance Life) website has full information about their product (Figure 4). Availability of required information about products on websites always contributes towards greater transparency in business which according to Saini ( 2011) is very important and sought after feature at the customers’ end.
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Figure 4: Website information
Trusted Option for Purchasing Although â&#x20AC;&#x2DC;company nameâ&#x20AC;&#x2122; does matters for purchasing an insurance product, customers are always influenced by the agent /broker/ facilitator for these transactions. Hence, companies must to take care of this aspect a lot to ensure good business volume. A dissatisfied customer will always provide negative publicity to a particular company, hence companies need to groom their agents /brokers/ facilitators well so as to enhance customer satisfaction levels. The respondents were offered different facilitators / mediators and asked to rank them on one to five (One being the most trusted & five as least trusted). According to study, customers rank referrals by their colleagues/ friends as most trusted option. This happens only when customers are satisfied, and they will refer the product to others. Composite broker was found to be the second more trusted option as it provides products from different companies. It is not necessary that a companyâ&#x20AC;&#x2122;s products will suit to everyone and here composite broker help customer to get the right product suitable to his needs and requirements (Figure 5).
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Figure 5: Trusted option
Advertisement Effectiveness Advertisement is the form of communication used by marketers to address customers and influence them. Nowadays companies spent big amounts on advertisements to influence customers for making them purchase companyâ&#x20AC;&#x2122;s products. Respondents were asked to rank advertisements of different insurance companies on a scale of one to five (one being the highly effective and five as least effective). Results showed Advertisements by HDFC Life are more effective compared to others. HDFC Life is leading in this, but still it is far away from perfection and it must take more steps to improve to its Advertisement campaign (Figure 6). Figure 6: Advertisement effectiveness
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Customer Satisfaction In this study, responses have been taken from people who know about ULIPs and they were also asked whether they own any of the life insurance product. The responses of the sample are recorded on which respondents had any of the product of the four companies. 42 out of 120 i.e. 35 % respondents, who already had an insurance product, were asked to rank their satisfaction level for the particular company on a scale of one to five (one as highly satisfied and five as least satisfied). According to the survey, ICICI Prudential had the maximum satisfied customers, followed by HDFC Life. According to this data, customers of Life Insurance Companies were very less satisfied. Here, ICICI Prudential is on top but with only 2.62 points (reflecting dissatisfaction level). Also, customers were asked about their reasons of satisfaction/dissatisfaction on the basis of the following four parameters i.e. Company’s Reminder Policy, Employee’s Concern After Sale of Policy, Monthly/Quarterly/Half-yearly Premium Scheme, Complimentary Gifts. 57 % of the respondents have voted Employee’s Concern after sale of Policy as an important aspect. This implies that all the insurers must train their respective employees to handle customer’s queries and problems carefully (Figure 7). Seth (2012) has stressed upon the customer satisfaction and asked market players to launch tailor made ULIP to cater to 60-70 % population which is largely uninsured. Figure 7: Customer Satisfaction
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Awareness about IRDA Guidelines IRDA (Insurance Regulatory & Development Authority) is apex legal body which regulates & develops Insurance sector in India. It was constituted in 1999. IRDA main aim is to protect the rights of policyholders, to ensure that insurers will do fair treatment with all policy holders. Respondents were asked whether they know about IRDA & its rules and regulations. Only 56 % respondents knew about IRDA and its importance. Indeed, companies should spread the awareness about IRDA so that people could believe that company is working according to IRDA guidelines. If company will start promoting their product matching with IRDA guidelines, they will get definitely a better response (Figure 8). Seth (2012) have already praised the guidelines on return focused illustrations issued by IRDA and explained the positive impact of the guideline on the overall market. Figure 8: Awareness about IRDA Guidelines
Expectations from Company A company launches a product with idea to cover a proper segment or area and should know customer needs. 41% respondents have responded that they expect more returns from a company followed by 35% respondents, who have responded in favor of complimentary gifts (Figure 9). During discussions with respondents it was revealed that companyâ&#x20AC;&#x2122;s employees should be in touch with customer after sale of policy and monthly payment feature should be available on all policies. Management & Change, Volume 17, Number 1 & 2 (2013)
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Figure 9: Expectations from company
COMPARISON All factors, like website information, Advertisement efficiency are ranked from 1 to 4 in context of all four companies (Figure 10). Some of the conclusions are as following: ICICI Prudential, have low website information and Advertisement Efficiency but have high customer satisfaction and earnings. This data shows ICICI Prudential customers have high satisfaction and they are referring their product to others. As discussed before, reference by known person is the most trusted option to purchase an insurance product. Among consistency, HDFC Life is on top because of their lowest mean. This data shows that HDFC Life is almost effective in every field. Still, HDFC Life is on second position on satisfaction and earnings after ICICI Prudential. HDFC Life, hence, needs to give more returns that will lead them to more customer satisfaction and earnings.
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Figure 10: Comparison of ULIPS
CONCLUSION The study has done a market analysis of ULIP product of HDFC Life with other competitors’ (Bajaj Allianz, Reliance Life, ICICI Prudential). The findings of the study from different quarters show that HDFC Life was rated the best company because of their consistency whereas ICICI Prudential had maximum market share and satisfied customers. ICICI Prudential was also seen to be generating business through word of mouth, because their advertisement efficiency was low. In context of customer satisfaction, HDFC Life was found to be second. Study was conducted to generate awareness of insurance industry. The study showed that LIC is the market leader with share of 70 per cent, which directly shows that people don’t trust private insurers. Among all private players, HDFC Life is on third position of total life insurance premium earned. One important takeaway was that all private insurers needed to improve their Children’s Plan because it was least selected reason for people for choosing an insurance product. HDFC Life’s website was not found very efficient. However, to Economic Times report dated 12th March, 2013, it was accepted by HDFC as an area of concern and was reported that HDFC would spend Rs 120 crore on advertisements over the next four years, as part of a technology-led business transformation initiative meant to help the company to be more competitive.3 3
From Economic Times News ‘HDFC Life plans 120 cr spend for Tech Edge posted on 12th march, 2013 Management & Change, Volume 17, Number 1 & 2 (2013)
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For many decades public insurer (LIC) alone has major share of 70% life insurance market. Private insurers have to create good impression among people about their products, services and returns. This huge market share directly signifies the trust building activities are very important for private insurers in India. Among all 23 private insurers, HDFC Life is on third position with 12 % market share whereas ICICI Prudential is on top with 16 % share. HDFC Life has to take major steps for consumer satisfaction to increase their business. RECOMMENDATIONS All private Insurers need to improve their Children’s Plan because it was least selected reason for people for choosing an insurance product. That shows people don’t want to take risk about their investment for children’s education. Insurers should offer guaranteed payback in Children’s Plan. Maximum people buy insurance product for tax deduction and returns, hence all private insurers should take all possible steps to incorporate these two benefits in their insurance products. Most people need high returns in ULIP and they are ready to take high risk. For this any insurer should manage their funds very carefully because equity market is totally unpredictable and insurers should diversify their investments in various companies of different sectors to minimize the risk. Minimum Guaranteed NAV Plans are less favored among high risk plans because of company’s high ‘Guarantee Charge’ on plans; hence insurers need to be come out with less ‘Guarantee Charge’. Further, insurers must understand that they need to give maximum returns to customers, because most people check past records before buying an insurance product. Others options like accessibility through internet, goodwill of company, product range of company are less important against past records of returns. Returns will directly be proportional to their market share, as more returns they will give more business they will get. Availability of information on website and its accessibility has also emerged as a major factor that people consider before buying an insurance product must be kept in mind by the companies. The findings of the study do not aim to be prescriptive, however, they can used as important guidelines of companies aiming for a larger market share in the area of ULIPs.
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REFERENCES Dash M., Lalremtluangi C., Snimer A. and Thapar S. (2007). A study on Risk-return characteristics of life insurance policies. Working paper, Social Science Research Network. September issue, pp 1-25. Devasenathipathi T., Saleendran P. T. and Shanmugashunaram, A. (2007). A study on consumer preferences and comparative analysis of all life insurance companies. Journal of Consumer Research. The ICFAI University, 2(4). pp 7-16. Khurana, A. (2009). An empirical study on performance of unit linked pension plans of selected private sector life insurance companies. Indian Journal of Finance. 3(11), pp 17-25. Kumar, K. R. (2013). Mutual funds VIS-à-VIS Ulips: An evaluation. EXCEL International Journal of Multidisciplinary Management Studies. Indian Journals.com, 3(2). pp 86-97. Mitra, D. & Khan, P. C. (2012). A comparative study of traditional policies and ULIPS with reference to life insurance companies in India. SIT Journal of Management. 2(2), pp 42-56. Prasad, J. C., Babu, S. H., Chiranjeevi, K. and Rao, KVVS Visweswara (2009). Unit Linked Insurance plans- the tasterís perceptions on the mixed bag of fruits. Indian journal of finance. 3(11), pp 42-50. Rajagopalan, R. (2005). Unit-linked insurance policies in the Indian marketa consumer perspective. Working Paper no. 56 (WP200519). T A Pai Management Institute, Manipal, pp 1-13. Saini, N. (2011). Unit linked insurance plans – a comparative study of selected insurance companies in Haryana and Punjab. Journal on Banking Financial Services & Research. 1(3),pp 119-127. Samajpati, U. (2012). Performance appraisal of Unit linked insurance Plans (ULIPs) in India: A case study. Management Insight. 8(2), SMS Varanasi, pp 66-69.
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Seth, N. (2012). Factors behind rise and fall in the sales of unit linked Insurance plans in India. Journal of Business Management & Social Sciences Research. 1(2), pp 70-76. Srivastava, A., Tripathi, S., and Kumar, A. (2012). Indian life insurance industry â&#x20AC;&#x201C; The changing trends. Journal of Arts, Science & Commerce. 3 issue (2(3)), pp 93-98.
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ANNEXURES Annexure 1 HDFC Life(CREST)
Bajaj Allianz ( I GAIN III )
ICICI Prudential ( Pinnacle Super )
Reliance Life (Guaranteed Maturity Insurance Plan)
ELIGIBILITY CRITERIA(AT ENTRY) Min age- 14 yrs. Max Age- 55 yrs.
Min age- 1 yr. Max Age-60 yrs.
Min age- 8 yrs. Min age- 8 yrs. Max Age- 70 yrs. Max Age- 50 yrs. (single premium) 65 yrs. (5 premiums)
AGE AT MATURITY Max - 65 yrs.
Min Age- 18 yrs. Max Age- 75 yrs.
Min age- 18 yrs. Min age- 18 yrs. Max age- 80 yrs. Max Age-60 yrs. (single premium) 75 yrs. (5 premiums)
POLICY TERM 10 yrs.
10,15 & 20 yrs.
10 yrs.
10 yrs.
MINIMUM PREMIUM Rs. 50,000
Rs. 15,000 (less than 9 yrs.) Rs. 10,000 (10 or more than 10 yrs.)
Rs. 48,000 (one pay) Rs 24,000 (five pay)
Rs. 50000
MODE OF PREMIUM Annual
Monthly / Quarterly/ Half Yearly/ Annually
Annual
Only Single Premium
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SUM ASSURED MIN – 10 times of Annual Premium MAX- 20 times of Annual Premium
MIN – 10 times for less than 45 yrs. 7 times for more than 45 yrs.MAX- Policy term times of Annual Premium
MIN- 125%of premium(one pay)10 times of annual premium (five pay)MAX-As per maximum sum assured multiples
POLICY YEAR 15 times the single premiumPOLICY YEAR - 2 and laterLife assured age at 1.25 times the single premiumentry
MATURITY BENEFIT Highest of Guaranteed fund of Rs. 15 Or NAV on date of maturity
Fund value as on maturity date
Higher of Higher of applicable fund applicable fund value or value or guaranteed value guaranteed value
DEATH BENEFIT Higher of Sum assured or fund value
Sum assured- all partial withdrawals
One pay- Sum Higher ofSum assured minus assured or fund all partial value withdrawals Five pay- Sum assured plus fund value, which should be not be less than 105per cent
PREMIUM ALLOCATION CHARGE Yr. 1&2 – 4per cent Yr. 3 – 3per cent Yr. 4 – 2per cent
Yr. 1to 5 – 2per cent Yr. 6 onwards – nil
Single premium No premium < Rs. 500,000 - allocation charge 5per cent>= Rs. 500,0004 per cent Five pay Yr.15 – 6per cent Yr.2 – 5per cent Yr.3,4&5 – 3per cent
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ANNEXURE 2 Figure 1:
HDFC Life- Crest
Bajaj Allianz- I Gain III
Figure 2:
ICICI Prudential- Pinnacle Super
Reliance Life Guaranteed Maturity Insurance Plan
Source: www.moneycontrol.com
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ANNEXURE 3 Exhibit 1: Customer satisfaction in India
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BOOK REVIEW Susan, M. Cantrell and David Smith (2010). Workforce of One: Revolutionizing Talent Management Through Customization (Boston: Harvard Business School Press), pp. 268, U.S. $ 35.00, ISBN 978-1-4221-4758-0. INTRODUCTION The notion of customization was first thought up in the context of manufacturing where it became necessary to differentiate between the mass production of standardized goods and a more customized set of products that would be responsive to a customer’s specifications. While the ‘customization’ of products was the ideal, it was beyond the reach of most manufacturers because of the cost factor. It was infinitely more affordable to ‘standardize’ than to customize products because the former would yield ‘economies of scale’ in manufacturing. But that was then; this is now. The good news in this book is that what advances in technology and the knowledge-based sector have made possible in manufacturing is nothing less than the imminent possibility of customization. The main beneficiaries of customization, needless to say, are external customers. Once it became possible to customize for external customers, however, the question that sprang up spontaneously in the minds of many was whether the methods developed under the aegis of customization could be used to address the needs of employees (given that they are often referred to as internal customers). And, if so, can the scope of HR approaches be activated in the direction of customization? The significance of this question emerges from the fact that the scope of most HR activity is preoccupied with increasing efficiency through standardization in the context of benefits administration for internal customers. What can be done to ensure that internal customers do not get only a standardized model of HR but rather one that is responsive to their particular circumstances? This is particularly the situation when what is at stake in talent management is a specific focus on value addition rather than an HR approach that takes in the employee population as an undifferentiated whole. While this specific approach through customization has been contemplated before, it could not be implemented in the past because the Management & Change, Volume 17, Number 1 & 2 (2013)
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requisite technologies and applications were not available. The excitement created by this book relates to the fact that these digital applications are becoming increasingly available: it is therefore important to make the best of these digital platforms to not just contemplate, but implement HR approaches with as high a level of specificity and customization as possible to benefit employees and manage their talent effectively. THE EMERGING CHALLENGE IN CUSTOMIZATION The emerging challenge then - to summarize the argument - is to deploy both database and digital technologies to customize HR offerings: this will keep individual employees happy by developing more effectiveness than is available in the context of standardized HR approaches. This however is easier said than done. But, whatever the difficulties in implementation, this management ideal at least gives HR professionals a new way to rethink the types and levels of employee engagement that are possible in principle. It also sets in motion the administrative foundations necessary to manage talent effectively. This book also shows exactly how this form of extreme customization can be done and what the implications are of doing so for the firm if it wants to increase productivity levels through forms of affective and intellectual engagement with its internal customers. The authors of this book are based at Accenture: Susan Cantrell is a researcher and David Smith is the Managing Director in charge of the talent management practice. The goal of their partnership is to work out the strategies of customization that will revolutionize talent management in knowledge-based firms and make these strategies available to their clients and readers so that HR does not just remain a ‘value saver’ but becomes instead a ‘value creator’. What would it be like to imagine a world where every employee is a ‘work force of one’? What this means is that it is possible to imagine a world where there is a specific HR policy for every single employee and designing such a set of policies becomes affordable through a process of mutual engagement between employees and firms. What are the ways of thinking required for such an approach to HR and talent management? How can such ways of thinking be leveraged to increase employee satisfaction, decrease employee turnover, reduce the total cost involved in the effective deployment of HR mechanisms, and help employees to preserve their sense of individuality? It is not clear whether the scope of such solutions is supposed to be available for firms across the board or Management & Change, Volume 17, Number 1 & 2 (2013)
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whether it is specific to societies that use the individual as the basic unit of cognition and behavior (as opposed to collectivist societies that remain indifferent to these challenges and questions). What this focus on individuals makes possible however is the development of the notion of the ‘granular’, or ‘granularity’, as the matrix of strategic interventions in the context of management consulting. THE STRUCTURE OF THE BOOK There are three parts to this book comprising eight chapters along with a conclusion and an appendix that seeks to examine how many employees may have actually encountered such forms of customization in firms. The first part sets out the rationale for customization; the second part sets out the four paths that can be followed to set up such forms of customization; the third part is about how firms can ‘cultivate’ such approaches to HR in order to get a ‘workforce of one’. This does not mean that there is only one employee; it means that every employee is made to feel so special that it is almost as though all the resources of HR were lavished on one person. This is the special feeling that is expended on external customers; the question here is whether such feelings can be generated to create both a feel-good environment and actually attend to the technical demands of value creation within an organization on a sustainable basis. The authors spell-out in great detail the potential benefits of customization for both external and internal customers before setting out the six trends that will make greater levels of customization possible in firms. The goal is ‘individuation’ for employees and ‘differentiation’ for firms in a highly competitive market such that both gain through this process of give-andtake. This is because firm performance and individual performance are interrelated whether everybody understands that to be the case or not. The authors do not argue that customization will always make sense or should be attempted in all types of firms; there are situations when customization is neither desirable nor possible. Understanding when, where, and why it should or should not be attempted as a part of organizational re-structuring is part of the diagnostic skill-sets that managers and consultants can pick up by taking the new ways of thinking discussed in this book seriously.
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THE FOUR APPROACHES TO CUSTOMIZATION The four approaches that the authors set out include the notion of segmentation (which is not unlike the segmentation of external customers), offering ‘modular choices’, developing the need for ‘broad and simple rules’, and the attempts to ‘foster employee-defined personalization’. The authors also include case-based examples of firms that have attempted to expand options for employees through the techniques enumerated above. While the initial impression of these approaches - despite the experience of these pioneering firms – is overwhelming, it is important to remember that the authors are not recommending an incremental approach to HR but advocating nothing less than a ‘paradigm shift’ so that the individuality of the employee becomes an opportunity for the firm rather than a constraint in the process of value addition. It is therefore a good idea to begin with a diagnostic to see whether the reader belongs to a company or a firm that requires such an approach; and, if so, to determine whether the necessary conditions required to do so are available in his organization. It is only after generating a diagnostic score that it becomes possible to decide whether to go ahead or not. In case the firm decides to go ahead, it must segment its work force by deciding on the employee value proposition (that is modeled on the customer value proposition). The different ways to segment the workforce are also set out along with notes on each of the relevant categories and the forms of value addition that are specific to each of these forms. The authors analyze the pros and cons of each of these approaches and make specific recommendations for the conditions under which each of these approaches are most applicable. What is important to remember is that these approaches are most likely to work only or mainly in a ‘results only environment’ that is more interested in productivity gains rather than in ‘narrow and detailed’ rules which are not cost-effective to follow. BROAD AND SIMPLE RULES The authors instead ask for rules that are ‘broad and simple’ and which do not forget the need to focus on exactly what form of value addition will accrue to the organization if they are followed. Such firms offer employees enormous flexibility in terms of where and how they work as long as the results lead to sustained productivity gains and regular breakthroughs for Management & Change, Volume 17, Number 1 & 2 (2013)
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firms. Almost all aspects of the workplace can be brought under the ambit of such rules which give employees an active hand in fostering the ethic of personalization. And, finally, it is important to remember that just as customization is important to handle internal and external customers, the ethic of customization also applies in the context of developing a theory of customization itself. This is because the spirit of customization should not be lost in the attempt to apply customization. It is also important to remember that customization is possible to varying degrees; the exact form of calibration that will help us to make a success of any particular attempt at customization is also something that requires a great deal of thought and planning. There are also case studies of companies such as Best Buy, Royal Bank of Scotland, Men’s Warehouse, and P&G to help us differentiate between different forms of customization. As Keith Lawrence of P&G puts it, ‘customization in a structured and highly facilitated fashion allows us to find a unique solution at the intersection of what is important to an individual, and what is important to the business – and scaling this so it works across the company’ (p.185). The authors also include a quiz which will help readers determine which form of customization will be most effective or useful in the context of their respective firms. The quiz will also make it possible for a firm to determine the proportionate share of each of these four approaches that characterizes the strategic potential of the firm. A NEW MANDATE FOR HR It is important to remember that any new way of thinking will be subject to challenges from the old ways of thinking; the authors therefore set out the range of possible objections to the new way of customizing HR approaches here. Each of these objections is addressed in detail so that the reader is in a position to take on these challenges should he find himself in the position of implementing this new model of HR. The reader will also be able to anticipate the fallout, if any, in the range of variations that afflict the process of customization along with the need to ‘ensure that employee needs align with strategy’. Unless this is kept in mind, it will not be possible to get buy-in at the level of the business as a whole, and risk the possibility that these approaches will only be of interest to HR departments and professionals. If we can get buy-in from the business as a whole, it will result in nothing less than ‘a new mandate for HR’ and HR professionals Management & Change, Volume 17, Number 1 & 2 (2013)
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will become a continual source of insights on people issues for top management. It is therefore imperative to find ways to ‘brand’ this process of customization so that this framework makes it possible for employers to brand themselves as highly sought after places to work. ‘We challenge you to apply the principles you’ve learned in this book to your own organization’, conclude the authors, so that the readers of this book can attempt to lead the firms and industries to which they belong into the future. Shiva Kumar Srinivasan, Professor, Behavioral Sciences, Indian Institute of Planning and Management (IIPM), Chennai, email: sksrinivasan2008@hotmail.com
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