CASE STUDY

REASONS AND WAYS TO CONTROL ATTRITION IN BPO INDUSTRY AND

PHARMACEUTICAL INDUSTRY
TRAINING AND DEVELOPMENT AT MAX NEWYORK LIFE
INDIAN AIRLINES HR PROBLEMS
IS RAJAT IN NEEDS OF REMEDIAL TRAINING?

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P O S T G R A D U ATE D I P L O M A I N B U S I N E S S
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HUMAN RESOURCE MANAGEMENT

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Case Study 1:
REASONS AND WAYS TO CONTROL ATTRITION IN BPO INDUSTRY AND
PHARMACEUTICAL INDUSTRY
First of all we need to know what attrition exactly is. Attrition is the rate of shrinkage in the
size or a gradual, natural reduction in membership or personnel, as through retirement,
resignation, or death. It is Normal and uncontrollable reduction of a work force because of
retirement, death, sickness, and relocation. It is one method of reducing the size of a work
force without management taking any overt actions. The drawback to reduction by attrition is
that reductions are often unpredictable and can leave gaps in an organization.
The formula for calculating attrition rate is;-

Attrition Rate% =

Total no of resignation per month

(Whether voluntary or compulsory)

x 100

Total no of employee in the beginning of the month + total

No of new joinees total no of resignation.

Attrition causes huge loss to the company, not only in terms of manpower but also in
monetary terms. The cost of attrition would be explained in details later in this report.
Moreover, this report will also cover the reasons why the employees leave a company.
Attrition is a universal phenomenon and no industry is devoid of it, but the degree fluctuates
from industry to industry and at different levels.
According to the study, the overall employee turnover rate was highest at the
professional/supervisor/technical staff level, recording total and voluntary attrition at a very
high 39 percent and 33 percent respectively. (See Figure 1)
The professional/supervisor/technical group constitutes a high percentage of the total
employee base in all organizations and high attrition at this level impacts the business

adversely. At 0.5 percent, attrition was lowest at the senior/top management level. Employees
at this level tend to be nearing the end of their careers, which means they are more averse to
risk and more likely to move to opportunities that are substantially better. Hence attrition is
considerably low at this level.
1) Employee attrition by group

We have examined two important sectors in which the attrition rate is high i.e. BPO/IT
industry and pharmaceutical industry, and we have focused basically at middle level of
employees where the rate is highest. Lastly, this report will explain what can be done to
control the attrition in both these sectors. And what are the measures that are taken up by
other companies.
BPO Industry in India
It is said that the Indian BPO Industry has come of age. This is very true if we analyze both
the past and present scenarios. Defying all the permutations and combinations, the Indian
outsourcing industry has registered a massive growth over the years. India has remained one
of the most favourite offshore destinations for BPO/ITES activities. One of the most
prominent reasons for the same is cheap labor. Over the past five years, the Indian BPO/ITES
has been growing at a rate of about 50-60%. As per NASSCOM, the Indian BPO/ITES
registered a growth rate of 46% and clocked revenue of UD$ 3.6 billion. This industry has

contributed a great deal to the export revenues of the country and is expected to do that in
future too.
This industry is expected to generate one million jobs by 2011. HR management is one of the
most critical areas in this industry, so important that it can be referred to as HR-enabled
services rather than IT-enabled services. The reason for the same is that this industry is facing
a very high rate of attrition of around 30-40%. Though this rate is not very high as compared
to US which faces an attrition rate of around 70% though, our next main competitor in this
area, China, is facing the attrition rate as low as 12-15%. The consequence of the same is that
this results in higher costs to the company and so the companies may lose its main
competitive edge which is lower costs. Later on, we have explained why the cost of attrition
is so high. This means that there is a very high need to control the attrition rate in the
industry.
Pharmaceutical industry in India
The Indian Pharmaceutical Industry today is in the front rank of Indias science-based
industries with wide ranging capabilities in the complex field of drug manufacture and
technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $
4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in
terms of technology, quality and range of medicines manufactured. From simple headache
pills to sophisticated antibiotics and complex cardiac compounds, almost every type of
medicine is now made indigenously.
According to the Economic Survey (2006-07), the pharmaceuticals industry had achieved a
turnover of about US$ 12 billion in 2005-06, and is expected to grow by 13% in 2007. Its
Pharma export value reached about US$ 4.7 billion during 2005-06.Pharmaceutical industry
accounts for about 2.91% of total FDI into the country. The FDI in pharmaceutical sector is
estimated to have touched US$ 172 million, thereby showing a compounded annual growth
rate of about 62.6%. Drugs and pharmaceuticals sector is at 8th rank in India's top 10 FDI
attracting sectors. According to the Economic Survey for the year 2006-07, the value of
Pharma output has increased ten times over the last 15 years.
From Rs. 50 billion in 1990 it has grown to Rs.550 billion (US$ 12 billion) in 2005-06.
Driven by growing number of pharmaceutical units, increased knowledge skills, improved

quality and increasing national as well as international demand, India is now recognized as a
leading global Pharma player.

COST OF ATTRITION
There are a number of costs which are incurred by a BPO when they hire any new employee.
These costs can be in terms of monetary or can be in terms of time wasted or any other
intangible things. Some of these costs can be as stated below:
Costs Due to a Person Leaving
I.

Recruitment Costs
1. The cost of advertisements; agency costs; employee referral costs; internet posting
costs.
2. The cost of the internal recruiter's time to understand the position requirements,
develop and implement a sourcing strategy, review candidates backgrounds, prepare
for interviews, conduct interviews, prepare candidate assessments, conduct reference
checks, make the employment offer and notify unsuccessful candidates. This can
range from a minimum of 30 hours to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help assess
candidates' skills, abilities, aptitude, attitude, values and behaviors
II. Training Costs
1. The cost of orientation in terms of the new person's salary and the cost of the person
who conducts the orientation. Also include the cost of orientation materials.
2. The cost of departmental training as the actual development and delivery cost plus the
cost of the salary of the new employee. Note that the cost will be significantly higher for
some positions such as sales representatives and call center agents who require 4 - 6
weeks or more of classroom training.
3. The cost of the person(s) who conduct the training.

4. The cost of various training materials needed including company or product manuals,
computer or other technology equipment used in the delivery of training.

II.

Lost Productivity Costs

As the new employee is learning the new job, the company policies and practices, etc.
they are not fully productive. Use the following guidelines to calculate the cost of this
lost productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a
25% productivity level for the first 2 - 4 weeks. The cost therefore is 75% of the new
employees full salary during that time period.
2. During weeks 5 - 12, the employee is contributing at a 50% productivity level. The
cost is therefore 50% of full salary during that time period.
3. During weeks 13 - 20, the employee is contributing at a 75% productivity level. The
cost is therefore 25% of full salary during that time period.
4. Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.

III.

New Hire Costs

1. The cost of bring the new person on board including the cost to put the person on the
payroll, establish computer and security passwords and identification cards, telephone
hookups, cost of establishing email accounts, or leasing other equipment such as cell
phones, automobiles.
2. The cost of a manager's time spent developing trust and building confidence in the
new employee's work.

IV.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the average
number of employees in a given year. Whether an employee contributes directly or
indirectly to the generation of revenue, their purpose is to provide some defined set of
responsibilities that are necessary to the generation of revenue. Calculate the lost

revenue by multiplying the number of weeks the position is vacant by the average
weekly revenue per employee.
Thus we can say that if a person leaves a job company has to suffer losses as it involves many
costs.
FACTORS
The main factors of attrition in both sectors are as follows:
1) External inequity of compensation
External inequity arises when an employee realizes that some other employee from a different
organization puts in much less efforts than he does, but receives a much higher compensation
than him. This could cause an employee to feel that maybe he is not getting compensated
fairly and can cause him to quit the job
2) Work Timings
The work timings in BPO are very odd. This affects the family life of the employee.
Moreover, the male to female ratio in BPO is quiet low. The number of females in BPO can
be as large as 35%. This means that working hour problem is quiet acute in their case
especially after they get married, as after marriage comes social and family pressure to adjust
work timings and take care of families.
3) Career Growth
Only 2 out of 10 employees on an average go on to be at the senior level. This means that
other employees look forward to change their job at other places where they can get better
opportunities to progress. Also, another problem arises with the mis-match of expectations
and qualifications of the employees. Along with that, some employees see no career growth
in this sector, so they move on to other companies in search of changing the sector.
4) Higher Education
This is a problem as most of the employees in this sector are pretty young and aspiring. They
join the firm because of lucrative salary. But with time, they try to move on to other sectors
or top management and one of the ways to do this is higher education

5) Role stagnation
Attrition rate is higher at knowledge level (middle level) in which the employee has to do the
same work again and again, which makes his work monotonous and due to lack of
responsibility and authority his growth is restricted to a particular role, so they move to other
companies where they can play different roles and handle responsibility.
6) Work life imbalance
The scientific approach towards management and organization resulted in a rigid structural
hierarchy, exhaustive specialization of jobs, deployment of unskilled employees and an
unfavourable work environment. This led to high employee turnover, decline in productivity,
absenteeism.
7) Lack of recognition
When an employee feels that he is not getting due recognition for his achievement, a feeling
of demotivation creeps into him, and this can cause him to consider leaving the organization.
Employees have an expectation that when they work well, they will get some recognition
from their managers in the form of a personal appreciation or an award etc.
8) Under-utilization of skills
Proper utilization of skills has a tremendous impact on the satisfaction of employees. If a
work is given to an employee it must be supported by adequate powers and responsibilities
which enable them to move up the career ladder and when their skills and potential is being
overlooked they end up with leaving the job.
9) Performance assessment
An employee may feel disappointed by the performance appraisal report and feel that he has
not been appraised in an unbiased manner. It may happen that he feels that the appraisal
process itself is flawed and the appraisers are biased. This can cause the employee to put in
his papers and leave the organization.
10) Internal inequity of compensation
Internal inequity occurs when the employee feels that the amount of efforts he puts in to do
his job are much more than what rewards he gets in return for them. This can cause him to
feel de-motivated and nurture feelings of dissatisfaction and eventually resign from his post.
11) Business instability

Many a times, when the organization faces some kind of instability or uncertainty with
regards to operations, an employee might quit his job before he is asked to leave. Many a
times when employees get a whim that the organization is going to down-size or is going to
be taken over by another company, they tend to feel safer quitting the job than worrying
about whether the organization will retain them.
WAYS TO CONTROL ATTRITION
In an environment of rapid growth, globalization and expansion, the pressure to attract and
retain outstanding employees has become a scary reality for most organizations. The new-age
economies, with their attendant paradigm shifts in human capital management, have placed a
heavy demand on todays organizations. Keeping in mind that overall turnover levels in Asia
are high (this includes those who are not only moving jobs but also shifting careers),
attracting and retaining employees becomes one of the more strategic plans an organization
can develop.
The Road Ahead
The road ahead for the BPO and pharmaceutical firms is very important because if they are
not able to control the attrition rate they will lose their competitive edge in the global market.
For these certain, strategies and certain improvements are needed to be made in the processes
followed in order to bring down the rate of attrition to 25%.
Providing Something Extra
Its always about providing something extra to your employees. Good salary is something
which is a standard in the industry. So what needs to be done is to give some perks to the
employees. They need to be given perks like rewards for their good performances. Owing to
the odd working hours, the employees have very tattered personal lives. So perks like foreign
tours or company sponsored vacations are always a welcome gift.
Honoring Performers
Performance based incentives is a must in the BPO companies as these are generally the
employees who gets picked up by the placement hunters most often. These employees are

also among the most aspiring ones in the company so there is a need to give them ample
opportunity to rise and progress in the organization.

Building Relationship
Relationship is something which lasts over time. So, if a company needs to hold on to its
employees, it needs to build a strong bonding with the employees. As we will see in the case
of Office-Tiger discussed below, there is a need to instill pride in the employees. They need
to be shown that the work done by them is important. Also, work needs to be shown in the
form of challenge to the employee rather than just a monotonous routine work. Provide
employee with ESOPs, which would give them a feeling that they are working for themselves
and that they are an inseparable part of the company.
HR Practices
HR is the most critical department in any BPO. While conducting the recruitment, it is in the
hands of HR to bring the right kind of people. HR needs to identify the employees who would
stick with the company and not get the employees solely based on the qualifications and
communication skills. Moreover, more diversity in the kind of employee hired needs to be
brought so there is a diversified culture within the company. Companies need to look to hire
from non metro cities as the employees from these cities are more likely to stay with the
company than those from metros. Also, they need to keep an eye on good performing
employees and have a career plan in mind. Not only this, they need to discuss it with these
employees on a regular basis and take feedback from them. They also need to give their
employees personal space to grow and adjust with social life. Moreover, in case of employees
leaving a good exit-feedback system should be in place so as to cover the reason for which
the employees leave.
Consider feed back
It is important to take feedback from employees through different means and work with the
HR department to iron out differences. Feedback can be got in two waysduring the
employees tenure, and through exit interviews. Inputs can be secured from existing
employees through various employee relationship management tools. Exit interviews help

management learn the reasons why employees leave the company; based on their revelations,
the organization can address the problems of existing employees, thereby curb attrition.

Quality of work life

The success of any organization depends on how it attracts recruits, motivates, and retains its
workforce. Organizations need to be more flexible so that they develop their talented
workforce and gain their commitment. Thus, organizations are required to retain employees
by addressing their work life issues.
INTERPRETATION AND ANALYSIS
Reason 1: Demand is more than supply: there is no dearth of graduates and plus two pass but
the supply of people with English speaking ability in this category is not adequate.
Strategy: Constantly identify talent, recruit and train either in-house if scale of operations
permit that or through an outsourced training agency in case of smaller operations.
Reason 2: People are joining with a short-term view and as a stepping stone to something
else.
Strategy: Create a culture and work environment that encourages people to think of a call
center job as a long-term career option. Use counseling by HR and line management. This has
to be backed up by demonstrated and perceived efforts by the management to move up the
value chain so that employees can clearly see that the management is making efforts to create
opportunities for upward mobility among employees.
Reason 3: A lot of young people are taking up call center jobs just to earn some money on
the side and not as a serious and long-term career option.
Strategy: Create a culture and work environment that encourages people to think of a call
center job as a long-term career option. Use counseling by HR and line management. Again
this has to be backed up management efforts to move up the knowledge continuum in terms
of the processes handled.

Reason 4: Long-term or intangible or contingency benefits such as PF or medical coverage

do not have much attraction for call center employees as they want everything in cash.
Strategy: Redesign the compensation package for call center employees and try to pay as
much as possible in hard cash. Work out if necessary a new pay structure highly skewed
towards cash benefits.
Reason 5: Call center employees have an average age profile of 20-24 years, so they are
highly emotional, impulsive and immature when taking career decisions.
Strategy: Constant counseling.
Reason 6: low company morale.
Strategy: following steps can be taken up by the HR department in order to satisfy their
employees.
Conclusion
With the strong growth expected in the Indian economy going ahead, it is clear that human
resources will be the key competitive advantage if the country has to sustain this robust
growth. Tackling attrition is not an easy task and the strategies suggested in the report are not
exhaustive to retain the human capital of BPOs. These are just the basics and if implemented
in a proper way can give good Results, but it can only become effective when both employee
& employer understand the importance of these precautionary measures & continuously
follow them only then this emerging & growing sector will give its proper results.
Recommendations
After a detailed analysis of both the industries we find that a key step in designing an
effective retention strategy is to ensure you have the right tools to gauge employee
engagement. Investing in the measurement of employee engagement is a key element of
building the type of high-performance culture that drives business. According to the study,
regular or formal employee interaction with managers and interaction with human resources
are the two most common ways of gauging engagement levels in organizations. We
recommend the following points to be followed:

 Good organizational behavior

Recognizing the contribution of outstanding achievers also inspires others to try hard and put
in their best. A good organizational behavior also focuses on areas like training, career
development and believe in equipping workforce better on the professional front. Good
organizational behavior is instrumental in extending the tenure of employees in the
organization as it increases their self-esteem, confidence, morale and motivation. A
substantial growth of employee's self-esteem is as important as the concept of learning in the
industry. Otherwise, pharmaceutical organizations will meet a sorry fate as far as retention
policies are concerned.
Salary structure

Basic (54%),

HRA (26%),

Medical Reimbursement (8%),

Management Supplement (12%),

PF Contribution (actual),

Tiffin Allowance (Rs 25-30 per day of attendance),

Attendance Bonus (Rs 500-1000 per month),

Loyalty Bonus (1 months salary after completion of each year in the company),

Performance Incentives (linked to specific performance criteria),

Referral Allowance (Rs 2000-3000 per candidate referred and recruited).

The EEE-Model
Exposure, Experience and Education are three things which are vital to any employee in any
sector or industry. These needs of the employees are needed to be taken care of for an
employee to feel motivated

An employee expects the company to give him good exposure in the kind of work he is
doing. Not only this, he needs to get a good experience working in the company from its top
management and colleagues. Monthly dinner with CEO of bonding programs with the other
employees of the BPO would be a good idea.
Also, some employees aspire for higher education to increase their knowledge base. Some
partnership with management institutes for short courses needs to be provided. Alternatively,
company can bear all the cost of further education for its good performing employees.
5). EEE MODEL

Methods to relieve stress

Stress is important from the point of view of retention and productivity.
Consequently, company can:

Organize events such as picnics, dance parties, get-togethers, cultural

evenings, quizzes and games and outdoor sports and games.

Appoint professional agencies to organize regular stints of aerobic exercises and dancing
sessions for employees as part of stress management.

Case Study 2:
TRAINING AND DEVELOPMENT AT MAX NEWYORK LIFE
Introduction- Company profile
Max New York Life wants people to view insurance as a financial protection and wealth
creation instrument and not just a tax-saving tool.
Max New York Life Insurance Company Ltd. is a joint venture between New York Life, a
Fortune 100 company and Max India Limited, one of India's leading multi-business
corporations. The company has positioned itself on the quality platform. New York Life is a
Fortune 100 company that has over 160 years of experience in the life insurance business.
Max India Limited is a multi- business corporate dealing in Clinical Research, IT and
Telecom.
Max New York Life Insurance started its operations in India in 2000. It is the first life
insurance company in India to be awarded the IS0 9001:2000 certification. Max New York
offers customized products tailored to suit individual's needs. With its various Products and
Riders, there are more than 400 product combinations to choose from. Today, Max New York
Life Insurance has a network of 57 offices spread over 37 cities all over India.
In line with its values of financial responsibility, Max New York Life has adopted prudent
financial practices to ensure safety of policyholder's funds.
Max New York Life has identified individual agents as its primary channel of distribution.
The Company places a lot of emphasis on its selection process, which comprises four stages -

screening, psychometric test, career seminar and final interview. The agent advisors are
trained in- house to ensure optimal control on quality of training. Max New York Life invests
significantly in its training program and each agent is trained for 152 hours as opposed to the
mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace.
Training is a continuous process for agents at Max New York Life and ensures development
of skills and knowledge through a structured program spread over 500 hours in two years.
This focus on continuous quality training has resulted in the company having amongst the
highest agent pass rate in IRDA examinations and the agents have the highest productivity
among private life insurers.
It has established a wide agency distribution network with 172 offices and representatives
across 120 cities in India. The company has established additional channel with 22
bancassurance relationships, corporate tie-ups and a strong Direct Sales Team. Through its
wide network of highly competent life insurance agent advisors, flexible product solutions
and strong customer focus, Max New York life is creating a partnership for life with its
customers in India.
Max New York Life, one of Indias leading life insurance companies, expanded its presence
in the southern region by opening its first general office in the city of Mysore. It has now has
established a countrywide network of 172 offices and representatives across 120 cities in
India.
Max New York Life, which has till date sold over 1.53 million policies and recorded a sum
assured of over Rs. 46,000 crore, has positioned itself on the quality platform. The company
has developed a strong corporate governance model based on defined core values of caring,
knowledge, excellence and honesty. Its strategy is to establish itself as a trusted life insurance
specialist on the bedrock of quality of advice. The company has over 25,300 agent advisors,
who are widely considered the best in the business.
Their Vision at Max New York Life
Vision statement is "Most Admired Life Insurance Company in India".
Max New York Life aspires to be the "life insurance brand of first choice" amongst Indian
consumers. To achieve this the company will draw on New York Life's demonstrated

competence in developing and managing a superior personal sales network. For the last 46
years consecutively, the largest number of agents qualifying for membership to the Million
Dollar Round Table (MDRT) have been from New York Life. The MDRT is the industry's
most prestigious organization comprising the world's most successful insurance agents. Max
New York Life, a merit oriented and equal opportunities employer, is looking for a few good
men and women who will spearhead the effort to realize their vision.
An ever expanding presence of Max New York Life offices across India reinforces our
commitment to serving the nation. We are extremely pleased with our progress in the region
and feel that opening an office in Mysore would help us educate people about the true
potential and benefits of life insurance. As life insurance specialists, Max New York Life will
continue to help consumers make the right choices to meet their financial goals, both for the
short and long-term, through sound quality advice offered by our agent advisors and a right
mix of product offerings. he added.
Max New York Life has been instrumental in changing the paradigm of life insurance in
India. It is the first life insurance company in India to introduce cause related marketing.
Children are at the very heart of Max New York Life's strategy. SOS Children's Villages of
India is internationally recognized for its work in giving underprivileged children a
wholesome life. The mission of SOS is "to help orphaned and abandoned children, by
providing them with a family, a permanent home, education and strong foundation for an
independent life." It's mission ties in with Max New York Life's philosophy of helping people
secure the future of their near and dear ones.
In line with its vision to be the most admired life insurance company in India, it has
developed a strong corporate governance model based on the core values of excellence,
honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a
trusted life insurance specialist through a quality approach to business.
Their Mission at Max New York Life
To become one of the top quartile life insurance companies in India and a national player. To
become brand of first choice, an employer of choice and the principal of choice for agents.
Max New York Life Values and Beliefs

Excellence
"In every aspect of work. Ranging from the in-house training institute to the detailed Personal
Insurance Plan. Max New York Life is focused on achieving the highest standards of quality
in every aspect of their business".

Honesty
"Is the heart of the Life Insurance business. Max New York believes that above all, Life
Insurance is based on trust. Transparency, Dependability and Integrity will form the
cornerstones of the Max New York Life experience."
Knowledge
"Is what makes experts. Max New York Life is focused on the Life Insurance business.
Perfectly combining global expertise with local knowledge, Max New York Life is the Indian
Life Insurance specialist."
Caring
"For the customer. Max New York Life is redefining the Life Insurance paradigm to focus on
the needs of the customers. The Max New York service process is responsive, personalized,
humane and empathetic."
Culture
Their "in house culture recipe" has some of the finest ingredients going into its making.
Some of the more prominent aspects of our culture are stated below:
Customer comes first
Do it right the first time
Bias for result oriented action
Financial strength and discipline

Clarity of purpose
International quality standards
Inclusive Meritocracy
Learning opportunities
Fun at work
Commitment to published value system
Training and Development at Max New York Life
What calls for Training?
Training has been defined as the systematic development of the knowledge, skills and
attitudes required by an individual to perform adequately a given task or job. Training refers
to efforts that help enhance employee skills for carrying out the present job. According to
Edwin B Flippo, training is the act of increasing knowledge and skills of an employee for
doing a particular job. Accordingly, Needs for training were identified to be improving the
current job performance of existing employees and to familiarise them with the policies and
procedures of the organisation. Training would also help in enhancing the creativity,
adaptability and versatility of employees, thereby facilitating learning at workplace and
preparing employees for future jobs. Merits to training would infact lead to changing skills,
knowledge and attitudes of employees on a permanent basis. In all, training would enable the
organisation to gain competitive advantage through a knowledgeable workforce and promote
organisational growth through individual growth.
In which areas to provide Training?
Company policies and procedures
Human relations training
Skill based training
Problem solving training

Onsite Workshops for Leadership Team: Employees need more than bosses... They need
mentors: Professionals skilled at assessing employee development needs and committed to
guiding employees toward professional success.
Team Leadership Workshop provides managers with proven techniques for effective
personnel management. By helping leaders understand and address their employees'
requirements, this interactive seminar offers significant benefit to managers at all levels. New
supervisors gain a solid grounding in the concept of ''leadership,'' while more experienced
managers refresh their commitment to teaching and coaching their team members.
This training program provides healthy perspectives for managers at all levels, making it an
ideal morale-boosting leadership development experience for mixed groups of front-line
supervisors and senior staff members.
Leadership Training for Success
All managers need methods. Leaders need to know the most effective techniques for guiding
teams, mentoring individuals, and validating the results. Without solid methods, managers
will resist the use of a one-size-fits-all approach to leadership that reflects the leader's
personality, rather than the employees' needs. Committed, mentoring leadership is essential to
employee morale, productivity, and retention.
A Results-Oriented Training Program
Team Leadership Workshop provides proven methods and procedures for successful people
management. Participants receive a step-by-step plan for guiding each employee toward
success. This workshop includes elements of Frank Whyte's nationally respected Team
Building Workshops expanding upon this foundation to help leaders:

To recognize each employee's personality preferences and supervisory needs.

To align their leadership styles with those of their bosses, colleagues, and
subordinates.

To develop competent and committed employees by mentoring and guiding them

towards their success.

Use practiced real-world scenarios to resolve challenges and to remove barriers.

Training Program adopted by Max New York Life

Training is a must for every individual when he enters into an organization. Even though the
candidate has experience but he must as well get training. Why, because an organizations
culture, values and beliefs differ from one another. So training is essential when it comes to a
long term skill development of an individual. Training program following by Max New York
Life Insurance is different at various levels. Mainly in training program the company
concentrates on sales managers, agents, operations executives and telecallers.

Training program for sales managers:

The training program duration is 15 20 days

Training on product knowledge

Motivating and encouraging Advisors.

Training program for Advisors:

The training program duration is 15 20 days.

Training on product knowledge.

Convincing people.

Objection Handling.

Training program for operations executives:

Training on customer database files.

Training in product information and documentation

Renewals to be informed periodically.

Required skills for employees in Max New York Life Insurance:

Interpersonal skills

Excellent communication skills

Understanding nature

Aggressiveness

Convincing skills

Ability to motivate others

Willingness to learn

Study of the effectiveness of training and development at Max New York Life showed
that only advisors have more knowledge than the telecallers, marketing executives and
new advisors. Advisors had the task of completing the deals, but after the remaining part
of the work had been delegated to the operations executives and telecallers. However,
without sufficient knowledge these people could not have worked well. When a
telecallers calls a customer for a renewal premium, then it is extremely important that the
person should have knowledge of how the premium should calculated etc. Accordingly it
was advisable that there be efficient and elaborate information systems.
It was found that, training not only makes employees work more efficiently but also made
them more loyal to the organisation. It enabled employees to secure promotions easily by
realising their career goals comfortably. Not only were the employees able to avoid
mistakes, but also handled their jobs with confidence leading to greater contribution and
higher productivity, ie, greater job satisfaction with lower employee turnover and with
that, enhanced abilities to cope up with organisational, social and technological change.
Recommendations
T&D exercise at Max New York Life not only contributed to employee satisfaction and
organisational growth, but also highlighted several areas which would have remained out
of visibility , had training and development not been introduced. These majorly hovered
around creating awareness; about products and services among advisors/agents. The
company also needs to reduce its mortality and administration charges and focus upon
giving periodic training. Product promotion strategies should be improved and the
company must act keeping in mind the present competition and evolving customer needs.
Conclusion

In this Knowledge-based economy, training helps people to learn how to do the things
differently or to the different things. Products are now increasingly knowledge-intensive;
for these employers are responsible to providing opportunities for continued learning. To
cope with the challenges and competitiveness in the world, every organization needs the
services of trained persons for performing the activities in the systemic way. So, training
program plays a key role in individual as well as organizational performance.

Case Study 3:
INDIAN AIRLINES HR PROBLEMS
CASE NOTES
FLYING LOW

Indian Airlines (IA) Indias national carrier is a perfect example of a monopoly

gone berserk with the absolute power it had over the market.

Continual losses over the years, frequent human resource problems and gross
mismanagement were just some of the few problems plagued the company.

Frequent strikes by IA pilots reflected the adamant attitude of the pilots resulting in
increased public resentment towards the airline.

Recurring human resource problems were attributed to its lack of proper manpower
planning and underutilization of existing manpower.

The recruitment and creation of posts in IA was done without proper scientific
analysis of the manpower requirements of the organization.

Employee unions were rather infamous for resorting to industrial action on the
slightest pretext.

The Government took various steps to turn around IA and initiated talks for its
disinvestment.

Amidst strong opposition by the employees, the disinvestment plans dragged on

endlessly well into mid 2001.

This shows how poor management, especially in the human resources area, could
spell doom even for a Rs 40 billion monopoly.

BACKGROUND NOTE

IA was formed in May 1953 with the nationalization of the airlines industry through
the Air Corporations Act.

IA and its subsidiary, Alliance Air, provided domestic air services.

IAs network ranged from Kuwait in the west to Singapore in the east, covering 75
destinations (59 within India, 16 abroad).

In 1999, the company

In 1999, it had a fleet strength of 55 aircraft - 11 Airbus A300s, 30 Airbus A320s, 11

Boeing B737s and 3 Dorniers D0228.

In 1994, the Air Corporation Act was repealed and air transport was thrown
open to private players.

Corporate houses entered the fray and IA saw a mass exodus of its pilots to private
airlines.

To counter increasing competition IA launched a new image building advertisement

campaign.

Improved its services by strictly adhering to flight schedules and providing better inflight and ground services.

Launched several other new aircraft, with a new, younger, and more dynamic in
flight crew.

These initiatives were soon rewarded in form of 17% increase in passenger

revenues during the year 1994.

Competitors like Sahara and Jet Airways (Jet) provided better services and network.

Unable to match the performance of these airlines IA faced severe criticism for its
inefficiency and excessive expenditure human resources.

Staff cost increased alarmingly during 1994-98.

These costs were responsible to a great extent for the companys frequent losses.

By 1999 the losses touched Rs 7.5 bn.

In the next few years, IAs market share however continued to drop.

In 1999, while IAs market share was 47%, the share of private airlines reached
53%.

Unnecessary interference by the Ministry of Civil Aviation was a major cause of

concern for IA.

Interference ranged from deciding on the crews quality to major technical decisions
in which the ministry did not even have the necessary expertise.

IA had to operate flights in the North-East at highly subsidized fares to fulfil its
social objectives of connecting these regions with the rest of the country. These
flights contributed to the IAs losses over the years.

The carriers balance sheet heavily skewed towards debt with an equity base of Rs
1.05 bn in 1999 as against long term loans of Rs 28 bn, heavy interest outflows of Rs
1.99 bn further increased the losses.

IA was found grossly deficient in realistic assessment of the manpower needs, needbased recruitment, optimum personnel utilization and abolition of surplus and
redundant posts.

FIGHTER PILOTS?

IAs eight unions were notorious for their defiant attitude and their use of
unscrupulous methods to force the management to agree to all their demands.

Strikes, go-slow agitations and wage negotiations were common.

Each had a different reason, but every strike was about pressurizing IA for more
money.

From November 1989 to June 1992, there were 13 agitations by different unions.

The strategies adopted by IA to overcome these problems were severely criticized by

analysts over the years.

Analysts noted that the people heading the airline were more interested in making
peace with the unions than looking at the companys long-term benefits.

Russy Mody (Mody), who joined IA as chairman in November 1994, made efforts to
appease the unions by proposing to bring their salaries on par with those of Air India
employees.

This was strongly opposed by the board of directors, in view of the mounting losses.
Mody also proposed to increase the age of retirement from 58 to 60 to control the
exodus of pilots.

Government however rejected his plans.

When Probir Sen (Sen) took over as chairman and managing director, he bought the
pilot emoluments on par with emoluments other airlines, thereby successfully
controlling the exodus.

Sen created Alliance Air, a subsidiary airline company where the

re-

employed people were utilized.

He was also instrumental in effecting substantial wage hikes for the employees.
The extra financial burden on the airline caused by these measures was met by
resorting to a 10% annual hike in fares.

Sen.s efforts seemed to have positive effects with an improvement in aircraft

utilization figures.

IA also managed to cut losses and reported a Rs 140 million profit in 1997-98.

But recessionary trends in the economy and its mounting wage bill pushed IA back
into losses by 1999.

Sen and the entire board of directors were sacked by the government.

In 1990s, in yet another effort to appease its employees, IA introduced the

productivity-linked scheme.

Eventually, the PLI schemes raised an additional annual wage bill of Rs 1.8 bn for IA.

It was alleged that IA employees did not work during normal office hours; this way
they could not work overtime and earn more money.

Though experts agreed that IA had to cut its operation costs. To survive the airline
continued to add to its costs, by paying more money to its employees.

In 1998, IA tried to persuade employees to cut down on PLI and overtime to help the
airline weather a difficult period; however efforts failed.

Over the years, the number of employees at IA increased steadily.

IA had the maximum number of employees per aircraft.

It was reported that the airlines monthly wage bill was as high as of Rs 680 million,
which doubled in the next three years

The Brar committee attributed this abnormal increase in staff costs to inefficient
manpower planning, unproductive deployment of manpower and unwarranted
increase in salaries and wages of the employees.

Analysts criticized the way posts were created in IA.

In 1999, Six new posts of directors were created of which three were created by
dividing functions of existing directors.

Thus, in place of 6 directors in departments prior April 1998, there were 9 directors
by 1999 overseeing the same functions.

Analysts pointed that in the case of cabin crew, 40 posts were introduced in the
Southern Region on an ad-hoc basis, pending the assessment of their requirement by
the Staff Assessment Committee.

Another problem was that no basic educational qualifications prescribed for senior
executive posts.

Even a matriculate could become a manager, by acquiring the necessary job-related

qualifications & experience.

Illiterate IA employees drew salaries that were on par with senior civil servants.

After retirement, several employees were re-employed by the airline in an advisory

capacity.

With each strike/go-slow and subsequent wage negotiations, IAs financial woes kept
increasing.

Though at times the airline did put its foot down, by and large, it always acceded to
the demands for wage hikes and other perquisites.

TROUBLED SKIES

Frequent agitations were not the only problem that IA faced in the area of human
resources.

There were issues that had been either neglected or mismanaged.

Various allowances such as out-of-pocket expenses, experience allowance,

simulator allowances etc. were paid to those who were not strictly eligible.

Excessive expenditure was incurred on benefits given to senior executives such as

retention of company car, and room air-conditioners even after retirement. All these
problems had a negative impact on divestment procedure.

Privatization was expected to give the IA management an opportunity to make the

venture a commercially viable one.

Freed from its political and social obligations, the carrier was expected to be in a
much better position to handle its labour problems.

The biggest beneficiaries would be perhaps the passengers, who would get better
services from the airline.

QUESTIONS

Analyze the developments in the Indian civil aviation industry after the sector
was opened up for the private players. Evaluate IAs performance. Why do you
think IA failed to retain its market share against competitors like Jet Airways?

IAs human resource problems can largely be attributed to its poor human
resource management policies. Do you agree? Give reasons to support your stand

Answer 1:

The Air Corporation Act was repealed in the year 1994, thus throwing the aviation
market open to private players.

Corporate houses entered the fray to milk the large opportunity available.

As a result, Indian Airlines witnessed mass exodus of its pilots to private airlines.

Indian Airlines had to face the heat of the open market competitors and consumer
expectations.

To gain competitive edge Indian Airlines launched a new image building

advertisement campaign.

Emphasis was put upon the improvement in services both in-flight and on-ground and
flights strictly adhering to schedules.

New flights with younger and dynamic crew were also launched to attract consumers.

As a result of the above effort Indian Airlines could garner 17% increase in passenger
revenues during the same year.

Meanwhile the other competitive player provided better services and networks on
offer for consumers

Indian Airlines Performance

The airlines response to the emerging competitiveness in the open market in 1999 was
eminent with the decision to undertake various initiatives to rebuild its image.
It was successful in its initiative and was even rewarded with increase in revenues.
This however couldnt be sustained by the airline and its revenues started sliding
downwards.
Unable to match the services and sustain improvements the airline was criticised for
its inefficiencies and excessive expenditure on human resource.
The organisation started to face frequent losses which amounted to Rs 7.5 billion in
1999.
Failures in Competition

The airline failed in its image rebuilding initiatives where in the contributing cost of
the human resource spiralled out of tolerance levels.

The inefficiencies and expenditures were attributed to the organisations growing

losses.

Staff cost increased alarmingly to Rs 5.9 bn during 1994-98 period.

Although many private companies were vanquished, those which went on to eat up
IAs market share.

This was evident by the fact that in 1999 IAs share was 47% where as that of private
airlines was of 53 %.

These failures could also be attributed to the unnecessary interference by the civil
aviation ministry which neither had the necessary competence or expertise to take
intricate decisions.

The decision making interference ranged from deciding on the crews quality to
major technical decisions.

More than required beaurcratic involvement in the organisational affairs was

responsible for the failures.

The fulfilment of social objective by the organisation of connecting the north-eastern

regions with the rest of the country also contributed to the already heaping losses.

Heavy interest outflows and large debts can be attributed as a major contributor to the
huge losses.

Unorganised and unplanned human resource were also responsible for the ever
increasing costs and inefficiencies.

Basic human resource management concepts were not followed that led to unplanned
manpower.

Inefficient Manpower planning can mainly be attributed as the prime reason for the
presence of surplus and redundant posts.

Inefficient in manpower planning, rocketing cost of human resource, social

obligations, too much beaurcratic and political interference, huge interest flows and
incapability of maintaining the improvements in combination fuelled the failure of the
airline in the open competitive market

Answer 2:

It is true that IAs human resources problems were due to its poor human resource
management policy.

Recurring human resource problems were attributed to its lack of proper manpower
planning and underutilization of existing manpower.

Employee unions were infamous for resorting to unscrupulous methods on the

slightest pretext and arm-twisting tactics to get their demands accepted.

In turn, the management of the airline was more interested in making peace with the
unions rather than looking at the companys long-term benefits.

Mounting wage bills as a result of the many employee wage friendly schemes
depicted the simplistic approach of the management.

Improper monitoring by management and abuse by employees of the Productivity

linked incentive scheme reflects the inefficient functioning.

Uncontrolled increase in the number of employees and the number of surplus and
redundant posts with maximum number of employees per aircraft.

This abnormal increase in staff was attributed to inefficient manpower planning,

unproductive deployment of manpower and unwarranted increase in salaries and
wages of the employees.

The recruitment and creation of posts were done without proper scientific analysis of
the manpower requirements of the organization.

In place of 6 directors in departments there were 9 directors.

In total there were 30 full time directors, who in turn had their retinue of private
secretaries, drivers and orderlies. These were superfluous staff that just added to the
organisations bill.

There were no basic educational qualifications or job specification prescribed for

senior executive posts.

A matriculate also could be a manager, by acquiring necessary job-related

qualifications & experience.

Illiterate employees drew salaries that were on par with senior civil servants.

Retired employees were re-employed by the airline in an advisory capacity.

Frequent Dissonance between the union and the management made a hostile
environment in the organisation.

Though, the airline at times held its ground, by and large, it acceded to the demands
for wage hikes and other perquisites.

Various allowances such as out-of-pocket expenses, experience allowance, simulator

allowances etc. were paid to those who were ineligible.

Excessive expenditure was incurred on benefits given to senior executives such as

retention of company car, and room air-conditioners even after retirement.

Case Study 4:
IS RAJAT IN NEEDS OF REMEDIAL TRAINING?
CASE NOTES:

Rajat Sharma has been employed for six months in the accounts section of a large
manufacturing company in Faridabad.

A formal investigation to monitor and determine the contributions of each

employee in the accounts section and check whether they meet standards.

After the investigation it was found that all employees in the accounts section were
meeting the targets that were set.

Rajat, an employee in the account section was an exception to the performance

displayed by his colleagues.

Along with numerous errors, Rajats work is characterized by low performance;

often he does 20 percent less than the other clerks in the department.

Questions:
Q1. As Rajats supervisor can you find out whether the poor performance is due to
poor training or to some other cause?
Q2. If you find Rajat has been inadequately trained, how do you go about
introducing a remedial training programme?
Q3. If he has been with the company six months, what kind of remedial programme
would be best?
Q4. Should you supervise him more closely? Can you do this without making it
obvious to him and his co-workers?
Q5. Should you discuss the situation with Rajat?

Answer 1:

Yes, the cause of the poor performance can be well determined as to whether, it is
because of poor training or other causes such as uncongenial work place, low
wages or low motivation.

To check whether the poor performance is attributed to poor training, the reports
of his performance/learning during the training must be checked.

It is to be inspected and identify the areas where he had not performed well or did
not show good progress in learning,

Then these identified areas must be closely supervised when the job is performed by
Rajat.

Mistakes encountered must be closely examined and brought to his notice along with
the corrections that are required.

He must also be humbly prompted to review his own work to find out the mistakes
in order to make him realise his mistakes and provide an opportunity for self
correction.

He must be properly supervised for 2-3 months so to bring about a change in

performance.

Parallel investigations must also be done to check factors other than training
affecting /demotivating him.

Incentives for improvements in performance can also be introduced to induce

genuine interest in the work.

Answer 2:

Firstly, it is to be checked as to what type of training Rajat had been through in the
organisation.

Then the records of the performance/learning in the training are to be investigated in

order to find the weak areas.

Secondly, an analysis is also to be done on his colleagues who had received same
training as him and determine as to how they are coping and performing with the
training provided.

Investigation into the training records can also help in determining the gaps in the
training that may have lead to the present problems

An appropriate plan of action or training has to be in place in order to fill the gaps
identified.

The remedial training should basically focus on the gaps observed in his earlier
training and also keeping the focus on the skills and abilities that hold primeimportance in meeting the set-standards.

Remedial training should be oriented in a manner such that Rajat would receive
Incentives /awards for his improvement in his work, thus acting as a motivating factor
for active participation.

The required training must not be long and should be precisely cut to needs.

Answer 3:

As Rajat has been working in the company for the last six months he must have
gained some necessary experience and skills to perform his job.

He must have been provided with a initial training during the period of his induction
into the company.

The training would have helped him understand and better comprehend his job and
make him understand as to be expected of him.

If in case due to some reason or the other if the training wasnt successful or any gaps
in learning may have been left in his training, it must be concentrated upon to fill
those required gaps by a remedial training.

An assessment of his training report can well highlight the gaps.

The training programme should be designed in a manner such that it serves the
purpose of covering the gaps.

The training necessarily may not be of long period and can also be of on-site in nature
i.e. on the job.

This shall help him gain practical experience as he goes through the training process
which shall help him retain and learn faster.

A close supervision even after the training is recommended so as to check whether the
performance is sustained and continuous

Answer 4:

Rajat must be closely supervised as it is necessary from his as well as the

organisations point of view to achieve appropriate standards of performance.

Supervision is strictly necessary to check the numerous mistakes and lessened

productivity portrayed by Rajat.

To some extent supervision is good as it is a matter of improving the person, holding

back from doing so would only harm him.

The supervision can be done by providing personal attention and interaction such as, a
one to one discussion of the problems faced and suggesting appropriate solutions for
them.

The supervision must be done on the lowest possible tone/intensity by indirectly

reviewing the daily work with least interventions possible and provide feedbacks or
recommend corrections by communicating informally/ personally rather than formal
communication.

Answer 5:

The magnitude of the problem is compelling and demands Rajats immediate

attention.

Rajat needs to be aware of the situation and the harm being caused, such that he
doesnt perceive close supervision of his work as criticism or reprisal.

Discussing the situation will make him aware of his current position, whats wrong
with it and what remedial action is planned.

Rajats interest and willingness are prerequisites for active participation in any
remedial measures and also to the success or positive outcome of the steps taken.

The above pre-requisites can only be stimulated by having a detailed discussion on

the concerning issue rather than keeping him unaware of the situation and create a
discomforting work environment.