07 Chapter 3

Chapter 3
HUMAN RESOURCE MANAGEMENT IN

PUBLIC SECTOR ENTERPRISES
The Indian public sector has been playing a dominant role in shaping the path of
economic development. Prior to independence, there were very few public sector
enterprises namely railway, post & telegraph and Ordinance factory. The visionary
leaders of independent India have drawn a crucial roadmap for the development of
public sector as a tool for self-reliant economic growth. Public enterprises of any
country may be conceived as instrument using in maximization the welfare function.
They draw a major influence on the development of a mixed economy as in India.
They are referred to as the ‘Commanding Height of Indian Economy.
3.1 Organization of Public Sector
The business units owned, managed and controlled by the central, state or local
government are termed as public sector enterprises or public enterprises. Public
enterprises may be defined as any commercial or industrial undertaking activity
owned and managed by government with a view to maximize social welfare and
uphold the public interest. In India public sector enterprises are classified as follows1:
A) Departmental Enterprises
Departmental enterprises are owned and operated by the Government. A departmental

undertaking is directly subordinate to a Ministry of the Government. They are run on
commercial lines and their working is fully control by Government. Example:
Railways in India
B) Government Companies
A government company is a body corporate and created under the Indian Companies
Act 1956 or 2013. In these companies whole or not less than 51 per cent capital stock
is held by Government. Example: Bharat Heavy Electricals Limited (BHEL)
1 Vibha Mathur, Disinvestment of Public Sector Enterprises, New Century Publications, New Delhi, 2004, p.26.
Human Resource Management in Public Sector Enterprises
C) Public Corporation
A public corporation is created by a special law defining its objectives, powers, and
privileges. Example: Life Insurance Corporation of India
3.2 Major Objectives of Public Sector
 Earn return on investment and generate resources
 Promote redistribution of income as well as wealth
 Create huge employment opportunity
 Promote regional development in balanced way
 Assist to the development of small scale and ancillary industries
 Act as an engine to stand and develop an economy
 Promote import substitutions to save and earn foreign exchange for the
economy2
Table 3.1: Investment and Number of Units of PSEs in Five Year Plans
Particular Total Investment Enterprises

(Rs. In Crore) ( Numbers)
At the commencement of the 1st Five year plan 29 5
(1.4.1951)
At the commencement of the 2nd Five year plan 81 21
(1.4.1956)
At the of the commencement of 3rd Five year plan 948 47
(1.4.1961)
At the end of the 3rd Five year plan (1.4.1966) 2410 73
At the commencement of the 4thFive year plan 3897 84
(1.4.1969)
At the commencement of the 5th Five year plan 6237 122
(1.4.1974)
At the end of the 5th Five year plan (1.4.1979) 15534 169
2 VKL Srivastava, Price Policy for Public Undertakings in India, Kalyani Publishers, New Delhi, 1982, p.13.
[45]

(1.4.1980)
(1.4.1985)
(1.4.1992
At the end of first year of 11th Five Year Plan 455554 242
(31.3.2008)
At the end of second year of 11th Five Year Plan 513532 246
(31.3.2009)
At the end of third year of 11th Five Year Plan 579920 249
(31.3.2010)
At the end of fourth year of 11th Five Year 666484 248
Plan(31.3.2011)
At the end of 11th Five Year Plan (31.3.2012) 729288 260
At the end of first year of 12th Five Year Plan 8,50,599 277
31.3.2013
At the end of second year of 12th Five Year Plan 9,92,971 290
(31.3.2014)
Source: Various issues of Public Enterprises Survey
The table reveals the importance of Public Sector Enterprises in terms of investment
in them. It can be concluded from the above table that Public Sector Enterprises plays
a crucial role in investment and capital formation in India.
[46]
Table 3.2: Cognate Group-wise Classification of Public Sector Enterprises as on

31.03.2018
Cognate Group No. of Enterprises Total

I Agriculture
1. Agro based industries 3
Sub total 3
II Mining & Metal
1.Coal 8
2.Crude Oil 5
3.Other Minerals and Metals 11
Sub total 24
III Manufacturing
1.Steel 4
2.Petrolium (Refinery & Marketing) 6
3. Fertilizers 7
4. Chemicals and Pharmaceutical 17
5. Heavy & Medium Engineering 36
6. Transport Equipment 1
7. Industrial & Consumer Goods 13
8. Textiles 4
9. Power Generation 12
Sub total 100
IV Services
1. Power Transmission 9
2. Trading and Marketing 20
3. Transportation & Logistics 23
4. Contract, Construction & Technical
43
Consultancy
5. Hotel & Tourist Services 7
6. Financial Services 20
7. Telecommunication & IT 8
Sub total 130
V Enterprise Under Construction 82 82
Total No. of Company 331
Source: Public Enterprises Survey 2017-18, Vol.1
[47]
The above table shows that there are total 331 PSEs engaged in major four sectors
those are; Agriculture Sector, Mining & Metal Sector, Manufacturing Sector and
Service Sector. The table also depicts that a good number of enterprises are indulged
in mainly Manufacturing Sector and Service Sector.
Table 3.3: Employment, Total and Per Capita Annual Emoluments in CPSEs
Year No. of Employees Total Annual Per Capita Annual

(in Lakhs) Emoluments Emoluments
(in Crore) (in Rupees)
2004-05 17.00 42569 286888
2005-06 16.49 49874 284123
2006-07 16.14 52586 325869
2007-08 15.65 64306 410898
2008-09 15.33 83045 541716
2009-10 14.90 87792 589210
2010-11 14.40 98402 683347
2011-12 14.50 105648 728606
2012-13 14.04 116375 830263
2013-14 13.51 888305 906665
2014-15 12.91 127387 986598
2015-16 11.85 127182 1072920
2016-17 11.35 140956 1241165
2017-18 10.88 157261 1448536
Through the above table it has been tried to attract the attention that how handsome
emoluments are being given to the employees of Public Sector Enterprises. It is the
matter of analysis whether the PSEs are playing as significant role in Indian economy
as handsome amount of emoluments are being given to their employees.
[48]
Table 3.4: Share of PSEs in GDP at Factor Cost at Current Prices

(Base Year 2004-05)
Year GDP GDP of PSEs % Share of PSEs in

GDP
(Rs.100 Crores) (Rs.100 Crores)
2004-05 29714.64 6805.19 22.90
2005-06 33905.03 7290.4 21.50
2006-07 39532.76 8188.89 20.71
2007-08 45820.86 9138.22 19.94
2008-09 53035.67 10747.16 20.26
2009-10 61089.03 13058.82 21.38
2010-11 72669.66 15116.67 20.80
2011-12 83534.95 17134.47 20.51
2012-13 94610.13 19198.06 20.29
2013-14 99565.29 20154.13 20.37
2014-15 107284.26 21583.43 21.58
2015-16 125142.96 23458.95 20.49
2016-17 135246.25 25954.56 22.57
2017-18 139628.26 27594.73 21.23
The above table 3.4 also proves the importance of PSEs for Indian Economy. It can be
seen in the table a major portion i.e., around 21% our Indian GDP consists of mere
Public Sector Enterprises.
[49]
Table 3.5: Top Ten Profit Making CPSEs 2017-18
Sl. Name of the CPSEs Net Profit % Share in Total

No. Net Profit
1. Indian Oil Corporation Ltd. 21346 13.37
2. Oil & Natural Gas Corporation Ltd. 19945 12.49
3. NTPC Ltd. 10343 6.48
4. Coal India Ltd. 9293 5.82
5. Power Grid Corporation 8239 5.16
6. Bharat Petroleum Corp. Ltd. 7919 4.96
7. Hindustan Petroleum Corporation Ltd. 6357 3.98
8. Power Finance Corporation 5855 3.67
9. Mahanadi Coalfields Ltd. 4761 2.98
10. Rural Electrification Corporation Ltd. 4647 2.91
Total (1 to 10) 98707 61.83
Other CPSEs (174) 60928 38.17
Net Profit of profit making CPSEs. 159635 100
Source: Public Enterprises Surveys 2017-18, Vol.1
The table 3.5 states that there are total 184 (10+174) PSEs which are generating profit
and major portion i.e., 61.83% of their total profit is generated by mere top 10 profit
making PSEs. It suggests that 174 other profit making PSEs are not doing their best to
strengthen the Indian economy. On the other hand, a large number of PSEs are still
running in loss.
[50]
Table 3.6: Top Ten Loss Making CPSEs 2017-18
Sl. Name of CPSEs Net Loss % Share in

No. Total Net Loss
1. Bharat Sanchar Nigam Limited -7993 25.57
2. Air India Ltd. -5338 17.07
3. Mahanagar Telephone Nigam Ltd. -2973 9.51
4. Hindustan Photo Films Manufacturing Co. Ltd. -2917 9.33
5. Western Coalfields Ltd. -1757 5.62
6. Bharat Coking Coal Ltd. -1391 4.45
7. Rashtriya Ispat Nigam Ltd. -1369 4.38
8. India Infrastructure Finance Co. Ltd. -1155 3.69
9. Eastern Coalfields Ltd. -931 2.98
10 STCL Ltd. -657 2.10
Total (1 to 10) -26480 84.71
Other CPSEs (61) -4781 15.29
Net loss of loss making CPSEs: -31261 100
Source: Public Enterprises Survey 2017-18, Vol.1
The table 3.6 states that there are total 71 (10+61) PSEs which are bearing loss and
major portion i.e., 84.71% of their total loss is being born by mere top 10 loss making
PSEs. It suggests that 61 other loss making PSEs are not as significant as the total
portion of their loss is only 15.29%. Since most of the losses are being born by only
10 PSEs so it is imperative to do something to improve their condition.
3.3 Human Resource Management in Public Sector
Human Resource Policies are the soul of Human Resource Management. The extent
of success or failure of Human Resource Management in an organization depends on
the suitableness of HR policies formulated for the organization. HR policies are the
[51]
bedrock to achieve the organizational goal as well as fulfillment of Vision and

Mission of the organization.
As far as Indian Public Sector is concerned, the achievement of the PSEs in the
changing economic scenario and increasing competition when every organization has
more or less equal access to all the factors of production depends on the effectiveness
and continuous development of their human resources.
In spite of the rapid technological changes to cope up with the competition and sustain
in the long run, public sector organizations undertaking critical responsibility of
transforming its operational system into the modern one that suits to the present
requirements.
3.4 Common Nature of HRM in PSEs
M-A-N is a Mindful Animal of the Nature3. Thus, they manifest themselves in any
organization through individual sections as well as through group interactions. They
come to their work place not only with technical skills, knowledge, etc., but also with
their unique feelings, perceptions, attitudes, motives, values and desires etc.
Therefore, management of employees in any organization does not mean the
management of only technical skills but that of other factors of human resources also.
3.4.1 Complex Dynamism
A close observation of employees revealed that they are complex beings, i.e.,
economical, physiological, psychological, sociological and ethical beings. The
proportions are intensities of these dimensions of the human factor in employment
may differ from one situation to another but the fact remains that these are basic
things of human factors in organizations.
3.4.2 Social System
Human resource management is relatively new and developed as a part of

management. In its simple terms, HR management is the task of dealing with the
human relationships, mounding and developing the human behavior and attitude
towards the job and organizations requirements.
3 Suresh Kumar Sharma, Human Resource Management Practices in Navratna Public Sector Undertakings in
India: A Case Study of GAIL India Limited, Unpublished Thesis (2011), p. 16
[52]
3.4.3 Challenging Task
The HR manager plays a crucial role in understanding the challenging needs of

organization and society. Further he/she faces some challenging tasks in attaining the
employee, organizational and societal objectives with the available resources. In
addition to it, the growing strength of trade unions, increasing educational standards,
etc., further complicates the role of HR manager. Hence the modern HR manager
should equip himself/herself with good knowledge of disciplines, viz., economics,
commerce, management, sociology, psychology, engineering, technology and law.
Figure 3.1: Centrality of Human Resources for Organizational Goal

Achievement
Financial
Capital
People Organizational Goal

Processes Utilization
Technology
Source: Tanuja Agarwala, Strategic Human Resource Management, Oxford University Press, New
Delhi, 2007
The figure 3.1 describes how any organization achieves its goal through the proper
combination of its financial capital, manufacturing or other processes adopted by the
organization and ever changing factor i.e., Technology. Further the figure states that
all other factors to achieve the organizational goal must go through the People
Utilization stage. Thus, it can be concluded that Human Resource of any enterprises
possesses a centrality nature which make it the very crucial for the attainment of
organization goal.
3.5 Recruitment
It refers to the process of searching for prospective employees and attracting them to
apply for jobs in the organization. It includes:
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 Screening of existing sources of applicants and developing them.
 Creation of new sources of applicants for the organization.
 Attracting the candidates to apply for jobs.
 Balancing the internal and external sources.
3.5.1 Factors Effecting Recruitment
At this stage, it is of great relevance to understand the factors that are effecting
recruitment in Public sector as on HR practice. The following factors have been
considered for this purpose. They are:
 The size of the organization;
 The employment conditions in the community, where the organization is

located;
 The effects of past recruiting efforts which show the organization’s ability to
locate and keep good performing people;
 Working conditions and salary and benefit packages offered by the

organizations which may influence turnover and necessitate future recruiting;
 The rate of growth of an organization; and
 Cultural, economic and legal factors.
3.5.2 Steps in Recruitment Process
As mentioned earlier, recruitment refers to the process of identifying and attracting

job seekers so as to build a pool of qualified job applicants.
For further process, it is relevant to understand the process and stages involved in it.
This gives a bird’s view of recruitment process in Public sector, as HR Practice. The
process comprises five inter-related stages, viz., Planning, Strategy Development,
Searching, Screening, Evaluation and Control.
3.5.3 Methods or Techniques of Recruitment
Further, it is also relevant to understand and appreciate recruitment as HR practice in

public sector. Different methods of recruitment are to be examined, examined in this
[54]
concept. The possible recruiting methods are classified into three categories. They
are:
 Direct Methods
 Indirect Methods
 Third Party Methods
3.5.3.1 Direct Methods
These include organization’s sending of traveling recruiters to educational and

professional institutions, employee’s contacts with public, and manned exhibits. One
of the widely used direct methods is that of sending of recruiters to colleges and
technical schools. In some organizations recruiting is done in co-operation with the
placement office of an institution. These days most of the Private sector organizations
are recruiting candidates from campus interviews. The placement offices in
institutions usually provide help in attracting students, arranging interviews,
furnishing space, and providing student resumes. For managerial, professional and
sales personnel, campus recruiting is an extensive operation. Persons studying for
MBA or other technical diplomas are picked up in this manner. For this purpose,
carefully prepared brochures, describing the organization and the jobs it offers are
distributed among students, before the interviewer arrives.
Sometimes, organizations directly solicit information from the concerned professors

about students with an outstanding record. Other direct methods include sending
recruiters to conventions and seminars, setting up exhibits to fairs and using mobile
offices to go to the desired centers.
3.5.3.2 Indirect Methods
Indirect methods mostly involve advertising in newspaper, on the TV, in trade and
professional journals, technical magazines and brochures. Advertising in newspapers
and/or trade journals and magazines is the most frequently used method, when
qualified or experienced personnel are not available from other sources. Senior posts
are largely filled by such methods when they cannot be filled by promotion from
within.
[55]
Advertising is very useful for recruiting blue-collar and hourly workers, as well as
scientific, professional, and technical employees. Local newspapers are a good source
of blue collar workers, clerical employees and lower level administrative employees.
Many organizations sometimes often place what is referred to as a blind

advertisement, one in which there is no identification of the organization.
Respondents for instance, are asked to reply to a post box number or to a consulting
firm that is acting as intermediary between the applicant and the organization. The
large organizations with regional or national reputation do not usually use blind
advertisements. Professional journals are read by people with specialized backgrounds
and interests. Therefore, advertisements in these are selective.
3.5.3.3 Third Party Methods
These include the use of commercial or private employment agencies, state agencies,
placement offices of technical institutions and professional associations, recruiting
firms, management consulting firms, and friends and relatives.
Private employment agencies are widely used. They charge a small fee from the
applicants. They are specialized in specific occupations. These private agencies are
brokers who bring employers and employees together. At present this practice
negligibly exits in the country.
State or public employment agencies also known as employment exchanges are the
main agencies of public employment. Employers inform them of their personnel
requirements, while job seekers get information for them about the type of jobs that
are referred by employers. Colleges and professional institutions offer opportunities
for recruiting their students. They operate placement services where complete bio-
data and other particulars of the students are available. These general and professional
institutions provide blue-collar applicants, white collar and managerial personnel.
[56]
Figure 3.2: Recruitment Process in Public Sector Enterprises 4
Personnel Recruitment Selecting Placing new

Human needed Qualified employees on
Resource personnel Personnel Job
Planning
Developing Search for Evaluating

sources of Potential Recruiting
potential Employees Effectiveness
employees
Personnel Upgrading in
Research Same Position
Transferring to
New Job
Internal Resources
Job Posting Promoting to Higher
Responsibilities
Employee
Referrals
External Resources Evaluating for
Selection
Advertising
Scouting
The figure explains the exhaustive process of recruitment used in any organization
especially in Public Sector Enterprises.
3.6 Selection
The selection procedure is the next stage, concerned with securing relevant
information about an applicant. This information is secured in a number of steps or
stages. The objective of selection process is to determine whether an applicant meets
the qualifications for a specific job and to choose the applicant who is likely to
4 Dr. G. Srinivas Rao, HR Practices in Public Sector Organisations, Himalaya Publishing House Pvt. Ltd.,
Mumbai, 2012, p.20
[57]
perform well in that job in the Public sector. That is being examined in the following
paragraphs.
Selection is a long process, commencing from the preliminary interview of the

applicants and ending with the ‘contract’ of employment. The hiring process is of one
or many ‘go, no-go’ gauges. Candidates are screened by the application of these tools.
Qualified applicants go on to the next hurdle, while the unqualified are eliminated.
Thus, an effective selection program is a non-random process because those selected
have been chosen on the basis of assumption that they are more likely to be better
employees than those who are being rejected.
Selection processes or activities typically follow a standard pattern, beginning with an

initial screening interview and concluding with the final employment decision in the
organizations. The traditional selection process for instance, includes: primarily
screening interview, completion of application form, employment tests,
comprehensive interview, background investigations, physical examination and
employment decision to hire.
3.6.1 Essentials of selection procedure
These are dependent on three forms, they are:
 The Nature of Selection
 The Policy of the Company
 The length of the Probationary or Trial Period
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Figure 3.3: Selection Stages in PSEs5
First Second Third Fourth Fifth Sixth

Stage Stage Stage Stage Stage Stage
 Purpose of  Identifying  Authorized to  Evaluating  Value  Rejection

Selection performance hire Test Result Judgment  Making
 Who makes of the  Initial Contact  Assessing  Assistance Job Offer
selection interviewee with potential Applicant
decision?  Determining employee Interview
 Screening Selection  Preliminary
out or Criteria Interview
selection in  Identifying  Testing
 Fitting predictors of  In depth
people to success interview
jobs  Verifying
Selection background
Procedure information
 Medical
Examination
The figure 3.3 clearly describes that there are mainly six stages of selection starting
from Purpose of Selection to Making Job Offer. Although the selection in any well-
structured organization go through these stages but in case of public enterprises in
India selection must go these stages.
The hiring process can be successful, if the following preliminary requirements are
satisfied:
1. Someone should have the ‘authority’ to hire. This authority comes from the
employment requisition, as developed by an analysis of the work-load and
work-force.
2. There must be some standard or personnel with which a prospective employee

may be compared. i.e., they should be available, beforehand, a comprehensive
Mumbai, 2012, p.22
[59]
job description and job specifications as developed by a job analysis, and
3. There must be a sufficient number of applicants from whom the required

number of employees may be selected.
3.6.2 Steps in Selection procedure
There is no short cut to an accurate evaluation of a candidate. The hiring procedures

are, therefore, generally long and complicate.
The following is a popular procedure though it may be sometimes modified to suit

individual situation in organizations. This is also presented pictorially in Figure 3.4
1. Reception of Preliminary Interview or Screening
2. Application Blank
3. A well conducted interview to explore the facts and get at the attitudes of the
applicant and his family to the job
4. A physical Examination
5. Physical testing to explore the surface area and get an objective look at a
candidates suitability for a job;
6. A Reference Check
7. Final selection approval by manager; and communication of the decision to

the candidate.
[60]
Figure 3.4: Selection Process Generally Adopted in PSEs6
Reception of Applications
Preliminary Interview
Application Blank
Psychological Tests
Interview
Background Investigation
Waiting List
of
Applicants
Final Selection by the Interviewer
Physical Examination
Negative Decision Placement
The above figure 3.4 describes the selection process generally adopted in Public
Sector Enterprises in very sound and precise way.
3.7 Placement
Once an offer of employment has been extended and accepted, the final stage in
procurement function is to be conducted, namely that, of placement of the individual
on the new job and orienting him to the organization.
Placement may be defined as “the determination of the job to which an accepted

candidate is to be assigned, and his assignment to that job. It is matching of what the
supervisor has reason to think he can do which the job demands. It is a matching of
what he deserves”. Companionship with others, promotional possibilities, etc., a
Mumbai, 2012, p.23
[61]
proper placement of an employee minuses employee turnover, absenteeism, etc.,

improves morale in the companies.
3.8 Training & Development
Companies haven’t been investing enough in people. Rather than train them, they let
them go. Our people are our capital. Nandan Nilekani, CEO, Infosys Technologies
Ltd. says that the more we invest in them, the more they can be effective.
In the present scenario of globalization and liberalization, the intensity of competition

increases day by day in all spheres of business and the BHEL, is no exception. While
all the resources at the command of an organization can be imitated by the competitor
to have an edge over the rivals, it is the human resource (HR) which eludes
duplication due to its uniqueness. HR is not just a number game, it is the sum total of
the inherited intelligent, acquired knowledge, learned skill and accumulated
experience over the years. According to Pfeiffer (1994), the significance of HR as the
greatest asset of an organization assumes highest importance since it constitutes the
organizations intangible, irreplaceable and inimitable resource. While discussing the
critical issues of Human Resource Development (HRD) in the public sector,
Khandwal (1998) observed that failure to motivate the employees or develop
collaborative process among them could severely jeopardize the purpose of banking
itself. Commenting upon the role of Indian institute of banks in HRD, Sharma and
Raipurohit (1993) noted that in the service oriented industry like public sector, the
man-power was the key input and serious focus had to be placed on HRD so as to
enable the existing system to successfully meet the emerging challenges in the coming
years.
The survey conducted by Rani Geeta Priyadarshini and Venkatapathy (2002)

indicated that the public sector with higher levels of deposits had higher HRD scores
and the public sector with lower deposits had lower HRD scores.
HRD is a system of developing in a continuous and planned way the competencies of

individual employees, dynamic groups, teams and the total organization to achieve
organizational goals. Some of the important techniques involved are training,
development, performance appraisal/ potential appraisal, career planning, etc., of the
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various techniques of HRD, training occupies the major position at it has a direct
bearing on the individuals.
Training refers to the teaching/ learning activities carried on for the primary purpose
of helping members of an organization to acquire and apply the knowledge, skills,
abilities and attitudes needed by the organization and it is the act if increasing the
knowledge and skill of an employee for doing a particular job (Monappa and
Saiyadain 1996).
3.8.1 Definitions
According to Dale S. Beach, “Training as the organized procedure by which people

learn knowledge and/or skill for a definite purpose.”
Training is a process of learning a sequence of programmed behaviour. It is

application of knowledge. It gives people an awareness of the rules and procedures to
guide their behaviour. It attempts to improve their performance on the current job or
prepare them for an intended job.
Every organization needs to have well trained and experienced people to perform the
activities that have to be done. If the current or potential job occupant can meet this
requirement, training is not important. But when this is not the case, it is necessary to
raise the skill levels and increase the versatility and adaptability of employees.
Inadequate job performance or technological breakthrough requires some type of
training and development efforts. In a rapidly changing society, employee training
and development are not only an activity that is desirable but also an activity that an
organization must commit resources if it is to maintain a viable and knowledgeable
workforce7.
We use training, education, and development frequently. On the face of it, there might
not appear any difference between them, but when a deep thought is given, we find
some differences between them conceptually. In all training there is some education
and in all education there is some training8. And the processes cannot be separated
from development. Precise definitions are not something possible and can be
7 Ratnakar Gedam, Public Sector Management, Deep and Deep Publications, New Delhi, 1995, p. 94
8 A.M. Sarma, Personnel and Human Resource Management, Himalaya Publsihing House, Bombay,1996, p 77
[63]
misleading; but different persons have used these activities in different ways.
Development is related process. It covers not only those activities which improve job
performance but also those which bring about growth of the personality. Training a
person for a bigger and greater job is development in a long term perspective9.
Need for Basic Training: In basic purpose of training in fact provides different
advantages10. They are mentioned below.
 To increase productivity
 To improve quality
 To help a company fulfill its future personnel needs
 To improve organizational climate
 To improve health and safety
 Personal growth
3.8.2 Importance
Training is a practical and vital necessity because, apart from the other advantages
mentioned above, it enables employees to develop and rise within the organization,
and increase their ‘market value’, earning power and job security. Trained employees
make better and economical use of materials and equipment; therefore, wastage and
spoilage are lessened, and the need for constant supervision is reduced.
The importance of training has been expressed in several ways by different authors.
However, it may be used that training is a widely accepted problem-solving device.
3.8.3 Responsibility for Training
 The top management, which frames the training policy.
 The personnel department, which plans, establishes and evaluates instructional

programmes.
 Supervisors, who implement and apply developmental procedure.
9 Memoria C.B. & Gankar S.V., Personnel Management, p. 277, 2002

10 Cambell J.P., Personnel Training & Development, P.1, 1971
[64]
 Employees, who provide feedback, revision and suggestions, for corporate

educational endeavors.
3.8.4 Steps in Training Programmes
 Discovering or identifying the training needs
 Getting ready for the job
 Preparation of the learner
 Presentation of operation and knowledge
 Performance tryout
 Follow-up or evaluation of the programme.
3.8.5 Training Methods and Techniques
The forms and types of employee training methods are inter-related. It is difficult, if
not impossible; to say which of the methods or combination of methods is more useful
than the other. An effective training technique generally fulfills these objectives;
provide motivation to the trainee to improve job performance, develop a willingness
to change, provide for the trainees active participation in the learning process, provide
a knowledge of results about attempts to improve, and permit practice where
appropriate.
CLASSIFICATION OF TRAINING METHODS

On the Job Training Off the Job Training Other Training Method
Vestibule Lecture Associations

Demonstration & Example Conference Visuals Audio
Simulation Case Study Role Playing
3.8.5.1 On-the-job-training (OJT)
Virtually, every employee from clerk to the president gets some on the job training,
when he joins a firm. Trainees earn as they learn under the watchful eyes of a master
mechanic or craftsman, receive immediate feedback, practice in the actual work
environment, and associate with the same people they will work with after training.
[65]
Under this technique, concerned with developing in an employee a repertoire of skills

and habits consistent an employee is placed in a new job and is told how it may be
performed. It is primarily an employee is placed in a new job and is told how it may
be performed. It is primarily with the existing practices of an organization, and with
orienting him to his immediate problems. It is mostly given for unskilled and
semiskilled jobs- clerical and sales jobs11.
3.8.5.1.1 Vestibule Training (Training Center Training):
This method attempts to duplicate on the job situations in a company class room. It is
a classroom training which is often imparted with the help of the equipment and
machines which are identical with those in use in the place of work. This technique
enables the trainee to concentrate on learning new skills rather than on performing an
actual job. Theoretical training is given in the class room, while the practical work is
conducted on the production line.
3.8.5.1.2 Demonstrations and Examples
In the demonstration method, the trainer describes and displays something, as when
he teaches an employee how to do something by actually performing the activity
himself and by going through a step by step explanation of why and what he is
doing12.
Demonstrations are very effective in teaching because it is much easier to show a

person how to do a job than to tell him or ask him to gather instruction from the
reading material. Demonstrations are often used in combination with lectures,
pictures, text materials, discussions, etc.
3.8.5.1.3 Simulation
Simulation is technique which duplicates, as nearly as possible, the actual conditions

encountered on a job. The vestibule training method or the business game methods are
examples of business simulations. Simulation techniques have been most widely used
in the aeronautical industry13.
11 Das Gupta A., Business and Management in India, p. 109

12 Sikula A.F., Personnel Administration & Human Resources Development, p. 245.
13 Beach D.S., The Management of People at Work, p. 388.
[66]
3.8.5.2 Off-the-job training or Classroom Methods
Off the job training simply means that training is not a part of everyday job activity.
The actual location may be in the company class rooms or in places which are owned
by the company. These methods consist of Lectures, Conferences, Group discussions,
Case Studies and Role Playing.
3.8.5.2.1 Lectures
Lectures are regarded as one of the simplest ways of imparting knowledge to the
trainees, especially when facts, concepts, or principles, attitudes, theories and problem
solving abilities are to be taught. Lectures are formal and organized talks by the
training specialist, the formal superior or other individual specific topics.
The lecture method can be used for very large groups which are to be trained within a
short time, thus reducing the cost per trainee.
3.8.5.2.2 The Conference Method
In this method, the participating individuals confer to discuss points of common

interest to each other. A conference is basic to most participative group centered
methods of development. It is a formal meeting, conducted in accordance with a
organized plan, in which the leader seeks to develop knowledge and understanding by
obtaining a considerable amount of oral participation of the trainees.
3.7.5.2.3 Seminar
It may be based on a paper prepared by one or more trainees on a subject selected in

consultation with the person in charge of the seminar. It may be a part of a study. The
trainees read their papers, and this is followed by critical discussion. The chairman of
the seminar summarizes the contents of the papers and the discussions which follow
their reading14.
The person in charge of the seminar distributes in advance the material to be analyzed
in the form of required readings. The seminar compares the reactions of trainees,
encourages discussion, defines the general trends and guides the participants to certain
14 Asthana G.P., Training Methods in Management Development, p. 165.
[67]
conclusions15.
3.8.5.2.4 Case Studies
The case is a set of data, written or oral miniature description and summery of such
data that present issues and problems calling for solutions on the part of the trainee.
The person in charge of training, makes out a case precedes the necessary
explanations, initiates the discussion going; and then, once the discussion gets going,
he intervenes as little as possible.
In the incident method, a full detailed description of a situation is not given. The
trainer merely presents an outline, often in the form of a complaint from a customer or
a severe conflict in the management of a business. The trainee arrives at the facts in
issue by asking questions from the trainer or by finding out solution by acting out the
situation in which a trainee plays a role.
3.8.5.2.5 Role Playing
In role playing, trainees act out a given role as the y would in a stage play. Two or
more trainees are assigned parts to play before the rest of the class. These parts do not
involve any memorization of lines any rehearsals. The role players are simply
informed of a situation and of the respective roles they have to play. Sometime after
the preliminary planning, the situation is acted out by the role players.
Role playing is primarily involves employee-employer relationships- hiring, firing,

disciplining a sub-ordinate or salesman making a representation to customer.
3.8.6 Training Need Identification Areas
According to the survey conducted by Venkatswamy G., there were some key areas to
train the employees working in public and private sector enterprises. These are, team
building, communication skills, employee’s motivation, leadership programmes,
computer education/ programme, attitudinal development, interpersonal relationship
and effectiveness, employee development and HRD, creativity management, time
management, training for trainers, managerial skill development, technology
15 Ibid., p. 292
[68]
developments, on-the-job training, etc.16
3.9 Performance Appraisal
The authors Rummler and Brache have pointed out six variables that affect the job
performance, namely, barriers, performance expectations, consequences, feedback,
knowledge/skill, and individual capacity.
Performance appraisal is a basic tool to measure the efficiency and potentiality of an

employee. Now-a-days, most of the Indian organizations introduced latest trends in
performance appraisal to know the efficiency of the employees at work place.
“Performance Appraisal is a process of evaluating an employee’s performance of a

job in terms of its requirements”. It is a process of estimating or judging the value,
excellence, qualities or status of some object, person or thing27.
3.9.1 Importance
Performance appraisal has been considered as a most significant and indispensable

tool for an organization, for the information it provides is highly useful in making
decisions regarding various personal aspects such as promotions and merit increases.
Performance measures also link information gathering and decision-making processes
which provide a basis for judging the effectiveness of personnel sub-divisions such as
recruiting, selection, training and compensation. Accurate information plays a vital
role in the organization as a whole. They help to pin-point weak areas in the primary
systems (e.g., marketing, finance, and production). It is easier for managers to see
which employees need training or counseling, because jobs are grouped by categories
(e.g., production foremen, sales manager, and financial analyst). These categories can
break into smaller and smaller groups, if necessary. If valid performance data are
available, timely, accurate, objective, standardized and relevant, management can
maintain consistent promotion and compensation policies throughout the total system.
McGregor says: formal performance appraisal plans are designed to meet three needs,
one of the organization and the other two of the individual, namely;
1. They provide systematic judgments to backup salary increases, transfers,
16 Venkatswamy G., Training & Development in Public Enterprises in India, pp. 13-14, Indian Publishers
distributors, 1998
[69]
demotions or terminations.
2. They are means of telling a subordinate how he is doing, and suggesting

needed changes in his behavior attitudes, skills, or job knowledge. They let
him know ‘where he stands’ with the boss.
They are used as a base for coaching and counseling the individual by the superior.
On the other hand, Levinson has given three functions of performance appraisal.
It seeks to provide an adequate feedback to each individual for his or her

performance.
1. It purports to serve as a basis for improving or changing behaviour toward

some more effective working habits.
2. It aims at providing data to managers with which they may judge future job
assignments and compensation. It stresses the fact that the existing systems of
performance appraisal do not serve any of these functions effectively but focus
on outcome of behaviour.
3.9.2 Process
The process of performance appraisal follows a set pattern, viz., a man’s performance
is periodically appraised by his supervisors.
Figure 3.5: Process of Performance Appraisal
Establish Performance Standards
Communicate performance expectations to employees
Measure Actual Performance
Discuss the appraisal with the employee
If necessary, initiate corrective action
[70]
3.9.3 Methods of Performance Appraisal
We have discussed the importance of PA process. It is also equally important to

understand the methods used in performance appraisal and their relevance to Public
sector. These methods can be broadly classified into two. They are traditional and
modern methods which are explained as under.
METHODS OF PERFORMANCE APPRAISAL

Traditional Methods Modern Methods
Straight ranking method Assessment centre

Paired comparison method Appraisal by results (MBO)
Man-to-man comparison method Human Asset Accounting Method
Grading Method Behaviorally Anchored Rating Scales
Graphing Rating Scale
Forced choice description method
Forced distribution method
Checklists
Free essay method
Critical incident method
Group appraisal method
Field review method
3.9.3.1 Traditional Methods
1. Straight Ranking Method: The ‘whole man’ is compared with the ‘whole
man’, that is, the ranking of a man in a work group is done against that of
another. The relative position of each man is tested in terms of his numerical
rank. It may be done by ranking a person on his job performance against that
of another number of competitive groups by placing him s number one or two
or three in total group.
2. Paired Comparison Method: In this method each employee is compared

with the traits identified, with all the other persons in pairs one at a time. With
this technique judgment is easier and simpler than with the ordinary ranking
[71]
method. The number times each individual is compared with another is tallied
on a piece of paper.
3. Man-to-Man Comparison Method: This technique was used by the USA

army during the First World War. By this method, certain factors are selected
for the purpose of analysis, and a scale is designed by the rater for each factor.
A scale of man is created for each selected factor. The each man to be rated is
compared with the man in the scale, and certain scores for each factor awarded
to him.
4. Grading Method: The actual performance of the employee is then compared

with grade definitions, and he is allotted the grade which best describes his
performance. Such type of grading is done in semester examinations. The
grades may be in the form of A: outstanding B: very good C: good D: fair E:
poor.
5. Graphic Rating Scale: This is the most commonly used method. Under it, a
printed form, one for each person to be rated. These factors are employee
contribution and employee characteristics. In employee characteristics are
included such qualities as initiative, leadership, cooperativeness,
dependability, industry, attitude, enthusiasm, creative ability. In the employee
contribution are included the quantity and quality of work, the responsibility
assumed, specific goals achieved, regularity of attendance, leadership offered,
attitude towards supervisors and associates, etc30.
6. Forced Choice Description Method: Under this method, the rating elements
are several sets of pair phrases or adjectives relating to job proficiency or
personal qualifications. The rater is asked to indicate which of the four phases
is most and least descriptive of the employee.
[72]
The following statements are illustrative of the type of statements that are used;
As comparison to ‘A’ ‘B’ ‘C’ ‘D’ ‘E’

‘A’ + + - -
‘B’ + - + +
‘C’ - - + +
‘D’ + - + -
‘E’ - - - +
3.10 Human Resource Development (HRD)

In simple terms, HRD is concerned with the development of the human resource
function in an organization. The term Human Resource Development involves mainly
two terms; Human Resources and Development:
Human Resources
It consists of the total knowledge, creative abilities, skills, talents and aptitudes of an
organization’s work force, as well as the values, benefits, and benefits of an individual
involved in the organization.
Development
On the other hand, involves enhancement of the skills and abilities of the employee in
the present job as well as making him capable of doing so in the future assignments too.
3.10.1 Evolution of HRD
Sometimes differences are observed because provinces or departments are at different

places on the evolutionary path of a more responsive and effective HRD delivery
structure. Ten years ago, HRD in the Public Sector was generally perceived to be
training and most HRD professionals were located at a very low level in the
organizational hierarchy of HR Directorates.
Expectations of them were generally low, many were not formally qualified in the
field, and there was little expectation that HRD could indeed enhance organizational
performance. Training was undertaken for the sake of training and a perception that
training would ensure the desire performance outcomes in the organization was not
[73]
generally held, and was not perceived as a priority.
This has slowly changed over time. There are many factors which have contributed to
reshaping HRD into a more dynamic and critical component of organizational
development and performance. These factors are illustrated in the following figure:
Leading among them is a more demanding set of policies, and a legislative framework
to govern HRD practice.
Figure 3.6: Mass Transformation of the Public sector has created a natural but
temporary period of instability which affects HRM performance
New
Technologies
and HRD’s
Body of Approaches
Policies and increased
being access to
Legal applied
Provision downward
input
HRM in Public
Organisation
Contributions Change, Evolve
for Strategic and adopt over Extended
position and time Responsibility
resources and higher
Expectations
of HRD
Higher New Systems
Responsibility for
and Monitoring,
Accountability Tracking and
Reporting
This framework has had a marked effect on practice in HRM-the HRM function
slowly become more prominent; and responsibilities and expectations of HRM staff
were significantly explained. The HRM function had to become better planned and
accountable because of the legal provision of more resources for skills development,
and as a result it emerged as more central to organizational development and
performance. Skills development legislation also brought in new requirements for
planning and reporting.
[74]
But HRM was not the only area in which the new policy and legislative frame work
sought to build a more effective and responsive Public Sector. Significant changes
took place in literally every aspect of the Public Sector establishment. There was a
mass transformation from the old to the new and a total restructuring of public
policies and processes in line with new constitutional principles, and in response to
the growing needs of the people to be served.
In all of this change there was a sense of urgency. There was a natural process of
organizations “finding their way” of things apart before they re-crystallize and reorder
themselves to function more effectively. In this process of evolution, there was a natural
instability that occurred with all the consequences. Among the consequences were:
 Instability
 Uncertainty and de-motivation
 Pockets of excellence and isolated points of regression
 Fragmentation and competition for priority
 Frequently changing organizational structures; and
 Instability in the leadership cadre, among others.
While some organizations and their HRM functions have moved from this phase into
a phase of greater stability, other provinces and departments are still in the midst of
this information they provide. Participants respond from the circumstances they
endure and from the perspectives they hold as a result. The instability which
accompanies progress is sometimes seen as mass destructive and as “things falling
apart”.
3.11 Major HRM Mechanisms or Tools

1. Performance Appraisal: It is used as a mechanism to understand the
difficulties/weakness of the subordinates and help/encourage them remove all
these and realize these. Other objective is to identify their strengths and
weaknesses of the subordinates too as to provide positive environment and
help them to understand their positive attitudes.
[75]
2. Career Planning: In HRM, corporate strategies and business expansion plans

should not be kept secret. Long term plans of the organization should be made
transparent employees. Most individuals want to know their career growth and
other possibilities. Hence, the manager should transform the organization
plans to the employees, thus making way for employees to plan their growth
possibilities accordingly.
3. Training: The training is directly linked with the career growth and appraisal
of the employees as such. Employees are given on the job training as well as
off the job training.
4. Potential Appraisal and Development: The capabilities should be developed
within the employees to grow/perform new roles & responsibilities by
themselves continuously. A dynamic and growing organization needs to
continually review its structure and systems, creating new roles and assigning
new responsibilities.
5. Rewards: Rewarding employees is a significant part of HRM. By this, the
organization helps in motivating & recognizing the employee talents as such.
It also helps in communicating the values of the organization also.
6. Employee Welfare: HRM systems focus on employee welfare and quality of
work life by continually examining employee’s needs and meeting them to the
extent possible.
7. Organisation Development: A continuous effort maintained to maintain the
development of the organization as whole. This may be mainly through
research methods and all, where in possible development in specific areas may
be reviewed and corrective action may be taken.
8. Feedback and Performance Coaching: This is the responsibility of the
supervisor to continuously monitor the employee performance and review and
provide necessary suggestions to improve them.
Thus, HRD is a major function of human resource management (HRM). The HRD
area consists of three primary functions: Training and Development, Organizational
Development and Career Development. It is critical that the HRD function recognize
its value to the organization in relation to the strategic planning process and the
opportunity to provide a true competitive advantage to the organization through its
[76]
sustained and continuous development of its most important asset-its people.
3.12 Role of Human Resource Development in Public Sector
1. It examines the relationships and problems that exist between the theory and
practice of Human Resource Management in Public Sector. Aims at enhancing
the capability of Human Resource Management system to adopt and respond
proactively to a constantly changing environment in the 1990’s and beyond.
2. Equal Employment Opportunity (EEO) is continually in the spotlight of
Human Resource (HR) management even after over 40 years of progress. The
number of EEO complaints and lawsuits remains significant, indicating that
ongoing progress is needed to decrease employment discrimination. EEO
issues in HR management are so prevalent that it has become one of the
biggest concerns for HR professionals.
3. While HR professionals agree that equal employment opportunities are a
legitimate focus, there is considerable controversy over best way to achieve
equality. One way is to use the “Blind to Differences” approach, which argues
that differences among people should be ignored and everyone should be
treated equally. The second common approach is “Affirmation Action”
through which employers are urged to employ people based on their race, age,
gender, or national origin. The idea is to make up for historical discrimination
by giving groups who have been affected enhanced opportunities for
employment. The former approach emphasizes equal treatment regardless of
individuals’ differences; the latter emphasize fairness based in individual
circumstances.
4. The role of the Human Resource Development department has become even
more important in countries like ours and specially in the government
organization because of the inefficiency of our government employees and the
laziness of these people, the main reason for the Indian government being so
important of the human resource department becomes even more because of
this very reason, generally in the private sector companies the human resource
is an very important department and they look after all the growth,
performance and other various important aspects of the employees of the
[77]
company but even though it exists in the public sector but the functioning is
one at the same level. It is very important that the human resource depertment
in the public sector takes following few steps for the better working of our
governmnet employees:
 Generally it is seen that the promotion in an government department is
very slow sometimes an employee does not get promoted for even more
than ten years and he stays in the same position. It makes the employee
disheartened and his working efficiency decreases drastically, so the
human resource department may see to it that this does not happen, may be
they should create some extra posts and divide the work of one post
between two or three posts that gives ample opportuniey for an employee
of getting an promotin in every three or four years and the promotion
should be performance based and not on the basis of the any reservation or
seniority that will make the employees work hard and efficiently for their
promotion.
 The human resources department should also start conducting training for
the government employees of all the post and cadre regularly so that they
are also equipped with all the modern techniques and the ways, they
should know how to deal with the common man because that ascpect of
our governmnet employees is really bad and brings an bad image to
governmnet.
 Also the governmnet employees should be taken for regular rejuvenating
tours and trios because this will keep them happy and also make them
more efficient.
 The most important of all before giving the perpormance incentive to the
governmnet employee the most important factor that should be considered is
the public responsce on his performance, this can be found out by having an
feedback from each person visiting the particular office and these feedback
forms should be given due respect and really comsidered as the most
important factor giving incentives because the government employees are
there for the service of the people and if the people are not happy with him
then there is no point of him doing the job and hence no incentives.
[78]
3.12.1 Key Areas Where Gains Have Been Made in HRD in the Public Sector
 Legislative framework and overall awareness of policies.
 Greater access to a wider spectrum of training at all levels.
 Generally more funds are available for training.
 More skills and knowledge in HRD personnel.
 Comprehensive strategies which frame and guide HRD acivities in

organisations.
 Growing alignment of strategies.
 Clear definition of responsibilitites of HRD professionals.
 Existence of learnerships and internships, bursaries.
 Improvement in HRD budget utilisation.
 Coordination of HRD initiative with their transformation and development

priortities of the nation and province.
 Conceptualisation of competency profiles.
 Availability of ETDP qualification and continuous professional development.
 Identification and concern regarding scares skills.
 Growing partnerships with institutions of higher learning
 Growing HRD and HRM coordination.
 Unit standard-based learning, competency assessment and accreditation.
 Management structures, for HRD-HRD Focum, Skills Development,

Committees.
 Greater application of advanced methods in HRD-skills, needs assessment,

competency profiling.
 Reduction of discrimatory barriers to training and more consideration for

issues of equity.
[79]
 The application of transversal training mehods in the public Services
 The growing use of professional Development Plans (PDPs).
 Greater availability of accredited course and accredited providers.
 Growing alingment of HRD to PMDS.
 More opportunities for gaining and imroving educational qualifications.
 Availability of learning frameworks which promote quality courses and

acceptable statndards for training.
 Promoting of representativity in planning and decision making for HRD e.g.,

involvement of labour in Skills Development.
3.12.2 Key Areas Where Problem Still Exist in HRD in the Public Sector
 No buy-in and support from senior management.
 HRD not seen as an organisational priority.
 Fragmentation of HRD functions, activities and initiatives.
 Inability to retain senior manager and officials with scare skills and lack of
comprehensive retention strategies.
 Lack of overall career planning and pathing for officials.
 Ad-hoc selection of courses and service providers.
 Lack of integration alignment and consolidation of the systems, structures and

activities to compete, support and sustain HRD.
 Managers not taking responsibility for the HRD component of their jobs.
 Inadequate allocation of budgets.
 Inadequate allocation of staff.
 Little or no succession planning.
 PMDS not integarted with HRD.
 Shortage of accredited providers in many fields of training.
[80]
 Training stll too theoritical and unrelated to practice.
 Poor implementation of policies and strategies.
 Lack of performance focus and impact assessment for training.
 Lack of proper and integrated information system for reporting and knowledge
management system enhancing practice.
 Non-availability of model organisation structures and arrangements for HRD

in Public Sector organisations.
 Lack of role clarity and proper alignment of roles and responsibilities.
 Poor implementation of a growing number of learnerships.
 Lack of thoroughness in the development of WSPs and lack of integrity in

their implementation.
 Lack of comprehensive and integrated HR plans.
 Lack of monitoring and enforceability of key legal provisions for HRD e.g.,
SDA 1% allocation to training.
 Lack of adequate qualified coaches and mentors.
 Dysfunctional and disempowered akills Development Committee.
 Sub-optimal utilisation of staff- poor recruitment, poor placement, irrelevent

tarining, mis-assignment of responsibilities.
 Little use of RPL.
 Constant change of organisational structures, personel and structural

arrangement for HRD
 Poor alignment and coordination between SETAs.
 Lack of pre-and post-training interventions.
 Discontinuity in leadership.
 Inconsitency and lack of thoroughness in induction and re-orientation.
[81]
 Too few partnership with educational institutions.
 Lack of optimisation of the HRD role of DPSA and SAMDI.
3.12.3 Critical Barriers Affecting Change in HRD
 HRD not seen as a strategic partner although highlighted as a critical part of

development and transformation.
 Occasional political interfence in HRD decisions.
 Shortage of staff and inability to retain personnel- high turnover.
 Lack of management buy-in and support.
 Non-alignment of structures and functions leading to fragmented delivery.
 Constantly changing organisational structures and pervasiveness of change

through the organisation.
 Lack of aftercare support in the workplace.
 Lack of synergy between HRD and HRM.
 Line mangers’ lack of undestanding, interest and support for HRD, and lack of
knowledge of their HRD resposibilities.
 Lack of integrated information systems for HRD.
 Accrediting traning without accredited outcomes-staff not completing

portfolios and accredited training is expensive.
 Theoretical nature of training in HRD.
 Lack of consitency between actual activities undertaken and the WSP.
 Lack of sufficient accredited training providers in many geographic areas and

in some areas of training for the Public Service.
 Inconsistency in incorporating the development agenda in HRD activities-

PGDP,JIPSA,ASGISA,EPWP.
3.12.4 Crirtical Areas Which Seem To Promote Success in HRD in Public Sector
 HRD manager is placed at a strategic level in the organisation.

[82]
 Personnel in the HRD units are qualified in HRD and update their training.
 Organisational Structure where HRD functions are strategically located and

managed.
 Overall structure for HRD which allow HRD responsibilities to be effectively

undertaken.
 Effective information management systems.
 High Level of participation and consultation in planning and decision making.
 Budget allocation is adequate and funds are readily accessible.
 Involment of senior officials in strategic HRD activities nationally.
 The application of transverse training for the Public Services within the
province.
 The availability of provincial academies and centers of learning that focus

secifically on Public Sector training.
 Skills Development Committee structures to which all staff have access and
input through representation.
3.13 Issues in Public Sector
Following are the various issues that can be observed in some PSUs:
 Inadquate training and inapprapriate selection of government employees.
 Poor working environment for healthy workers.
 Poor moral and lack of involvement of workers in the management decision

making process.
 Irrelevent job description of employees.
 Employees turnover.
 Inadequate education of the skills and level of performance of workers.
 Poor work ethic amongst Public Sector employees.
[83]
3.14 The Conceptual Model For The Revised Strategy
The Strategic Framework for HRD in the Public Sector stands on four pillars of
strategis intervention. Based on the research review, each of these pillars represents a
critrical set of strategic initiatives which futher strengthen Human Resource
Development in the Public sector. Each strategic pillar, and the initiatives they
enbody, are highlighted and disscused briefly below:
The strtegic framwork also promotes ten priciples of action. These too are
highlighted.
Pillar 1: The Capacity Development Initiatves
The capacity development initiatives of the strategy focus on “developing human

capital for high performance and service delivery”. Capacity development is at the
centre of HRD as a profession, and, as a result, it is one of the primary areas of focus
here. Inteventions releted to capacity development sought to identify strategic
interventions which could add the hightest value to the public infrastructure for
capacity development. Adding the highest value here means the interventions must be
made to resolve the persistent issues which compromise the process of capacity
development.
But in addtion, interventions were also designed to set the foundation for a new era of
capacity development where learning environments are created for people to develop
themselves. Embodied in the capacity development pillar are eight areas of strategic
interventions.These are as follows:
 Strengthening systems for workplace learning.
 Integrated ABET framework.
 Leadership development management strategies.
 A more strategic role for professional bodies- Norms, Standards and capacity
developments.
 Promoting leadership, internship and traineeships.
 A national/Provincial public service academy.
[84]
 E-Learning programmes for the public service.
 Fostering HEI and FETC pertnership.
Pillar 2: The Organistational Support Initiatives
The organisational support pillar of strtegic framework is presented in recognition of

the fact that the services of HRD in the public sector depends on the extent to which
pertinent organisational support structures and systems are properly integrated so that
it may compliment and support the activities of HRD.The research review process has
highlighted that many of the more persistent issues in HRD in the public sector relate
to the in adequecy of organisation support. Among the many possible interventions
which could have been selected, therefore, this pillars seeks to embody those
interventions which could have the highest impact in tranforming the enviornment in
which HRD is undertaken. As a result, the selected strategic interventions are those
which could provide a plateform to further strengthen and support a transformed HRD
function. The organisational support pillar includes eight areas of strategic
interventions as follows:
 Human resource planning- Supply and Demand management.
 Knowledge and information management.
 Performance management development systems.
 Promoting appropriate organisaional structures for HRD.
 Ensuring the adequacy of physical and human resources and facilities.
 Managing employees’ health and wellness.
 Career Palnning and talent management.
 Mobilisation of management support.
Pillar 3: Governance And Institutional Development Initiatives
Successful implimentation of the strategic framework is not possible without good

governance. Governance here means that the HRD strategy framework must be
properly driven at all levels so that there is a coordinated and concerted effort in
understanding shared responsibilities. Good governance here must be facilitative in its
[85]
efforts to create an environment that promotes professionalism and fosters

implementations success. But Good Governance must be promoted a level of
accountability which will ensure that each party meets its obligations within the
strategic framework. This pillar therefore embodies strategic initiatives which add
value in terms of oversight, strategic support and the promotion of professionalism in
the field. This pillars on governance initiatives embodies seven areas of strategic
interventions as follows:
 Strengthening and aligning Governance role in HRD (SETAs, DPSA,

SAMDI)
 Managing HRD Policies and planning frameworks and gudelines.
 Fostering effective monitorning, evaluations and impact analysis.
 Managing the effectivness of communication.
 Promoting HR learning networks.
 Values, Ethics and a professional code of practice.
 Utilisation of the strategic role of SETAs.
Pillar 4: Initiatives to Support Governments Economic Growth and

Development Initiatives
The end result of the government’s efforts is seen in the extent to which their service
contributes to the lives and welfare of people. In this light all public sectors are
focused on a development agenda that seeks to promote the general welfare. With this
more comprehensive view, the HRD strategic framework cannot ignore or overlook
its responsibility to enable the public sector to more adequately contribute to an
agenda of development which includes economy growth and development initiatives.
This pillar therefore seeks two craft selected strategic interventions which will
strengthen and streamline support for the developmental priorities of Government.
Conclusion
The analysis has assisted in creating a path forward in the design and development of
HRD strategy. Not all ideas proposed could be embodied in the strategy.
[86]
Notwithstanding, those ideas that are identified in this section constitute the key areas
of focus and the initiatives which could potentially make a substantial difference in
the structure and practice of HRD in public sector.
3.15 HRD in Public Sector Undertakings
HR management in Indian PSUs had a great passed and currently at cross roads in
spite of some innovative practices a few of them are attempting. The way they are
growing about is not right. They have become increasingly consultant dependent and
surrendered their own learning and leadership opportunity to external agencies and
ignored their role in institutionalization and effective implementation.
They have become short term target driven than long term intellectual capital focused.
Cost saving (Rather pseudo cost saving) and vigilance concerns and risk aversion
seem to characterize their work that performance focus and long term commitment.
Consultants introduce and leave but the problem of HRD in PSUs had never been lack
of ideas but that of serious and consistent implementation.
The implementation suffered in the past due to frequent changes on top level
leadership. Instead of figuring out and working on implementation issues most PSUs
and their HR manager are busy in shopping spree to introducing systems without
understanding the implications and changing systems along with the consultants as
their top management changes. Following is the trend which is meant to set direction
for the future by pointing out the areas where the PSUs lacks:
3.15.1 HR in PSUs in 70s And 80s
HRD in the public sector undertaking had glorious past. PSUs attracted highly
competent people in the past. It used to be a prestigious thing for most engineering
graduates from leading educational institutions to join corporation like NTPS,BHEL,
BEL,HMT,HAL and the like in 70s and 80s.High achievers in economics and other
areas considered joining the nationalized banks and the RBI as a dream job. Thus
PSUs attracted talented engineers and other graduates. The quality of man power was
great. They also instituted good HRD systems which were path breaking. The
following illustrate the same:
HMT was the first to start a dedicated Organization Development (OD) department in
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early seventies. The work of this department was well respected and quoted. Those
associated with this OD department later rose to be leading CEOs and consultants and
contributed in many ways to development of other sectors. MSS Varadan in
Bangalore who became active process facilitators and worked with ISTD, NIPM and
HRD network besides the institutions like the Indian institute of science and so on.
BHEL was the first to initiate MECOMs (Manager Employee Communications)

systems to facilitate employees’ development and create a healthy organizational
culture.
State Bank of India and its associates were the first to start the HRD function under
the guidance of Dr. Udai Pareek and appointed a full pledged HR department to
design and implement HRD systems to promote continuous development of
employees. The author was associated with training the various HRD managers of
these banks to initiate various systems.
The HRD manager of the associate banks used to meet periodically to share their
progress. OD works was undertaken systematically to survey the organizational
climate in these banks. SBI itself appointed a highest level functionally (A Chief
General Manager and subsequently elevated to dy. Managing director level) to look
after HRD.
In late seventies BHARAT Earth movers (BEML) appointed the author as adviser in
general Managers capacity to design and develop HRD systems and also to train
internal talent to manage HRD. It is largely based on these experiences of BEML they
work able to complete the first book on HR (Pareek and Rao) and test out various
ideas in a seminar organized at IIMA.
Thus, HRD in PSUs in seventies and eighties can be characterized as path breaking,
with highly committed HRD facilitators who devoted their time and energies to
design and lead HR. This era can be characterized as HR leadership era in seventies
and eighties.
3.15.2 Fall of HR-Nineties
With opening up of the economy in nineties the HRDs role had to be redefined in
PSUs. It succumbed to pressure and changing realities of the PSUs and the
[88]
Governments. With liberalisation the benchmarks started changing. The HR

departments had to largely perform the painful role of downsizing and VRS scheme in
many organizations.
Organizations were under tremendous pressure to perform. This perhaps was the time
when HR managers could have come more alive and thought of innovative HR
practices for developing current manpower, modernizing their technical and other
skills, conduct change management programmes and develop new era of leadership.
Unfortunately, they were caught unaware. Combined with this was pressure on
organizational performance, upgrading the quality of products, cost reduction,
exercises etc.
The HR people largely concentrated on downsizing or rightsizing the organizations.

Unfortunately, this also append to be time when many private sectors and MNCs
grappled competent people PSUs. Many PSUs like the SAIL, NTPC, IOC etc. lost a
lot of its talent to private sector and MNCs. The HRD managers of PSUs helplessly
watched this talent migration. Their focus on performance management and OD
interventions also dwindled.
However, in all fairness it must be said that a few of them struggled and did their best
to keep their talent management practices intact. As the PSUs Chiefs were pre-
occupied with debates on privatisation or disinvestment they remained the HR got
pre-occupied with downsizing and rightsizing and VRS. HTD suffered quite bit in this
period and its credibility got into the bottom. A few innovations started in those years
to promote change went un-noticed are talked about. For example, SBI under the
guidance of the then banking Secretary Dr. Y.V. Reddy introduced assessment centre
approach in the top level promotions. In this approach the departmental promotions at
the top level got replaced by a full day testing and interactions by a group of internal
and external experts who sued multiple techniques of assessment. IOC started its
petroleum management institute. RBI itself has appointed a HRD advisor to change
its HRD systems.
3.15.3 Rise of HR in 2000+
The last 10 years have seen again a good rise of the HRD function. With increase
[89]
success of liberalization the country realize that there is no alternative to talent

management. Competencies are being recognized the PSUs have come to terms with
the reality. They also face the stark reality that they have to be content with existing
systems and staff.
Given the difficulties a compensation changes there is recognition that PSUs cannot
come to compete with MNCs in their race for salaries. They however recognized that
their CTC (Employee Cost to Company) as they projected are under estimated of
what they really give to their employees. When their investments on infrastructure
like residential facilities, hospitals, schools, townships, other benefits in organizations
like SAIL, BHEL, BEML, ITI, LIC, BEL, HAL, Nationalized Banks are taken into
account the CTC may be considered as large thought not comparable with the MNCs
and private sectors.
The recognition coupled with the reforms in the PSUs relentlessly though somewhat
unsuccessfully being pursued by the government has put pressure on the new HR
manager in the PSUs to perform. Today almost al the PSUs have Director level
positions for HR. They are expected to manage talent. Many of the PSUs have begun
to meet this challenge in the last years by initiating appropriate interventions.
NTPC has profiled the competency requirements of its General managers and EDs in
early part of this century and started the concept of assessment centers. They have
been running the same for the last seven to eight years.
ONCG has also started assessment and development centers for their Asset and basin
managers and have trained a number of their Directors as assessors with the help of
the author.
SAIL has revisited their performance appraisal system and has redesigned the new
system incorporating 360 degree feedback and Assessment Centers for appraising the
potential of their managers. HAL has been running Leadership development
programmes with the help of IITs and other consultants. BEL has been using 360
degree Feedback and Change Management interventions to train managers with the
help of MDI, COD and TVRLS.
LIC has started a one year Post Graduate Programme to develop their internal Talent
[90]
with the help of IIMA, BOB has identified a large number of their top level managers
aged above 50 years and have worked out Leadership development interventions.
The recently released directive from the department of Public Enterprises appealing to
all PSUs to revamp their PMS and make it more robust and transparent especially in
view of the introduction of the performance based incentive or pay system is laudable
and may give rise to some innovations and more accountability.
3.16 HR Management in Public Enterprises
The future of an organization is shaped by the care with which it plans for
development and motivates its high talent manpower. This personnel planning in an
organization should receive key attention, since the public sector in India holds a
crucial position in the economy, it is of utmost importance to man these undertakings
with fully qualified personnel who can perform their assumed functions effectively
and efficiently and ensure protection of public interest alongside commercial success
is a vital issue involved in the management and working of our public undertaking.
The need for building up competent personnel to man the top posts in public
undertakings cannot be over-emphasized with the rapid expansion of the public sector
undertakings, this problem will assume greater and greater importance. Public
undertakings have special responsibility and purse personnel policies which can help,
attract and maintain competent personnel at a reasonable cost and which will
encourage added effort and initiative and give the employee satisfaction, a sense of
participation and feeling of loyalty to the enterprise and provide for its achievements.
Taking into account rapid expansion of public sector in the country, several
experiments are being made in the field of HR Management. The recruitment policy
in public sector undertaking in India has been passing through several stage of
evolution; even today our Government has not been able to decide a clear cut policy
on managerial personnel for public sector enterprises and the area of selection of top
management is still an unsettled issue. The following are some of the landmarks in
personnel policies and practices in public enterprises.
3.17 Deputations in Public Enterprises
The Chairman, Managing Director and other full time top mangers mostly draw up to
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mow from Government service. Moreover, quite a significant proportion of them

belong to the top Generalist Service – the Indian Civil Service or The Indian
Administrative Service. In recent year, however, an increasing number of persons
with technical or financial experience in Government have also been appointed to
such position. The system has criticized on the ground that these deputationists come
as “birds of passage” and have interests and loyalties outside the organization in
which they serve.
3.17.1 Towards an All India Commercial and Industrial Service
Public sector undertaking in fact, are to be run not by administrative service but by
competent men from business, trade, commerce and industry men in whom the
parliament and government have confidence and men who are to be judged by the
results and by nothing else. Therefore, it was recommended that there should be a
cadre of capable men drawn from business, commerce, industry and trade who have
given good account of themselves in the various sphere of activities and state
undertakings must be entrusted to them to be run on efficient business principles and
practices and this should be in the nature of an All India Service designated as “The
Indian Commercial and Industrial Service”.
The idea of constituting an All India Service designated as the “India Commercial and
Industrial Service” to provide candidates to man the high level and middle level posts
in the public sector undertakings has not so far been realized. This has been opposed
mainly on the grounds that such a service may not provide an answer to the
requirements of managerial personnel in enterprises of varied nature. Besides, such a
move on the part of the Government may also affect the operational autonomy of the
enterprises which are required to operate on efficient commercial and business
principals.
3.17.2 A Case for a Central Personnel Commission for Public Enterprises
In view of the increasing number of enterprises and huge investments in them, the
creation of an industrial public service commission has been suggested in some
quarters. The advantages of an independent body like Industrial Public Service
Commission being associated with recruitment cannot be minimized. The idea behind
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the suggestion was that such a personnel agency if created, it was hoped, would
remove the impression of extra-political aspects.
3.17.3 Experiment of “Industrial Management Pool”
The Government decision to constitute an Industrial Management service – All India

Service, designated to meet the needs of all Government Industrial Undertakings was
tried in a somewhat modified from when it created the Industrial Management Pool in
1957. The Industrial Management Pool new service to stable management posts
throughout the public sector and separate to be recruited independently on its own
lines by each enterprise. The main objects of the Industrial Management Pool Scheme
was to build up a pool of officers with Industrial or Managerial experience for
manning difference management posts in public sector enterprises.
3.17.4 Empanelment Procedure
The question relating to manning of top posts in public sector enterprises with special
reference to remuneration terms of service etc. was considered by a committee of
secretaries headed by the cabinet secretary. Panels of appointments were to be
maintained by the Bureau of Public Enterprises under the supervision of the cabinet
secretary. These panels include the names of experienced persons in different field in
public enterprises, Government service including Industrial Management Pool, retired
persons and outsiders.
3.17.5 Public Enterprises Selection Board
Public sector undertaking now enjoy more autonomy in respect of appointments to top
posts, middle management positions, and other cadres. Appointments to all these
posts will be decided by the Board of Directors of the Individual Enterprises and the
Appointment Committee of the Cabinet and Administrative Ministry will no longer be
required to clear these appointments. The Government decided that recruitment,
training and promotions in respect of the bulk of the managerial posts in public
enterprises be delegated to the enterprises themselves.
Thus, several experiments are being made by the Central Government in this vital
field of HR Management in public enterprises. Today, the trend is in the direction of
providing more operational autonomy to public sector undertaking rather than
[93]
desiring to have too much control in this functional area of management. Therefore, it
is proposed to examine how the BHEL, one of the leading Public Sector Undertakings
in the country has been striving hard to give a definite shape to its personnel policies
and practices.
3.18 Evolution of grievance machinery in India
The following section discusses the evolution of grievance machinery in India. In

large undertakings a common type of grievance procedure involves successive steps
at different levels a workers grievance being first discussed with the immediate
supervisor, and then if no solution is found with higher levels of management. The
number of levels and steps in the procedure usually increases with the size of the
undertaking. Sometimes, when an important question of principle, which would
involve a number of workers, is concerned the matter may go directly to a higher
level of management. Under some procedures, bipartite or Joint Grievance
committee within the undertaking here grievance when they have been considered at
lower levels at a number of earlier stages in the procedures. A settlement reached
jointly by the worker and management representatives at any level is generally
regarded as final and binding on the parties.
Till the enactment of the Industrial Employment (standing orders) Act 1964, the
settlement of the day-to-day grievance of workers in India did not receive much
attention in the legislative framework. So, all the industrial units did not have any
machinery for redressal of grievance, and when day-to-day grievance piled up, the
accumulated discontent of the workmen often culminated in the industrial disputes.
The matter regarding the formulation of a grievance procedure was therefore, referred
to the 15th session of the Indian Labour Conference, 1957 which accepted the code of
discipline. It specially laid down that management and unions will establish upon a
mutually agreed basis, a grievance procedure which will ensure speedy and full
investigation leading to settlement. The guiding principles, which were evolved under
the code for this purpose and the Model Grievance Procedure for adoption by the
parties, were settled in a Tripartite Committee is September, 1958. The Model
Grievance procedure has three important principles viz.,
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 Settlement at the lowest level
 Settlement as expeditiously as possible
 Settlement to the satisfaction of the aggrieved.
Like justice, grievance must not only be settled but also seem to be settled in the eyes
of the aggrieved. The model Grievance procedure has a three tier system for
settlement of grievances at the level of the immediate supervisor, departmental or
factory head, and a bipartite grievance committee representing the management and
the union with the provision for arbitration or appeal to the organization head with a
specified time limit for the resolution process.
The procedure has successive time-bound steps, each leading to the next step in case
of lack of satisfaction under the procedure, an aggrieved employee would first present
his grievance verbally to a designated officer who would give a reply within 48 hrs. In
case the worker is dissatisfied with the decision or fails to get an answer within the
stipulated time, he would personally or accompanied by his departmental
representative, present his grievance to the head of the department. If the department
head fails to give a decision within three days or if the decision is unsatisfactory, the
aggrieved worker can seek relief through the grievance committee, consisting of
nominees of management and workers. This committee would communicate its
recommendations to the manager within 7 days of the grievance reaching it. If
recommendations are not made within this time, the reasons therefore would be
recorded, and if the unanimous decision is not possible, the relevant papers would be
placed before the manager for decision. The Manager is expected to communicate his
decision within three days.
The worker would have a right of appeal to higher authorities for revision of the
manager’s decision. All such appeals have to be decided within 7 days of the workers
petition. The worker, if he desires so, would take a union official with him for
discussion with the appellate authority. In case of failure to settle the grievance even
at this stage, the union and the management may refer to the voluntary arbitration
within a week of receipt of the management’s final decision.
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3.19 Service Conditions and Unionism
Industrialization no doubt has brought new opportunities for workers both in the
public as well as private sector, but at the same time it has also brought new problems.
It has not only contributed to economic and scientific development, but also at social
and psychological stress and strain. Therefore, these factors automatically bring out a
question of what measures have these industrial societies and their industries have
taken to relieve this stress and strain and work for social welfare of those people who
are working in the industries. The concept of welfare is necessarily dynamic bearing,
a different interpretation from country to county and from time to time and even in the
same country according to its value system, social institutions, degree of
industrialization and general level of social and economic development. Labour
welfare initiates efforts to make life worth living for workers.
Service unions throughout the world have become a force and have come to occupy a
strategic position in the country’s industrial set up. Service unions force management
to think through its problems more carefully, knowing that it must justify its
decisions. The very fact that unions have been a continuing pressure group has
compelled management to look more carefully to the question of productivity,
efficiency and technological change.
The experience in both public and private sectors reveals the fact that the main cause
of labour unrest is the lack of proper dialogue between the employees and the
management. Employee unions represent an extension of democracy into the
economic sphere. Since management essentially consists of getting things done
through the efforts of other people, the type of relationship existing between people in
an enterprises is the most important single factor in determining how effective that
enterprises is. Adequate arrangements have to be made by making provisions to take
care of the employees during the different stages of their association right from
recruitment to their leaving the organization by way of catering to their physical,
mental and social needs. A large portion of employees deal with management through
their unions which represent the special interest of their members Unions establish
and maintain a special structure in industry in which individual employee gain
recognition and status and feel an increased degree of personal security.
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Organisation setup and personnel policies considerably determine employee–

employee relations and consequently morale which have a direct bearing on
organisation efficiency. It is possible to harness the willing co- operation of employee
if the right organization prevailing with policies and procedures well defined. Labour
welfare especially in industries is that aspect of HR Management that deals with the
physical, psychological and social well-being of the worker. That is why labour
welfare policies and programmes seek to bring about better employee-employer
relations. The following sectors discuss about unionism in public enterprises.
3.19.1 Unionism in Public Enterprises
The maintenance of good labour-management relations is necessary for sustaining and

developing high levels of production. An efficient personnel department adequately
staffed with trained and experienced personnel would go a long way in improving the
labour-management relations in public sector undertakings. With the growing size of
industrial and commercial enterprises the body of workmen in these establishments
became necessarily large and the relationship between the management with the
general rank and file of workers became gradually a remote nature. In keeping with
this rapid expansion the employees of public sector undertaking formed themselves
into a strong and vocal groups, so that the attention of the public sector management
was pointedly drain to the problems concerning to the safety, welfare and economic
prosperity of their brethren and satisfactory solutions obtained.
The committee on public undertakings considered that public undertakings as national

assets and there is no room for a class struggle in these undertakings. It should also be
the purpose of the Government to see that the personnel policies of public
undertakings are oriented to ensure efficient and economic management of the
undertakings and to ensure good labour relations. This would help to keep the
undertakings free from public criticism. The Estimates Committee expresses the hope
that well-staffed personnel departments in all public sector undertakings and constant
guidance from the Ministry of Labour will improve the successful implementation of
labour laws. One of the most crucial inputs that tends of influence the productivity of
public sector undertakings is the “Human side of the Enterprises” unless and until the
entire labour force and the management are properly motivated to perform their jobs
[97]
in an efficient manner, the performance of public sector undertakings may not

improve. The human side of enterprise in any organisation needs careful attention.
The Administrative Reforms Commission has expressed concern over the increasing
number of strikes in some of the public sector undertakings. The Committee on Public
Undertakings also observed that labour-management relations in the number of public
sector undertakings are not cordial. There have been frequent strikes, work stoppages,
lockouts, etc., and considerably loss in production and value. Thus, in view of the
importance attached to the public sector in India, the high investment and
employment init and its aim of proving the image of a model employer, the study of
labour management relations of this sector assumes special significance.
The responsibilities of providing the welfare facilities and amenities to the workers
rest with the respective employers. But most of the employees try to comply with the
statutory compulsions in the letter instead of complying with them in the spirit. It is
only the progressive employees who go beyond the statutory limits in providing
welfare amenities, facilities and services for the benefits of their workers. Originally
labour welfare was conceived as humanitarian approach to labour. But with the
advancement in industrialization, labour welfare came to be regarded as a means of
increasing production of attracting labour with high productivity and of winning their
loyalty to the firm.
The concept of labour welfare again underwent a change with a wider acceptance of
democratic principles and the welfare state. It has come to be accepted as an essential
feature of employment and working conditions. The workers everywhere demanded
welfare facilities and amenities as a matter of right. The need for providing welfare
activities for the workers hardly received attention in our country in the early stages of
industrialisation. Employees were not generally inclined to accept the financial
burden on account of welfare activities. The government has to intervene using its
persuasive and legislature powers. The Factories Act 1948, provided for some
amenities in respect general health, safety of the workers. Later Government started
envisaging interest in welfare programmes and introduced schemes for labour welfare
in their factories.
[98]
3.20 Participative Mechanism in Public Enterprises
Several persistent and multi-dimensional efforts have been made and are being made
to translate the concept of workers participation in management into practice. Soon
after independence, in the Industrial Dispute Act, which came into force from 1947,
the Government demonstrated its keenness for an appropriate machinery to channelize
the effective and meaningful participation of workers in the management of
enterprises. For the first time, it provided for limited participation of elected
representative of workers in bipartite works committees which aimed at promoting
measures for securing and preserving amity and good relations between employers
and workmen, Following the Government Industrial Policy Resolution and the
Second Five Year Plan recommendations, a scheme of Joint Management Councils
was introduced in 1958. In 1970, the Nationalized Banks Scheme provided for the
appointment of one Director from among the employees of the nationalized banks. In
1971, a scheme of inducting representative of workmen as directors on the boards of
management of public sector undertakings were introduced in a few selected
enterprises. Each Ministry or Department concerned with the public enterprises is
expected to prepare a list of undertakings in which Board level participation should be
implemented. Then followed the two voluntary schemes of workers’ participation in
industry at shop floor and plant level and workers’ participation in commercial and
service organizations having large scale public dealings. The scheme will be operated
at shop floor and the plant level in all public sector undertakings.
3.21 Shop Council
In every industrial unit employing 500 or more workmen, the employer shall
constitute a shop council for each department or shop or one council for more than
one department or shop, considering the number for workmen employed in different
departments or shops. The representation of workers at the shop floor would cover
different categories of workers at the shop floor would cover different categories of
workers such as skilled and unskilled, technical and non- technical. The managerial
personnel would be excluded, but supervisory categories such as Foremen, Charge
man would be covered. Both the workers and the management will get equal
representation at the shop floor. Each party will have a representation of five and ten
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members depending on the size of the work force. The exact number would be arrived
at by the management in consultation with the trade union leaders in the undertaking.
The management will also consult the concerned trade union leaders and evolve
through consensus the mode for representation of workers at all levels at which the
scheme would be implemented. In persuading the union leaders to reach a consensus,
the management may point out that in the absence of such a consensus, the scheme
would not be capable of implementation. The management and the trade union leaders
would ensure that there is adequate representation for women in the participative
forums where women workers constitute ten percent or more of the total work force.
The management would also unsure that adequate provision is made to safeguard
workers independence from management pressure so as to ensure workers
protection against any harassment or victimizations. The chairman of the shop
council shall be a nominee of the management the worker members of the council
shall elect a vice-chairman from amongst themselves. A shop council once formed,
shall function for a period of two years. Any member nominated or elected to the
council in the mid-term to fill casual vacancy shall continue to be a member of the
council for the unexpired portion of the term of the council. The shop council, in the
interest of increasing production, productivity and overall efficiency of the shop or
department attend the following matters. Shop level production facilities, storage
facilities in the shop, material economy, operational problems, wastage control,
hazards, safety problems, quality improvement, monthly targets and production
schedules, cost reduction programmes and welfare measures related particularly to the
shop.
3.22 Plant Council

There shall be a plant council in each plant under the company. It should consist of
not more than 12 representatives of the workers and an equal number of
representatives of the management. The plant level body has been assigned some of
the important functions like review of the working of the shop level bodies, matters
not resolved at the shop level or concerning more than one shop, quality and
technological, improvements, evolution of productivity schemes taking into account
the local conditions, improvement in productivity in general and in critical areas in
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particular, administration of social security schemes and initiation and supervision of

the workers training programmes.
At the Board level, the workers representatives will participate in all the functions of
the board. One of special functions assigned to the board would be reviewing the
work of the shop and plant level participating forums. It has been observed that the
Government has initiated several steps from time to time for the effective
implementation of the participative system of management. The present system of
workers participation at the shop floor and plant level was introduced in all the public
sector undertakings.
3.23 HRD in PSUs at Cross Roads Now: Problems and Issues
1. While many good things are going on, a great qualitative difference in the way
HRD interventions are being made today as compared to eighties, something
missing, perhaps the spirit essentially because in many of the PSUs, HRD
interventions seem to have become short term target-driven, consultant driven,
vigilance driven and Tender Driven.
2. As a result, they have taken away the spirit and pleasure of implementation
from the HR managers. The HR managers’ themselves including their top
needs to be blamed for this. It is time that the PSUs realize the traps they
walked themselves into.
3. Talent is the most needed thing in PSUs. However, they also have talent. They
need to realize that they have certainly talented people and they are not using
their talents. The only issue with these talented people is this: Those who are
older in age and need to change are not changing and those who are young in
age and talented are not sticking. Younger generation has to be put in
forefront. However a number of senior employees may not appreciate the
same. Hence there is a generation gap developing. HRD needs to fill this by
providing opportunities for younger group to play leadership roles. PSUs have
the capability but this needs to be focused. The bureaucratic approach and love
for seniority, designation and power prevent them from doing. Changing this
culture and getting put first is the first challenge they seem to face.
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4. With different generations of employees in a PSU you need differentiated HR

policies. You cannot treat baby boomers, Gen X and Gen Y the same way.
Gen X is PF and pension driven. While Gen X likes quick settlements fast
changing role and high movement and activity level. Uniform HR policies
don’t serve the three generations of employees.HR department should be
seized with this issue. On the contrary they are seized with the problem of
uniform application of policies for all people for equality and justice.
5. Other challenges they seem to face is to think innovatively. Most of the HR

manager have surrendered their thinking and intellectual faculties to
consultants. There are some PSUs where the number of consultant is more
than the number of HR section heads. There are a set of consultant to do
competency mapping, another set to do PMS, a third group to do 360 degree
feedback, a fourth to do assessment centers and a fifth to do employee
engagement surveys. Ultimately one raises the question “What are the HR
managers doing”. Should they be designated as outsourcing manager rather
than HR managers?
6. Each HR manager is busy preparing tendered documents, appointing

consultants monitoring their work arranging line manager interviews and the
like and they is no HR happening. It breaks down the credibility of HR in such
corporation. It is high time the HR staff become sensitive to this. They may
feel that by appointing consultants they transferred the risk of designing,
managing and implementing HR systems to consultants. They also have
wasted the company money.
7. Ignorance of the local tasted out practices and preference for un-
implementable global practices, HR is one area where the country needs no
foreign expertise. There is abundant expertise available in the country. In one
organization they recruited and “expert HR Chief” for handling HR and spent
ten times the amount they were spending on the earlier head HR. The new
HRD managers have to be put up is a five star portal for four months. Toured
round the country and visiting their outfits and few outside India, and
concluded that little could be done in this company as Indians don’t respect
[102]
systems and like to feel powerful by breaking systems and rules while he
comes from a country where systems are adhered to. Expressing these inability
he left the company and the company took another six months to fine a new
HR manage after conducting that outside talent cannot do much in HR.
fortunately this is not a PSUs but one will not be surprise in future Indian
PSUs start looking for foreign HR manager considering the rate at which they
are appointing foreign consulting firms. Ones should review the experiences
of the consulting firms. Most of the big five and other consultants carry big
name but used local talent from IIMs, XLRI and the like. Consider the fact
that most of the consultants are graduates from these management schools of
the last five years and yet employed at high cost for promoting HR themselves
have learnt largely from text books including the Indian books.
8. Tendering syndrome: Imagine if the prime minister of India has to be operated

for his heart through a tendering process and lowest bidding surgeon will be
called on to operate him. What would have been the faith of this country?
Most PSUs do not realize that management practices cannot be designed and
implemented through tendering process. Most competent consultant including
the leading institutions like the IIMs does not participate in bidding process.
Just like a famous surgeon who needs not be subject to a tendered document
and examination by a committee who knows nothing about surgery to decide
whether he is a famous surgeon or not. In fact there is no need for most
management practices to be designed by external consultants. There are
enough internal talents available in Indian corporation to design and
implement any HR system. There is more expertise available in India and
Indian academics and consultants on PMS, ADCs, competency mapping,
learning systems, soft skills training, 360 DF (in fact it was first initiated at
IIM but before US called it as 360 DF), employee engagement and
commitment. There are more than score of thesis retain on this theme at IIMs
and other places. Yet the preference for foreign expertise in HR is amusing.
Probably we have to live still with the old dictum “Ghar ki murgi daal
barabar”. Indians seem to respect foreigners, this is our culture. Public Sector
or private sector no difference. The farther the distance of the consultant is
[103]
from you the more he is respected. New York is farther than Delhi and Delhi
is farther than local town. If you cannot get a foreign consultant get at least a
foreign consultancy firm. They quit often forget that the consultancy service of
the foreign firm is delivered by the locally trained youth and what the
company gets is the local knowledge at global rates. It is very sad to see this
happens in Hr field which took lead cross the word in eighties. PSUs seem to
fall to this trap. One PSU sent a delegation to five people from several
hundred kilometers to negotiate a five lakh rupees project to feel the tendering
requirements. The same company gave a two crore project to another
organization without any tendering process. When asked the reply I got was
“This party is only one of these kinds and hence does not need any tender”.
The party was a reputed business school with foreign faculty. Also often the
HR managers take protection for their inability to make difference under the
vigilance requirements.
9. It is true that vigilance departments have become very active. They have become
active to protect the interests of the organizations as well as the employee.
Vigilance therefore attempts to protect people do that they can follow the process
and at the same time do good job. In my view subjecting management
consultancy to tendering because of vigilance is doing serious damage to the very
purpose of management systems improvements. This is because management
consultancy does not need such high level of investment. The movement you get
in to tendering the level of cost raises. For example I got once and invitation to
submit a proposal. Only those companies with the turnover of more than five
crore were allowed. Imagine what would be the signal to companies. Research
evidence shows that small companies deliver better service in management
consultancies. In my view many HR managers are reducing themselves in PSUs
to be outsourcing manager rather than change agents.
10. The top level managers in HR are busy with other policy issue they are
neglecting most important Talent management issues. The credibility of HR at
present in most PSUs is at their lowest in spite of the scope for great work.
What the most HR people think about them and their work in some of the
[104]
PSUs in totally different that what their line manager think.
3.24 An Assessment of HR Management in PSEs
The assessment of proper implementation of Human Resource Management in Public

Sector Enterprises of India can be done by the analysis of the information provided by
the below mentioned tables:
Table 3.7: Break-up of Total Employees in CPSEs
Supervisory Non-Executives Casual/daily Contract

Managerial
Year Non- Rated Workers/ Total
/ Executives Unionized Skilled Unskilled
Unionnised Workers Employees
2004-05 239287 67839 55629 774989 555534 83468 - 1776746
2005-06 245681 69548 52359 845927 485319 98567 - 1797401
2006-07 257657 72363 47908 929710 306531 165602 - 1779771
2007-08 262712 85616 34011 892928 294669 50071 182245 1802252
2008-09 265935 101025 36533 840418 291106 17047 231930 1783994
2009-10 266871 97620 32755 803640 289813 25257 216138 1732094
2010-11 277100 95069 32698 763407 276119 26234 154864 1599257
2011-12 273698 96154 31412 736198 260841 24838 262815 1685966
2012-13 276430 96125 43815 698607 289480 43166 286350 1733973
2013-14 271950 101495 19047 673320 275494 30716 308719 1690741
2014-15 264497 102987 27221 647673 248796 21086 274889 1587149
2015-16 259565 82324 39669 614059 238001 19103 267929 1520650
2016-17 265486 76828 28071 562134 198321 54225 338521 1523586
2017-18 266478 79096 29629 521778 191159 40060 338494 1466694
The table 3.7 shows the bifurcation of total number of employees in Indian public
sector enterprises. As per the table, the PSEs consist of various categories of
employees such as employees of Managerial or Executive cadre, employees of
supervisory cadre and non-executive employees. Apart from this, there are daily rated
as well as contractual employees in the PSEs.
The table depicts a trend starting from 2004-05 to 2017-18 that the proportion of non-
executive as well as daily rated and contractual employees are mostly increasing with
the passes of the years. This shows that the management of PSEs is of the thought that
employees of lower cadre even daily rated and contractual are more productive rather
than employees of higher cadre.
Table 3.1 states that number of PSEs is generally increasing year by year while the
table 3.7 shows that total number employees in PSEs are in tune of 1700000 from
[105]
2004-05 to 2009-10 while in later years their numbers has significant fluctuations.
The fluctuations may be due to strong steps of privatization or shut down of units etc.
taken by the governments.
Table 3.8: Number of Employees and Houses Constructed in CPSEs
Total No. of No. of House No. of Houses Under Total No. of

Year
Employees Constructed in Township Construction Houses
2004-05 1693278 839829 14787 854616
2005-06 2549648 764821 28564 793385
2006-07 3837389 108243 36985 151237
2007-08 1566387 748552 10642 759194
2008-09 1535017 613887 3347 617234
2009-10 1490699 697775 3844 701619
2010-11 1444393 523062 3404 526466
2011-12 1398313 549743 5335 555078
2012-13 1404457 515628 92096 607724
2013-14 1351306 575773 13461 589234
2014-15 1291174 414153 20619 432772
2015-16 1233618 435793 31974 467767
2016-17 1130840 504816 4560 509376
2017-18 1088140 461489 15171 476660
The table 3.8 provides information of year wise total number of employees in the
public sector enterprises and the number of houses constructed or under-construction
for the their employees. Providing suitable accommodations to the employees also
works as an effort to develop sound HR management in the organization.
It is clear from the table that companies of public sector in India take into
consideration the arrangement of proper accommodation to their employees as in
most of the year number of house constructed in township is changed in approximate
proportion with the number of total employees in PSEs.
3.25 Representation of Employees of Reserved Categories i.e., Scheduled

Castes/ Scheduled Tribes and Other Backward Castes in CPSEs
The implementation of reservation policies regarding employment and promotion at
[106]
every level of appointment i.e., at Managerial or Executive level, at Supervisory level

or at Non-Executive level could be analysed through the information collected from
the various reports of Public Enterprises Survey. The information has been arranged
in tabulation forms which are as follows:
Table 3.9: Representation of SCs, STs and OBCs in Group ‘A’

Managerial/Executives Level of CPSEs
Group ‘A’ Managerial/ Executives Level

Year
Total No. of Employees SCs STs OBCs
2010-11 209292 30416 11198 20901
2011-12 225786 34579 12585 22246
2012-13 249974 36458 13742 28947
2013-14 270539 39855 14992 34598
2014-15 262911 38539 14234 34944
2015-16 258659 39177 14617 37905
2016-17 264648 41236 15959 41960
2017-18 265543 40404 16602 45266
The table 3.9 depicts the representation of SCs/STs and OBCs at Group ‘A’ Level of
employees. The employees of Managerial Level or Executive Level are considered as
the employees of Group ‘A’.
The table carries the total number of employees of Group ‘A’ in all CPSEs. On
observing the table, it is very clear that CPSEs are maintaining the reasonable
proportion of SCs/STs and OBCs on their employees of Group ‘A’ Level.
[107]
Table 3.10: Representation of SCs, STs and OBCs in Group ‘B’ Supervisory
Level in CPSEs
Group ‘B’ Supervisory Level

Year
2010-11 209086 31149 13521 19336
2011-12 178495 23549 12546 18458
2012-13 154983 21788 9824 17432
2013-14 130345 19432 8762 17555
2014-15 129996 14282 6549 13984
2015-16 121596 13383 6195 13742
2016-17 104404 24929 10808 28027
2017-18 108622 14136 8471 25546
The table 3.10 depicts the representation of SCs/STs and OBCs at Group ‘B’ Level of
employees. The employees of Supervisory Level are considered as the employees of
Group ‘B’.
The table carries the total number of employees of Group ‘B’ in all CPSEs. On
observing the table, it is very clear that CPSEs are maintaining the reasonable
proportion of SCs/STs and OBCs on their employees of Group ‘B’ Level.
[108]
Table 3.11: Representation of SCs, STs and OBCs in Group ‘C’ Workers
(Skilled) in CPSEs
Group ‘C’ Workers (Skilled)

Year
2010-11 737273 141422 64575 101809
2011-12 717384 139832 65378 108902
2012-13 685429 137458 67436 111764
2013-14 673164 136112 69177 113806
2014-15 647511 127839 64091 113863
2015-16 613911 119196 60705 107840
2016-17 561938 105262 50890 98552
2017-18 521409 100935 52717 96549
The table 3.11 depicts the representation of SCs/STs and OBCs at Group ‘C’ Level
of employees. The skilled workers of PSEs are considered as the employees of
Group ‘C’.
The table carries the total number of employees of Group ‘C’ in all CPSEs. On
observing the table, it is very clear that in most of the year representation SCs /STs
and OBCs in total number skilled workers is increasing. This may have two reasons;
first, applicants of reserved categories who applied for the recruitment are more
competent in terms of Educational Qualifications as well as in terms of Working
Experience. Secondly, it may be the consequent of the policy of No-Interviews at
Group ‘C’ Level of employees being followed by most of the PSEs.
[109]
Table 3.12: Representation of SCs, STs and OBCs in Group ‘D’ Workers (Un-
Skilled) in CPSEs
Group ‘D’ Workers (Un-Skilled)

Year
2010-11 244192 49694 28849 37956
2011-12 251368 48753 25413 39123
2012-13 268952 45987 24867 39998
2013-14 275445 43446 23007 40124
2014-15 248743 40633 23220 38538
2015-16 237995 42376 23371 45898
2016-17 198271 39918 27155 43134
2017-18 191154 33718 26859 39957

The table 3.12 depicts the representation of SCs/STs and OBCs at Group ‘D’
Level of employees. The unskilled workers of PSEs are considered as the
employees of Group ‘D’.
The table carries the total number of employees of Group ‘D’ in all CPSEs. On
observing the table, it is very clear that in most of the year representation SCs /STs
and OBCs in total number unskilled workers is increasing. This may have two
reasons; first, applicants of reserved categories who applied for the recruitment are
more competent in terms of Educational Qualifications. Secondly, it may be the
consequent of the policy of No-Interviews at Group ‘D’ Level of employees being
followed by most of the PSEs.
After analyzing the information shown by the above tables from table no. 3.7 to to
table no. 3.12, it can be said in conclusive form that in most of the enterprises of
public sector in India, reservation policies are being strictly followed regarding the
employment.

[110]

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Chapter 3

HUMAN RESOURCE MANAGEMENT IN

3.1 Organization of Public Sector

Departmental enterprises are owned and operated by the Government. A departmental

3.2 Major Objectives of Public Sector

 Earn return on investment and generate resources

 Promote redistribution of income as well as wealth

 Create huge employment opportunity

 Promote regional development in balanced way

 Assist to the development of small scale and ancillary industries

 Act as an engine to stand and develop an economy

Particular Total Investment Enterprises

At the commencement of the 6th Five year plan 18150 179

Table 3.2: Cognate Group-wise Classification of Public Sector Enterprises as on

Cognate Group No. of Enterprises Total

Year No. of Employees Total Annual Per Capita Annual

Table 3.4: Share of PSEs in GDP at Factor Cost at Current Prices

Year GDP GDP of PSEs % Share of PSEs in

2004-05 29714.64 6805.19 22.90

2005-06 33905.03 7290.4 21.50

2006-07 39532.76 8188.89 20.71

2007-08 45820.86 9138.22 19.94

2008-09 53035.67 10747.16 20.26

2009-10 61089.03 13058.82 21.38

2010-11 72669.66 15116.67 20.80

2011-12 83534.95 17134.47 20.51

2012-13 94610.13 19198.06 20.29

2013-14 99565.29 20154.13 20.37

2014-15 107284.26 21583.43 21.58

2015-16 125142.96 23458.95 20.49

2016-17 135246.25 25954.56 22.57

2017-18 139628.26 27594.73 21.23

Source: Various issues of Public Enterprises Survey

Table 3.5: Top Ten Profit Making CPSEs 2017-18

Sl. Name of the CPSEs Net Profit % Share in Total

1. Indian Oil Corporation Ltd. 21346 13.37

2. Oil & Natural Gas Corporation Ltd. 19945 12.49

3. NTPC Ltd. 10343 6.48

4. Coal India Ltd. 9293 5.82

5. Power Grid Corporation 8239 5.16

6. Bharat Petroleum Corp. Ltd. 7919 4.96

7. Hindustan Petroleum Corporation Ltd. 6357 3.98

8. Power Finance Corporation 5855 3.67

9. Mahanadi Coalfields Ltd. 4761 2.98

10. Rural Electrification Corporation Ltd. 4647 2.91

Total (1 to 10) 98707 61.83

Other CPSEs (174) 60928 38.17

Net Profit of profit making CPSEs. 159635 100

Source: Public Enterprises Surveys 2017-18, Vol.1

Table 3.6: Top Ten Loss Making CPSEs 2017-18

Sl. Name of CPSEs Net Loss % Share in

1. Bharat Sanchar Nigam Limited -7993 25.57

2. Air India Ltd. -5338 17.07

3. Mahanagar Telephone Nigam Ltd. -2973 9.51

4. Hindustan Photo Films Manufacturing Co. Ltd. -2917 9.33

5. Western Coalfields Ltd. -1757 5.62

6. Bharat Coking Coal Ltd. -1391 4.45

7. Rashtriya Ispat Nigam Ltd. -1369 4.38

8. India Infrastructure Finance Co. Ltd. -1155 3.69

9. Eastern Coalfields Ltd. -931 2.98

10 STCL Ltd. -657 2.10

Total (1 to 10) -26480 84.71

Other CPSEs (61) -4781 15.29

Net loss of loss making CPSEs: -31261 100