An

Internship Report on
“HR PRACTICES IN
INDIAN LIFE INSURANCE COMPANIES”

Submitted in partial fulfilment of the requirement on the

Master of Business Administration program
offered by Shriram Life Insurance Company

Submitted by
NIHARIKA MAHAKUR
ROLL. NO – 14S21MB15

P.G. DEPARTMENT OF BUSINESS ADMINISTRATION

SAMBALPUR UNIVERSITY,
JYOTI VIHAR, BURLA ODISHA- 768019

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 CERTIFICATE

This is to certify that Miss NIHARIKA MAHAKUR (Roll no –

14S21MB15) has completed the project on “MANPOWER
PLANNING IN INDIAN INSURANCE COMPANIES.’’ as a part of
Master in Business Administration (Finance specialization) for the
academic year 2021-2023. She has worked at Shriram Life
Insurance Company for summer internship during the period of
1st May, 2022 to 31st May.

Authorized signatory

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 DECLARATION

I, NIHARIKA MAHAKUR student of Department of Business

Administration Sambalpur University Jyoti Vihar, Burla hereby
declares that the project entitled “HR PRACTICES IN INDIAN
INSURANCE COMPANIES’’ are true to the best of knowledge. This
report is on my own and is not submitted to any other institution
or published at any time before. I am responsible for the
malpractices found, if any.

Date: Place:

NIHARIKA MAHAKUR

14S21MB15

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 ACKNOWLWDGEMENT

I would like to thank and express my gratitude to everyone

who has been a part of my project directly and indirectly, to those
who have extended their valuable cooperation and contribution to
the project by taking time out of their busy schedules and giving
access to the information required.

I would like to start by expressing my gratitude to the

Company for their constant support, guidance and hospitality for the
duration of my virtual internship in Shriram Finance Company Pvt ltd.

I would specially like to thank Mr. SUPRAVAT BHATTACHARYA

Sir, my guide, coach and mentor for being a constant support, for
providing a learning atmosphere and for giving me complete freedom
to interact, to discuss and to learn even by making mistakes.

At the outset, I would like to extend my gratitude to

Department of Business Administration Sambalpur University, Jyoti
Vihar, Burla for giving me the opportunity to undertake this project
and would also like to thank Prof. D.K. Mahallik (HOD of Department
of Business Administration) for giving invaluable guidance and
support in the completion of the project.

And the last but not the least I am thankful towards my

Parents and my sister and my classmates for being moral supporter
throughout.

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 INDEX
Table of content page no.
CERTIFICATE 2

DECLAIRATION 3

ACKNOWLEDGEMENT 4

CHAPTER-1: INTRODUCTION………………………….
1.1 Introduction 9
1.2 Abstract 10
1.3 Objective of the study 11
1.4 Literature review 12
1.5 Need of the study 20
1.6 Challenges 22
CHAPTER-2: COMPANY OVERVIEW…………………..
2.1 Know the Company 24
2.2 Mission & Vision 25
2.3 Highlights of Shriram Life Insurance 25
2.4 Corporate Profile 26
2.5 About Shriram Life Insurance 27
CHAPTER-3: COMPANY OVERVIEW………………….
3.1 Board of Directors 29
3.2 Management team & Other 31
3.3 Key persons 33
3.4 Award & Recognitions 34
3.5 CSR activities 35

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CHAPTER-4: THEORITICAL OVERVIEW……………….
4.1 Concept of HRD 43
4.2 History & origin of HRD 44
4.3 HRD in LIC 46
4.4 Conceptual framework of HRD 47
4.5 HRD Mechanism or sub system 50
4.6 HRD Climate…………………………………….57-61
3.6.1 Need to Develop HRD climate 58
3.6.2 Component of HRD climate 60
3.6.3 HRD climate in LIC 61
4.7 Training & Development…………………….61-66
4.7.1 Methods of Training 62
4.7.2 Training strategies in LIC 64
4.7.3 Types of Training Centres 65
4.8 Performance Appraisal…………………………66-72
4.8.1 Performance Appraisal System; different
Methods 67
4.8.2 Performance Appraisal System in LIC 70
4.9 Quality of Working Life …………………………72-74
4.9.1 Practices of Quality of Working Life 72
4.9.2 Quality of working Life in LIC 74
4.10 Employees Counselling………………………….74-76
4.10.1 Types of Employees Counselling 75
4.10.2 Employees counselling in LIC 76
4.11 Reward System/compensation
4.11.1 Recent trends of Reward System in LIC 77
4.12 Employees Productivity ………………………….78-80

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CHAPTER-5: FINDING & OBSERVATION………….80-89
5.1 Conclusion 82
5.2 Suggestion 83
5.3 Recommendations 86
CHAPTER-6: ANNEXURE………………………………91-94
6.1 Bibliography 91
6.2 Webliography 91
6.3 Questionnaire 91

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 CHAPTER-1
INTRODUCTION

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INTRODUCTION: -
The Life Insurance Industry in India has the important
contribution towards the service sector. It plays a crucial role in
the economic development of the country. It n o t o n l y p r o v i d e s
p r o t e c t i o n a g a i n s t l i f e r i s k f o r people but also work
on savings, financial intermediary, and promoter of
investment activities and stabilizer of financial markets.
Which in turn gives rise to long- term reversing funds for
country building and improve the life style of every single
individual. Financial systems are a significant factor for the
economic growth process, because they have a function which
provides funds for wide spreading of innovative technologies and
huge amount of funds. Developed financial systems which are
successfully attain the functions can enlarge efficiency in
addition to economic growth. These functions are such as
orientation of small deposit is owned by individuals to large
investments. The investments are classified to decrease the
threat of depositors, decreasing gathering and evaluating data
costs a b o u t t h e p r o j e c t s w h i c h i s a p p l i e d b y t h e
specified agencies. The life insurance field in the country has seen
an attire of changes in the past one decade. The economic
structure which come out after globalizatio n,
privatization and liberalization has thrown a new challenge
before the insurers. Now it has to be more c o m p e t i t i v e i n
o r d e r t o m e e t t h e n e e d s a n d demands of its customers.
The reforms contributed to increase the awareness of the
insuring public about the wider range of choice of
insurance products and the price offered by the competing
insurers in the market. The customers know well about their
rights and remedies, availability of d i f f e r e n t g r i e v a n c e
r e d r e s s m e t h o d s progressive decontrol and detoxification of
pricing of insurance products. The technical know-how,
expertise and wide experience of multinationals that h a v e
j o i n e d w i t h t h e I n d i a n c o m p a n i e s h a v e revolutionized
almost all aspects in the industry.

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 ABSTRACT: -

Life insurance is not simply a business proposition. It is

not just a question of mobilization of resources for development;
it is a question of citizen’s sense of security. It provides a link
between the present and the future. Today India is one of the
fastest growing economies of the world. It is now Asia's third
largest economy and has made inroads into the global top 10 in
terms of Gross Domestic Product (GDP). GDP originating from the
service sector recorded a growth rate of 9.30 per cent in 2010-
2011. The contours of insurance business have been changing
across the globe and rippling effect of the same can be observed
in the Indian market as well. Insurance Industry is a growth-
oriented industry. The life insurance sector in India has seen an
array of changes in the past one decade. The economic scenario
which emerged after globalization, privatization and liberalization
has thrown a new challenge before the insurers. Now it has to be
more competitive in order to meet the needs and demands of its
customers. With a huge population base and large untapped
market, life insurance industry has a big opportunity in India for
National as well as foreign investors. The profitability of the life
insurance companies have also been changed due to change in
operating activity like selling new policies, appointment of active
agents, giving commission to the agents and evaluating maturity
value. The growth of insurance business of private sector
companies has been higher than government sector.

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OBJECTIVE OF THE STUDY
The following are the objectives of the study:

• To examine the development and progress of the Indian life

insurance companies in post- liberalization period.

• To analyse the elements influencing the financial efficiency of

the life insurance companies in India.

• To offer findings and to make suggestions for the improvement

of Insurance companies in India.

LITERATURE REVIEW: -
A literature review is conducted to generate a theoretical and
scientific examination of a specific phenomenon and uncover
what is known and the gaps related to that topic. The primary
purpose of a literature review is to gain a broad background
related to problems in conducting research on a particular topic,
selecting a problem and purpose, developing a framework and
formulating a lesson plan. In order to attempt reach this goal, an
attempt has been made to review and discuss literature related to
the field of insurance.

Available Literature Before 1990

Dodds J.C. and Croom H. (1979) have critically analysed the
investment behaviour of life insurance companies; with an
objective to providing guidelines to show the future investment
pattern in the insurance business. Hubner S.S. and Kenneth B.
Jr. (1982) have worked on life insurance & health insurance and
the different types of products and plans that are offered by
insurers. The fundamentals of pricing of a variety of products,
the organizational and marketing aspects of insurance firms are
also discussed at length by the authors.
Marks,S. D. (1982) explained the fundamentals of insurance
and discussed the various types of insurance such as life, fire,
marine, life etc are discussed in detail.
Rajan Saxena (1986) in his article titled “Marketing of Life
Insurance Services”, discussed different issues related to the
marketing strategies of insurance firms. The author focused on
the importance of applicability of marketing concepts to the
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selling of life insurance products, and the need for interactive
strategies in the marketing of life insurance products.

Available Literature between 1990- 2000

Hofsted G. (1995) identified the major function of life
insurance was to guard against financial loss. Any event affecting
an individual’s earning ability has an impact on the individual’s
human life. This event may be early death, incapacity, retirement
or unemployment. Besides covering the risk of death, it covers
the risks of disability, serious illness and superannuation.
Pedro P. B. (1996) in his article “Competition Effects of Price
Liberalization in Insurance” outlines the insurer’s decision-
making process, and their exercise of monopoly power. The
author concluded with presenting a case study of the Portuguese
auto-insurance market. Two distinct time spans were taken and
a panel of data was used. 1982-1988 was characterized by price
regulation, and 1989-1990, was characterized by pricing
freedom. A clear change in the company’s market conduct was
observed after the price liberalization event. The results
suggested that firms behaved in a more competitive way than the
post liberalization period, where a significant degree of conspiracy
was identified.
Gidhagen (1998) attempted to develop a conceptual framework
from a relationship perspective for the study of insurance
services marketing. Deregulation and internationalization have
created a new, increasingly competitive business climate. The
focus of this research work is on the relationship between
insurance companies and their corporate customers.
Mishra and Simita M. (2000) compared the position of the
Indian insurance sector to European countries, in which life
insurance accounted for 58% of the global direct premium and
non-life comprised 42%. The study states that the need for
insurance arises when economic activity increases, families
become nuclear, kins gets geographically dispersed and
individuals become more dependent on employment. The author
analysed the top ten largest insurance markets and how they are
ranked by revenue in the year 1998.

Available Literature 2001 Onwards

Agarwal (2001) examined the role of information technology in
the insurance sector in his study, and focused upon the

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requirements of providing effective services due to the entry of
private firms. An insurance firm can utilize its services in many
ways such as: customer service, investment management, claim
management, relationship management etc. This article
emphasizes that to gain overall boost in the size and revenue of
the insurance market, it is understood that information
technology must take on a vital role, to enable extensive
penetration.

Michael (2001) analysed the demographic facets in this article

and appraised the insurance business with a case. Additional
features added to conventional products are referred to as help
products. In this study, the author has conducted a customer
survey to identify the demographic aspects and their roles. The
author has also invested efforts to analyse the consumer’s
decision towards a new class of insurance products. Finally, the
study concludes that, there is a weak relationship between the
consumer’s decision-making process and the class of products
offered, as demographic factors do not always perform as
expected. Therefore, it seems sensible to focus on alternate
factors alongside to ensure effective marketing.
Nikhil G. (2001) in his article has identified, that the strategies
that Indian insurance firms adopt, is hinged upon the product’s
essential usefulness in providing safety features. The author
highlights the growing proportional aspects, penetration levels
and other macro factors affecting the global insurance market
during the year 1999. Each private player’s viewpoint is to sell
the product for customers at their own risk.

Vasanthi S., Prakash, and Sithramu (2001) explored the

(agents in the liberalized economy and the changes taking place
in their management. This article aimed upon identifying the
competencies needed and methodology adopted for selecting
effective agents. A sample of 15 agents of the age range between 28
to 47 years, and customers of such agents were taken for
qualitative assessment. The findings of the research conducted
indicated that, professional competency plays a vital role for
successful insurance agents. The study also highlighted how to
manage agents to develop competencies and area experts in the
selection of effective agents.
Ajay K. R. and Mukesh D. (2002) focused upon the social
implications in opening up of the insurance sector to private

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firms to identify reasons as to why there was private entry after
nationalization, what the social aspects are so far and how the
reforms have taken place in the Indian insurance industry. The
issues faced by private firms due to competition are to enhance
resource optimization, reduce premium cost, mobilize funds
domestically, offer better pay packages and attract inflow of
foreign capital. This study has also revealed that, most of the
private firms concentrate on business only in the urban areas,
due to a lucrative market response.

Pradeep G. and Sanjay B. (2002) analysed and discussed the

challenges with possible solution strategies, applicable to the
insurance sector in India. Authors have made an attempt to
identify how different brands can be positioned in the market and
how business practice codes are given by IRDA to maintain
standards. The research piece revealed that after liberalization,
awareness of brands is 100% for LIC, 70% for ICICI Prudential
awareness and 52% for HDFC.
Hendel and Lizzeri (2003) studied the long -term contract
properties and found empirical support, for forecasting the model
by using data from the life insurance market. In particular, they
presented that all types of life insurance contracts especially the
more front-loaded contracts, are associated with lower lapses and
lower present discounted value of premiums over their coverage
period. They argued that asymmetric information among others is
not a reasonable option or explanation of their findings.
Pramod P. and Saumya S. (2003) in their research article tried
to find out the competitiveness between LIC and the new players
and carried out as SWOT analysis to advise effective strategies.
The objective of this article was to assist the public sector
insurance giant to boost the market share, to help LIC to retain
old customers, and to attract new customers.
The study also highlighted the level of customer satisfaction
and quality of services disbursed. The methodology applied in
this article has been derived through open-ended interview with
customers, to identify their perceptions and expectations. 100
customers in Dhanabad and its surrounding areas were selected
to collect information on the sum assured, annual premium paid
etc. The findings of the study noted, that majority of customers
were graduates, who felt that the main work of LIC is to insure
human life. Most respondents however preferred only money
back polices and Bima Nivesh covering a single premium.

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Hitt and Croson (2004) pointed out, that there were three
principal issues i.e., transparency, dis-intermediation and
differential pricing that help in determining the transformation of
retails financial services, including life insurance firms. The
authors have explored, that financial services industries are
gradually transformed by these three trends.
Vaidyanathan R. (2007) discussed regulation and financial
convergence in the insurance sector. In his article he mentioned,
that there is no legislative framework for considering the
compound nature of the working of the financial corporation. A
new structure needs to be developed to monitor activities of
insurance providers in a structured system.

Santosh D. and Upinder D. (2007) tried to focus on global

state of affairs, as they opine that India cannot remain
inaccessible. It is apparent that the existing firms need to gear up
to face the competition. These new firms will have to consider
new requirements of customers. The existing firms will also have
to take care of customer specific aspects and needs. As a matter
of information, custom-based products will have to be developed
to suit specific customer needs. New products have to be
developed for large corporate groups. The Insurance industry is
going to undergo a vast change in its marketing practices, as well
as its marketing strategies. The existing and new firms will have
to work out different strategies to keep and improve their market
share.
Devasenathipathi, Saleendran and Shanmugasundaram
(2007) in their study, “A Study on Consumer Preference and
Comparative Analysis of All Life Insurance Companies” analyzed
and rated all life insurance firms by analysing certain factors.
They examined the effect of privatization, measured customer
perception, purchase behaviour and consumer awareness
regarding life insurance products. The study concluded that the
deciding factor of the purchase process depended on quality,
convenience and promptness of services that may lead a
company to acquire the to prank with a huge market share.

Pillai (2007) in his article titled the “Life Insurance Business”

defined life insurance as, the business of offering contracts of
insurance upon human life, including any contract whereby the
payment money is assured on death (except death by accident
only) or the happening of any contingency affecting human life.

15
This also includes any contract which is subject to the payment
of premium for ensuring a team’s human life.
Narayanan (2008) in his article attempted to decode the
secrecy of pension plans and assist people to zeroing down on an
apt pension plan. Originally, it dealt with the basics of Unit
Linked Pension Plans (ULPP) and how it works. The article
explained how it is different from the traditional insurance plan
and discussed, the basis for selecting an appropriate ULPP will
would prove to be beneficial at the time of retirement.

Mahesh Chand G. and Deepti (2008) in their article,

“Efficiency of the General Insurance Industry in India in the Post-
Liberalization Era: A Data Envelopment Approach”, attempted to
examine the technical competence and the scale efficiency of 12
general firms in India, in the financial year 2002-03 and 2005-
06. Their study presented that, private firms are lagging behind
public firms but they are fast catching up and the competence
scores of public and private firms seem to converge. James P.C.
(2008) understood that by calculating the probabilities of the
occurrence of risks leading to loss; it is possible to convert risk
conditions into catalysts for driving the economic momentum in
society. In fact, insurance public good; regulation, self-
regulations and standards usually requires that rates and terms
are fair, reasonable and not excessive’.
Ramin Cooper M. and Chris Sakellariou (2008) in their paper,
“Financial Liberalization, Deposit Insurance and Bank Stability”
investigated the impact of implementing an explicit deposit
insurance scheme, on the likelihood of banking crisis in
countries with well-liberalized financial systems. They concluded
that deposit insurance will be successful in alleviating moral
hazard and will increase the constancy of the financial system,
only if an adequate degree of financial liberalization exists.

Sonia S.(2008) observed the potential for insurance companies

in housing areas, with the objective to find out the profiles of
consumers in insurance, and the attributes of insurance that
become functional while taking decisions. The author concluded
with findings from 500 respondents, that there is an immense
prospect for insurance in housing areas as most of these areas
are untouched. For insurance firms to be successful in their
areas, must design their products and services in such a way so

16
as to attract customers, and provide them with the best products
and services.

Rajendran R. and Natarajan B. (2009) highlighted that the

business in India, the business outside India as well as the total
business of LIC has always had an increasing trend. The
collected and analyzed data proved that liberalization,
privatization and globalization are exerting a positive influence on
LIC and its performance.

Murthy T.N., Raja Babuand Riswana Ansari (2009) in the

paper titled, “Performance Evaluation of LIC: Ways of Winning
Confidence” highlighted the development and expansion of the
company, a performance review before and after liberalization,
their innovative product lines, improved customer services and
enhanced distribution channels of Life Insurance Corporation of
India (LIC). Their objectives were to know about the growth and
development of the LIC business before and after liberalization,
privatization and globalization; and to study the ways to improve
customer services in LIC for winning confidence, and making
appropriate suggestions for the improvement of the LIC business.
The study concluded that to achieve greater insurance
penetration, public as well as private insurance units have to
improve in terms of quality of services offered and greater
efficiency.
M.C. Garg and Anju Verma (2010) in their paper titled “An
Empirical Analysis of Marketing Mix in the Life Insurance
Industry in India”, examined the marketing mix in life insurance
in India. The population this research comprised of all employees
of public and private life insurance companies in India. A sample
of 95 employees was drawn on the basis of convenient sampling.
Their prime objective was to study the nature, pattern and
process of the marketing mix in life insurance companies in
India. They concluded that various dimensions of the marketing
mix where measured and analysed. For instance age-wise, sex-
wise, qualification-wise, hierarchy-wise and organization-wise
analyses depicted that a majority of respondents are of the
opinion, that the concept of marketing mix is understood and
executed systematically, that the elasticity of different mix
elements aren’t always studied by the marketing departments of
life insurance industries, that the marketing departments of life
insurance firms always review the mix, that regular careful

17
examine is carried out to develop an optimal and most economic
mix, and that other departments are always invited to take part
in developing this optimal mix . However, they were also of the
opinion that the marketing departments sometimes an attempt at
quantifying the level of expenditure, that life insurance
companies sometimes attempt at analysing their competitors’
mix, and that life insurance companies sometimes do briefing
about the mix plan to outside contractors. Life insurance
companies rarely adjust their marketing mix in relation to
particular segments.

Manjit Singh and Rohit K. (2011 in their paper “Efficiency

Analysis of the Public Sector General Insurance Companies: A
Comparative Study of Pre- and Post-Reform Period”, compared
the competence of the Indian public sector general insurance
firms during the pre- and post-reform periods. The pre-reform
time span includes 1993-94 to 1999-00, and the postreform time
span includes 2000-01 and 2007-08. The outcomes concluded
that the competence of the public sector general insurance firms
is higher in the post-reform period, than the pre-reform period.

Debabrata Das and Jasojit Debnath (2012) in their paper,

“Performance of Insurance Companies in India: A Comparison of
Public and Private Insurers”, highlighted the performance of life
insurance sector in terms of variety of variable, and also focuses
light on the various marketing channels. Their study also
proposed that life insurers have developed over the years, and
insurance is now not limited only to a specific class or society.
Rather with creative products and better customer services, the
insurance industries are trying to cultivate an insurance habit
among all divisions of the population.

Pamecha and Chhajer (2013) in their article talk about the

standard changes that happen in the Life Insurance industry in
India. These authors have explained the rations behind the
leadership position enjoyed by LIC in the market. The newly
administrative changes in the Life Insurance industry in India
have also been highlighted in the article. Authors found that the
global integration of financial markets resulted from de-
regulating measures, explosion of technological information and
financial innovation. Also, the study point up, that liberalization
and globalization have permit the entry of foreign players in the

18
insurance field, providing a better formation of services for the
clients at competitive prices.

V. Ushakiran, Maschendar and Sreenivasan (2013) talk about

that growth in the life insurance field reached new height, and
the arrival of the private companies has given a tough dare to the
Life Insurance Corporation of India. The whole risk business has
started to show important changes. Right from increasing
insurance entered to changing the customer’s mind-set about life
insurance to the state of reducing risk as an investment
alternative. Insurance industries have started drawing upon
contemporary policies and genius application in the Indian
market. This direction has changed the whole size of the life
insurance field in India. Mandeep K. and Dal winder K. (2014), in
their paper, “Customer Satisfaction towards Life Insurance in
Punjab” recognised the union between customer satisfaction and
demographics of customers. Their study brought out seven
factors through factor analysis, namely; services and company
reputation, quick and timely services, customer convenience,
additional facilities, loyalty of employees, efficient departments Di
disciplined employees, and service material and understanding of
requirements.
Ramamurthy and Kumar (2014), comment on the theoretical
investigation of product liability insurance between buyers and
sellers. A model consisting of three groups of buyers, a producer-
seller, and an insurance organisation has been expanding under
varying acceptances in their study. Authors have found that the
liberalization of the economy has resulted in the accessibility of
large number of profitable alternative products and financial
services. Sinha (2015) has used a dynamic slacks-based data
development analysis model (DEA). The DEA model was proposed
by Tone and Tsutsui (2010) to be used for performance
evaluation. The same has been used in this study using 15 life
insurance companies in a seven-year period (2005–2006 to 2011–
2012). The author has found that, the special selling point of the
present approach is unlike the conventional static DEA models.
He has also presented a framework, by using a link variable,
connecting the observed years and thereby creating a common
benchmark.
Joy and Pratim (2016) took a look that in the pre-reform era,
the Life Insurance Corporation of India control the Indian life
insurance market with a market share close to 100 %. But the

19
situation hugely changed since the enactment of the IRDA Act in
1999. At the end of the FY 2012-13 the market share of LIC stood
at around 73%, with the number of players in India’s life
insurance sector. The authors calculated that; the reason for the
decreased market share over this period could be assign to the
increasing competition win out in the country’s life insurance
sector. At the same time, the liberalization of the life insurance
sector for private involvement has after some time increased
problems, about ensuring sound financial performance and
solvency of the life insurance companies; besides protect the will
of the customers.
Kumar (2016) took a look, that there has been an observable
change in the market dynamics since liberalization and
introduction of economic reforms. A considerable amount needs
to be done for future growth and development of the market in an
exact and sustained way. Even after liberalization insurance
companies in India have been ignoring rural markets. Insurance
companies in India will have to show long term dedication to the
rural sector as well, and will have to design products which are
appropriate for village livelihood. Insurance companies need to
think about their distribution method to work properly in rural
markets.
NEED OF INSURANCE
1. To provide Security and safety:
The Life insurance provides security against premature
death and payment in old age to lead the comfortable life.
Similarly in general insurance, the property can be insured
against any contingency i.e., fire, earthquake etc.
2. To provide peace of Mind:
The uncertainty due to fire, accident, death, illness,
disability in the human life, it is beyond the control of the
human beings. By way of insurance, he may be
compensated financially but not emotionally. The financial
compensation provides not only peace of mind but also
motivates to work more and more.
3. To Eliminate Dependency:
On the death of breadwinner, the consequences need not be
explained. Similar to the destruction of property and goods
the family would suffer a lot. It could lead to reduction in

20
 the standard of living or begging from relatives, friends or
neighbors. The Insurance is the only way to assist and
provider them adequate at the time of sufferings.
4. To encourage Savings:
Life Insurance provides protection and investment while
general Insurance provides only protection to the human life
and property respectively. Life Insurance provides
systematic saving because once the policy is taken then the
premium is to be regularly paid otherwise the amount will
be forfeited.
5. To fulfill the needs of a person:
a) Family needs
b) Old age needs
c) Re-adjustment needs
d) Special needs: Education, Marriage, Health
e) The clean up needs: After death, ritual ceremonies,
payment of wealth tax and income taxes are certain
requirements, which decreases the amount of funds of
the family members.
6. To Reduce the Business Losses:
In business the huge amount is invested in the properties
i.e., Building and plant and machinery. These properties
may be destroyed due to any negligence, if it is not insured
nobody would like to invest a huge amount in the
uncertainty of business losses due to fire or accidents etc.
7. To enhance the Limit:
The business can obtain loan but pledging the policy as
collateral for the loan. The insured persons are getting more
loan due to certainty of payment at their death.
8. To identified the Key man:
Key man is a particular man whose capital, expertise,
energy and dutifulness make him the most valuable asset in
the business and whose absence well reduce the income of
the employer tremendously and upto that time when such
employee is not substituted. The death or disability of such
valuable lives will prove a more serious loss than that fire or
any hazard. The potential loss to be suffered and the

21
 compensation to the dependents of such employee require
an adequate provision, which is met by purchasing an
adequate life policies.
9. Welfare of Employees:
The welfare of the employees is the responsibility of the
employer.
The employer is supposed to look after the welfare of the
employees. The provisions are being made for death, disability
and old age. Through these can be insured through individual life
insurance but an individual may not be insurable due to illness
and age. But the group policy will cover his insurance and the
premium is very low in group insurance. The expenditure paid on
account of premium will be allowable expenditure.

CHALLENGES FACING THE INSURANCE INDUSTRY

a) Lack of Consumer Awareness
b) Negative Consumer Experience and Perception
c) Poor offtake of micro-insurance
d) Agency led Distribution Model
e) Distribution Costs
f) Lack of Alternate Distribution Channels
g) Lack of product innovations and Customizations
h) Intense Market Competition
i) Human Resource Challenge
j) Volatility in Global Financial Markets
k) Costs and profitability
l) Adverse Claims Ratio for Non-Life Insurance

22
 CHAPTER-3
COMPANY OVERVIEW

23
 COMPANY OVERVIEW

The Shriram Life insurance company works with the purpose - To

bring every family in the Indian society, especially the segment
most vulnerable to the financial impacts of the loss of a
breadwinner, into the safety net of Life Insurance.
Operational efficiency, integrity and a strong focus on catering to
the needs of the average Indian, by offering him high quality and
cost-effective products and services, are the core values that drive
the organisation. These values have been strongly adhered to
over the decades and are now an integral part of the
organisation’s DNA.
The company prides itself on its deep understanding of the
customer. Each product or service is tailor-made to specifically
suit the needs of the customer. It is this guiding philosophy of
putting people first that has brought the group company closer to
the grassroots and has made it the preferred choice for all truck
financing requirements amongst the customers.
The Shriram Life Insurance Company was founded with the
objective of reaching out to the “common man” with products and
services that would be helpful to him as he sets out on the path
to “prosperity”. Operational efficiency, integrity and a strong
focus on catering to the needs of the average Indian, by offering
him high quality and cost-effective products and services, are the
core values that drive the organisation. These values have been
strongly adhered to over the decades and are now an integral
part of the organisation’s DNA. The company prides itself on its
deep understanding of the customer. Each product or service is
tailor-made to specifically suit the needs of the customer. It is
this guiding philosophy of putting people first that has brought
the group company closer to the grassroots and has made it the
preferred choice for all truck financing requirements amongst the
customers.

24
Mission: The Shriram Life Insurance Company is set out with the
objective of reaching out to the "common man" with a host of
products and services that would be helpful to him in his path to
"prosperity".

Vision: Efficiency in operations, integrity and a strong focus on

catering to the needs of the common man, by offering him high
quality and cost-effective products and services, are the values
driving the organization. These core values are deep-rooted
within the organization and have been strongly adhered to over
the decades.
Shriram Life Insurance
Shriram Life Insurance Company, also known as (SLIC) was
founded in the year 2005 and commenced operations in the year
2006. SLIC is well known for their efficient use of capital and low
operational costs.

Shriram Life Insurance Company is a joint venture between

Shriram Group founded in 1974, headquartered in Chennai and
Sanlam, a leading financial services group based in Cape Town,
South Africa. Together, Sanlam and Shriram’s group aims to
provide the best life insurance products to cater different
segments of Indian market. In 2016, Shriram Life Insurance
Company received the Bizz Americas 2016 Awards. The
company’s objective aims in ‘reaching out to the common man
with products and services that would be helpful to him/her as
they set out on the path to prosperity.’

Highlights of Shriram Life Insurance

• Shriram Life has more than 528 branches with over and
above 1.45 crore customers.
• Shriram Life clocked Rs.1020 crore gross premium in 2015-
2016.

25
 • The company has a network of 609 offices and 75,000
agents across India.
• Shriram has an outstanding Underwriting Record and has
awarded as ‘Underwriting Initiative of the Year.’
• Shriram Life Insurance generates more than 40% business
through providing insurance to rural area and weaker
segment individuals - ‘AAM AADMI’ of India.
• The Founder of Shriram Group, Mr R Thyagarajan, has
been awarded with Padma Bhushan award
Corporate Profile
Shriram Life Insurance, made profits in the first three consecutive
years — becoming the only private life insurer to have achieved the
distinction. Compared to industry peers after 10 years of
operation, Shriram Life insurance was the most profitable life
insurance company in the country. The company’s performance
stands out in efficient use of capital and low cost of operations. In
line with group philosophy, Shriram Life has significantly focussed
on Inclusive growth by taking life insurance to the section where it
is needed the most — The ‘AAM AADMI’ (Common Man). The
Founders have always maintained a firm focus in the rural market
since they put their first step in 1974 towards building the group.
The standing committee of Parliament on Insurance, Headed by
Honourable member of Rajya-Sabha Dr. Maya Singh has
applauded Shriram Life’s sincerity towards business through
socially weaker segment and policies sold in rural areas. Shriram
Life generates more than 40% of its business through the segment,
again a confirmation of the business model. The company also has
an outstanding Underwriting Record; Underwriting Profits have
emerged every year without a break. Shriram Life was awarded the
best “Underwriting Initiative of the Year” at ‘Stars of the Industry
awards by 94.3 My FM’ for innovation in relaxing the underwriting
standards to suit the customer base. The Company is poised to
make further growth and achieve bigger milestones in the years to
come.

26
About Shriram Life Insurance
Shriram Life Insurance was incorporated in 2005 and it
commenced business in 2006. Since the first year of operations,
the company made profits in the first three consecutive years-
becoming the only private life insurer to have achieved the
distinction. Compared to industry peers after 7 years of operation,
Shriram Life insurance was the most profitable life insurance
company in the country. The company’s performance stands out
in efficient use of capital and low cost of operations.
Life insurance arm of Shriram Group has carried forward the
group philosophy of financial inclusion by penetrating the
unexplored segments. Shriram Life has significantly focused on
Inclusive growth by taking life insurance to the section where it is
needed the most -The ‘AAM AADMI’ (Common Man)
Sanlam, the second largest insurer in South Africa and Shriram’s
Insurance partner, is working closely with the group to take the
Insurance Businesses to the next level in the coming years.

About Sanlam
Sanlam is a leading financial services group, originally
established as a life insurance company in 1918.Their head office
is in Bellville near Cape Town in South Africa and they have offices
throughout South Africa and business interests elsewhere in
Africa, Europe, India, the USA and Australia.
The relationship started in 2005 with emergence of Shriram Life
Insurance Company (SLIC), a part of diversified Shriram Group,
where SANLAM has 26% stake. In last 8 years the strength of
relationship has grown impressively and now SANLAM has 26%
stake in the holding company Shriram Capital, which owns
companies like Shriram Transport Finance and Shriram City
Union Finance (SCUF). Sanlam Website: www.sanlam.co.za

Company overview: -

The Shriram Life insurance company works with the purpose - To

bring every family in the Indian society, especially the segment

27
most vulnerable to the financial impacts of the loss of a
breadwinner, into the safety net of Life Insurance.
Operational efficiency, integrity and a strong focus on catering to
the needs of the average Indian, by offering him high quality and
cost-effective products and services, are the core values that drive
the organisation. These values have been strongly adhered to
over the decades and are now an integral part of the
organisation’s DNA.
The company prides itself on its deep understanding of the
customer. Each product or service is tailor-made to specifically
suit the needs of the customer. It is this guiding philosophy of
putting people first that has brought the group company closer to
the grassroots and has made it the preferred choice for all truck
financing requirements amongst the customers.

28
 BOARD OF DIRECTORS
Mr S Lakshmi Narayanan holds Master’s degree in Science in
Chemistry and post graduate diploma from University of
Manchester (U.K.) in Advanced Social & Economic Studies. He is
a member of the Indian Administrative Service (IAS-retired) and
as such held several senior positions in the Ministry of Home
Affairs, Ministry of Communications and Information Technology,
Ministry of Information and Broadcasting of the Government of
India and in the Department of Tourism, Culture and Public
Relations, Department of Mines, Mineral Resources, Revenue and
Relief and Rehabilitation of the Government of Madhya Pradesh.
He has served as Director on the Board of Directors of several
Public Sector Undertakings in the State of Madhya Pradesh. He is
currently serving as director in various public and private
companies.
Mr. R S Krishan is a Chartered Accountant (Institutes of
Chartered Accountants of India and England & Wales (1986)). He
has over 31 years of experience with Mergers & acquisitions
(M&A), private equity, capital markets (both Equity Capital
Markets and Debt Capital Markets), securities/ cash equities,
restructuring, structured finance, acquisition finance and similar
lending activity and experience in Insurance industry.
Mr Steven Phillips Mostert has Graduated from the University
of Stellenbosch, obtained an MBA from the same university, and
also holds an Honours Degree in Educational Psychology from
the University of South Africa. He has over 26 years’ experience
in financial services. He has extensive experience in line
management and delivering large transformation projects. He was
instrumental in Sanlam's entry into India. He played the leading
role in the implementation of a very successful Bancassurance
programme across 5 African countries and Sanlam's entry into
Nigeria. He is a member of the Sanlam Emerging Markets EXCO
and serves on the Shriram General and Shriram Life Insurance.
Mr Umesh Govind Revankar holds Bachelor's degree in
Business Management from Mangalore University and a Master
of Business Administration (MBA) in finance. He attended the

29
Advanced Management Program at Harvard Business School. He
has been associated with the Shriram group
Mr Duruvasan Ramachandra holds Bachelor's degree in
Commerce. Mr. Duruvasan Ramachandra is a Commerce
Graduate has been serving the Shriram Group for more than 3
decades. He has started his career with Shriram Chits at
Chennai in the collection department and has worked his way up
to being CEO and Executive Director of Shriram Chits P Ltd,
Hyderabad. He was instrumental in the growth of the Company
during his stint at Hyderabad and has expanded the Company
from 16 branches to 202 branches. During his tenure the
Company flourished as the largest chit fund Company in the
country. In terms of Auction Turnover, No of Branches,
Manpower and Customer base, his contribution paved way for
the Shriram Group to expand its Deposit and NCD portfolio. Mr.
Duruvasan was the Managing Director and Principal Officer of
M/s Shriram Life Insurance Company Limited. He also serves on
the Board of M/s CES Limited, He has been inducted as
Wholetime Director in Shriram Capital on 18th November, 2019.
Mr Daniel Hermanus Gryff Enberg holds B.com (Hons) from
University of Stellenbosch. Danie Gryff Enberg is the current
Head of Product Management within Sanlam Personal Finance
(SPF) Actuarial where he is responsible for the pricing, experience
investigations, reinsurance strategy and management and
systems testing of most products of Sanlam Life. He was
appointed in this role in January 2018 and has been with
Sanlam since 2006.
Sanjeev Mehra is a Director at TPG Capital Asia where he
covers the Financial Services and Consumer sectors. He is based
in Mumbai and has over 10 years of investing experience. Mr.
Sanjeev has an MBA from London Business School and an
undergraduate degree in Economics from Delhi University. He
was appointed in the capacity of Non-Executive, Non-
Independent Director of the Company in August, 2020.
For the last 29 years and has extensive experience in the
financial services industry. During his stint with the Shriram
Group, he has shouldered various responsibilities and worked in

30
several key roles of business operations. He is also the President
of the Federation of Indian Hire Purchase Associations.

MANAGEMENT TEAM AND OTHERS

MR CASPARUS JACOBUS HENDRIK KROMHOUT

MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER

MR MANOJ KUMAR JAIN

MANAGING DIRECTOR

31
MR. BRAHMAIAH TELAPROLU MR JOHANNES GILLIAM

CHIEF FINANCIAL OFFICER VAN HELSDINGEN

APPOINTED ACTUARY &

CHIEF OFFICER

SMT. AKHILA SRINIVASAN MR. T.S. KRISHNA MURTHY

DIRECTOR CHAIRMAN

32
 KEY PERSONS

SL. NO. NAME DESIGNATION

1. Mr. Casparus MD & CEO

Jacobus

Hendrik
Kromhout

2. Mr. Manoj MD
Kumar Jain

3. Mr Johannes Appointed
Gilliam Van Actuary and
Helsdingen Chief Risk Officer

4. Mr. Brahmaiah Chief Financial

Telaprolu Officer

5. Ms. Samatha Company

Kondapally Secretary & Chief
Compliance
Officer

6. Mr Ajit Banerjee Chief Investment

Officer

33
 Shriram Life insurance Award and Recognition: -

Shriram life insurance company limited (SLIC) has won

the Recognition for Active Customer Engagement Award
2019 from the Confederation of Indian Industry (CII) on 11th
Dec’19 at New Delhi based on the assessment outcome of the ‘CII
AWARD FOR CUSTOMER OBSESSION -2019’. This is an
extremely proud moment for us as we stood among the 25
most reputed companies (likes of Tata Capital, Schneider
Electric, Uber and many other top companies) which have won
recognitions in various categories in the CII Award for Customer
Obsession – 2019. The award has been received by our MD &
CEO, Mr. Casparus Kromhout accompanied by Mr. Atul Sharma,
Mrs. Madhavi Shrine and Mrs. Sailatha Kannepalli.

CII had instituted the ‘CII Award for Customer Obsession’ in

2016, to promote the culture of customer centricity in the
industry. We received this award from Mr. B. N. Satpathy,
Former Senior Advisor, NITI Aayog, Sr Consultant in the office of
Principal Scientific Advisor, Cabinet Secretariat – Govt. of India.

This Recognition for Active Customer Engagement is

awarded to Shriram life on the basis of an in-depth evaluation of
the self-assessment report submitted by Shriram life to the CII
followed by a rigorous two- day onsite assessment at the SLIC’s
Head office, Hyderabad and Lakdikapul office by the CII
Assessment team. The companies are evaluated on 7 major
categories which demonstrate the focus on customer centricity
and experience. This Award is a result of the SLIC’s efforts as a
company in building and strengthening processes towards better
customer experience.

Mumbai, December 12, 2019: Shriram Life Insurance

Company has won the Recognition for Active Customer
Engagement Award – 2019 based on the assessment outcome of
the ‘CII AWARD FOR CUSTOMER OBSESSION-2019’.
Confederation of Indian Industry (CII) had instituted the ‘CII
Award for Customer Obsession’ in 2016, to promote the culture
of customer centricity in the industry.

34
THE CORPORATE SOCIAL RESPONSIBILITY POLICY

Introduction:
The Corporate Social Responsibility Policy (hereafter referred
to as ‘Policy’ or ‘CSR Policy’) of Shriram Life Insurance Company
Limited (“SLIC” or “Shriram Life” or “Company”) has been
designed in consonance with Section 135 of the Companies Act,
2013 (the ‘Act’) to lay down the guidelines for undertaking CSR
initiatives at Shriram Life in accordance with the Companies
(Corporate Social Responsibility Policy), Rules, 2014 (‘Rules’) as
amended from time to time. This Policy lays down the guiding
principles or rules that shall apply to all CSR programs/projects
to be undertaken by the Company, as per Schedule VII of the Act,
within the geographical limit of the Republic of India.

Objective of the CSR Policy

To identify deserving causes amongst the marginalized sections

of society and support them in a continuing manner thereby
ensuring a high degree of social impact through the projects /
programmes which will enhance the socioeconomic well-being of
the communities and society at large.

Scope and Applicability

The CSR Policy of the Company shall contain the approach and
direction given by the Board, taking into account the
recommendations of its CSR Committee, and includes the guiding
principles for selection, implementation and monitoring of
activities as well as formulation of the CSR Annual Action Plan.
The Policy would apply to all CSR programs/projects to be
undertaken by the Company towards fulfilling its Corporate
Social Responsibility objectives.

35
Focus Areas and Guiding Principles

Driven by the Company’s core objective, SLIC CSR Vision is to

focus its efforts in the areas of Education, Vocational Skill
Training, Promotion of Preventive Health Care, Sanitization and
other Projects that may be identified from time to time.
Through these efforts, SLIC strives to contribute to nation
building and the economy and act as a responsible Corporate
Citizen.
All CSR projects of the Company will be in line with the CSR
vision, as well as areas listed in Schedule VII of the Companies
Act, 2013. CSR projects will be undertaken in India except for
training of Indian sports personnel representing any State or
Union territory at national level or India at international level. It
will not include the activities undertaken in pursuance of normal
course of business of the Company, projects benefitting the
employees of the Company (as defined in clause (k) of section 2 of
the Code on Wages, 2019 (29 of 2019) and as amended from time
to time), or contributions of any amount directly or indirectly to
any political party. Further, it will not include activities
supported on sponsorship basis for deriving marketing benefits
for its products or services or activities carried out for fulfilment
of any other statutory obligations under any law in force in India.
The Company will continue to provide support to specific
needs such as during natural disasters, through financial as well
as logistical support. Apart from the activities undertaken in
areas or subjects of primary focus, the CSR Committee may
choose to select activities and recommend to the Board, areas or
subjects, as prescribed in Schedule VII of the Companies Act,
2013.

CSR Expenditure/Budget

The annual CSR Budget would be approved by the Board on

the recommendation of the CSR Committee, subject to the
provisions of the Act.
The Company will ensure that in each Financial Year, at least
two per cent of the average net profit (calculated as per Section 198
of the Act) made during the immediately preceding FYs, is spent
36
on CSR projects/programmes subject to the regulatory
requirements as applicable from time to time. The Chief Financial
Officer shall certify to the utilisation and manner of utilisation of
the funds disbursed by Shriram Life for the purposes of CSR.
Based on the total approved Budget, CSR Committee would be
authorized to allocate funds for different projects / programmes
on the basis of identified CSR plan on yearly basis, under
different budget heads for undertaking CSR activities. Such
allocation of funds shall not act as a constraint in the event of a
national calamity and the Company may contribute such amount
as may be deemed necessary for a cause. The Company may
spend up to 5% of the total CSR expenditure in one financial year
on administrative expenses relating to the general management
and administration of CSR functions in the company.
If the company fails to spend the total approved CSR budget
for the financial year, the Board shall specify the reasons for not
spending the amount and, unless the unspent amount relates to
any ongoing project, transfer such unspent amount to a Fund
specified in Schedule VII, within a period of six months of the
expiry of the financial year.
Any unspent amount pursuant to any ongoing project, shall
be transferred by the company within a period of thirty days from
the end of the financial year to a special account, to be opened by
the company in that behalf for that financial year in any scheduled
bank to be called the Unspent Corporate Social Responsibility
Account, and such amount shall be spent by the company in
pursuance of its obligation towards the Corporate Social
Responsibility Policy within a period of three financial years from
the date of such transfer, failing which, the company shall transfer
the same to a Fund specified in Schedule VII, within a period of
thirty days from the date of completion of the third financial year.
The surplus arising out of the CSR activities will not be
considered as a part of the business profits of the Company and
shall be ploughed back into the same project/programme, or shall
be transferred to the Unspent CSR Account and it should be spent
in pursuance of this CSR policy and annual action plan of the
Company, or the Company may transfer such surplus amount to
a Fund specified in Schedule VII of the Act, within a period of six
months of the expiry of the financial year.

37
 In any year, where the Company has spent in excess of its
CSR obligation, such excess spending shall be available for set off
against the Company’s CSR obligations for up to the next three
financial years in accordance with Applicable Law, and the Board
shall be competent to pass a resolution in this regard.
Implementation modalities:
The Company will undertake its CSR activities (being projects /
programs/other permitted activities), approved by the CSR
Committee/Board either directly or through non-governmental
organizations (NGOs) and/or such other eligible entity/
organization in accordance with Rule 4 of the aforesaid CSR Rules
and other applicable provisions.
CSR projects/programmes will be identified and budgets
allocated through a process, incorporating identification of
suitable implementation agencies, need assessment (where
required) and clear outlining of desired outcomes. The CSR
Committee will deliberate on the proposals and approve proposals
for implementation at its discretion.
While implementing the identified programme, time frames
and milestones maybe predefined. If the projects/programmes
successfully perform, they will be supported on a continuing basis
and may be annually renewed if the duration of the activities
approved was on an annual basis.
Funds would be disbursed either in tranches or as one-time
payment. The terms, conditions and timing of disbursement
would be conditional upon the nature and requirement of the
CSR project or programme.
Governance Mechanism:
The Corporate Social Responsibility Committee (CSR Committee)
is the governing body that will articulate the scope of CSR activities
for the Company and ensure compliance with the CSR Policy. The
CSR Committee would comprise of three or more Directors
including at least one independent Director.

The CSR Committee shall:

• Formulate & recommend to the Board the CSR

Policy and any Amendment thereto;

38
 • Indicate the activities to be undertaken by the
Company as specified in the act.
• Review and recommend the annual CSR plan to
the Board.
• Monitor the CSR activities and compliance with
the CSR policy from time to time; and
• Review and implement, if required, any other
matter related to CSR initiatives

The Board of Directors shall:

i) Approve the CSR Policy based on the recommendation of

the CSR Committee;
ii) Approve the CSR activities, annual CSR plan and CSR
utilisation based on the recommendation of the CSR
Committee; and
iii) Review the CSR Policy and CSR activities.

The CSR Committee shall decide on the locations for CSR activities
and formulate and recommend to the Board for approval a CSR
annual action plan, which shall contain all matters which are
required under applicable Law and any other matters as the CSR
Committee may deem fit from time to time. The Board may modify
the annual action plan as per the recommendations of the CSR
Committee at any time during the financial year, based on
reasonable justification.
The CSR Annual Action Plan shall include the following:

• The list of CSR projects or programmes that are approved

to be undertaken in areas or subjects specified in Schedule
VII of the Act.
• The manner of execution of such projects or programmes
• The modalities of utilisation of funds and implementation
schedules for the projects or programmes
• Monitoring and reporting mechanism for the projects or
programmes
• Details of need and impact assessment, if any, for the
projects undertaken by the company

39
 Monitoring Process

The CSR Committee shall ensure a transparent monitoring

mechanism for CSR activities.
a) The CSR Committee shall review the progress of CSR
activities at least twice a year, including the annual
review.
b) The Finance team under the Chief Financial Officer shall
be responsible for monitoring expense on CSR activities
with respect to the plan and submission of the same to
the CSR Committee and the Board.
c) The Board of Directors shall review the progress of CSR
activities at least annually.
d) The Board shall

• Satisfy itself that the funds so disbursed have been

utilised for the purpose and in the manner as approved
by it;
• For any ongoing project, shall monitor the
implementation of the project with reference to the
approved timelines and year-wise allocation and shall
be competent to make modification, if any required.

CSR Reporting:

The company shall follow and comply with the requirements

for disclosure of the CSR Policy, composition of the CSR
Committee and CSR projects/programmes approved by the
Board on the website of the company.
Further, the Board shall disclose the composition of the CSR
Committee and the CSR activities in the Board’s Report, in
the manner prescribed in the Rules.
If the average CSR obligation exceeds Rs 10 crore or more in
pursuance to Section 135(5) of the Companies Act 2013, in
the three immediately preceding Financial Years, impact
assessment through an independent agency shall be
undertaken for CSR project having outlay of Rs 1 crore or
more and which have been completed not less than one year
before undertaking the impact study.
The impact assessment reports shall be placed before the
Board and shall be annexed to the annual report on CSR.

40
If impact assessment is undertaken, the Company may book the
expenditure towards Corporate Social Responsibility for that
financial year, not exceeding five percent of the total CSR
expenditure for that financial year or Rs 50 lakh rupees,
whichever is less.
The Policy shall be subject to review by the CSR
Committee/Board on an Annual basis or as per the requirement,
including change in law.

41
 CHAPTER-4
COMPANY OVERVIEW

42
4.1 CONCEPT OF HRD

Today, more importance is being given to “people” in

organizations. This is mainly because organizations are realizing
that human assets are the most important of all assets. This
emphasis can also be partly attributed to the new emerging
values of humanism and humanization. Moreover, with the
increased emphasis on creativity, and autonomy, which people
are increasingly acquiring and enjoying in the society,
the expectations of people are fast changing. People cannot be
taken for granted any more.
In the past, people working in organizations were given
attention merely in administering the necessary conditions of
work. The traditional concept of personnel management was
based on a very narrow view of human motivation. The basic
assumption underlying with view that human beings are
primarily motivated by comforts and salary, and necessary
attention may be given to rationalise these, so that people do not
get dissatisfied. Most of the attention, therefore, was on
administration of salary and other benefits. It is now being
increasingly realized that people working in organizations are
human beings. They have their own needs, motivation and
expectations, and that their contribution to the organization is
much more than that of any other resource being used.
Human Resource Development (HRD) is a process by which the
employees of an organization are helped, in a continuous,
planned way to:
1) Acquire or sharpen capabilities required to perform various
functions associated with their present or expected future roles,
2) Develop their general cap-abilities as individuals and discover
and exploit their potentials for their own and/or organizational
development purposes, and
3) Develop an organizational culture in which supervisor-
subordinate relationships, teamwork, and collaboration among
sub-units are strong and contribute to the professional well-
being, motivation, and pride of employees (Rao 1985).
In Life Insurance Corporation human resource development is
a people-oriented concept that focuses on developing the skills,
knowledge and competencies of people. Various authors have not
yet been fully successful in conceiving the whole concept of
human resource development. They have defined the term

43
from their standpoint due to the fact that it is a recent concept
and therefore is still in the conceptualizing stage.

IMORTANCE OF HRD

• HRD makes people more competent. It develops new skill,

knowledge, and attitude of the people in the concern
organizations.
• An environment of trust and respect can be created with the
help of human resource development.
• Employees found themselves better equipped with problem
solving capabilities.
• It improves the all-round growth of the employees. It
improves team spirit in the organization.
• They become more open in their behavior. It generated
values among people.
• It also helps to create the efficiency culture in the
organization. It leads to greater organizational effectiveness.
Resources are properly utilized and goals are achieved in a
better way.

4.2 HISTORY AND ORIGIN OF HRD

The origin of HRD is indistinct but may be traced back to

the 1960’s in the United States. It is gaining popularity and is
widely practiced these days. Nadler used the term HRD for the
first time in the George Washington University in 1968. Now-a-
days, every enlightened employer takes interest in it. It is gaining
popularity and is widely practiced these days.
In 1969, it was used in Maimi at the American Society for
Training and Development Conference. But by the middle of
1970's, it gained more acceptances, but it was being used by
many as merely a more attractive term than 'Training and
Development’ It was 25 years ago that our country witnessed the
emergence of a new HRD culture in our country with Prof Udai
Pareek and Prof T.V. Rao heading the movement. What started as
a "Review Exercise of the Performance Appraisal System" for L&T
by two consultants, Prof Udai Pareek and Prof T.V. Rao from the
Indian Institute of Management, Ahmedabad (IIMA), resulted in
the development of a new function - The HRD Function.

44
 In the early seventies, this company, in association with IIMA
the reviewed all aspects of its operations. In 1974, the
consultants studied the organization and prepared a new
integrated system called Human Resource Development (HRD)
System. This was probably the first of its kind in India. The new
system clearly established the linkages between the various
personnel related aspects such as performance appraisal,
employee counselling, potential appraisal, training, etc.
In the opinion of some management thinkers, Japan is the
first country to stress and use HRD Practices. According to Prof.
Udai Pareek, as far as India is concerned, the term HRD was
introduced for the first time in the State Bank of India in 1972.It
is believed that the concept of HRD has not been imported in
India. It is a philosophical value concept developed by Dr. Udai
Pareek and Dr. T. V. Rao at the Indian Institute of Management,
Ahmadabad. By the late seventies, this professional outlook on
HRD spread to a few other public sector organizations, such as
BHEL, SAIL, Maruti Udyog Ltd., Indian Air Lines and Air India;
and the private sector organizations, like L & T Ltd. and TISCO.
Based on the recommendations a very high level role was created
at the Board level to give a greater thrust to the new system. A
separate HR Department was created. A high level internal team
headed by a General Manager, monitored the progress of
implementation of the new system initially, which was
subsequently handed over to the HRD Department.
The HRD system has since then been reviewed from time to
time and improvements made, retaining the basic philosophy.
The original consultancy reports of Dr. Udai Pareek and Dr.
T.V.Rao have sown the seeds for this new function and new
profession. This pioneering work of Dr. Rao and Dr. Pareek lead
later top the establishment of HRD Departments in the State
Bank of India and its Associates, and Bharat Earth Movers
Limited in Bangalore in 1976 and 1978. The establishment of a
separate Ministry of Human Resource Development (HRD) in
1986 is a logical culmination of the realization of the importance
of the human factor in the development by Government of India.
In the last few years, ever since the Central Government
started a ministry called HRD, quite a few organizations have
introduced this department in their organizations. Previously, the
department was called Personnel Department, but now it has
been renamed as HRD Department. In some organizations, there
are HRD officers or Managers who are merely carrying out the
45
training activities. In effect, some training managers are now
being called HRD managers. One must admit that the phrase is
becoming increasingly popular.
The role of Indian Institute of Management, Ahmadabad; Centre
for HRD at Xavier Labour Relations Institute, Jamshedpur;
Indian Society for Training and Development at New Delhi; and
National HRD Network at New Delhi and some individual
researchers are important in carrying the HRD movement in
India.

4.3 HRD IN THE LIC

The Life Insurance Corporation of India (LIC) was set up in

1956 by the Government of India, on the nationalization of life
insurance business. It took over the entire life insurance
business which had been transacted in India by private
companies till then. The fund (assets and liabilities) and
employees pertaining to this business were automatically
transferred to the LIC. Since 1956, LIC alone has the authority to
transact life insurance business in India, subject to special
authorizations for some government schemes, which are allowed
to operate outside the purview of the LIC. Apart from the Central
Office, the LIC has five Zonal Offices, sixty-four Divisional Offices
and Branches in over eight hundred centres.
In 1980, the LIC launched on a major exercise to
organizational restructuring which led to major decentralization
of responsibilities to the branches. Each branch was recognized
as a profit and growth centre. The number of positions in the
branches as well as the level of responsibility in these positions
was considerably enhanced. Microprocessors were made available
to branches. The new structure provided for consultation
processes and joint decision-making in planning and other
operations. The new systems included data being generated
about the socio-economic conditions of the area under the
Branch jurisdiction for planning purposes and developing
strategies for operations on the basis of such data. Consequent to
the restructure of work, there was need to enhance the skills of
the personnel to operate the new systems. It was recognized that
the organization to successfully adapt to the serious challenges
from the complex turbulent environment, needed long-term
strategies with regard to the social systems. Aware that

46
bureaucratic procedures, narrowly defined jobs and tight
supervision can wreak havoc on human motivation and that
excellent performance comes when individuals are committed to
using full capacities to solve problems, the need was felt to
develop strategies that would meet the needs for learning,
development, belongingness, variety and creativity.

4.4 CONCEPTUAL FRAMEWORK OF HRD

(I) Philosophy and meaning of HRD

The impact of dynamic and fast changing business
environment cannot be avoided by LIC. For the success of a
corporation, it is necessary to be dynamic and to cope with the
changing world and it is equally necessary to change the
approach of working. In this context, it is necessary to
understand the basic philosophy of HRD.
• HRD philosophy represents all those basic beliefs, ideals,
principles and views which are held by the management with
respect to the development and growth of its employees. A
well-established HRD philosophy plays two important
functions. First, it gives rise to what one may call 'style of
management'. A manager develops his practices on the basis
of his philosophy. Second, it makes organizational goals more
explicit.
• It has very rightly described the following beliefs essential
for the success of any HRD programme. In 1987, the
organization stated its beliefs about HRD as under:
• Human potential inherent in every employee is vast; it can
be further enhanced by various interventions, like, training,
job rotation, counselling, organizational action, etc. That
people are major assets and that an organization can foster
full realization of individual potential by providing a
developmental environment and opportunities, by
encouraging and rewarding innovativeness, etc.
Such people who are not able to contribute to the
organization fully due to reasons beyond their control can
also give the best if they are taken care of proper
environment and conditions are provided.
• Competencies can be developed in people at any point of
time, as a model employer it is desirable that weencourage
competency enhancement.

47
 • HRD provides for higher quality of work-life through
opportunities for a meaningful career, job satisfaction and
professional development.
• HRD philosophy emphasis’s human well-being and
organizational growth, that HRD policies are relationship
cantered and the extent of relationships under HRD ambit
is life long and not merely for 8 hours.
As a model-employer, the Corporation must provide for
employee growth, if an employee perceives a nurturing
environment, there would be a positive response to
matching individual aspirations with organizational needs.
In order to be effective, HRD processes have to be planned
and continuous.
Human Resource Development is a multi-dimensional concept. It
has been defined differently by economists, social scientists,
industrialists, managers and other academicians from different
angles. Dr. Len Nadler observed, "HRD means an organized
learning experience within a period of time with an objective of
producing the possibility of performance change." According to
John E. Jones "HRD is an approach to the systematic expansion
of people's work-related abilities, focused on the attainment of
both organizational and personal goals." But the thinkers like Dr.
Nadler and Jones used the terms 'HRD' in a limiting sense to
mean training, development and education. But the concepts of
these thinkers are practical and pragmatic. HRD could be
initiated and facilitated by the HRD departments, but the
achievement of its goals depends entirely on various
implementing agencies. At the organizational level, these are line
managers and at the national level, these are the various
agencies and agents working for development.
Basically, HRD involves two issues; relationship of the person
to (i) oneself, and (ii) to the society. A person may be an asset or a
liability to himself and the society depending upon the
development of his skills and abilities and his social attitudes
and values. The first step in the development of HRD is, of
course, the development of the abilities and the work competence
of the person. HRD cannot only be considered as the
development of resources or abilities in the individual but it has
to be combined with one's social commitments. HRD, therefore,
should aim at the development of professional competence as
well as pro-social attitudes.

48
Another way of looking at HRD can be to identify the factors in an
individual which determines his personal satisfaction, social
utility and work efficacy. These are the factors in the personality
of the individual and his attitudes and professional skills.
Broadly, four such factors can be identified namely;
• Cognitive abilities, e.g., intelligence;
• Acquired personal traits, e.g., rationality and work
commitment;
• Social attitudes, e.g., altruism, consumerism, etc.
• Work competence, e.g., skill and creativity.
Thus, HRD may be defined as the development of abilities and
the attitudes of the individual leading to personal growth and
self-actualization which enables the individual to contribute to
societal wellbeing and development and in achieving personal
satisfaction and happiness. HRD believe that individuals in the
organization have unlimited potentials for growth and
development and that their potentials can be developed and
multiplied through appropriate and systematic efforts. Given the
opportunities and by providing the right type of climate in the
organization, individuals can be helped to give full expression of
their potentials, contributing to the achievement of the goals of
the organization and, thereby, ensuring optimization of human
resources. Investment in human beings is another underlying
concept of the human resource system. The organization accepts
that the development of human resources involves investment of
time and effort for growth.

(ii) Nature and Defined Goals of HRD

HRD is a deliberately adopted systematic set of measures to
develop the existing manpower in a particular organization. HRD
is a newly adopted and a very popular approach in the modern
industrial world. It is a continuous learning process and not
merely a set of mechanism or techniques. The techniques such
as organization development, training and development,
performance appraisal, career advancement, etc. are used to
initiate, facilitate and promote HRD process in a continuous way.
The HRD department envisages a major role in the development
of employees but the co-operation of other parts of an
organization is necessary in such as effort. Prof. Udai Pareek and
T. V. Rao have very rightly identified four basic agents or
partners of development as under:
• The employee or individual (the self).
49
 • The immediate boss of the employee.
• The HR Department and
• The organization.
HRD function is an administrative function. Previously, it was
treated as a staff function but now HRD manager is a line
manager and has an important place in the organizational
framework of an institution. The HRD goals of LIC in the revised
structure are:
• To ensure that adequate number of persons with sound
insurance background and experience, both as generalists
and specialists, are available at different levels, to facilitate
enhanced standards of service to customers and fast
growth.
• To provide human resource policies that are not only fair
and just but also perceived as fair and just.
• To provide employees equitable opportunities to move up in
the organization on the basis of their performance and
ability.
• To ensure that responsibility for results is provided right
from the lower levels so that employees can develop a sense
of independence and self-confidence
• To provide employees opportunities for learning new and
varied skills, thus, making the work more satisfying and
meaningful.
• To provide opportunities for training and development of
employees with special potential.
Several strategies to achieve the stated objectives and goals were
developed. Consistent with the policy of
consultation, the new strategies were circulated among and
discussed with groups of employees. It was,
however, clear that the organisation needed a comprehensive
HRD approach.

4.5 HRD MECHANISMS OR SUB-SYSTEMS

HRD is a total system with various sub systems. Various HRD

thinkers and professionals have designed the mechanism of HRD
in different ways. Prof. T. V. Rao opines that the sub systems
should comprise the performance appraisal, potential appraisal
and development, feedback and performance coaching, career

50
planning, training, organization development, rewards,
employee’s welfare and the quality of work life and human
resource information system. There are many instruments that
can be used to facilitate HRD. These instruments may be called
sub systems, methods or mechanisms. Each of these sub
systems focuses on some particular aspect of HRD. To have a
comprehensive HRD, many of these instruments may be needed
to be used simultaneously. Any systematic or formal way of
facilitating competency, motivation and climate development
could be considered an HRD instrument. The most frequently
used HRD mechanisms are:

Manpower Planning-
Manpower planning is the process which assesses and
determines that the organization will have an adequate number
of qualified persons available at specific times, performing jobs
which would fulfil the needs of the organization and which would
provide satisfaction for the individuals involved. It is an
endeavour to catch demand and supply.

Recruitment, Selection and Placement-

Generation of applications for specific positions for actual or
anticipated vacancies is known as Recruitment. Through ideal
recruitment procedure suitable applicants could be identified.
Selection is the process of ascertaining the qualifications,
experience, skill, knowledge etc of an applicant with a view to
appraising his/her suitability to a job. The selected candidate is
assigned the most suitable job is Placement. Right person on the
right job may produce the best results.

Training and Development-

The two terms are quite identical to each other, but they are not
the same in meaning. Training is a learning process that aims to
permanently improve the ability and behaviour of the employees
by enabling them to acquire new skill, knowledge and attitude for
more efficient performance.
This includes:
• Identification of training needs
• developing suitable training programmes
• providing requisite job skills and knowledge to employees

51
• evaluating the effectiveness of training programmes
Development is the growth or realization of a person’s ability,
through conscious or unconscious learning.
Development programs usually include phases of planned study
and experience, and are usually supported by a coaching or
counselling facility. Development occurs when a gain in
experience is effectively combined with the conceptual
understanding that can illustrate it, giving increased confidence
both to act and to perceive how such action relates to its context.

Performance and potential appraisal-

If the performance of people is to be enhanced, their
performance needs to be periodically evaluated. For this purpose,
performance appraisal interviews between the manager and the
subordinate are to be conducted at regular intervals. During
these interviews, the performance over the review period is
evaluated; strengths and weaknesses identified, and reasons for
any shortfall in performance is examined. The goal, objectives,
and action plan with target dates for future are also worked out.
Different methods like ranking method, paired comparison
method, graphic rating scales method, forced choice list method,
forced distribution method, field review technique, rating by self
and the peer group, 360° performance appraised, etc. can be
used as per need and requirement. Potential appraisal means the
possibility of career advancement. A dynamic and growing
organization needs to continuously review its structure and
systems, creating new roles, and assigning new responsibilities.
Capability to perform new roles and responsibilities must
continuously be developed among employees. Potential appraisal
focuses on identifying the employee's likely future roles within
the organization, and can be assessed by observing employees
performing different functions.

Feedback and performance coaching-

Feedback of performance is an important control measure.
Knowledge of one's strengths help one to become more effective to
choose situations in which one's strength is required, and to
avoid situations in which one’s weaknesses could create
problems. This also increases the individual satisfaction. Often,
people do not recognize their strengths. Managers in HRD system
have the responsibility for observation and feedback to
subordinates about their strengths and weaknesses on a
52
continuous basis. These are also responsible for providing the
employees proper guidance to improve their performance
capabilities.
Employees career planning and development-
Career planning essentially means helping employees to plan
their career in terms of their capabilities within the context of
organizational needs. The HRD philosophy is that people perform
better when they feel trusted and see meaning in what they are
doing.
People want to know the possibilities for their own growth and
career opportunities. As managers have information about the
growth plans of the organization, it is their responsibility to
transmit information to their subordinates and to assist them in
planning their careers within the organization. In the HRD
system, long term corporate growth plans are not kept secret but
are made known to the employees. Employees are helped to
prepare for change whenever such change is planned.
Development and training programmes-
Training and development programmes can be designed to
improve performance and to bring about measurable changes in
knowledge, skills, attitudes and social behaviour of work force for
doing a particular job. Training is linked with performance
appraisal and career development. Employees generally are
trained on the job or through special in-house training
programmes.
Some employees may be deputed for outside training to enhance,
update, or develop specific skills. This is especially valuable if the
outside training can provide expertise, equipment, or sharing of
experiences that are not available within the organization.
Periodic assessments are made of the training needs within the
organization. Training programmes are developed and conducted
by in house trainers or consultants /institutions hired for the
task. The effect of all training programmes is monitored, analysed
and used for fine tuning. Managers and employees who attend in
house or outside training events are also expected to
submit suggestions concerning any changes they would like to be
implemented on the basis of their new knowledge.

Assessment and development centre-

A centre can be an end in itself for assessment of need, potential
and appoint ability or it can be a means to an end. These means
can be diagnostic tools by which appropriate action can be taken
53
to help an individual and or group of individuals to upgrade their
managerial performance against an agreed set of criteria. If the
criteria have been drawn from the job through job analysis and
the current level of performance assessed against them in job
relevant but unfamiliar situations, good quality information can
be gathered from which one can draw up developmental plans.
Developmental applications of assessment centres represent an
emerging exciting area for practitioners interested in maximizing
the benefits of assessment centres. Development centres can also
serve as a development tool for employees. These are workshops
which measure the abilities of participants against the agreed
success criteria for a job or a role. They also involve much more
self and peer assessment than is usually used in selection-
oriented assessment centres.

Organization Development-
This function includes research to ascertain the psychological
health of the organization. This is generally accomplished by
means of periodic employee surveys. Efforts are made to improve
organizational health through various means in order to maintain
a psychological climate that is conducive to productivity. The OD
specialists also help any department in the organization that has
problems such as absenteeism, low production, interpersonal
conflict, or resistance to change. These experts also revamp and
develop various systems within the organization to improve their
functioning.
Honours and Awards-
Honouring and awarding employee performance and behaviour is
an important part of HRD. Appropriate honours and awards not
only recognize and motivate employees but also communicate the
organization's value to the employees. In HRD systems,
innovations and use of capabilities are awarded in order to
encourage the acquisition and application of positive attitude and
skills. Typical awards include cash award, certificates of
appreciation/commendation, news Etters announcements, pay
rise, special privileges, etc. Award may be given to individuals as
well as to teams or departments.
Employee’s welfare and quality of work life-
Employees at lower levels in the organization usually perform
relatively monotonous tasks and have fewer opportunities for
promotion or change. In order to maintain their work
commitment and motivation, the organization must provide some
54
welfare measures, such as medical insurance, disability
insurance, holidays, vacations, etc. Quality of work life
programmes generally, focus on employee needs and meeting
them to the extent feasible. Job enrichment programmes,
educational subsidies, recreational activities, health and medical
benefits, etc., generate a sense of belonging that benefits the
organization in the long run.
Quality circles (Participative Management)-
Co-operation and participation between management and labour
at the undertaking level serves to ensure increased production,
secure full recognition of the importance of the human element in
the industry, greater interest in the general operation and
improve
industrial relations. There are various forms and styles of
participative management. One of them which is widely applied
and practiced is 'Quality Circles'. Every human being is a
veritable storehouse of ideas. In normal working, he is generally
not called upon to contribute ideas. He is, at best, asked to
perform a given set of duties. Given the right kind of
environment, he will be inspired to also lend his intellect and
creativity to the organization. Quality circles lead to a good
participative environment and greater acceptability of decisions.
Since the employees are not very good at analysing and decision-
making, the part of quality circle includes teaching employees
group communication skills, quality strategies and measurement
and problem analysis techniques.
Human Resource Information Systems-
A systematic way of gathering and storing information about each
individual employee for the benefit of planning, decision-making
and supply of returns to external agencies at the organizational
level is known as human resource information system. A variety
of records are maintained to meet the needs of manpower
planning, recruitment, development of people, compensation,
integration and maintenance and separations not only for
internal control, feedback and corrective action, but also to meet
the various constitutional obligations. A model explaining the
linkages between HRD mechanisms, processes, outcomes and
organizational effectiveness can be presented as:

55
 MODEL DISPLAYING LINKAGE BETWEEN HRD
MECHANISMS AND
ORGANISATIONAL EFFECTIVENESS

HRD HRD Process

HRD outcome Organizations
Mechanisms and HRD
variables Effectiveness
Or Sub- climate
Dimensions
systems or variables
, etc.
Instruments

Performance Role clarity More Higher

and potential Employee self Competent productivity
appraisal Development People Growth and
Feedback and Awareness of Better diversification
counselling Competencies development roles Cost
Career required for job Higher work reduction
Planning performance commitment Higher
Training and Proactive And job Profits
development orientation involvement Better
Trust Problem Solving Image
Organisational Collaboration Skills
development and Better
Honours and team work utilization
Awards Authenticity of human
Employees Openness resources
welfare and Risk Taking Higher job
QWL Value satisfaction and
work motivation Other
Self-renewal generation
Health Factors
and Clarification of
institution norms and More team work
Synergy and Environment
building standards
Other Better respect for each
Technology
communication other
Resources
Fair rewards
Other Factors
Generation of
Personnel Availability
unbiased data on
Policies Nature of
employees
Job Business,
management etc
Styles,
Investment on
HRD, Top
Management’s
commitment

56
Each of these mechanisms contributes to the achievement of
overall HRD goals. Performance appraisal focuses primarily on
helping the individual to develop his present role. Potential
appraisal focuses primarily on identifying the employee's likely
future roles within the organization. Training is a means of
developing the individual's personal effectiveness or developing
the individual's ability to perform his present job role or future
job roles. Training can also strengthen interpersonal
relationships and increase team work and collaboration through
management and leadership training and team building
programmes. Feedback and performance coaching help the
development of individual as well as relationships. Organization
development is the mechanism for developing team collaboration
and self-renewing skills. Efforts to promote employee welfare and
ensuring the quality of work life, along with honours and awards,
promote a general climate for development and motivation among
employees. The overall effectiveness and success of HRD system
depend upon a well devised HRD strategy. HRD is a total
integrated system. That is why, strategies of introducing HRD
system must be clear in the mind of the management, a vision
that may guide the choice of HRD programmes and direction. It
should include the following phases systematically in order to
make it purposeful, meaningful and effective for the organization.
The new human resource practices like,
1. HRD climate
2. Training
3. Performance Appraisal
4. Quality of working life
5. Counselling
6. Compensation/Reward system is to be used to fulfill the
internal needs of organizations

4.6 HUMAN RESOURCE DEVELOPMENT CLIMATE

An organization’s success is determined as much by the skill and
motivation of its members as by almost any other factor. While
this has always been true, recent changes focus attention on
ways human resources development activities can be used to
ensure organizations have what it takes to successfully meet the
challenges (Desimone et. al. 2002).
Reichers and Schneider (1983) outline a four-fold progress made
in climate research. This approach is founded on perception and
aids in the understanding of how work contexts affect behaviour
57
and attitudes. It provides an alternative to motivation theories as
explanations for almost everything that people face while at
work. What motivational, whether of the content (need) or
process (instrumentality) persuasion fail to recognize is the key
role these perceptions play in operational wing.
A second advance in climate research examines multiple levels of
analysis. While motivations tend to concentrate on the
explanations of phenomena from an individual's perspective,
climate research tends to focus on aggregated or group level data
to discover relationships between clusters of perceptions and
organizationally relevant outcomes. A third advance has been the
explanation of the distinction between psychological climates and
organizational climate. This distinction, first proposed by James
and Jones (1974), and further clarified by Jones and James
(1979), has gained general acceptance The fourth advance follows
from the idea that people attach meaning to, or makes sense of
clusters of psychologically related events. People in organizations
encounter thousands of events, practices and procedures and
they perceive these events in related sets.
HRD climate is characterized by the tendencies such as treating
employees as the most important resources, perceiving that
developing employee is the job of every manager, believing in the
capability of employees, communicating openly, encouraging risk
taking and experimentation, making efforts to help employees
recognize their strengths and weaknesses, creating a general
climate of trust, collaboration and autonomy, supportive
personnel policies, and supportive HRD practices. An optimal
level of development climate is essential for facilitating HRD
activities (Rao & Abraham 1986). The top management
subscribing to these values is a starting point. When a critical
mass internalized these values, there emerges a conducive
climate for HRD. This positive HRD climate renders the existing
systems more effective and makes the organizations more
receptive to the introduction of relevant additional system
(Athreya 1988). A healthy HRD climate certainly bolsters the
overall internal environment of the organization, fosters employee
commitment, involvement and satisfaction with the job.

4.6.1 NEED TO DEVELOP CORPORATION CLIMATE

Top to Bottom effort: - Organization is considered to be

complete organization after including top authority to bottom line
58
of workers. And whenever we talk about development at
organizational level effort is needed from top level to bottom level.
Top authority should not have thinking in their mind that their
task is to only take decisions but they should also emphasized on
proper implementation of decision by adopting various controlling
technique. Bottom level workers should have loyal mind-set
towards their organization. They should have realization that
organization is their organization.
Motivator role of Manager and Supervisor: - To prepare HRD
Climate, Manager and Supervisor’s responsibilities are more or
we can say that they are the key players. Manager and
Supervisors have to help the employees to develop the
competencies in the employees. To help the employees at lower
level they need to updated properly and they need to share their
expertise and experience with employees.
Faith upon employees: - In the process of developing HRD
Climate employer should have faith on its employee’s capabilities.
Means whatever amount is invested that should be based on
development of employees. Top management should trust the
employees that after making huge effort to develop employees,
employees will work for the well-being.
Free expression of Feelings: - Whatever top management feels
about employees they have to express to employees and whatever
employees think about top management it must be express in
other words we can say that there should not be anything hidden
while communication process. Clear communication process
will help to establish the HRD Climate.
Feedback: - Feedback should be taken regularly to know the
drawbacks in system. This will help to gain confidence in
employee’s mind. Employee will trust on management and he can
express his opinion freely which is very good for HRD Climate.
Helpful nature of employees: - Whenever we talk about 100%
effort then we have to talk about employee’s effort too. Nature of
employees should be helping for management and for its
colleagues. They should be always read to help to customers too.
Supportive personnel management: - Personnel policies of
organisation should motivate employees to contribute more from
their part. Top management’s philosophy should be clear towards
Human Resource and its well-being to encourage the employees.
Encouraging and risk-taking experimentation: - Employees
should be motivated by giving them authority

59
to take decision. This concept is risky but gradually it will bring
expertise in employees to handle similar situation in future. It
will help to develop confidence in employee’s mind. Organisation
can develop employees by assigning risky task.
Discouraging stereotypes and favouritism: -Management need
to avoid those practices which lead to favouritism. Management
and Managers need to give equal importance. Those people who
are performing good they need to appreciate and those who are
not performing well they need to be guided. Any kind of partial
behaviour should avoid.
Team Spirit: - There must be feeling of belongingness among the
employees, and also willingness to work
as a team.

4.6.2 COMPONENTS OF CORPORATION CLIMATE

Organizational Structure-An organization’s structure is actually

a ‘snapshot’ of a work process, frozen in time so that it can be
viewed. The structure enables the people’s energy to be focused
towards process achievement and goal achievement. Employee
must have a clear definition of not only the work structure but
also the role used to organize the work. If the structure and the
role is not clear, people will not know what the work process is,
who is responsible for what, whom to go for help and decision,
and who can Assist in solving problems.
Organizational Culture-Organizational culture is the pattern of
beliefs, knowledge, attitudes, and customs that exists within an
organization. Organizational culture may result in part from
senior management beliefs or from the beliefs of employees.
Organizational culture can be supportive or unsupportive,
positive or negative. It can affect the ability or willingness of
employees to adapt or perform well within the organization. The
most effective work culture is one that supports the organizations
HR strategies by aligning behaviours, processes and methods
with the desired results. It is not just achieving results but the
methods through which they are achieved that are critical to
long-term success. Before any HR strategy is designed there must
be a clear understanding of the organization, its current values,
its structure, and its people.

60
4.6.3 HRD CLIMATE IN LIC

In LIC HRD climate can be grouped into three categories such as

general climate, OCTAPAC culture and HRD mechanisms.
The general climate items deal with the importance given to
human resources development in general by the top management
and line managers.
The OCTAPAC items deal with the extent to which openness,
confrontation, trust, autonomy, pro-activity, authenticity and
collaboration are valued and promoted in the organization.
The items dealing with HRD mechanisms measure the extent to
which HRD mechanisms are implemented seriously. It is found
that employees of LIC are very sincere and committed. The
managers in general showed a favourable attitude towards HRD
Policies and practices of the organization. They were satisfied
with the developmental policies of the top management as well as
contented with their work and the organization as a whole i.e.
level of job satisfaction was also good. OCTAPAC culture is
average in LIC. It’s also noticed that top management efforts with
regard to identification and utilization of the potential of the
employees is simply at the middle of the road.

4.7 TRAINING & DEVELOPMENT

Training is a process that tries to improve skills or add to the

existing level of knowledge so that the employee is better
equipped to do his present job or to mould him to be fit for a
higher job involving higher responsibilities. It bridges the gap
between what the employee has & what the job demands. One of
the objectives of the corporation is to involve all people working in
the corporation to the best of their ability in furthering the
interests of the insuring public to provide efficient service with
courtesy.
John (2005) defined training as: A planned process to modify
attitude, knowledge or skill behavior through learning experience
to achieve effective performance in an activity or range of
activities. Its purpose, in the work situation, is to develop the
abilities of the individual and to satisfy the current and future
needs of the organization.
Training is an integral part of the HRD programme which the
corporation is undertaking in terms of the personnel policy. A
clearly laid down training policy, becomes essential to set the
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goals, indicate the strategies and give proper direction at all levels
in the area of training. Since training involves time, effort &
money by an organization, so an organization should to be very
careful while designing a training program. The objectives & need
for training should be clearly identified & the method or type of
training should be chosen according to the needs & objectives
established. Once this is done accurately, an organization should
take feedback on the training program from the trainees in the
form of a structured questionnaire so as to know whether the
amount & time invested on training has turned into an
investment or it was a total expenditure for an organization.

4.7.1 METHODS OF TRAINING

The most widely used methods of training used by organizations
are classified into two categories: On-the- Job Training & Off-the-
Job Training.
On-the-job training
It is given at the work place by superior in relatively short period
of time. This type of training is cheaper& less time-consuming.
This training can be imparted by basically four methods:
Coaching is learning by doing. In this, the superior guides his
sub-ordinates & gives him/her job instructions. The superior
points out the mistakes & gives suggestions for improvement.
Job Rotation: In this method, the trainees move from one job to
another, so that he/she should be able to perform all types of
jobs. E.g. In banking industry, employees are trained for both
back-end & front-end jobs.
In case of emergency, (absenteeism or resignation), any employee
would be able to perform any type of job.
Off the job training
It is given outside the actual work place.
Lectures/Conferences: - This approach is well adapted to
convey specific information, rules, procedures or methods. This
method is useful, where the information is to be shared among a
large number of trainees. The cost per trainee is low in this
method.
Films: - can provide information & explicitly demonstrate skills
that are not easily presented by other techniques. Motion
pictures are often used in conjunction with Conference,
discussions to clarify & amplify those points that the film
emphasized.

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Simulation Exercise: - Any training activity that explicitly places
the trainee in an artificial environment that closely mirrors actual
working conditions can be considered a Simulation. Simulation
activities include case experiences, experiential exercises,
vestibule training, management games & role-play.
Cases: - present an in-depth description of a particular problem
an employee might encounter on the job. The employee attempts
to find and analyse the problem, evaluate alternative courses of
action & decide what course of action would be most satisfactory.
Experiential Exercises: - are usually short, structured learning
experiences where individuals learn by doing. For instance,
rather than talking about inter-personal conflicts & how to deal
with them, an experiential exercise could be used to create a
conflict situation where employees have to experience a conflict
personally & work out its solutions.
Vestibule Training: - Employees learn their jobs on the
equipment they will be using, but the training is conducted away
from the actual work floor. While expensive, Vestibule training
allows employees to get a full feel for doing task without real
world pressures. Additionally, it minimizes the problem of
transferring learning to the job.
Role Play: - It’s just like acting out a given role as in a stage
play. In this method of training, the trainees are required to enact
defined roles on the basis of oral or written description.
Management Games: - The game is devised on a model of a
business situation. The trainees are divided into groups who
represent the management of competing companies They make
decisions just like these are made in real-life situations.
Decisions made by the groups are evaluated & the likely
implications of the decisions are fed back to the groups. The
game goes on in several rounds to take the time dimension into
account.
In-Basket Exercise: - Also known as In-tray method of training.
The trainees is presented with a pack of papers & files in a tray
containing administrative problems & is asked to take decisions
on these problems & are asked to take decisions on these within
a stipulated time. The decisions taken by the trainees are
compared with one another. The trainees are provided feedback
on their performance.

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4.7.2 TRAINING STRATEGIES IN LIC

There are two ways of conducting training programmes – through

an established department having a full time HRD functionary
who oversees all the training and development functions of the
corporation or through an external trainers coordinated by the
HRD department These days corporation have recognized the
need for training and re-training their staff, in order to develop a
competitive edge over their competitors in delivering high quality
services to the customers. In case of small branches, who can
neither afford to have an established HRD department nor
employee an external training consultant whose just conduct the
training programmes and often do not have official arrangements
for the post training improvements at the work place. Therefore,
these branches could come together and have an independent
HRD networking institution, which is represented by their
respective divisional administrators. These representatives seek
the external consultants help in designing and conducting the
programmes and the full-time employed professionals of
the networking institution take care of the follow-up services.
This way, the HRD efforts in these branches will not only be more
productive but also meaningful in terms of the financial dictum
“return on investment”. As regards the areas of training in the
corporation, it is suggested that some of the major subjects that
deserve utmost attention are emotional intelligence, high quality
service orientation and employee empowerment. The programme
should be designed to impart different skills/knowledge as stated
above and will differ from one course to another, depending upon
the requirements of type of the job and the level of people.
Training programme should be repeated at regular intervals for
individuals to provide reinforcement of learning. At present the
following types of programmes will be designed and conducted by
the training
centres.
• Standard programme on repetitive basis.
• Role orientation courses in functional areas.
• Special courses and seminars.
• Sales training for supervisory and field personnel.
The first category should be attended by all employees at
predetermined intervals. A course will also be given to all officers
when they move from one level of job to another. When an officer
is appointed as Branch, Divisional or Zonal Managers for the first
64
time, he would be assigned to a programme to help him
understand the demands of his new role. This will also apply to
persons who are appointed as Heads of a Department in Branch
office.
The second category of courses will be arranged regularly for
officers as they enter into that function at the Divisional, Zonal of
Central office level in case they have not attended a programme
in that function earlier.
No officer should hold a post in functional area for more than six
months unless he has attended a programme in that function.
The third categories of courses are special programmes
depending on the specific requirements of the particular level or
the group.
The fourth categories of courses are meant for field staff-
development officers and Agents. Job training programme in
subject matter or programme for agents will be responsibility of
the functional or specialist manager as now. Induction training
for the newly recruited personnel in assistant’s cadre shall be the
responsibility of the divisional office.
SALES TRAINING
The responsibility for sales and marketing training shall be with
central office marketing Department, as a part of marketing
strategy. However, HRD/Training Dept. of central office will
coordinate
• Training of Trainers
• Training of Marketing Managers
• Training of Manager (sales), ABM (sales), selective
agents/agency managers in marketing area.

4.7.3 TYPES OF TRAINING CENTRES

There will be three types of training Centres, with defined

functions, as follows:
1. Management Development Centre (MDC)
The present OTC will be renamed as Management Development
Centre imparting knowledge in the following areas:
• Management programmes and special
seminars/workshops.
• Training of trainer’s programme.
• Functional programmes.
2. Zonal Training Centre (ZTC)

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Nine Zonal Training Centres one at each Zone, shall impart the
following training:
• Courses on general management
• Courses on supervision.
• Functional training
• Sales Training
• Seminars on special subjects
• HGA, Section Head Training
• Staff Training
3. Sales Training Centre (STC)
There will be four STCs for each Zone, depending on the need,
and shall impart the following training:
• ADOs training
• Development Officers training
• Club Members other than Chairman &Zonal Members.
• Selected agents training
• Necessary administrative arrangements like facility
support, teaching aids will be provided by the Zonal
office.

4.8 PERFORMANCE APPRAISAL

Performance appraisal is a formal structured system of

measuring and evaluating an employee’s job related
behaviours and outcomes to discover how and why the employee
is presently performing on the job and how the employee can
perform more effectively in the future so that the employee
organization and society all benefits.
In LIC, Performance appraisal systems aim to evaluate the job
performance of employees, so that appropriate corrective action
and management decisions can be taken. As performance
appraisal is part of organizational control, the components of the
control system are indispensable in the appraisal system. In
general, a basic control system consists of control standards,
measurement, and corrective actions (Newman, Warren &
McGill, 1987). Among these three phases, control standards are
based primarily on organizational missions or departmental
goals, which reflect the role a performance appraisal plays in the
organization. Measurement is concerned with the actual
appraisal process, including the appraiser, appraisal criteria,
appraisal methods, and appraisal timing. Corrective actions

66
comprise the feedback processes after the performance appraisal
is completed. If there is an evident gap between actual
performance and performance standards, appropriate
corrective actions should be taken to change the behaviours of
the employees.

4.8.1 Performance Appraisal System: Different Methods

In the following section we will discuss the traditional and

modern types of methods used to design an appraisal system as
per Insurance Institute of India.
Traditional Methods
The older methods of evaluation usually attempted to qualify
employee behavior on traits that were deemed to be important
measures of their worth to the organization. Some of the
traditional methods are discussed below: -
Confidential Report - It is used in Life insurance Corporation to
assess the employee’s performance. It is a descriptive report
prepared, generally at the end of every year, by the employee’s
immediate superior. The report highlights the strengths and
weakness of the subordinates. The report is not data based. The
impressions of the superior about the subordinates are merely
recorded there. It does not offer any feed back to the appraisee.
The appraisee is not very sure about why his rating has fallen
despite his best effort, why others are rated high when compared
to him, how to rectify his mistake, if any: on what basis he is
going to be evaluated next year etc. Since the report is generally
not made public and hence no feedback is available, the
subjective analysis of the superior is likely to be hotly contested.
In the recent years due to pressure from court and trade unions,
the details of the negative confidential report are given to the
appraisee.
Grading: In this technique, the rater considers certain features
and marks them according to a scale. The selected features may
be analytical ability, cooperativeness, dependability, self-
expression, job knowledge, leadership and organizing ability.
These may be graded as e.g. A-Outstanding, B-Very good, C
Average, D Fair, E-Poor and F-Very poor. The actual performance
of an employee is then compared with these grades and he is
allotted the grade which best describes his performance.
Graphic Rating Scale: This is the most commonly used method
of performance appraisal. Under it, a printed form, one for each
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person to be rated, is supplied to the rater. The form contains a
number of factors to be rated under two broad categories viz.
employee characteristics and employee contribution. Employee
characteristics include such quality as initiative, leadership,
cooperativeness, dependability, industry, decisiveness etc. In
employee contribution are included the quality and quantity of
work, specific goals achieved; regularly in attendance etc. these
traits are then evaluated on a continuous scale wherein in rather
places a mark somewhere along the continuum.
Checklist Method: Under this method a series of questions are
presented concerning an employee and his behavior. The rater
then checks to indicate if the answer to a question about an
employee is positive or negative. Final rating is done by personnel
department by assigning value to each question.
Forced choice method: This method attempts to reduce rater’s
bias to some extent. The typical forced choice rating scale
requires the rater to indicate by a check mark those statements
that best describe the individual being rated, since several
statements equally favourable or unfavourable appear. The
person completing the forced choice report form cannot be
certain whether the employee is being given a high or low rating.
Critical incident method: The essence of this technique is that
it attempts to measure employees performance in terms of certain
events or episodes that occur in the performance of the job.
These events are known as critical incidents. The basis of this
method is the principle that there are certain significant acts in
each employee’s behaviors and performance, which make all the
difference between success and failure in the job. The supervisor
keeps a written record of the events that can easily be recalled
and used in the course of a periodical appraisal. These events
could be in the areas of productivity, precision in work,
responsibility and initiative.
Field Review Method: In this method, a representative of the
personnel department goes to the work place to obtain
information from the supervisor about the work of individual
employees. On the basis of such information, evaluation reports
are prepared by the personnel department, in consultation with
the supervisor.

Modern Methods
Human Asset Accounting Method: In this method monetary
estimates are attached to the value of a firm’s internal human
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organization and its external customer goodwill. If able, well-
trained personnel leave a firm, the human assets are decreased.
On the other hand, if they join it, its human assets are increased.
If distrust and conflict prevail, the human enterprise is devalued.
On the other hand, if teamwork and high morale prevail, there is
premium on human asset value. Current value of a firm’s human
organization is appraised by undertaking periodic measurements
of key variable (management policies, leadership, strategic, skills
and behavior) and intervening variables (employee’s loyalties,
motivation, communication and decision – making). The method
is not yet very popular.
Assessment Centre Method for Potential Review: The review of
potential is concerned with forecasting the direction in which an
individual’s career should go and the rate at which he is expected
to develop. It provides information to the company, which may
encourage him to stay and to improve his abilities still further.
The assessment of potential requires the analysis of existing
skills, qualities and how they can be developed to the mutual
advantage of the company and the employee, as well as the
identification of any weaknesses, which must be overcome if the
employee’s full potential is to be achieved.
Results-Oriented methods: Results-oriented schemes embody
the principle management by Objectives (MBO) philosophy. The
aim is to relate assessments to a review of performance against
specific targets and standards of performance agreed jointly by
superior and subordinate. The accent is on analysis of results
rather than assessment of the subordinate’s personality (traits),
which is done where traditional methods are employed. An
employee is judged on the basis of the achievement of the targets
that have been set and the superior plays supportive counselling
and coaching roles.
360-degree Feedback of Performance Appraisal: 360 Degree
Feedback is a system or process in which employees receive
confidential, anonymous feedback from the people who work
around them. This typically includes the employee's manager,
peers, and direct reports. A mixture of about eight to twelve
people fill out an anonymous online feedback form that asks
questions covering a broad range of workplace competencies.
The feedback forms include questions that are measured on a
rating scale and also ask raters to provide written comments. The
person receiving feedback also fills out a self-rating survey that

69
includes the same survey questions that others receive in their
forms. Managers and leaders within organizations use 360
feedback surveys to get a better understanding of their strengths
and weaknesses. The 360-feedback system automatically
tabulates the results and presents those in a format that helps
the feedback recipient create a development plan. Individual
responses are always combined with responses from other people
in the same rater category (e.g. peer, direct report) in order to
preserve anonymity and to give the employee a clear picture of
his/her greatest overall strengths and weaknesses. 360 Feedback
can also be a useful development tool for people who are not in a
management role. Strictly speaking, a "non-manager" 360
assessment is not measuring feedback from 360 degrees since
there are no direct reports, but the same principles still apply.
360 Feedback for non-managers is useful to help people be
more effective in their current roles, and also to help them
understand what areas they should focus on if they want to
m360 degree appraisal has four integral components: 360-degree
appraisal has four integral components:
1. Self-appraisal
2. Superior’s appraisal
3. Subordinate’s appraisal
4. Peer appraisal.

4.8.2 Performance Appraisal System in LIC

The performance appraisal system in LIC is on a conventional

pattern of annual confidential reports for all the classes of
employees except the four cadre of class I. It is a descriptive
report prepared, generally at the end of every year, by the
employee’s immediate superior. The report highlights the
strengths and weakness of the subordinates. The report is not
data based. The impressions of the superior about the
subordinates are merely recorded there. It does not offer any feed
back to the appraisee. The appraise is not very sure about
why his rating has fallen despite his best effort, why others are
rated high when compared to him, how to rectify his mistake, if
any: on what basis he is going to be evaluated next year etc.
Since the report is generally not made public and hence no
feedback is available, the subjective analysis of the superior is
likely to be hotly contested. In the recent years, due to pressure

70
from court and trade unions, the details of the negative
confidential report are given to the appraisee.
Development Oriented Performance appraisal (DOPA) is used to
assess the employee’s performance for the four cadres of class I
AAO, AO, ADM, DM. It is also descriptive report prepared,
generally for the end of every year, by the employee’s immediate
superior. Performance parameters are used to assess the
employee’s performance. Different parameters are evaluated on
the basis of Likert scale. Five points is assigned for high and one
is assigned for low performance. Development oriented
performance appraisal (DOPA) allows an employee draw up his
own review on a continuous basis on performance targets. In
DOPA appraisee also participates for fixing the target in the
beginning of the year, appraiser and appraisee both discuss and
decide the grade of appraisal and then it is reviewed by the
reviewing officer. The objective of DOPA is to steer the entire
operational framework within the organisation. The goals and
targets for individual officers set will be reviewed openly on a
regular basis for the first time.
There are four parameter divisional head judge employees-best,
good, satisfactory, least (not up to the mark).
Divisional head has to give explanation why he has rated least to
an employee in the case least rate was given. Further the
employee also gets a chance to explain rating against least rating.
If the explanation is satisfactory then it is acceptable. Divisional
head need not give any explanation to other parameters.
Divisional head, appraises job performance and other relevant
factors are overall assessed. The employee’s integrity is also
assessed. If his job performance along with others potential
factors is excellent and his integrity is faultless. The reporting
and reviewing officers will suggest this employee id fit for
promotion/increment in written format. Later these formats are
sent to managing director for further necessary actions.
Recently the corporation has used 360-degree feedback
performance appraisal system. It is only for Sr. Divisional
Managers (In-charge).360 Degree Feedback is a system or
process in which employees receive confidential, anonymous
feedback from the people who work around them. This typically
includes the employee's boss, ZM (I/C), RM (Mktg.), RM (P&IR)
and RM(CRM) peers, (Sr. DMs working as functional heads in the
zones and Subordinates (All branch heads and managers directly

71
reported to him/her and Development officers of his /her choice
numbering around 5.

4.9 QUALITY OF WORKING LIFE

Quality of Working Life is a process of work organizations which

enables its members at all levels to actively participate in shaping
the organization environment, methods and outcomes.
Conceptual categories which together make up the quality of
working life are adequate and fair compensation, safe and
healthy working conditions, immediate opportunity to use and
develop human capacities, opportunity for continued growth and
security, social integration in the work organization,
constitutionalizing in the work organization, work and the total
life space and the social relevance of work life.
Thus, quality of work life refers to all the organizational inputs
which aim at the employee’s satisfaction and enhancing
organizational effectiveness. The concept of QWL is based on the
assumption that a job is more than just a job. It is the center of a
person’s life. In recent years there has been increasing concern
for QWL due to several factors: Increase in education level and
consequently job aspirations of employees; Association of
workers; Significance of human resource management;
Widespread industrial unrest; Growing of knowledge in human
behaviours, etc.

4.9.1 Practices of QWL

Quality of working life though came into circulation in 1970s

became popular only in 90s and organizations realized its
potential to enhance the productivity in the new century. This
works as a comprehensive model to those employers who want to
ensure quality in working life of their employees. An ideal quality
of work life programme will include practices in eight major areas
as discussed below:
Adequate and fair compensation: This is fundamental to QWL.
Human beings work for livelihood. Therefore, success of rest of
the initiatives depends upon fulfilment of this. However,
important here is that compensation offered must be adequate
implying it must be proportionate to labour, and there should be
internal consistency among salaries of employees.

72
Safe and healthy working conditions: Unsafe and hazardous
working conditions cause problems to both employers and
employees. There may be little advantage to the employer in
short-term but in medium and long-terms, it adversely affects the
productivity. Therefore, adequate investment must be made to
ensure safe and healthy working conditions.
Immediate opportunity of use and develop human capacities:
The jobs have become routine, meaningless and too specialized,
depriving the employees of fulfillment satisfaction. Therefore,
efforts should be made to increase the autonomy, perspective and
exposure to multiple skills.
Future opportunity for continued growth and security: This is
related to career aspects of employees.
Meaningful career paths must be laid down and career mapping
of employees is to be followed. The provisions of advancement
opportunities play a central role in QWL.
Social integration in the work organization: Relationships
between and among the employees is an indicator of healthy
work organization. Therefore, opportunities must be provided for
formal and informal interactions. All kind of classes religions,
races, crafts, and designations must be treated equally on a
social platform. In other words, it creates egalitarian
environment.
Constitutionalism in the work organization: This is related to
organizational norms that affect the freedom of an individual
employee. Efforts must be made to see right norms are formed in
the organization. It means norms that accommodate the privacy
of an individual employee, freedom of speech, equity and freedom
to dissent on some aspects.
Work and the total life space: Employees should not be allowed
to continuously exert themselves. The continuous hard work
causes psychological and physical strains. Therefore, there has to
be a balance between personal and professional life. Organization
must create proper work offs to enrich the life of employees.
The social relevance of work life: Employees must be given the
perspective of how his/her work in the organization helps the
society. This is essential to build relevance of the employee’s
existence to the society he/she lives in.

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4.9.2 Quality of working life in LIC

In LIC, Quality of Working Life principles are the principle of

security, the principle of equity, the principle of individuation and
the principle of democracy. QWL includes working conditions,
harmonious relationship with colleagues, adequate and fair
compensation, linking rewards to job performance, Future
opportunity for continued growth and security etc. Sometimes
dissatisfaction with working life is a problem, which affects
almost all workers at one time or another, regardless of position
or status. The frustration, boredom, and anger common to
employees, disenchanted with their work life, can be costly to
both individual and corporation.
Many managers seek to reduce job dissatisfaction at all
organizational levels, including their own. This is a complex
problem, however, because it is difficult to isolate and identify all
of the attributes, which affect the quality of working life. Due to
the competitive work environment, there is great pressure on
employees to not just perform, but excel. There is also excessive
expectation from their organizations to increase productivity at
any cost. This takes its toll on the physical and mental well-being
of professionals. Hence quality of working life is average in LIC.
Poor work life balance leads to many disastrous things like tardy,
bad performance, lack of motivation, more errors, absence from
work and so on. The worst thing is that poor work-life balance
reduces work quality and productivity without any doubt. When
an employee won't be able to give time to his family at home, he
will feel stressed out at work. Sound work life balance will
definitely have a positive impact on employee’s productivity. The
quality of work improves significantly as employees feel fresh and
not stressed out at all.

4.10. EMPLOYEE COUNSELING

Employee counseling or counseling is a discussion between the

counsellor and the counselled which is aimed at making the
counselled person feel better and comfortable about self, and
thus better equipped to deal with the daily life problems and
work situations. Thus, counselling is a process of finding a
resolution i.e., determination/perseverance of solving the
problems faced and not necessarily a solution. Some
characteristics of Counseling are:
74
 • Counseling is a communication between the counsellor and
the counselled. It's an exchange of ideas between the two.
• Counseling is a process and not an advice giving procedure.
It is a long-term process and takes some time for the
person(s) involved to understand the problem and learn
how to cope with it.
• Counseling is about clarifying and helping the counselled to
handle him or her in the time of crisis and be able to meet
the demands of life. Both professional and non-professional
counsellors can provide counselling.
• Counselling is usually private and confidential so that the
employee is free to' speak out without a fear of retribution
i.e., penalty from the employers.
• Counselling is beneficial to the organisation as it helps to
solve problems relating to both job and personal life of the
employees; thus helping them perform better on the job
and also giving a more humane look to the organisation.
Emotional makeup of the employees plays a big part in
their work efficiency.
• Counselling helps in understanding the employee
grievances and also lets the employee know about the
company rules and policies and disciplinary actions as well
without being too much impersonal.

4.10.1 Types of Counseling

Counseling session depends upon the counsellor to give it a

direction. The type of direction the counsellor gives to the session
differentiates it into three types of counselling:
Directive Counseling: In this type of counseling the counsellor
gives the vision its full direction. The counsellor leads the session
completely and this type of counselling fulfils the criteria of the
counsellor giving advice and reassurance. The counsellor listens
to the counselled and decides on behalf of the counselled as to
what should be done. It also helps in releasing the emotional
tension. But this form of counselling does not equip the
counselled person to handle similar situations in future as no self
- growth has taken place. The self - growth can be achieved when
a development person tries to look for the answers himself or
herself with some help from someone,' else. But, as stated earlier,
in this case a person will always have to look towards someone

75
else to advice and sort out the problems in future. All said and
done, one should remember that in many cases advice acts as
reassurance. In adverse conditions advice and reassurances act
as morale boosters and in the long nm help on taking a course of
action to resolve the difficult situation.
Non-Directive Counselling: This type of counselling is counselee
oriented. This means that the counsellor focuses on the
counselee and his or her problems without any sort of
interference. The counsellor does not act as an advisor; rather
the counsellor only listens to the counselee, understands the
problem but does not offer any solutions. The counselee here has
to the find the solution on his or her own. This type of
counselling helps in employee orientation as the employees are
given a chance to find their own solution.
Thus, they are prepared to handle at least similar kinds of
problems in future on their own.
Co-operative/Participative Counselling: This is a compromise
between the above two extreme types of counselling. It is a
mutual contribution for diagnosing a problem, analyzing the
problem and then looking for a solution. It is a mutual counsellor
-counselee relationship where both participate to find a solution.
Here an exchange of ideas takes place between the two. Both the
participants provide a bit of knowledge, experience
and insight and thus it is a case of balanced compromise.

4.10.2 Employees Counselling in LIC

Employees Counselling include initiating special counseling

session, offer specific and concrete suggestions to employees, to
tell the employees about their strengths and weakness etc.
There is no formal system of counseling in LIC. Mostly in the LIC
the immediate manager’s help in counseling as they are known to
the employees and employees can open up fast and easily with
the manager.
When an employee with a grievance against the manager and
cannot possibly speak to the same manager about the reason of
grievance then the employees can open with other manager. The
employees won't have to do a lot of explaining as the organization
is same because the rule, policies and company structure is
known to the manager.

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4.11 COMPENSATION /REWARD SYSTEM

Compensation is concerned with the determination of adequate

and equitable remuneration of the employees in the corporation
for their contribution to the organization goals. The employees
can be compensated both in terms of monetary as well as non-
monetary rewards. The components of a reward system consist of
financial rewards (basic and performance pay) and employee
benefits, which together comprise total remuneration.
They also include non-financial rewards, (recognition promotion,
praise, achievement responsibility and personal growth) and in
many cases a system of performance management. Pay
arrangements are central to the cultural initiative as they are the
most tangible expression of the working relationship between
employer and employee.
Intrinsic rewards
Intrinsic rewards are less tangible, originate from persons or job
itself and reflect Herzberg motivators. Example of such factors
includes; Variety in Job Content, Sense of being a part of value
adding process, believe that they are valuable members of a
team, increased responsibility and autonomy, Sense of
accomplishment, Participation in setting targets and
opportunities to achieve them, Feedback information,
Recognition, opportunities to learn and grow.
Extrinsic rewards
Results from the actions of others, such as supervisions are more
easily controlled by managers. Examples include pay, fringe
benefits, praise and promotion.

4.11.1 Recent trend of Compensation /reward systems in LIC

In LIC the components of a compensation/reward system consist

of financial rewards: Basic and performance pay, Dearness
allowances, House rent allowances, City compensatory
allowances, Special allowances, functional allowances, hill
allowances, Provident fund, Gratuity, Graduation increment and
graduation allowances, Northern Eastern States Education
allowances, Transport allowances, Encashment of Unveiled
Privilege leave, Medical Benefits, Audit allowances Pension, which
together comprise total remuneration. This intrinsic reward is
given all class employees. But extrinsic reward i.e., non-financial

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rewards (recognition, promotion, praise, achievement
responsibility and personal growth) are given only class II
employees. Pay arrangements are central to the cultural initiative
as they are the most tangible expression of the working
relationship between employer and employee.
LIC of India has decided to reward its employees by giving meal.
This meal scheme can be considered as one of the strangest
decisions taken by LIC (Life Insurance Company). As per the meal
scheme, LIC employees across India, who will come on time, will
receive food coupons ranging between INR 1000 to INR 4000
along with their monthly salary. However, LIC India has taken an
aberrant decision of rewarding its employee who comes on time.
Actually, LIC India has decided to develop it employee by giving
meal coupons ranging between INR50 to INR200 per day to
employees who come on time i.e., by 10am and there is 10
minutes grace period too.

4.12 EMPLOYEES PRODUCTIVITY

Performance of work, in terms of quantity and quality, expected

from each staff member is called the Productivity of the
Employees. These standards are the foundation for performance
evaluation. In other words, it is an amount of work that is being
produced in the organization, in terms of how much and how
well. High productivity is what makes an organization thrive.
Without a good product or service to sell, problems in an
organization are sure to arise. Accordingly, productivity
improvement programmes are becoming more popular with
organizations. Many components constitute the productivity
factor; we can condense these components into four categories;
capital investment, innovation, learning, and motivation
(Stein, 1983: pp.10-11) Employee’s productivity variable covered
different aspects like, quality of employee, idea creation and
appreciation, goal achievement, target achievement, improvement
in success, enjoyment at work, high performance at work,
rational decision making of employees, communication skills and
alignment of employees’ competency with organizational
requirements and goals.
Employee’s productivity is contingent on an employee’s
motivation. The best-trained employee, one who not only has the
ability but has access to the most advanced piece of equipment,
will not be productive if he or she is unwilling to be so. Attitude
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plays an important role as to whether an individual has the
propensity to work. Accordingly, to increase productivity we
must, in part, change an employee’s attitude or, in academic
terms, increase his or her morale. Strategic Human Resource
Management (SHRM) enhances employee productivity and the
ability of government agencies to achieve their mission (Jules and
Holzer, 2001).
Human resource development is considered the key to higher
productivity, better relations and greater profitability for any
organization. Iqbal (2007) says human productivity is crucial for
growth and survival of organizations. Cheney (2002) supported
the concept that higher productivity leads to ultimate societal
benefits. As far as the dimensions/components/sub- systems of
human resource development are concerned, mechanisms of
human resource development have been designed in different
ways and various thinkers and professionals have offered
divergent views.
Rao (1988) suggests that human resource development sub-
systems comprise performance appraisal, potential appraisal,
career planning, training, performance coaching, organization
development, employee welfare, rewards, qualities of work life
and human resource information system. Pareek (1983) refers to
performance appraisal, feedback, counseling, potential appraisal,
career advancement, career planning and training as dimensions
of human resource development. Varadan (1987) traces human
resource development mechanism into performance appraisal,
role analysis, organization development and quality circles.
Though there is diversity among these arguments, but one can
trace out that on some of the dimensions there is unanimity of
opinion among the experts. Therefore, organizations need to
develop employees to enhance productivity.
HRD practices enhance the internal capabilities of an
organization to deal with current or future challenges to be faced
by an organization. Good HR practice also energizes people. The
commitment and motivation built through good HR practice can
lead to hard work and can have a multiplier effect on the
conversion of human capital to organizational capital. The
culture so built can help to create a sustainable and lasting
capability of the organization to manage itself and not only cope
with the external turbulence but even encash on the
opportunities offered by the changing environment. For synergic

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benefits of integrated subsystems, the HRD mechanisms should
not be thought of in isolation.
They are designed to work together in an integrated system. For
example, In LIC the outcome of performance appraisal provides
inputs for assessment of training needs, awards, career planning
and feedback and performance coaching. HRD instruments
should lead to the generation of HRD process like role clarity,
performance planning, development climate, risk taking and
dynamism in employees. Such an HRD process should result in
developing more competent, satisfied and committed people, who
by their contribution would make the organization, grow. Such
HRD outcomes influence organizational effectiveness.

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 CHAPTER-5
FINDING & OBSERVATION

81
 CONCLUSION

At last, I want to say that when recruitment & selection help to

recognise the right candidate, the process will be continued for
the new employee with induction program. Then we are able to
compare the organisational desire and the candidate’s talent.
Then to improve employee’s skill behavioural training may be
provided.
It makes a positive impact of every organisation, but it
need a lot of money, time, attention and guidance. It is just like
only taking, not giving or taking the starting benefits and when
the time comes for returning back you just quit the job. So, it is
not always fruitful.
The employee motivation is needed to be built up through
constant attempts of the organisation. The organization may
adopt various methods for motivating the employee. It may be by
providing recreational functionals, and parties. The organisation
must consider its employees as its family members and must
provide some profit-sharing policy such as ESOPs, bonus, and
shares. The organisation may provide fringe benefits.
Welfare activities to be undertaken by the organization
may include various facilities such as uniform for the employees
for whom HR department is responsible for its maintenance and
providing it.
Last but not the least rewards are the main motivational
activity, which may be monetary and non-monetary rewards

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 SUGGESTION
As in the competitive world where the need for every
organization to prove itself the best and make an outstanding
and remarkable progress is need, no fact could be left ignored.
Every organization must know the shortcomings and must try to
go for building up the shortcomings. An ethical practice in any
organization could only be achieved if the organization works for
the well-being of its employees. Every organization must possess
a basic structure and the organization must be capable enough
to reward its outstanding performers and must appreciate the
initiative works.
According to the survey been conducted with various HR
heads of various organisations here are few suggestions from
their side:
A. INDUCTION PRACTICES:
Induction is must in every organization for all level of
employees to make them well known of the industry they
are working in.
The best ways to perform induction may be through:
• Lectures
• Power point presentations prepared explaining
company’s policies,
• Through SOPs (Standard operating procedures)
• Manuals,
• Diaries,
• But the most adopted one is through personal
induction.

The induction program must follow a proper feedback

from employees been put into the program which is again an
ethical practice and is achieved by:
• Induction scheduling
• Opinions from supervisors,
• Feedback forms

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 B. BEHAVIORAL TRAINING:
• Behavioral training is boon for any organization.
• The organization could provide on the job training,
which is quite common and most adopted. The
organization may also go for outdoor training.
• Job rotation could be preferred which could make the
employee skilled in overall working of an organization.
• The organization may provide a basic training for
FIRST AID & SAFETY OR FIRE SAFETY TRAINING.
• The organization may have tie ups with the training
organization may take up the best course as per
requirements of their staff.
• A proper feedback must be taken to grasp the extent
the employees have versed themselves with knowledge.
• Proper Feedback could be taken through-
1. Evaluation,
2. Questionnaire,
3. Feedback forms,
4. Submission of report through trainee,
5. Feedback through trainers.
C. MOTIVATIONAL TOOLS:
Motivating for work is inseparable to continue
productivity. But work when itself serves as motivation then
progress is inevitable. The organization must take great care
to motivate its employees through various methods.
Promotion may be one of the best motivational factors.
Promotional basis could be-
• Work performance,
• Qualification,
• Performance Evaluation,
• Skill Enhancements,
• Initiative steps taken.

Organization may also provide fringe benefits such as:

• Leave Travelling Allowance,
• Medical,

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 • Free Transportation,
• ESI (Employees State Insurance)
• Furnishing Scheme,
• House Lease,
• Hospitalization.

D. WELFARE ACTIVITIES:
The organization may adopt welfare policies such as:
• Transportation facility,
• Canteen facility with breakfast, lunch and dinner
facility along with refreshments.
• Canteen could be free, subsidized, paid. But the
most preferred one is through subsidized mode.
• The organization must also possess first aid
facilities for its staff. A well-versed rehabilitation of
injured staff and a duty doctor or an ambulance
should be always provided.
• The organization must also possess a grievance
handling committee despite a union to take an
action for their problems. It could be a three tier
grievance committee.

E. REWARD & RECOGNITION SCHEME:

Rewarding the best work not only provide the candidate

with appreciation but also provide enthusiasm to do better.
A competitive spirit is also developed to perform the best.
Some of the practices of rewarding the employees
practiced in organizations are:
• Award after completion of 10 years of service,
• Company’s well-furnished housing & hotels for
officers,
• Paid vacations to foreign countries,
• Yearly reward scheme,
• Overall equipment efficient efficiency reward,
• Quality man of the year award,
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 • Best man of the year award,
• Best man of the year,
• Best kaizen award,
• Increments,
• Promotions,
• Incentives,
• Monetary rewards,
• Public appreciation.

RECOMMENDATION

For all the programs the organization must follow feedback

method to understand the effectiveness of any practice in a better
way.
Holistic views of induction should out show both positive
and negative aspects of the organization. This ultimately let the
employee know about both the phases of the policies adopted by
the organization.
Practice of providing a brief presentation of the company
and a booklet for rules and regulations of company must be
maintained so that the employee could go through it whenever
required.
Individual should concentrate more while training. When an
organization invest on training of an employee, the purpose of
training serves the mutual benefit of both the organization and
the employee, the purpose of training serves the mutual benefit of
both organization and the employee. Thus, the employee should
be more oriented towards drawing as much benefits as he can.
Employees are supposed to understand their role for particular
training program.
Company must maintain training manuals or training charts
and training report submitted by the trainee. This, practice not
only keeps a maintained record of the programs been conducted
but also keep the employee known of the knowledge gained by
him which could later be utilized.

86
 A pre-evaluation and post-evaluation practice should be
followed to understand the success of training and the training
could be then effectively used to fill gaps later.
Continuous training module should be conducted,
personality development training should be provided.
• To motivate the employees,
• Performance awards could be given every year,
• Incentives could be paid,
• Salary saving schemes could be provided.

Extra activities such as games and sports, community

meetings, recreational activities, picnics, tours and outings
should be planned to improve the interpersonal relationships.
External welfare activities could also be taken up by the
organization such as-
• Blood donation camps,
• Safety week,
• Free eye camps,
• Free books for children,
• Poster & quotes competition could be organized.

Devotion, belongingness and good team member sprit should

be rewarded. Employees should be encouraged for group efforts
and team work.
To avoid worker union for better employee welfare and give
suitable welfare activities from time to time to the employees in
house work committee should be developed to handle the
grievance.
Employee’s participation is key issue. Thus, suggestions
should always be invited and maximum efforts should be put up
to implement the suggestions.
INITIATIVE SUGGESTIONS:
Employee’s family’s involvement in motivating employee is
the key element. It creates a special pressure point.

87
 • Drawing competitions of children could be organized.
• Special training for wives could be arranged to teach
them what are the do’s and doesn’t.
• Special scholarships could be announced for the
children of employees securing good marks.

Management by objective should be adopted. The practice

should be objective to avoid biasness.
Kaizen award could be given to the implementer of best
suggestion.

BENEFITS:
For scientific and systematic execution of all human
activities, two essential watch words are- administer well and
manage well.
Thus, focusing the benefits of ethical HR practices are:
• INCREASED PRODUCTIVITY: HR practices deals with
training process which teach the methods to put their
resources to optimum utilization with minimization with
minimization of losses and minimum wastage.
• EMPLOYEE SATISFACTION: HR goes for human
resource development functioning. It looks after the
welfare activities of the employees. Take care of their
problems. Thus, an overall care of their health,
transportation, meals and well-being is taken. Which
ultimately results into employee satisfaction?
• INDUSTRIAL PEACE: Ethical HR practices contain a
well-maintained grievance handling machinery which
deals with the internal problems and provide employees
with satisfactory solutions.
• ORGANIZED WORK PATTERN: With the ascent of HR
practices the organization follows the process of
departmentation. Which further results to delegation of
work and an organized work pattern.

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 • BETTER INTERACTION: Through recreational activities
been organized by the organization like parties, picnics,
get-together, annual days celebration. This inculcates
team spirit among the employees.
• BETTER ADMINISTRATION: Through following a fixed
and scheduled work pattern like induction feed-backs,
induction scheduling, training feed-backs, performance
appraisal forms etc.
• KNOWLEDGE ENHANCEMENT: Through trainings like
on-the-job training, out-door training etc.
• PARTICIPATION IN MANAGEMENT: Through
motivational activities and reward and recognition
schemes.
• EMPLOYEE ADVANCEMENT
• SYSTEMATIC SCHEDULE
• EMPLOYEE CARE
• GOOD INTERPERSONAL RELATION

89
 CHAPTER-6
ANNEXURE

90
Bibliography:
1. Dr. P. Subba Rao- Essentials of Human Resource
Management and Industrial Relations (Himalaya
Publishing house, 3rd Revised Edition)
2. K. Aswathapa- Human Resource and Personnel
Management (Tata McGraw Hill, 5th Edition)
3. C.R. Kothari – Research Methodology Methods &
Techniques (New Age International Publishers, 2nd
Edition, 2004)

Webliography:
• http://www.licindia.in/
• http://www.reliancelife.com/
• https://www.flatworldsolutions.com
• http://insurance-analyzer-info.cum
• http://researchget.net
• http://en.wikipedia.org/wiki/Reliance_Life_Insurance
• http://en.wikipedia.org/wiki/Sun_Life_Financial
• http://en.wikipedia.org/wiki/Aditya_Birla_Group
• http://en.wikipedia.org/wiki/List_of_insurance_comp
anies_in_india
• http://en.wikipedia.org/wiki/Human_resource_polici
es
• http://www.policyholder.gov.in/
• http://www.ijcams.com
• https://www.academia.edu
• http://www.shriramlife.in
• http://www.shriramlife.com

Questionnaire
A. INDUCTION PROGRAM

1. Does your company provide induction for new employees?

a) Yes b) No
2. Who participates in delivering the function?
91
 a) HR Department b) Related Department

c) All Departments d) Any, other please specify….

3. Does Induction is?
a) Same for all b) Different for different levels

B. BEHAVIORAL TRAINING
4. How does the company recognize the need of training?
a) Through Questionnaire
b) Performance Monitoring
c) Reference from supervisor
d) Absence in pride
e) Defective Quality product
f) Unsatisfactory promotions
5. What type of training is conducted?
a) On the job training
b) Class room session
c) Online Training
d) Apprentice Training
e) Outdoor training
f) Any, other please specify…….
6. What is the annual budget for training?
a) 1-2 Lac. d) 2-3 Lac
b) 3-5 Lac. e) 5-10 Lac.
c) Any, other please specify…….
7. What is the module duration for training programmee?
a) Less than a week c) Minimum of 2 hours to 2 days
b) Maximum 6-7 days d)For 4 weeks

C. MOTIVATIONAL TOOLS
8. Does the company provide any profit sharing policy?
a) ESOP’s d) Bonus
b) Shares e) None
c) Any other please specify……
9. Does the company provide any recreational activities (You
can mark more than one options in case applicable)?
92
 a) Picnics d) Tours
b) Family Outings e) None
c) Any other please specify…….
10. Does the company provide any retirement benefits?
a) Gratuity d) VRS
b) PF (provident Fund) e) pension
c) Old Age Security f) Any, other please specify

D. WELFARE ACTIVITIES

11. Does the company has any special aid facility (You can
mark more than one options in case applicable)?
a) On duty Doctors
b) Collaboration with Hospitals
c) Ambulance for Emergency
d) First aid kit
e) None
f) Any, other please specify….
12. Does the company adopt any on job safety measures?
a) Fire Safety
b) Electric/Shock Safety
c) Radiation Safety (if any)
d) Handling of machinery
e) None
f) Any, other please specify……

E. REWARD AND RECOGNITION

13. What appreciation schemes are being followed by your

organization?
a) Appreciate Publically d) Incentives
b) Increments e) Promotions
c) Any, other please specify…...
14. What are various rewards and recognition schemes for
the organization?
a) Additional pay for extra work e) Perks
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 b) Overtime d) Monetary Rewards
c) Paid vacations
d) Any, other please specify……
15. How do you recognize outstanding performer?
a) Regularity d) Punctuality
b) Initiative e) Extra work
c) Any, other specify…… f) Productivity

16. Any Suggestions: -

94