E213947

International Journal of Business and Management Invention ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X www.ijbmi.org Volume 2 Issue 1 ǁ January. 2013ǁ PP.39-47

A study on procurement and development of personnel in small scale industries Dr. J.S.V.Gopala Sarma Department of Commerce & Management Studies Andhra University, Visakhapatnam.

ABSTRACT: Efficient management of human resources is a crucial factor in determining the growth and prosperity of business enterprises. This is particularly true in the case of small industry where the owners are forced to have a close and more personal association with their employees. In order to build up loyal, efficient and committed work force, small scale organizations should pay adequate attention to hiring, training and employee development activities and undertake systematic human resource practices on a long term basis. This paper explains two major areas from my research study. The first one is procurement of employees in small scale industries and the second one is development of human resource in small scale industries. This paper describes that how the HR Practices like HR Planning, Recruitment, Selection, Training and promotions are conducted in the small scale industries. The main source of information, however, is primary data collected through the questionnaires* meant for employees and employers. In view of the large number of small scale units in Visakhapatnam, it has been decided to go for a sampling method.

Keywords–– HR planning, Recruitment, Selection, Training and Promotions.

I.

INTRODUCTION

For a large scale organisatin, the untimely loss of an employee can be frustrating, but for a small scale unit it can be devastating. Key and important people in small firms are likely to assume more responsibilities than they do in a large-scale organisation. Improper handling of human resources may compel a small firm to be satisfied with less qualified and too serious to be wished away through fanciful thinking and haphazard actions. Using appropriate appeal in recruiting employee selecting the right person for the right job, offer requisite training, instituting a satisfying reward structure are not the issues that could be discounted by a small business owner. An attempt is made in this chapter to examine the human resource planning, recruitment process, selection methods, training and development of employees in the selected small scale units.

The first step in the procurement function is manpower planning that aims at ascertaining the manpower needs of the organization both in right number and right kind. Once determination of human resources requirements has been made, the recruitment and selection process – which forms the next phase of procurement function – can begin. Procurement of efficient and capable employees can significantly contribute to the success of an organization. A faulty recruitment and selection procedure can play havoc with the organization‟s plans and all its future vision will be in jeopardy. Thus, to ensure a smooth implementation of its plans and policies, sound recruitment and selection has to be carried out by the personal department in the organization. The process of recruitment begins after manpower requirements are determined in terms of quality through job analysis and quality through forecasting and planning.

Need or Importance of The Study The study has been conducted in Visakhapatnam – an emerging industrial city in the state of Andhra Pradesh.

Visakhapatnam is the second biggest urban complex in the State, next to the capital city of Hyderabad.

Visakhapatnam city, popularly called “The City of Destiny‟ has been witnessing phenomenal growth in terms of industrial development and infrastructure facilities. Visakhapatnam, the rising steel city, throbbing with maritime activity, is fast developing into one of the premier industrial centers in the world. Besides, the first ever port based Steel Plant, it also houses some of the major private and public sector units viz., Hindustan Shipyard, Bharat Heavy Plate and Vessels Limited, Hindustan Zinc Limited, Hindustan Polymers, Coromandel Fertilizers and Hindustan Petroleum Corporation Limited. The city‟s location as strategic port endowed it with all the requisites for the establishment of Naval Project and Eastern Naval Command.

Progress in respect of small industry has been no less impressive, the first Industrial Estate was established in the city way back in 1957, developing an area of about 50 acres with an investment of Rs. 29.71 lakhs near Anantagiri Road and all the 33 units constructed at the time were allotted to industrialists who had come forward to set up units. To meet the increased need of the infrastructure to develop new industries in Visakhapatnam, an area of 15.95 acres has been acquired in the year 1958 to create Marripalem Estate that was www.ijhssi.org

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A study on procurement and development of personnel in small scale industries developed into 54 plots, and allotted to various industrialists. The Andhra Pradesh Industrial Infrastructural Corporation (APIIC) has developed 182 plots in an area of 39.90 acres around the same time for various industries in Autonagar in order to accommodate industrialists and entrepreneurs from various parts of the state.

In response to increased Government support and assistance, the small scale industry has grown by leaps and bounds in several parts of the country, and Visakhapatnam is no exception to this general trend. A number of small scale units have come up in Visakhapatnam As on 31st March 2008 there are 14,290 SSI units in Visakhapatnam with an investment of Rs. 12,488 lakhs providing employment to more than one lakh people.

Visakhapatnam not only occupies a unique place in the industrial map of Andhra Pradesh but also offers brighter prospects for further industrial development.

Keeping the strategic role of small scale units in our country and the contribution this sector is making to the growth of the economy, it is considered important to make them more competitive and effective through well designed and appropriate HR policies and practices. But unfortunately HR element in small scale industries has not received the attention it deserved by the researchers. The review of literature suggests that there is preponderance of studies focusing on marketing, finance and entrepreneurship aspects of small scale industries. Comprehensive studies covering the important HR practices in small scale industries are few and far between. A modest attempt, therefore, is made in the present study to fill this research gap to some extent. The scope of the study is confined to small scale industries located in the industrial city of Visakhapatnam. While there are plenty of HR studies made in relation to various large scale organizations, no comprehensive study has yet been carried out covering the human element in small scale units that have grown enormously in this growing city in recent years.

II. i) ii)

OBJECTIVES OF THE STUDY

The present study has been carried out with the following specific objectives: To study the HR Planning, recruitment, selection, training and development practices Followed in the selected units To offer suggestions for creating a good HR culture in small scale units by Practicing sound and effective HR practices

III.

METHODOLOGY AND SAMPLING

In view of the large number of small scale units in Visakhapatnam, it has been decided to go for a sampling method.

Selection of Sample Employers For the purpose of administering the questionnaire among the Employers, we have taken as many employers as there are sample units. Since 54 units are taken as sample units from the five dominant industrial groups, 54 employers are taken to represent their respective units and the questionnaire has been administered among them. All the employers responded to the questionnaires.

Selection of Sample Employees There are 624 employees totally working in the 54 sample units covered in the study.

The number of employees working in each category of the industrial groups is shown in the Table1.1.

Table 1.1 Sample Sizes of Respondent Employees Industry Groups

Sample Units

No. Employees

Agro based Food Chemical & Engineering Electrical Electronics Total

7 7 20 14 6 54

78 114 230 142 60 624

of

5 0% Sample Size of Employees 39 57 115 71 30 312

Actual No. Employees Responded 32* 57 115 51* 30 285*

of

*A few employees not responded to the questionnaire Source: Records of DIC, Visakhapatnam.

Table 1.2 Sample Sizes of Small Scale Units Industry Groups Agro based Food Chemical & Engineering Electrical Electronics Total

Small Units in the Universe 65 70 200 140 60 540

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Sample Units of 10 percent 7 7 20 14 6 54

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A study on procurement and development of personnel in small scale industries Source: Records of DIC, Visakhapatnam.

Since only a few employees work in each unit, a sample size of 50 percent was considered reasonable and accordingly sample size of respondents has been arrived at and shown in the table. However, the actual number of respondents was slightly short of the required sample size because of the failure of seven employees in Agro-based industry and 20 employees in Electrical industry to respond to the questionnaires due to their personal reasons and due to their non availability in spite of repeated visits of the researcher. As a result the final sample size of employees remained at 285 in all the categories of units covered viz., Agro-based, Food, Chemical & Engineering, Electrical and Electronics. In selecting the respondents from each unit, stratified sampling method has been followed. First the workers were classified on the basis of their skill into skilled, semi-skilled and unskilled categories. Following stratified sampling method, the respondent employees were selected from all the categories to ensure representation of all employees.

Human Resource Planning Human resource is an important corporate asset and the overall performance of companies depends upon the way it is put to use. In order to realise corporate objectives, it is essential that every company should plan for its human resources. Human resources planning (HRP) is essentially the process of getting the right number of competent people into the right job at the right time.

Unfortunately, HRP is a neglected area in the Indian context. Not many organizations are willing to invest in this field and the small industry is no exception to this general trend. Two recent studies have highlighted the virtual absence of manpower planning in small scale units. The factors responsible for this unhealthy trend could be easily recounted. One basic reason is that small size does not permit the industry to hire the exact type and number of people required. Lack of facilities for proper recruitment, selection and training of human resources is a characteristic feature of almost all small scale industries especially in developing country like India Administration of any systematic personnel programme turns out to be a luxury.

Consequently, most enterprises are compelled to live with employees whose qualifications, skills and competencies are open to doubt. Additional problems also arise when the owners are made to succumb to the pressures brought in by relatives and influential personalities, i.e., DIC Officials, Factory Inspectors, Excise Collectors, Managers of Banks and financial institutions while manning their key positions. In the face of these mounting pressures, the decision making capabilities of owners are watered down and they are forced to accommodate “misfits� in their organizations. Under the circumstances, any amount of planning with regard to human resources seems to be a futile exercise. Against this background the practices followed in the establishments with regard to HRP and the opinions of employers are sought to be examined in detail in the sections that follow.

Table 1 .3 H.R.Planing Planning practice Formal planning process

Agro based 1 (14.29)

Food

Personal judgment Partly formal planning

Total

Electrical

Electronics

1 (14.28)

Chemical & Eng 2 (10.00)

1 (7.14)

1 (16.67)

Total N= 54 6 (11.11)

4 (57.14)

5 (71.44)

15 (75.00)

10 (71.43)

3 (50.00)

37 (68.52)

2 (28.57)

1

3

3

2

11 (20.37)

7 (100.00)

7 (100.00)

(14.28)

(15.00)

20 (100.00)

(21.43)

14 (100.00)

(33.33)

6 (100.00)

54 (100.00)

Note: Figures in parentheses indicate percentages to total.

With a view to find out the difference in adopting the HRP in various product groups an industry wise analysis of HRP Practices is made and the information is presented through table 1.3.

Formal planning process, as the table clearly shows, is followed in small scale industrial groups only, Agro based, Food, Chemical & Engineering, Electrical and Electronics. HRP is followed either in a rigorous manner or in a mild way (combining planning process with judgement) by 20.37 per cent of the units while filling up key and important positions. Majority of the units in all product groups, without exception, are planning their human resource requirements based on the judgement of employer only (68.52 Per cent). 11.11 www.ijhssi.org

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A study on procurement and development of personnel in small scale industries per cent of the units are followed formal planning process only. 57.14 per cent of the Agro based industries are planning their human resource requirements based on the judgment of employer only.. Half of the Electronics industries are planning their human resource requirements based on the judgment of employer only. Above onethird of Electronics industries are followed partly formal planning. Formal planning process is followed in 16.67 percent of the Electronics industries.

B. Recruitment Recruitment is the process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organization. Employment of right kind of people with appropriate skills and technical competence is one of the most important duties of the owner in a small scale unit since key people (people with technical expertise, supervisory skills etc.) in a business are likely to be shouldering a larger share of the responsibility then they do in larger organizations, the owner should be particularly careful in recruiting the right kind of people to fill the vacancies that arise from time to time. i) Recruitment Methods / Sources in Sample Units Mainly recruitment sources can be divided into two categories- internal and external. Some companies prefer to recruit from within through promotions, since this aids employee morale, loyalty and motivation.

Others prefer to recruit externally to prevent inbreeding and to encourage new ways of thinking. The discussion below, while not exhaustive, represents the external sources tapped by the employers in the sample units. The internal recruitment of employees through promotions is discussed in a later section. Table 1.4 presents the data relating to recruitment sources tapped by sample units.

Table 1.4 Recruitment Methods for Various Categories Of Employees Agro based Food Chemical & Electrical Electronics Engg.

Notice Boards 4 28 26 7 2 (Gate Hiring) ( 12.50) (49.12) (22.61) (13.73) (6.67) Friends and 16 12 59 26 16 Relatives (50.00) (21.05) (51.30) (50.98) (53.33) Methods

Total N=285 67 (23.51) 129 (45.26)

Unions

2 (6.25)

_

10 (8.70)

3 (5.88)

__

15 (5.26)

Reputed Institutes Advertisement

1 (3.13) 3 (9.37) 5 (15.62) 1 (3.13)

_

2 (1.74) 3 (2.61) 8 (6.96) 7 (6.08)

1 (1.96) __

__

13 (25.49) 1 (1.96)

10 (33.33) 2 (6.67)

4 (1.40) 16 (5.61) 41 (14.39) 13 (4.57)

Causal Callers Employment Exchange Total

10 (17.54) 5 (8.79) 2 (3.52)

__

32 57 115 51 30 (100.00) (100.00) (100.00) (100.00) (100.00) Note: Figures in parentheses indicate percentages to total.

285 (100.00)

a) Friends and Relatives (Pre- Employment Acquaintances) Owing to the location of the small scale units in a city surrounded by backward areas, it could be expected that most of the recruitment is done through the source of „friends and relativesâ€&#x; i.e., pre-employment acquaintances. The present study did reinforce this belief in the sense that nearly fifty percent of the employees were recruited through this source. b) Notice Boards (Gate Hiring) It is found to be a predominant source of recruitment in Food industry which employed nearly 50 percent through this source. This is followed by Chemical & Engineering (22.61 percent) Electrical industry (13.73 percent) Agro-based industry (12.50 percent) and Electronics industry (6.67 percent). c) Casual Callers On occasions, people will drop in without any vacancy announcement to find out, if jobs are available in various small scale units. Interestingly, One-third of employees in Electronics industry and one-fourth of employees in Electrical industry found their way into the small industry through this source. Further, 15.62 www.ijhssi.org

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A study on procurement and development of personnel in small scale industries percent of employees in Agro based industry, 8.77 percent of employees in Food industry and 6.96 percent of the employees in Chemical & Engineering industry were recruited through this source. Thus source is resorted to whenever emergency needs have to be executed quickly. d) Advertising It may be noted that out of the five categories of industries covered in the study, only three categories of industries used this source of recruitment. Among them, Food industry used this source to the extent of 17.54 percent of employees, Agro-based industry to the extent of 9.37 per cent and Chemical & Engineering industry to the lowest extent of 2.61 percent. e) Unions The unions could effectively find employment to 8.70 per cent of employees in Chemical & Engineering sector, 6.25 per cent of the employees in Agro based industries and 5.88 percent of the employees in Electrical industries. f) Employment Exchanges A very insignificant percentage of employees (1.96 percent) in Electrical industry recruited employees through employment exchanges. g) Reputed Institutions It is clear from the above analysis that „friends and relatives‟ constitutes the major source of recruitment for the small scale units followed by gate hiring and casual callers. It is, however, unfortunate that sources like employment exchange and recruitment from reputed institutes have been virtually ignored. It is suggested that the employers in small scale units should recruit their employees through sources like employment exchanges, reputed institutes or by advertising for increased level of employee productivity and efficiency.

C. SELECTION It may be noted that selection decision is very crucial for employers in small business because a poor decision or one made in haste may mean untold expenses and severe hardships for the organizations. As a result, more often than not, the employers in small scale units pay a heavy price in the form of wrong choice of the people that are less productive or less committed or undisciplined. Therefore, the importance of sound selection method for identifying the talented people cannot be overemphasized for small scale units as well. It is against this background, an attempt is made here to examine the method and manner in which the selection process is followed in the sample units.

The absence of scientific selection process obviously implies that employers base their selection decisions one some other criteria than skill and ability. The selection process, when it is not tied to a systematic procedure is bound to evoke undesirable consequences affecting the efficient working of the organization. What criteria are followed in the selection of employees remains a matter of curiosity. Hence, the employees were asked to indicate the bases or criteria followed in their selection and the responses are shown in Table 1.5

Basis adopted Educational Qualifications Skill & Experience Both Qualification & Experience Recommenda tion Total

Table 1.5 Opinions of Employees on Selection Criteria Agro Food Chemical & Electrical Electronics based Engg.

5 10 12 5 4 ( 15.63) (17.54) (10.44) (9.80) (13.33) 7 30 65 24 18 (21.87) (52.63) (56.52) (47.06) (60.00) 4 8 18 6 6 (12.50) (14.04) (15.65) (11.77) (20.00) 16 9 20 16 2 (50.00) (15.79) (17.39) (31.37) (6.67) 32 57 115 51 30 (100.00) (100.00) (100.00) (100.00) (100.00) Note: Figures in parentheses indicate percentages to total.

Total N=285 36 (12.63) 144 (50.53) 42 (14.74) 63 (22.10) 285 (100.00)

It is also clear that employers are not selecting employees on the basis of “Educational Qualifications‟ in any industry. Such instances are very few. It can be concluded from the above that employers in small scale industries give priority to „Skill & Experience‟ rather than mere „Educational Qualifications‟. However, it is disheartening to note that there are employers selecting employees on the basis of „Recommendations‟ which does not augur well for the effective and efficient working of the small organizations. This is neither sound nor scientific method of selection and hence to be avoided. www.ijhssi.org

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A study on procurement and development of personnel in small scale industries D. TRAINING Training and development (T &D) deals with the design and delivery of learning to improve performance, skills or knowledge within organizations. Training and development is necessary in any organization for improving the quality of work of the employees at all levels, particularly in a world of fast changing technology, changing values and environment.

Need for Training – Employers’ Views The table 1.6 shows that Engineering firms and Furniture manufacturing units provided training to the most of their unskilled workers. They had also extended the facility to skilled employees sometimes depending on expediency units in other industrial groups are emulating the same practice to a limited extent. Viewed broadly, employees belonging to Agro based, Chemical & Engineering, Electrical and Electronics industries recognize the importance of training.

Table 1.6 Employers’ Views Regarding Need For Training Agro Food Chemical Electrical Electronics based & Engg..

0 0 0 0 0

0

Training for some

4 (57.14)

3 (42.86)

16 (80.00)

10 (71.43)

4 (66.67)

37 (68.52)

Training for None

3 (42.86)

4 (57.14)

4 (20.00)

4 (28.57)

2 (33.33)

17 (31.48)

Employer s’ Views Training for all

Total

7 7 20 14 6 (100.00) (100.00) (100.00) (100.00) (100.00) Note: Figures in parentheses indicate percentages to total.

Total N=54

54 (100.00)

Training is vied as a costly and unnecessary exercise. The fear that trained people may sit on their necks and may even quit their jobs if, lucrative avenues were thrown open prevented them from incorporating training facilities.

E. PROMOTIONS The concept of starting at the bottom of the ladder when one is young and rising in status and income as one grows older is deeply embedded in our culture. Since a promotion is generally associated with improvement in status, salary and responsibility, it instills a feeling of pride and accomplishment in the person receiving the promotion. It may stimulate the employee to greater effort and encourage him to expand his capacities. It usually builds the morale of the employee and promotes a feeling of closeness and kinship to the organization. i) Impact of Promotion on Performance It is generally presumed that existence of adequate promotional opportunities generate within organization beneficial effects on work performance and desired behavior of all its members. An enquiry is made in this regard to find out the opinions of employees in sample units and the information is presented in table 1.7.

Table 1.7 Employees’ Views on Impact of Promotions On Performance Employees’ Agro Food Chemical Electrical Electronics Total Views based & Engg.

N=285 Promotion 17 30 60 28 16 151 improves ( 53.13) (52.63) (52.17) (54.90) (53.33) (52.98) performance

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A study on procurement and development of personnel in small scale industries Promotion does not improve performance No Idea Total

5 (15.62)

7 (12.28)

20 (17.39)

7 (13.73)

3 (10.00)

10 20 35 16 11 (31.25) (35.09) (30.44) (31.37) (36.67) 32 57 115 51 30 (100.00) (100.00) (100.00) (100.00) (100.00) Note: Figures in parentheses indicate percentages to total.

42 (14.74)

92 (32.28) 285 (100.00)

The above table reveals that in the opinion of majority employees promotions will improve employees‟ performance. While 14.74 percent of respondents felt that there is no such relationship, about one-third claimed no idea in this respect. Across the various industry groups, no significant differences could be found in the views of employees. ii) Availability of Promotional Avenues All the employees in the sample are probed to find out their views regarding the availability of promotional avenues in their units. The responses in this regard have been analyzed through Table 1.8.

Table 1.8 employees’ opinion availability of promotional avenues Agro Food Chemical Electrical Electronics based & Engg.

Promoted 8 18 22 5 2 ( 25.00) (31.58) (19.13) (9.80) (6.67) Views

Expecting promotions shortly No channel of promotions Total

Total N=285 55 (19.30)

3 (9.38)

4 (7.02)

15 (13.04)

10 (19.61)

4 (13.33)

36 (12.63)

21 (65.62)

35 (61.40)

78 (67.83)

36 (70.59)

24 (80.00)

194 (68.07)

32 57 115 51 30 (100.00) (100.00) (100.00) (100.00) (100.00) Note: Figures in parentheses indicate percentages to total.

285 (100.00)

It may be noted that there is no channel of promotions as viewed by two- thirds of employees in all the units. Among others, one-fifth said that they were already promoted and more than one-tenth said they are still expecting promotions shortly. Looking into the specific industry groups, promotional opportunities are very rare in Electronic and Electrical industries where an overwhelming percent of respondents saw no chances of promotions in their units. Relatively, it is in Food industry units more number of employees (31.58 percent) could secure promotions followed by Agro based industry (25.00 percent). iii) Employees Satisfaction Regarding Promotions Employees‟ satisfaction regarding promotions has been measured with the help of Table 1.9.

Table 1.9 Employees’ Satisfaction Regarding Promotions Response

Agro based

Food

Chemical & Engg.

Electrical

Electronics

Total

Satisfied

16 ( 50.00)

29 (50.88)

59 (51.30)

28 (54.90)

18 (60.00)

N=285 150 (52.63)

Neutral

3 (9.38) 13 (40.62) 32 (100.00)

5 (8.77) 23 (40.35) 57 (100.00)

10 (8.70) 46 (40.00) 115 (100.00)

2 (3.92) 21 (41.18) 51 (100.00)

3 (10.00) 9 (30.00) 30 (100.00)

23 (8.07) 112 (39.30) 285 (100.00)

Dissatisfied Total

Note: Figures in parentheses indicate percentages to total. www.ijhssi.org

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A study on procurement and development of personnel in small scale industries We can understand from the table that one-half of the employees expressed satisfaction in spite of the fact that two-thirds did not find any channel of promotions in their respective units. Out of the remaining, many (39.30 percent) are dissatisfied and a few (8.07 percent) remained neutral. Industry-wise, not many differences were seen in the satisfaction levels of employees.

IV.

CONCLUSIONS (MAJOR OBSERVATIONS)

Majority of the employers did not repose their faith in HRP. However, recent developments in small scale industry such as modernization, increased competition from large scale units and the resultant need to maintain quality and precision in their products, the availability of jobs demanding specialized skills (for instance, electronics and engineering sectors) demand a serious rethinking on the part of the employers with regard to HRP. It is strongly advocated even in small industry because it helps the employers to obtain and retain the quality and quantity of manpower they require from time to time.

In the recruitment, apart from skill & experience, recommendation was also followed as a criterion for selecting employees. It is disheartening that there were employers selecting employees on the basis of „recommendations‟ which does not augur well for the effective and efficient working of the small organizations. This is neither sound nor scientific method of selection and hence to be avoided.

Regarding the non-availability of talent for recruitment, most of the employers showed the reason that there were better opportunities available for people elsewhere and hence they were not seeking jobs in small scale industries. The other hurdles were scarcity of skilled labour in the region, government reservation policy, and competition from large industry. As these employers in small scale units are carrying out their operations in an urban industrial city, this kind of problems are bound to be there. Since the region is bustled with several economic activities, naturally, plenty of opportunities are thrown open, may be with higher level of wages, for the skilled people in this area. Under these circumstances, it is small wonder if the small scale units face scarcity of labour. The employers can, however, get over these hurdles by offering more wages and benefits to the employees and by making them more productive in their performance.

Unfortunately, many employers in small business units appeared to be overlooking training function.

The costs involved seem to be too prohibitive for them. Sometimes the fear that trained worker would not stay on the job for long, also acted as a deterrent. Again, after receiving training, employees may demand more wages and if it is negative, may quit the jobs. Such psychological fears and emotional objectives have prevented many a small business owner from undertaking systematic training programmes for their employees.

Regarding the promotional opportunities, two- thirds of employees covered in the study saw no such chances available in their units. While one-fifth said that they were already promoted, the remaining (one-tenth) said they were still expecting promotions. Therefore, in respect of promotions, there is much to be desired. The employers should be able to create more opportunities of promotions for their employees in order to make employees feel committed.

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