PLANNING AND MANAGEMENT OF SURPLUS MANPOWER: INDIAN MANUFACTURING INDUSTRY AN OVERVIEW

Puspanjali Sarangi, BSc, MBA Student of Rourkela Institute of Management Studies, Rourkela E-mail ID: puspanjali.sarangi@gmail.com

Prof. Sreekumar Associate Professor, Rourkela Institute of Management Studies, Gopabandhu Nagar, Chhend, Rourkela

PLANNING AND MANAGEMENT OF SURPLUS MANPOWER: INDIAN MANUFACTURING INDUSTRY AN OVERVIEW

Puspanjali Sarangi, BSc, MBA Student of Rourkela Institute of Management Studies, Rourkela Prepared under the guidance of Prof. Sreekumar, Associate Professor, Rourkela Institute of Management Studies, Rourkela

Abstract
To look after the various functions set for organization, adequate resources like man, material, and money is required. Of all these Ms, the most important is Man or Human Resource. In any business plan, we need to draw out the key human resources actions required so that appropriately designed strategies are planned, developed and implemented in a way that enables business objectives to be achieved. Matching manpower demand to manpower availability for the favored options is, therefore, a vital element of business and manpower planning activity. As companies experience the need for change they often apply manpower planning to define the relevant issues and develop responses to them. Manpower planning is the process of analyzing an organizations manpower needs under changing conditions and developing the activities necessary to satisfy these needs. Manpower planning has been a function of management since the origin of the modern industrial organization.

Introduction
This project attempts an analysis of Planning and Management of Surplus Manpower: Indian Manufacturing Industry an Overview. It was found that careful controlled recruitment, reduction of manpower to an optimum level, improvement of skill mix have been the key objectives of the manpower policy at any manufacturing industry like in Nalco. To make manpower planning effective, a number of measures like elimination of work consider unnecessary, making full use of mechanization, taking advantages of new technologies; redesigning jobs with multiskill flexibilility have been undertaken. The study will be helpful to those who have keen interest in Manpower Planning and Management of surplus Employee through Voluntary Retirement Scheme.

Man is a great acquisition for us that will help us with efficiency and renewable markets. It increases our resources, primary human resources, and helps our growth. Human resource or manpower is a primary resource without which other resources, physical and financial, can not be put in to use. Even a fully automatic unit requires manpower to run it and also to plan for further improvement. To achieve any goal, manpower requirement needs to be assessed, located and harnessed. Improper manpower planning may lead to overstaffing increasing direct cost (viz., salary), cost of training, amenities, apart from the cost of production. Under-staffing also affects production, morale and productivity. Optimum manpower planning, therefore aims at: Balancing demand, supply, distribution and allocation of manpower. Controlling cost of human resources. Formulating policies on transfer, succession, reallocation of manpower. Specifically, human resource planning is the process by which an organization ensures that it has the right kind and number of people at the right places, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve organizations objectives and plans into the number of workers needed to meet those objectives. Objectives The study is based on the following objective: (i) To find out the process followed in organizations for determining the future manpower requirements; (ii) To analyze the wastage pattern in the organizations; (iii) To study the planning and forecasting process of manpower of the organization; (iv) To study them process of recruitment, selection, training and development, promotion, performance appraisal etc. in the organization briefly; (v) To study the VRS in terms of the benefits available and the number availed; (vi) To study how the organization is managing the surplus employees; (vii) Finally to understand the significance of downsizing manpower in the organization. Research Methodology

The present study is a case study in NALCO with emphasis on Planning and Management of Surplus Manpower. Data for the study have been collected for the whole organization including its works at Angul and Damanjodi. For questionnaire administration, the captive power plant of Angul was selected. To determine the satisfaction level of the employees, a structured questionnaire was designed to ascertain the views on a 5 point scale ranging from: Highly Satisfied, Satisfied, Undecided, Dissatisfied and Highly Dissatisfied. The data have been collected both from primary and secondary sources. Primary data were collected from the selected representatives/employees through structured questionnaires, personal interviews and observation method. Secondary data relating to organizational growth, manpower and various statistical data regarding manpower were obtained by accessing to different sources of information like- records, documents, files, personnel bulletin and manuals etc. the data collected though the above methods were compiled, analyzed and presented through Table, Piechart, Bar-chart, etc. All collected information was helpful in deriving conclusions. Sample As a part of the study on Planning and Management of Surplus Manpower, it was not possible to do complete enumeration of the subject. So a sample size of 70 respondents (28 executives and 42 non-executives) was selected. The respondents were selected on the basis of simple random sampling and purposive selection. A total of 76 questionnaires ere received back. Care has been taken to ensure that the sample covers all most all important departments in the corporate office. The sample consists of junior management and middle management and middle management level i.e. from E1 to E5. Data Analysis
The

primary data obtained through questionnaire administration and personal interview were processed and analyzed to arrive at meaningful conclusions. Direction for Future Research 1. Future research will be undertaken by considering the present study as a base record i.e. this study will be considered as a stepping stone for carrying out further extensive studies. 2. Future studies will be undertaken at different production centers (works) of the organization, which will provide a clear picture of manpower planning in the company. 3. Future studies will be conducted by considering a large number of samples to arrive at a reliable result. 4. In case of large sample, a pilot study needs to be conducted for pre-testing of planning and management of surplus manpower. 5. This will help in correcting various organizational limitations relating to Manpower Planning and Management of Surplus Employee. 4

6. This will act as a catalyst for improving the organizational policies.

Theoretical Framework
Manpower management basically aims at having the right kind of people available as and when required and improving the performance of the existing people to make them more effective in their job. Core Definition: Manpower planning has been defined s a strategy for the acquisition, utilization, improvement and preservation of an enterprises human resources (Department of Employment, 1976). Manpower planning is a process by which management determines how the organization should move from the current manpower position to desired manpower position. Manpower Planning Process: First we need to analyze the manpower requirement to allocate the manpower demand and according to the demand the internal and external supply of manpower can be recognized. By the company objectives helps the concern is recognizing the budget and manpower demand. When the manpower demand, supply (both internal and external), and budget reconcile at one point it gives rise to manpower plan. The manpower plan has four elements: 1. Utilization 2. Supply 3. Training and 4. Personnel policies
ANALYSIS OF MANPOWER

COMPANY OBJECTIVES

MANPOWER DEMANDS

INTERNAL MANPOWER SUPPLY

BUDGET

RECONCILE

EXTERNAL MANPOWER SUPPLY 5

MANPOWER PLANS

Surplus Employees: Management of surplus manpower is one of the most critical problems in the industry and business today. With the recent economic liberalization the competition will grow amongst industries and the problem of surplus manpower may become more acute. Many organizations have achieved remarkable success in solving this problem. Companies will have to respond to the pressure of market competition with management initiative like: technology up-gradation, business process re-engineering or alliances and joint ventures that will entail manpower reduction. The manpower shouldnt be excess or lacking it should be optimum.

Retirement & its forms: Retirement on attainment of age of superannuation: Retirement o attaining age of superannuation is nothing but retirement by compulsion. Retirement is a compulsion to the employees notwithstanding desired or liked by the employee on attaining the age of superannuation. (A) Premature Retirement: Premature retirement is nothing but retirement by circumstantial compulsion. Premature is a forced action for committed proved misconduct, like long absenteeism due to prolong sickness or alike cause etc. It is purely at the hands of that management of that industrial organization. (B) Voluntary Retirement: Voluntary retirement, on the other hand is purely a separate entity unconnected either with compulsion of automatic action on attainment of the age superannuation. It is purely a voluntary scheme available to all the eligible employee of the industrial organization exclusively for those who are yet to attain the age of supper-annuation. Retirement is an end to the system where the voluntary retirement is a means to an end. Voluntary Retirement Scheme: Voluntary retirement scheme (VRS) a compensation package for exit policy is not new to Indian Industry.

The main objectives of the scheme are: To achieve optimum and effective manpower utilization. To improve productivity. To reduce cost. To improve the quality of work life. To improve the average age-mix of the employees To improve the overall skill level.

Indian Manufacturing Industry: NALCO in a nutshell:

CMD of NALCO Mr. C.R Pradhan Incorporated in 1981 as a public sector enterprise of the Govt. of India, National Aluminum Company Limited (NALCO) is Asias largest integrated aluminum complex. The integrated complex has five segments Viz. Bauxite mine, Alumina refinery, Aluminum smelting and casting, power generation, rail and port operations. Leveraging the technical collaboration with Aluminum Pechiney of France, ISO 9002 certification of quality management, LME registration of products, environment care to ISO 14001, low cost operations, international customer base, NALCO has continued to add value and is poised to grow further. Transparent and successful operations of NALCO, as well as its contributions, have brought about remarkable Socio-economic progress in the two under developed districts of Orissa, where the companys plants and facilities are located. VISION To be a company of Global repute in Aluminum. MISSION To achieve growth in business with global competitive edge, providing satisfaction to the customers, employees, shareholders and community as large. Man power planning in Nalco: For initial manpower planning in NALCO, the industrial engineers had taken into consideration inter alias, the feasibility report estimates operating manpower of

Alumina and Aluminum industries with similar technology and interaction with companys senior personnel in the related functional areas. For assessing the manpower requirement of NALCO in various segments/fields, comparison has been made with companies of similar capacity, such as for assessing the manpower requirement of mines and refinery complex, the comparison has been made with A.P (France) Frigua Plant. The existing manpower placements are mostly done through manpower studies conducted by the Industrial Engineering department of the company. The methods use are work study, work sampling, utilization study and discussion with respect to head of the department and line managers. The additional or surplus manpower are thus evaluated and planned accordingly placement.

Manpower Status as on 31.03.08 in NALCO

847, 11% 1817, 25% 1000, 13% 127, 2%

Executive Unskilled High Skilled Semi Skilled

3622, 49%

Supervisory

MANPOWER TURNOVER Manpower turnover is basically carried out to keep detailed data base of those employees whose work hours with the company may have ended due to specific reasons, such as: Resignation, Voluntary retirement, Expiry,Retirement,Super annuation,Dismissal o the grounds of discipline etc. As far as NALCO is concerned, the Industrial Engineering Department housed in the Corporate Office of the company maintains a detailed database of manpower. Last 10 years data are given below:

Table: 1.1 (Manpower Turnover in NALCO)

Year 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Executive 24 32 21 12 13 15 26 31 52 25 ----Nonexecutive 21 17 18 20 19 24 23 32 115 35 ----Total Turnover 45 49 39 32 32 39 49 63 167 60 ----Total Employee 6084 6120 6232 6307 6468 6522 6515 6644 6654 6702 ----% of manpower to total 0.74 0.80 0.63 0.50 0.51 0.60 0.75 0.95 2.50 0.89 -----

From the data, it is clear that the number of employees vary from year to year in the sense that some shows increasing tendency while some decreasing tendency. The reason may be many such as if there is an increasing trend then it implies that the number has increased due to new recruitment or promotion and if it shows a decreasing trend then that may be due to any of the reason such as retirement, voluntary retirement, resignation, expiry, death, etc. ABSENTEEISM Absenteeism is one of the major problems faced by industries in India. The tendency on the part of workers to absent themselves disrupts work schedules, imposes added supervisory workloads, and causes unnecessary overtime costs and results in low employee morale as well as an overall increased in cots. It hinders proper planning of production and the smooth functioning of an organization. In fact, rates of absenteeism are indicative of an organizations health and also its supervisory and effectiveness (Swain & Mohanty, 1977). Number of man days lost due to absence Absenteeism = Total number of man-days Surplus employee in Nalco: X 100

With the implementation of modern technology, the company faces the problem of surplus employees at the Corporate Office of company through sanctioned strength is more than the man in position in NALCO as a whole. Thus Govt. has implemented the separation scheme like VRS (Voluntary Retirement Scheme) in NALCO in the early nineties i.e. in the year 1991 to rightsizing the manpower. This process of rightsizing is purely on voluntary basis. By this process, NALCO will able to separate the old and undesirable person and retain the highly talented, young, dynamic persons having a desire to work hard and go up. Till date, more than 178 people have taken the VRS (Voluntary Retirement Scheme) in NALCO. They provide them their whole salaries more than what they could earn during their whole service period with extra benefits. The surplus employees in NALCO, is due to only implementation of modern technology. Thus the personnel department of NALCO deals with surplus employees by way of: training and deployment grating separation scheme (VRS)

VRS in Nalco: As a part of the manpower planning in NALCO, the scheme of the company applied to regular employees who have completed 10 years of services in the company or have completed 40 years of age. An employee, who has been declared medically unfit for work or has been disabled due to an accident or unfit to discharge his duties for any other reason may also seek Voluntary Retirement even though he doesnt satisfy the service and/or age criteria.

Recent Amendment for VRS in NALCO (i) Ex-gratia payment equivalent to 60 days emoluments (i.e. pay adhoc/interim relief or any such relief as applicable plus Dearness Allowance) for each completed year of service or a part thereof in excess of six months, or moths emoluments at the time of voluntary retirement multiplied by the balance months of service left up to the date of super annuation which ever is less. Once an employee avails himself of voluntary retirement, he shall not be allowed to take up employment in anther PSU. If he desires to do so, he shall have to return the VRS compensation received by him to the company. Employee while applying for Voluntary Retirement has to furnish an undertaking to this effect.

(ii)

The competent authority to sanction voluntary retirement is Chairman-cum-Managing Director.

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Opinion Analysis: The opinion analysis of the employees reveals that there is surplus manpower in the corporate office of NALCO. This is due to: - Obsolescence of process/equipment. - Installation of new equipment, process, technology, or system. - Skill obsolescence. The secondary data reveals that most of the employees stressed that there is no surplus manpower in NALCO. The employees have taken Voluntary Retirement only in anticipation that the company is going to be privatized and also some have taken voluntary retirement due to the attractive packages (a new package meant for the voluntary retirement persons) given by the company to the employees. Most of the employees also told that the allotted manpower is more than the existing manpower (i.e. sanctioned strength is more than the man in position) in NALCO. Conclusion & Suggestions: Success of personnel management is judged by its ability to secure commitment and motivation of human resources for over all planned personnel management. Determination of accurate demand of the manpower and its supply is very important in any industry. In NALCO, it is seen that the responsibility for manpower planning is totally vested in the Personal Department and Industrial Engineering Department jointly. The process is found to be moderately successful in achieving its task, which is revealed from the answers of the respondents and the secondary data collected. All the problems can be overcome through mutual understanding between the departments and help out in taking a common decision regarding manpower planning. Through opportunities for growth is fair in the company it still calls for a planned career development activities to tackle future anticipation problems. Manpower planning, as already mentioned is a vital element of each and every Organization today. More importantly, in the era of civilization, privatization, and globalization, the surplus manpower is the corporate concern of each and every organization; it may be private or Public Sector Company. So there should be proper manpower planning and proper management of surplus manpower in the organization. The company should conduct regularly employee satisfaction survey to assess the organizational climate. To strengthen this, a set of pre-designed structured questionnaires may also be administered among the selected groups of executives from time to time to gather information regarding needs, aspiration, preference, skills etc. of executives.

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Another thing is that as most of the employees taking VRS are above 50 years old, the company should start the rehabilitation scheme for the employees who are taking VRS so as they can engage themselves and earn something at the old age to run their family after taking VRS.

Lastly, one must remember that the We department is better than Me department and An organization is bigger than that an Individual

Reference
Heneman, Hebert G., and Seltzer George (1968), Manpower planning and forecasting in the Firm: An Explanatory Probe, Minneapolis: Industrial Relations Centre, University of Minnesota. Bell, D.J (1974), Planning Corporate Manpower, London: Longmans & Harlow Department of Employment (1976), Company Manpower Planning, Manpower Papers No. 1, HMSO, London. Stainer Gareth (1978), Manpower Planning, Heinemann, London Vtter Eric (1967), The Nature of Managerial Manpower Planning High Talent Manpower, University of Michigan, Graduate School of Business Administration IGNOU, MS-2, BLOCK-1, (2002), Managing Men (Planning Personnel Function) IGNOU, MS-23, BLOCK-1 (2003), Human Resource Planning IGNOU, MS-24, BLOCK-4 (2003), Human Resource Development Prasad, L.M (1995), Principles & Practices of Management, Sultan Chand & Sons Stainer Gareth (1978), Manpower Planning, Heinemann, London

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Venkat Ratnam C.S (2001), Voluntary Retirement, conference volume on management Beyond Boundaries, Bhubaneswar Walker, James W. (1980), human Resource Planning Mc Graw Hill, New York. Plant-Level Analysis, American Journal of Agricultural Economics, 83(1):64-76. Siegel, D. 2001. Do British companies really need a minister to make them socially responsible? Web sites: http//: www.proquest.com, www.goggle.co.in www.nalcoindia.co.in www.12manage.com

Author: Puspanjali Sarangi MBA, Rourkela Institute of Management Studies Gopabandhu Nagar, Cheend-Rourkela, Orissa. puspanjali.sarangi@gmail.com

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