Dissert-HR RiskMgmt

HR Risk Management of NTPC Nov.
14th, 2008
HR RISK MANAGEMENT OF NTPC

(Dissertation Report – PGDBM 4th batch)
Domain: HUMAN RESOURCE
Knowledge Management System
Area : HR - POLICY
Key Words : Risk Mitigation, Retention, Attrition, Inspiring, Employee

Engagement
Submitted by : Ms T.M.Devi, Sr.Manager(HRD), PMI, Noida, 9868390843,

devitm@hotmail.com
14/11/2008
HR Risk Management of NTPC
A dissertation submitted in partial fulfillment of the requirements

for the award of
Post-Graduate Diploma in Management
by
T M DEVI
NMP20 – 52
XX National Management Programme
Management Development Institute

Gurgaon 122 001
September, 2008
HR Risk Management of NTPC
A dissertation submitted in partial fulfillment of the requirements

for the award of
Post-Graduate Diploma in Management
by
T M Devi
(NMP20 – 52)
under the guidance of
Shri Ashok Swarup Dr. Tanuja Sharma

DGM, HRD Associate Professor
NTPC Ltd. MDI, Gurgaon
XX National Management Programme
Management Development Institute

Gurgaon 122 001
September, 2008
Dissertation by T M Devi, Roll no 52, NMP 20 Page 2 of 152

Certificate of Approval
The following dissertation titled "HR Risk Management of NTPC." is hereby approved as a
certified study in management carried out and presented in a manner satisfactory to warrant its
acceptance as a prerequisite for the award of Post- Graduate Diploma in Management for
which it has been submitted. It is understood that by this approval the undersigned do not
necessarily endorse or approve any statement made, opinion expressed or conclusion drawn
therein but approve the dissertation only for the purpose it is submitted.
Dissertation Examination Committee for evaluation of dissertation
Name Signature
_______________________ ___________________
_______________________ ___________________
_______________________ ___________________

Certificate from Dissertation Advisory Committee
This is to certify that Ms. T M Devi, a participant of the XX National Management

Programme, has worked under our guidance and supervision. She is submitting this dissertation
titled "HR Risk Management of NTPC." in partial fulfillment of the requirements for the award
of the Post-Graduate Diploma in Management.
This dissertation has the requisite standard and to the best of our knowledge no part of it has been
reproduced from any other dissertation, monograph, report or book.
Dr Tanuja Sharma Shri Ashok Swarup

Associate Professor DGM, HRD
Management Development Institute NTPC Ltd.
Gurgaon PMI, NOIDA
Date Date

Acknowledgement
At the onset, I would like to thank MDI and NTPC Management who have given me the chance
to do a higher study at the middle of my career and the freedom to select the project topic on HR
Risk Management and allowed me to work on this project, which has given me a broad insight
regarding the importance of HR in any organisation and also an in-depth knowledge about what
good HR practices as well as bad HR practices can do to an organisation like NTPC and its
functioning. As the topic is close to my heart, I was self motivated to bring out all the aspect of
the HR policies and practices that motivate or demotivate an employee creating a risk to the
organisation’s business.
I am thankful to all the respected faculty members of all departments in MDI, who have given us
invaluable inputs from time to time which I found very essential for the project. I only hope I
have done justice to their efforts by using relevant inputs at appropriate places.
My special thanks go to Prof C P Gupta, NMP Chairman, who has given us the overview of the
schedule of the project, well in advance along with important milestones and corresponding dates.
This has helped me in proper time management for completing Project in time without
compromising the Quality aspects.
I am also thankful to our Library staff, who are always co-operative and actively helped me to
find all the necessary books and articles useful for this project. The alert staff of our Computer
Centre have helped us in our global search for various articles, by making the internet available
24x7 in our hostel rooms.
I am thankful to all my classmates who have given several innovative ideas during discussions,
which have given me clues and vision about progressing in my project in a better way.
I am thankful to all my NTPC colleagues, working in different projects and offices, who have
spared their valuable time and filled up the survey questionnaire. I appreciate the patience and
interest shown by each of them to read and respond to a rather long list of statements.
I am especially thankful to Sh Ashok Mehra, ES to GM (HR-EOC), Dr R K Sharma, Sr

Manager (R&D) and Sh K K Basak DGM (OS) among others who have taken the responsibility
to collect and send the filled up formats for their friends and collegues, for which they had to do a
lot of follow up work. This helped me to enlarge the base of my survey.
I am thankful to the seniors in my department Sh A C Chaturvedi GM (HRD & PMI) and Sh

Rakesh Prasad, DGM(HRD), for supporting me and providing me with all necessary facilities
for the smooth conduct of my work. I am also obliged to Ms Jasleen Kaur Seera, Officer (HRD)
for providing valuable background material related to the ERM study which formed an important
part of my study. Thanks are also due for Sh Prem Chand, Sr Manager (HRD), and Sh Purnesh
Devangan, Dy Manager (HRD) who not only coordinated the course but also gave me due
guidance, advice and kept my morale high during the course and research period. Ample
encouragement from the abovementioned persons as well as the whole team at HRD, PMI helped
me to complete this project in right direction and use time and effort effectively.
My special thanks to Sh H K Sandhir GM(OS), and Sh S K Gupta AGM (OS), CC who have
gone out of their way to help me in giving overall picture of the employee perception and the
things that makes a difference for the employees from their vast experience of many years in OS
interacting with employees of all levels at locations all over NTPC. Their whole hearted

contribution could enable me to include all relevant information and data about the working and
morale levels of employees .
My heartfelt thanks are due for Sh Animesh Jain, Sr Manager (CP) who took pain to explain to
me the NTPC ERM framework and also provided me with some essential guidance literature.
Without his help this study would have remained half done.
I am thankful to my husband Sh Vivek Mukundan who readily agreed to shoulder all the
additional responsibilities that arose during my one year absence from home for my studies and
my daughter Kum. T M Divya, who have always supported and encouraged me to take the
higher study as a challenge and look out for new meaning of it.
No amount of words is sufficient to express my gratitude to my guide Sh Ashok Swarup,

DGM(HRD), NTPC who is a very Proactive, knowledgeable and impartial person. He was kind
enough to allow me do research on the topic of HR risk assessment of NTPC which was
conceptualised by him in the firstplace. His support was not only limited to the research work but
also was readily available for me in all aspects of my requirements during the study period. His
regular technical inputs have enriched the research work as well as given me valuable guidance
whenever I am stuck in the process of the study. His inputs have made the process of report
compilation not only easy but also of quality. His support has helped me in taking tough decisions
and approaching higher management to get their viewpoint on certain aspects, essential for my
project.
No amount of thanks will convey my feelings of gratitude towards my guide Dr Tanuja Sharma,
Associate Professor, MDI, without whom, this project could never be completed in the befitting
way as it is now. She has taken pains to spare her valuable time at the initial stages of the project
to give a proper shape and direction to the study. Her constant support by way of new practical
ideas, latest books & reading material on the topic has helped me to dig deeper in the field and
bring out the best from this research. Her regular monitoring has kept me on track both in time
management and knowledge enrichment.
Her unfailing faith in me has made me try my level best not to fall short of her expectations and
to bring the best out of me. I have learnt a lot from her and wish to learn more from her in future
also. In true sense, I feel indebted towards Madam Tanuja.
Last but not the least, I thank all those who directly or indirectly contributed to this research and
convey my best wishes to all of them.

Abstract
A Study of the Risk Aspects of the HR policies Followed at NTPC

By T M DEVI, NMP20 – 52
HR risk management is an area not very widely explored in the Indian business scenario.
Business risk management is a process through which an organisation continuously scans its
business environment for possible threats in the form of competition, supply crunch, demand
variation, technology change, variation in the customer base, etc in the external business scenario
and financial situation, operational health, product flexibility, etc within the organisation to assess
the effect on the business health of the organisation in the event of any variation in any of the
abovementioned parameters. Those incidents that cause or is likely to cause a hurdle in the
smooth operation of the firm’s business are termed as the business risks. These business risks are
then categorised in terms of their likelihood to occur and the impact such an occurrence may have
on the business of the organisation as High-High, High-low, Low -High or Low-Low, etc. While
those risks that occur in the Low Likelihood – Low Impact category may even be ignored, those
that occur in the High-High category needs immediate attention and plan for counter measures.
HR risks are very similar to the enterprise risks in causing damage to the business prospects and
even existence of the organisation. However, these risks are caused by the people factor involved
in any business. The source of these risks can be internal as well as external for example, a
sudden demand for skilled manpower in the market may cause a spike in the attrition rate of the
expert manpower reserve of the organisation causing damage to its market competitiveness. On
the other hand a workforce which is not motivated to perform to the best of its ability may again
pose a question mark on the chances of survival of the organisation. Hence it turns out that
identification and mitigation of people risks are as crucial for an organisation as in the case
business risks. This is the reason why HR risks are considered a crucial part of the Enterprise
Risk Management (ERM) process.
NTPC Ltd., in order to fulfil its requirement as a listed company in the stock exchange, undertook
an enterprise wide risk assessment study through a consultant during the current year. The
purpose of the study was to identify the major threats the company is facing in its present
business scenario, categorise them as per the likelihood – impact matrix and suggest possible
ways for combating such risks. The assessment team of the consultant had meeting with the heads
of all the major functions of the organisation in order to identify potential risks for the business
enterprise. The team also gathered information on the HR policies and practices of the
organisation. The input to this study from the HR function is taken as the base for the current
study on the HR Risk Management of NTPC.
The major aspect of the HR Risk in the current study is the difference in perception of the HR
policies and practices of the organisation by the management on the one hand and by the
employees on the other. Even if the management perceives a certain phenomenon as normal and
not affecting the day to day running of the organisation, the employees perception may vary
drastically from this which in turn may constitute a major threat for the business success of the
organisation. A survey was undertaken among the executives of the middle and higher
management level of NTPC about their perception on the various aspects of HR policies and
practices that was studied by the consultant also. Since the consultant inputs are mainly taken
from the HR policy and strategy groups, any amount of variation that gets projected in the survey

can be counted as an HR risk to the organisation and as such should be further studied and
prioritised.
A part of the survey was for measuring the commitment of the employees towards the
organisation and also the employee’s inclination towards leaving the organisation. The responses
were analysed and compared with the findings of the consultant to assess whether there are any
risks that were not taken into account by the consultant.
The analysis of the survey responses show that most of the employees are deeply committed to
NTPC and are ready to go the extra mile for the success of this organisation. However, a
measurement of employee output in terms of attrition and grievances show that not only the
employees are dissatisfied with the grievance handling mechanism in NTPC, they are ready to
leave NTPC for an organisation which provide more creative freedom, social status or a friendlier
working environment. It also came out from the survey that some of the major HR policies like
the Performance Management System, Leadership Development and Training do fall short of the
actual expectations of the employees. It has also came out from the survey that many of the issues
the management consider as of no serious consequence such as decreasing motivation, lack of job
rotation opportunities, perceived lack of fairness and transparency in the performance appraisal
and transfer decisions, labour issues at sites, etc are considered as major potential hindrances that
may come in the way of NTPC’s achievement of targets.
These points that emerged from the survey are then prioritised according to the effect they may
have on the productivity of NTPC. The points that were mentioned or agree with by the
maximum number of employees are counted as High likelihood and the likely impact assumed on
a conceptual ground is taken to categorise the impact. The risks so categorised gave the points
Talent and Leadership Development, Attrition / Retention, Attracting / inducting fresh talent,
Training and development /capability building and Remote postings. A periodic review at the
highest lev el in the organisation is needed to keep the Risk Matrix relevant as the risk priorities
change with the changes in the business scenario.
A model risk register is devised for these points of high likelihood- high impact quadrant with the
root causes, the likely mitigating factors and the action plan details. The purpose of this risk
register is to have a record of the planned action for the risk mitigation. The status of the risk and
the effect of mitigation strategy are reviewed periodically.
Other measures suggested for the risk mitigation include strengthening of the HR audit system
bringing the policy group also under the purview of the audit etc.
The main learning from the study has been that even if a management frames all possible policies
to provide an inspiring environment for a productive employee engagement, it may not produce
the desired result unless special efforts are made to get the benefits of the policies to the grass-
root level employees. Most of the risks that came up for NTPC were more of implementation
issues than of lack of adequate policy framework.

Table of Contents
Page
Acknowledgement 5
Abstract (maximum two pages) 7
Table of Contents 9
List of Tables 11
List of Appendices 12
I CHAPTER 1
1.1 INTRODUCTION 13
1.2 WHAT IS RISK MANAGEMENT? 14
1.3 RISK MANAGEMENT SETUP IN NTPC 17
II CHAPTER 2
2.1 LITERATURE SURVEY 18

2.2 ENTERPRISE RISKS AND HR 21
2.3 HUMAN ASSETS AND UNCERTAINTY 25
2.3.1 UNCERTAINTIES OF RETURNS 26
2.3.2 UNCERTAINTIES OF VOLUME AND COMBINATIONS 28
2.3.3 UNCERTAINTIES OF VOLUME AND COMBINATIONS 29
2.4 HR ACCOUNTING AND AUDITING 33
2.4.1 RATIONALE OF HUMAN RESOURCE VALUATION AND
AUDITING 33
2.4.2 WHAT TO AUDIT 37
2.4.3 CONDUCTANCE OF THE AUDIT 37
2.5 NTPC’S HR AUDIT SYSTEM 38
2.5.1 OBJECTIVE OF THE AUDIT 38
2.5.2 SCOPE OF THE AUDIT 38
2.5.3 AUDIT STRUCTURE & CYCLE 38
2.5.4 ELEMENTS OF HR AUDIT 39
2.5.5 FOCAL PERSON 40
2.5.6 PROCESS 40
III CHAPTER 3
3.1 RISK MANAGEMENT AND NTPC 42

3.2 THE PEOPLE FACTOR – COMMITMENT AND MOTIVATION 43
3.3 TO WHAT EXTENT IS MONEY A MOTIVATOR? 45
IV CHAPTER 4
4.1 PROBLEM FORMULATION 51
V CHAPTER 5
5.1 RESEARCH DESIGN 59

Table of Contents
Page
VI CHAPTER 6
6.1 DATA ANALYSIS 62

6.2 ANALYSIS OF RESPONSES FOR QUESTIONNAIRE PART I 64
6.3 ANALYSIS OF RESPONS ES FOR QUESTIONNAIRE PART II 114
VII CHAPTER 7
7.1 RISK PERCEPTION RESULTS AND INTERPRETATIONS 122

7.2 INERPRETATION OF COMMITMENT QUESTIONNAIRE 125
7.3 SUMMARY OF ANALYSIS RESULTS 125
7.4 POINTS THAT HAS PRODUCED A RESPONSE OF DISAGREE 125
7.5 ANALYSIS OF COMMETS THAT WERE EXPRESSED IN WORDS
BY THE RESPONDENTS 128
7.6 ANALYSIS OF QUESTION NUMBERS 3, 4, 5 AND 6 OF PART III 131
VIII CHAPTER 8
8.1 TESTING OF HYPOTHESES 132

8.2 THE MAJOR RISKS IDENTIFIED FOR THE ORGANISATION 133
8.3 OTHER MAJOR HR RISKS IDENTIFIED THROUGH DESCRIPTIVE
ANSWERS 134
8.4 RISK MATRIX FORMED OUT OF THE IDENTIFIED RISKS 136
8.4.1 POINTS IN THE HIGH-HIGH SEGMENT 136
8.4.2 POINTS IN THE HIGH-LOW SEGMENT 137
8.4.3 POINTS IN THE LOW-HIGH SEGMENT 138
8.4.4 POINTS IN THE LOW-LOW SEGMENT 139
IX CHAPTER 9
9.1 SUGGESTIONS FOR IMPROVEMENT 140

9.2 ISSUES IN THE HIGH-LOW AND THE LOW-HIGH QUADRANTS 146
9.2.1 HIGH – LOW 146
9.2.2 LOW – HIGH 147
9.3 CONCLUSIONS 149
REFERENCES 150

List of Tables

Table No. Description Page
Table I: Envisaged growth chart of NTPC 14
Table II: SWOT analysis of NTPC 16
Table III. Principal characteristics of the control systems 24
Table IV. Principal Uncertainties associated with human assets 29
Table V. Average cost per employee in terms of salary and benefits from
1997-98 to 2006-07 35
Table VI: Key factors that guide the HRM Practices in Indian Public Sector
Organisations 36
Table VII: HR audit team structure at NTPC 40
Table VIII: HR audit Schedule and activities at NTPC 41
Table IX. HR solutions in terms of options for the Uncertainties (risks)

associated with human assets 47
Table X. Points that has produced a response of Disagree 127
Table XI. Points that has produced a response of Disagree 130
Table XII. Points that has produced some correlation 132
Table XII. Major Risks identified for the organisation 133
Table XIII. Major Risks identified through descriptive answers 134
Table XIV. Risk Matrix formed out of the identified risks 136
Table XV. Risk Register Page I 141
Table XVI. Risk Register Page II 142
Table XVII. Risk Register Page III 143
Table XVIII. Risk Register Page IV 144
Table XIX. Risk Register Page V 145

List of Appendices

Appendix No. Description Pages
I AUDIT CHECK LIST i-xiv
II QUESTIONNAIRE ON ENTERPRICE RISK MANAGEMENT
HUMAN RESOURCES DEPARTMENT i-xiii
IIA REASONS CITED FOR RESIGNATION DURING EXIT
INTERVIEWS i-ii
III QUESTIONNAIRE i-vi
IV SUMMARY OF COMMENTS i-xvii
VA MODIFICATIONS IN HR AUDIT CHECK LIST FOR
LOCATIONS (ADDITIONAL POINTS) i-ii
VB HR AUDIT CHECKLIST FOR POLICY GROUPS i-ii

Dissertation Report for XX National Management Programme by
T M DEVI, NMP20 – 52
CHAPTER 1
1.1 INTRIDUCTION
NTPC (The National Thermal Power Corporation) was established in 1975 as a public
sector undertaking to establish and run fast track power generation facilities throughout India
under the guidance of the Government of India. In its more than thirty years of existence, NTPC
has managed to establish its own identity and its own benchmarks in project execution, power
plant operation and maintenance and efficient resource utilisation.
Today, named as NTPC Ltd., it is the largest power producer in India and is ranked as the 6th
largest and the second most efficient power producer in the world. NTPC has an installed
capacity of 27,904 MW through its 15 coal based (22,895 MW), 7 gas based (3,955 MW) and 4
Joint Venture Projects (1,054 MW). NTPC’s share on 31 Mar 2007 in the total installed capacity
of the country was 20.18% and it contributed 28.50% of the total power generation of the country
during 2006-07. NTPC would target to build an overall capacity portfolio of over 50,000 MW by
2012 and 75,000 MW by 2017 with a projected man power requirement of 30,000.
The major milestones in the life of NTPC can be summarised as:

1975: NTPC was set up with 100% ownership by the Government of India. Today NTPC has
grown into the largest power utility in India.
1991: Power transmission was separated from NTPC with the formation of the Power Grid
Corporation of India Limited.
1997: Government of India granted NTPC the status of ‘NAVARATNA’, one of the nine
jewels of India, enhancing the powers of the Board of Directors.
2004: NTPC became a listed company with the majority Government ownership of 89.5%.
NTPC became the third largest market capitalisation company among the listed companies.
2005: Rechristened as NTPC Ltd. in line with its changing business portfolio and visionto
transform a thermal power utility to an integrated power utility.
By the year 2017, NTPC would have successfully diversified its generation mix, diversified
across the power value chain and entered overseas markets. As a result NTPC would have altered
its profile significantly. In order for NTPC to achieve such ambitious targets, it is necessary for
the management to be aware of the hurdles that are likely to occur which may hinder the
organisation from achieving its targets. Further, in today’s power generation scenario in India,
NTPC’s position is fast changing from a state sponsored monopoly into one competing for
survival in a field of many private owned utilities. The competition may further intensify once the
power availability in the country shifts from one of intense shortfall to break even or even excess
production which may be a future scenario given the Govt. policies and the amount of support
Independent Power Producers are receiving from the Govt. agencies.
NTPC’s targeted growth profile can be summarised as:

Ownership PRESENT 2011-12 2016-17
Power Owned 26,850 45,200 ~ 69,500
Generation Through JV / 1,053 4,804 ~ 5500
(ownership -wise Subsidiaries
in MW Total 27,904 50,004 ~ 75000
Power Coal Based 23,209 (83.2%) 40,789 (81.6%) ~ 54,000 (72%)
Generation Gas based 4,695 (16.8%) 7,295 (14.6%) ~ 9,000 (12.2%)
(Fuel-Wise in Hydro Nil 1,920 (3.8%) ~ 9,000 (12.2%)
MW) Nuclear Nil Nil ~ 2,000 (2.5%)
Renewables Nil Nil ~ 1,000 (0.8%)
Coal Mining (Production) Nil 15 MTPA ~ 47 MTPA
Power Trading (Units Traded) 2.66 BU 10 BU 25 BU
Distribution Nil 1,000 MW 2,000 MW
Table I: Envisaged growth chart of NTPC (Adapted from Corp Plng., NTPC document)
All these create a scenario of high business risk for NTPC. Some of these risks arise out of the
external business environment as stated above while some of the risks arise from the internal
processes and systems present at NTPC. Internal systems and processes may include the
operation and maintenance systems and procedures that exist in NTPC, disaster management
systems, robust business planning and monitoring systems and employee motivation and
assistance programs.
1.2 WHAT IS RISK MANAGEMENT?

As cited by (Germond, 2008) Risk Management involves the elaborate process of identifying
assets, whether business or personal, at risk, assessing the risk and then framing of plans and
strategies for the mitigation of such risk. In today’s increasingly unsure world, organizations
large and small can no longer safely assume they are adequately managing their risk. The risks
an organization faces as described in case of NTPC, can be overwhelming, and theses risks need
to be assessed and mitigated or managed in such a way that the organisation concerned is least
affected. Hence risk management is not only another management process, but is a method
whereby an organization examines its policies, procedures, and operations to:
1. Identify assets that may be at risk. These assets include as in the case of NTPC, tangible
assets like its various installations, its employees, costly generation equipments etc or intangibles
such as its position of being the first and foremost player in the Indian power generation scenario,
its ambitious plans for becoming a global player or even the loyalty and commitment of its
employees.
2. Determine what could go wrong with each asset. Predict how each adverse event might
occur and the consequences to the organization if it did happen. For example, a plant might be
damaged due to an accident or it may become obsolete. The supply of raw material (Coal, Natural
Gas in case of NTPC) may dwindle causing the plant to shut down loosing huge amount of
revenues for the company. A delay in project execution may cause to push up the cost of the
product (ie., electricity) loosing business to competitors or a loss of expert employees may cause
the efficiency of the operations to go down. Determin ing how likely this event is to occur ie, a
risk assessment, developed by the organization or a consultant, will be of great help in this
situation.
3. Determine how you will treat the risk. You may handle the risk through:

a. avoidance – Do not get involved in business, however rewarding it may be like in case of
NTPC, give up its ambitious expansion and diversification targets and confine to its current
strongholds of power plant O&M and slow pace capacity addition.
b. reduction – Avoid accidents or limit their damage. This can be done through elaborate disaster
management plans, preparedness and through safety precausions.
c. retention – Determine how far the organization can afford to pay for the adverse event or
survive in an adverse/highly competitive environment.
d. transfer – Purchase insurance or transfer the risk by requiring organizations with certificates
of insurance on contractual language which limit the organization’s liability.
4. Create a plan that makes sense for the organization. A one-size plan does not fit all
organizations nor may not cover all activities of an organisation. Each scenario of the company’s
business profile will have to be evaluated like in case of NTPC, what will be the consequence of
decreased plant availability or increased maintenance costs may be entirely different from a risk
arising out of a sudden dwindle in the coal supply or a quick pace approval of a few fast track
ultra mega power projects for the private players. These are different possibilities that require
different considerations for risk mitigation. Hence the plan should be evolved taking into
consideration all factors that the SWOT analysis throws up for the organisation.
5. Implement the plan. Once a plan is developed, it has to be implemented. Implementation may
include restructuring a part of the organisation, strengthening of monitoring mechanism, entering
into long term agreements with upstream or downstream partners in the business, or buying
insurance policies etc. It may also include increased training for the workforce or enhanced
followup programs for trainings.
6. Monitor the results. Considering the fact that the business scenario is rapidly changing, close
monitoring of both the changes as well as the continued suitability of the risk mitigation plan are
both equally important. Many of the risks that an organisation faces can neither be foreseen nor
be predicted beforehand. New threats appear and losses occur that could have been avoided with
better planning and greater foresight. The plan also, should be fluid and proactive in order to fit
into the changing business scenario.
As a part of NTPC’s past performance analysis, the key strengths and weaknesses have been
identified by the corporate planning department of NTPC. Similarly the opportunities offered by
the changing business scenario as well the potential threats were identified. They can be
summarised as:

STRENGTH WEAKNESS
• Largest Market share in domestic power • Low risk diversification of business
generation and a broad customer portfolio
portfolio across the country • Poor financial health of customers
• Excellent track record of performance. • Functional orientat ion hampering cross
• Diversified thermal generation portfolio functional perspective in decision making
• Highly skilled and experienced human • Long and multi layered procurement
resources, exposed to state-of –the-art process leading to long lead times and
technologies. process delays
• Navaratna status • Gaps in HR systems such as performance
• High brand equity among stakeholders management, rewards and incentives and
• Strong balance sheet career development.
• Turnaround ability for old plants • Hierarchy of decision making that affects
• High credit rating which is indicative of responsiveness
confidence of lenders • Role ambiguity and dilution within
• Established systems and procedures to different levels of the organisation
institutionalise excellence in business
operations
OPPORTUNITIES THREATS
• Expanding generating capacity by putting • Limited experience of operating in a truly
up thermal and hydro capacities, liberalised environment with competition.
maintaining the position of a dominant • Limited experience of operating in an
player in the Indian power sector independently regulated system.
• Broad base fuel mix by considering • Delayed reforms and continuing financial
imported coal, gas, domestic coal, ill-health of SEB’s
nuclear power etc to mitigate fuel risk • Constraint in redirecting power due to
and maintain long run competitiveness insufficient inter-regional connectivity
• Lead the development and commercial • Downward regulatory and competitive
deployment of non-conventional energy pressure on tariffs.
sources especially in the distributed • Possib ility of coal non-availability as coal
generation mode supply agreement of state Gencos and IPPs
• Expand services for EPC, R&M and with CIL emerge
O&M activities in the domestic as well as • Lower than expected availability of gas
international markets. • Stringent norms for approval of increase in
• Backward integration into fuel capital costs of projects in the event of
management to exercise greater control time overrun.
and understanding of supply economics • Stringent norms for the utilisation of ash
• Improve collections by trading, direct generated by power stations in the absence
sale to bulk consumers and active role in of adequate demand from user industries
capacity allocation in new plants. and due the high cost of transportation of
• Execute increased number of power ash
plants that qualify for mega power • Stringent environmental norms in the
project status thereby reducing the cost future adding cost to generation.
of projects and power generated. • Absence of independent regulator for the
• Forward integrate into the distribution in coal industry and the delay in private
India investments leading to low availability of
• Carrying out R&M of old generating coal in the future.
plants, to enhance its life and regain lost
generation.
Table II: SWOT analysis of NTPC (Adapted from Corp Plng., NTPC document)

1.3 RISK MANAGEMENT SETUP IN NTPC
The strategies NTPC has adopted for growth are rapid capacity expansion by adding larger
capacities in shorter time spans, foray into hydroelectric power, securing fuel supply by
undertaking mining business and stepping into natural gas value chain. NTPC also has the
strategy of maintaining high levels of operational efficiencies, high availability and generation
from its plants which enable it to earn efficiency gains from our operations. These strategies
generate their own share of risks also. Since inception NTPC had systems and practic es in place
which help to identify risks and to take measures to mitigate them.
As NTPC Ltd became a listed company, the listing agreement which included provision for risk
management mandated that the company should have a risk management policy framework that
help the executive management control risk and keep Board members informed about the
potential risks. To comply with this a high level multidisciplinary committee has been set up in
2005, which framed the risk management policy. As risks cut across various functions, a high
level standing committee is also constituted to review the risk profile of the company on a
quarterly basis and identify suitable mitigation measures. Last year a consultant was also hired to
suggest a detailed enterprise wide framework for Risk management, Internal Control and other
disclosure requirements in accordance with regulatory provisions. The major risks identified are:
• Fuel Risks: Availability and Pricing
• Operational Risks: Machine break downs, spares availability, water availability
• Project implementation Risks: Suppliers not meeting requirements, IR issues of the
contractor, Hydro-geological surprises, availability in terms of equipment, technology,
contractor skills.
• Regulatory Risks: CERC orders, GOI policies, changes in Environmental regulations.
• Business Risks: Non compliance of contractual commitments in international business,
customer (revenue realisation) risk, entry into newer business areas
• Asset Risks: Natural calamities, Industrial disasters.
• Financial Risks: Funding risk, financial frauds
• Human Resource Riks: Attrition / retention of quality people, employee safety and
security
• IT Risks : Failure of servers, failure of applications, hacking, network failures.
The risks are then classified into

High Impact an d High likelihood – Critical.
High Impact and Low likelihood – Major.
Low Impact and High likelihood – Major.
Low impact and low likelihood – Minor.
The framework used is:

Identification and grouping of potential risks
Classification and grading of risks on the basis of its impact
Indicators or triggers for risks
Framing strategies for identification of identified risks
Procedure for monitoring and systematic reporting to the Board / Committee of Dirctors
Periodic review of risk matrix
Communication of risk management policy across the company.

CHAPTER 2
2.1 LITERATURE SURVEY

There are two ways of predicting risks. One is through a study of the past history of the
organisation where those incidents that had undesirable consequences and the loss due to these
incidents quantified. Risk management involves the precautionary measures that are planned/in
place for avoiding such incidents in future. The second aspect of risk management involves the
study of the market space in which the firm exists. Envisagin g the various future scenarios can
help a risk scenario modelling. The risk management plan in such a case should identify the most
imminent and quantitatively the most damaging of circumstances before formulating mitigation
plans. In this case, the mitigation plan is more likely to include some kind of a drastic change in
either the internal or the external systems and strategies of the organisation. Risk management
may not always be strictly quantitative. For example, an employee who has never been a problem
may become irrational and unpredictable. While one can’t quantify the change, one shouldn’t
ignore this problem. Watching for subtle changes in the organization is the "art" of risk
management (as cited by Germond , 2008).
A study of the risk scenario or formulating a plan may not necessarily see the organisation
through difficult times. In order for the organisation to stay in the cutting edge of competition, it
is highly essential that the process of identification of threats, whether geopolitical or from
market should continue with essential evolution affected to the risk management plans. This also
involves the frequent monitoring and rework of the plan itself ( Germond, 2008).
As has been discussed in the literature (Position Statement, The Institute of Internal Auditors
2004), Over the last few years, the importance of strong corporate governance to managing risk
has been increasingly acknowledged. As can be seen from the discussion above, enterprise risks
are not limited to the internal systems an d processes. Organisations are under pressure to identify
all the business risks they face; social, ethical and environmental as well as financial and
operational, and to formulate suitable plans as to how they manage them to an acceptable level.
This stresses the importance of strong corporate governance as the expanded framework of
enterprise-wide risk management demands that organisations recognise their advantages as well
as weaknesses instead of having a less coordinated approach to risk management.
Any enterprise should have various levels of risk management activities to identify, assess,
manage, and control all kinds of events or situations. These can range from single projects or
narrowly defined types of risk, e.g. market risk or accidents, to the threats and opportunities
facing the organisation as a whole.
Enterprise-wide risk management (ERM) (The iia, 2004) is a structured, consistent and
continuous process across the whole organisation for identifying, assessing, deciding on
responses to and reporting on opportunities and threats that affect the achievement of its
objectives.
As can be seen from the definition, ERM to be effective, should involve everyone in the
organisation. Success of the process cannot be ensured without the involvement of all employees
as the form the medium for implementation of these plans. However, the primary responsibility of
identifying the risks and formulating the RM plans as well as effectively communicating these
plans to the employees lies the with management.
ERM can make a major contribution towards helping an organisation manage the risks to
achieving its objectives. The benefits include (The iia, 2004) :

• Greater likelihood of achieving those objectives;
• Consolidated reporting of various categories of risks at board level;
• Improved understanding of the key risks and their wider implications;
• Identification and sharing of cross business risks;
• Greater management focus on the issues that really matter;
• Fewer surprises or crises;
• More focus internally on doing the right things in the right way;
• Increased likelihood of change initiatives being accepted and internalised;
• Enhancement in capability to take on greater risk for greater reward and
• More informed risk-taking and decision-making.
The activities included in ERM are:
• Articulating and communicating the objectives of the organisation;

• Determining the risk appetite or the resilience of the organisation towards risks ;
• Establishing an appropriate internal set up, including a risk management framework;
• Identifying potential threats to the achievement of the objectives;
• Assessing the risk i.e. the impact and likelihood of the threat occurring;
• Selecting and implementing responses to the risks;
• Undertaking control and other response activities;
• Communicating information on risks in a consistent manner at all levels in the
organisation;
• Centrally monitoring and coordinating the risk management processes and the outcomes,
and
• Providing assurance on the effectiveness with which risks are managed.
The top management of the organisation including the board plays a very crucial role in the ERM
process. They not only have to monitor and satisfy themselves that the risk management
processes are working effectively and that the key risks are being managed to an acceptable level;
but also communicate this assurance to all stakeholders effectively. Even if the assurance may
come from many sources, the communication of assurance from the top management plays the
most crucial role in the risk preparedness of the organisation. An objective way of verifying the
ERM status of an organisation is through systematic audits either through internal audit process
or through external auditing. Other sources include independent specialist reviews. Internal audit
will normally provide assurances on three areas (The iia, 2004) :
• Risk management processes, both their design and how well they are working;
• Management of those risks classified as ‘key’, including the effectiveness of the controls
and other responses to them; and
• Reliable and appropriate assessment of risks and reporting of risk and control status.
Every organisation should have an Internal audit function which is independent, objective and
which acts as a consulting activity. It should have its core processes designed in such a way that it
provides regular monitoring with regard to the ERM processes in respect of the organisation are
in place, effectively working and is reviewed systematically and provide objective assurance to
the board on the effectiveness of risk management. Effective management of Enterprise risks with
internal audit as a monitoring mechanism for both business risk appreciation as well as for the
control framework that is in place for the management of these risks, has been widely appreciated
both by the board of directors and also by research findings (The iia, 2004).
The iia, 2004 lists a range of ERM activities and indicates which roles an effective professional
internal audit function should and, equally importantly, should not undertake. The prime factors

that are to be taken into account while determining internal audit’s role in an organisation are
whether there is any threats to the internal audit function’s independence and objectivity and
whether it is likely to improve the organisation’s risk management, control and governance
processes.
(Core internal audit roles in regard to ERM)

• Giving assurance on the risk management process
• Giving assurance that risks are correctly evaluated
• Evaluating risk management processes
• Evaluating the reporting of key risks
• Reviewing the management of key risks
(Legitimate internal audit roles with safeguards)

• Facilitating identification and evaluation of risk
• Coaching management in responding to risks
• Coordinating ERM activities
• Consolidating and reporting on risks
• Maintaining and developing of ERM framework
• Championing establishment of ERM
• Developing RM Strategies for board approval
(Roles internal audit should not undertake)

• Trying to set the risk appetite of the organisation
• Imposing risk management processes
• Management assurance on risks
• Taking decisions on risk responses
• Implementing risk responses on management’s behalf
• Accountability for risk management
It is essential that the internal auditor is well versed with the enterprise systems, processes and its
business environment so that there is full appreciation of the various risks and the RM practices in
place within the organisation. He should get access to all information either internal or external
available with the board if he has to become an effective ERM consultant for that organisation.
Internal audit or’s expertise in considering risks, in understanding the connections between risks
and governance and in facilitation mean that he is well qualified to act as champion and even
project manager for ERM, especially in the early stages of its introduction. As the organisation’s
risk maturity increases and risk management becomes more embedded in the operations of the
business, internal audit’s role in championing ERM may reduce.
This makes the internal audit responsible for additional activities apart from assurance activities,
some of the consulting roles such as (The iia, 2004) :
• Making available to management tools and techniques used by internal audit to analyse
risks and controls;
• Being a champion for introducing ERM into the organisation, leveraging its expertise in
risk management and control and its overall knowledge of the organisation;
• Providing advice, facilitating workshops, coaching the organisation on risk and control
and promoting the development of a common language, framework and understanding;
• Acting as the central point for coordinating, monitoring and reporting on risks; and
• Supporting managers as they work to identify the best way to mitigate a risk.
However, in the case of ERM, internal audit can provide consulting services only so long as it has
no role in actually managing risks as actual management of risk is the responsibility of the top

management. The effectiveness of ERM also depends strongly on the support and cooperation of
senior management. If the organisation’s enterprise-wide risk management strategy is well
founded, properly reviewed and is put in operation through the consistent and coordinated
approach by the top management it can bring many benefits in giving the much needed
competitive edge to it business. The key role is to be played by the Internal audit in relation to
ERM in provid ing assurance to management and to the board on the effectiveness of risk
management.
2.2 ENTERPRISE RISKS AND HR

As cited by (Smith & Bob,2003), a thorough analysis of any business scenario and the risks
involved will invariably bring to the fore that a major chunk of those risks are related to the
people and human resources (HR). As more and more business leaders recognize this, "HR risk
management" is going to be term that will become an integral part of the process of overall
business risk management.
Even though business risk management traditionally does not focus on people, it is
becoming more and more accepted that people are at the core of managing any endeavour.
Hence, Instead of business risk management focus on such things as policies, procedures,
planning, and bottom line results of business activities , people issues particularly as they
relate to change are becoming increasingly to the fore.
It is argued by Smith & Bob (2003) that by integrating the disciplines of human resources
and business risk management, HR risk management can optimize productivity and
contribute positively to the bottom line of any organization. They argue that by working
together, business risk managers and HR executives can create a very effective approach
to change that minimizes harm to the organization and revitalizes the workplace.
It is expected that under the HR risk management concept, HR professionals can adopt
the techniques of risk managers and hold themselves responsible for managing the value
of human capital assets within their organizations. The questions they should seek to
address are along the lines of the following (Smith & Bob, 2003) :
* Does the board communicate clear objectives to staff?
* Do we support the business objectives and risk management/internal control system by

creating an appropriate culture, code of conduct, set of human resources policies, and
performance reward system?
* Do our own people and our external providers have the knowledge, skills, and tools to
support the achievement of company objectives?
* Is our management committed to fostering trust and integrity?
* In our international operations, are we taking advantage of and dealing with

implications of local cultures?
The responsibility of HR professionals in respect of risk management becomes dual as it

not only requires that the proper systems, role clarity and accountability are developed
and achieved but even the responsibility of implementation and monitoring of these lies
with them. Thus apart from the traditional role of service providers, HR becomes one of

creating a critical junction between effective risk management and greater organizational
value. This requires that HR departments develop a more coherent and persuasive
approach to risk management.
It is essential that the HR professionals realise the importance of their function as a

service provider as well as their role as consultant in drawing up of various employee
benefit schemes as these are the building blocks that support the organisational culture
and values. The organisational culture plays an important role in support ing the
utiliz ation of the generic risk management processes within the sphere of HR
management.
Putting HR risk management in the broader business context, Smith & Bob (2003),
explains good HR risk management as a process which makes HR a much broader and
much more crucial function than simply hiring and firing workers, setting salary levels,
and administering benefits. Its purview should include the operational performance of
people in the work environment and all dimensions of how people relate themselves to
their jobs and to their work organizations.
As in case of enterprise risk management where first a broad basis is established for
identifying key risk areas in financial, general business, or strategic risks and then
prioritise them in terms of severity, impact, frequency etc; HR also should have a system
of identifying the broad base risks and prioritise them.
Unlike business risks, it is often hard to assess HR risks accurately because they need to
be considered within their overall business context. For example , it is generally presume d
that, labour turnover is undesirable and consider it a high-risk area. But whether turnover
is "good" or "bad" in risk terms depends on who is leaving and who is joining and what is
driving the situation.
For example, many organisations may benefit from rapid staff turnover in terms of cost
and structural flexibility and access to new ideas, knowledge, and skills. Most of the IT
organisations fall in this category. On the other hand, some work organizations that
demonstrate consistently low or stable rates of labour turnover find it diffic ult to cope up
with rapid changes in the business scenario, suffer from latent inefficiencies and
mounting employee costs. The potential risks of labour turnover, therefore, are critically
dependent on context.
According to Smith & Bob (2003), the process of HR risk management consists of two
broad categories of activities: risk assessment and risk control. Risk assessment
comprises risk identification, risk analysis, and risk prioritization. These might involve
the following:
* Key performance indicators (KPIs);
* Checklists;
* Project or divisional reporting;
* Corrective action processes from quality systems; and/or

* Comparisons with historical or financial data.
Risk identification may reveal not only risks that stem from people or events, but also
risks posed by specific needs that are not being addressed or those that need special
attention of the management. For example, a financial manager may identify a slow but
steady drop in productivity He/she makes management aware of the situation, and
management is motivated to address it. An HR manager will then define the risk in terms
of the human element – perhaps the line manager is not communicating effectively with
staff, or perhaps workers feel their concerns are not being heeded by the management.
It is common case that most organisations take note of the Human Resources management as
potential area for business risks only after it precipitates. The major causes include executive
management ethics, skyrocketing costs, employee fraud, and outsourcing. Other risks associated
with HR include non-compliance with employment laws, inadequate compensation and benefit
plan design, not maintaining appropriate staffing levels, and poor record keeping.
According to a survey as reported in BNA (1995), Human resource (HR) departments regardless
of the type of organisation or the business in which they are, on the whole, handle similar
activities . The survey was reported to have covered over 1,000 human resources and employee
relations executives in the USA. The main activities were found to usually fall within such areas
as:
• employment and recruiting;

• training and development;
• compensation;
• benefits;
• employee services;
• employee and community relations;
• personnel records;
• health and safety;
• strategic planning.
Certain functions are more common in some industry sectors than in others, such as the
prevalence of compensation, benefits, and employee services in profit based organizations, as
opposed to organisations for social cause such as hospitals, schools and government agencies.
It was reported to be observed that almost all HR departments deal with employment and
recruitment matters, although just over one-third share the responsibility for employment
interviews with other departments. Employee services and benefits, employee and community
relations, and personnel records are other sole domains of the HR department; while training and
development, compensation, health and safety, and strategic planning are often tasks shared
between the HR department and others within the organization (BNA, 1995).
Risk analysis looks at decision-making processes, cost control and management, schedule
reviews, product return rates, and product and service reliability and uses statistical or
other formal techniques and models to quantify the risks. In risk prioritization, the
significance of each risk is placed into the overall context of the business and the
exposures are examined (Smith & Bob, 2003).
The enterprise risk related to the HR practices of a firm is dealt with in detail by Tacoronte and
Gonza´lez (2007). Quoting (Huselid, 1995); they argue that research has shown significant

relationships between the firm performance and the human resource (HR) practices of the firm.
And hence human factors carry significant amounts of risks or ‘uncertainties’ for any firm.
It has been argued by Tacoronte and Gonza´lez (2007) that While those studies have been useful
in showing the potential value of the application of certain configurations of HR practices, they
have not offered much information about the processes by which those results are achieved
(Wright et al., 2003 – cited by Tacoronte and Gonza´lez, 2007). Organizational control systems
are composed of various HR practices that lead the organization to the accomplishment of its
established objectives. If it can be established that a control system is a process that helps to align
the actions of individuals with the interests of their firm (Tannenbaum, 1968 – as cited by
Tacoronte and Gonza´lez, 2007), and that individuals’ actions have a basic influence on
organizational performance, then the study of HR control systems becomes extremely important
in predicting the risks the organisation is likely to encounter in the HR area. Since the literature as
quoted above gives ample confirmation that the fir m performance is influenced by the prevalent
HR practices of the firm, a study of the best practices and the uncertainties that the human
resources hold for the firm can help us identify the major risks that are to studied.
Apart from best practices, the firm should also have well defined control system s which can be
defined as the execution of the monitoring, directing, evaluating and rewarding activities of how
the firm’s human resources carry out their functions and responsibilities (Anderson and Oliver,
1987 – as cited by Tacoronte and Gonza´lez, 2007). The purpose of a control system is to
guarantee that the best practices in the organization achieves its objectives while also ensuring
that its members behave in the appropriate way (Challagalla and Shervani (1996) – as cited by
Tacoronte and Gonza´lez, 2007). I short, control systems consist of the application of the HR
practices of performance and incentives which are commonly referred to as best practices or high
commitment practices . (Huselid, (1995) – as cited by Tacoronte and Gonza´lez, 2007)
Many researchers have tried to establish the links between control strategies and the concepts of
performance namely, behavior- and outcome-based performance strategies. The main features of
both are listed below.
Behavior-based control Outcome-based control

Fixed reward (salary) Variable reward (commissions and/or
bonus)
Management supervises behavior more than Management supervises outcomes more
outcomes than behavior
Low span of control, that is, a low number of High span of control, that is, a high number
subordinates per supervisor of subordinates per supervisor
Significant workforce contact with managers Limited contact with management
Subjective assessment of performance Performance is assessed on the basis of a
few observable outcomes
The firm bears the risk The salesperson bears the risk
Source: Adapted from Anderson and Oliver

(1987) cited by Tacoronte and Gonza´lez
(2007)
Table III. Principal characteristics of the control systems
From the firm’s point of view, as the risk increases, organizations would benefit by opting for
incentives rather than intensifying direct control since incentives share the risk among all the
employees. Incentives motivate the employees to become involved in taking risks that improve
long-term firm performance. Gerhart and Milkovich, (1990) – (as cited by Tacoronte and
Gonza´lez, 2007) support that argument. Therefore, from the point of view of reducing agency
costs and increasing firm performance, when the risk faced by the firm is high, it will be more

efficient to use more incentives in order to transfer risk to employees (Tacoronte and Gonza´lez,
2007).
Vito (2008) quotes the Society for Human Resource Management definition of the "people risk"
as exposing organizations to more liability than traditional areas of risk management. Because of
the continued increase in the worker's compensation expenses, Labour law violations, and other
compliance issues, the risk function is over lapping with safety and HR more than ever. It is time
that Auditors' review of the organization's safety and health program focus es on whether work-
site analyses to identify hazards and potential hazards, stringent prevention and control measures,
and thorough training are provided. On the people side, HR should establish controls to minimize
risk, including succession planning, adequate severance and outplacement services, executive
coaching and development, thorough HR handbooks, documented employee hiring, training and
termination procedures, and internal employee surveys. Despite its integral role, HR has often
been considered a "soft" area, and management is yet to appreciate the inherent risks involved
with this function (Kelli, 2008).
Bhattacharya and Wright (2005) try to treat Human assets which are valuable to the firm like any
other asset the company possess. They argue that even their return are to accounted for once they
are counted as an asset. However, unlike other assets, their returns may not remain stable over
time due to changes in business conditions, changes within the firm or more importantly, changes
in individuals who own the knowledge, skill and abilities that comprise human capital. So, any
discussion on the value of human resource management (HRM) for strategic outcomes is
incomplete without an analysis of the uncertainties associated with human assets and the role that
certain human resource (HR) practices play in managing these uncertainties. They argue that a
comprehensive theoretical framework for uncertainties of human assets and the contribution of
HR practices in building capabilities for managing them would not only provide a rationale for
adopting these practices, but also would highlight a hitherto unexplored area in strate gic HRM.
HR practices can impact on firm performance by influencing the development of human capital
as a strategic asset. Grounded in resource-based theory, Becker and Huselid (1998) argue that
systems of HR practices are inimitable and are the basis for the 'acquisition, motivation, and
development of the intellectual assets that can be a source of competitive advantage'. Strategic
HRM researchers have focused more on this latter process where HR practices are hypothesized
to impact on the intellectual capital (or human capital), which is viewed as one of a firm's most
strategic assets.
However, Bhattacharya and Wright (2005) argue that this treatment of the human capital as an
asset has universally focused only on the upside value inherent in any asset. They show us that
while accepting the argument that human capital should be treated as an asset, we generally tend
to forget that one necessarily must recognize, like any asset, human capital also entails
uncertainties of return and part of the strategic management of the firm requires managing these
uncertainties. The issue of managing the uncertainties of human assets according to the has been
unexplored in strategic HRM, leaving a gap in existing theory. Absence of analysis of the
uncertainties of human assets may cause over-emphasis on their value and the role of different
HR practices in maintaining the value of human assets may be underestimated.
2.3 HUMAN ASSETS AND UNCERTAINTY
Going into details of uncertainties or risks associated with human assets, Bhattacharya and
Wright (2005) tries to show how it compares with any other asset the firm possesses. A firm's
human asset consists of the employees and the collection of their knowledge, skills and abilities,
also known as human capital. The firm can 'buy' the human capital by hiring employees, and it

can 'make' human capital through training, job experience, etc. Bhattacharya and Wright (2005)
cites several researchers as having discussed human capital as a valuable strategic asset for the
firm and how people are the main sources of 'competencies' and 'capabilities' of the firm. Most of
the capabilities that a firm possesses can be linked to human capital and therefore this form of
asset is considered critical for creating and sustaining competitive advantage.
However, human assets, like other forms of assets, have several uncertainties associated with
them. Bhattacharya and Wright (2005), tries to put these uncertainties in the framework of the
financial theory of Real options . They explain that the future value of human assets can be
uncertain for example, performance of employees may go down over time or job responsibilities
may change causing a misfit between the person and the job, which is uncertainty of returns. The
number of employees required may fluctuate according to market conditions or there may be
unexpected demands for skills that the employees may not possess. Bhattacharya and Wright
(2005) defines this situation in terms of the financial theory of Real options as called uncertainty
of volume and combinations. Furthermore, costs of human assets, in the form of wages, salaries,
benefits, etc., may also be uncertain measured in terms of increasing health benefit costs or in
terms of high fixed costs vis-a-vis low cash flow of the firm. Again, following the real options
terms, this situation is being referred to as uncertainty of cost of continued investments.
Consequently, any investment in human assets, from the decision to acquire, employ, develop,
motivate or retain employees, carries with it uncertainty or risk regarding the future return from
that investment and the risk that the pay-off may not be as expected.
Uncertainty of human assets can arise from various factors for example, the firm, due to things
such as changed strategic direction, or from the market, as business conditions, customer needs
and competitor actions change. However, the major difference that is to be taken into account
while exploring a real options approach to managing human assets is that, the major uncertainties
can also arise from individuals because one way in which human capital differs from real assets is
that the firm does not own the capital; the employee does. Consequently each employee makes
behavioural choices, and these choices may or may not be predictable. Thus, in addition to the
firm and the market, the individual serves as a potential source of uncertainty for human assets
(Bhattacharya and Wright, 2005).
Hence Bhattacharya and Wright (2005) classify the uncertainties associated with human assets as
related to returns, volume, combinations and costs. Uncertainties of returns refer to the
depreciation (or appreciation) of the value of human assets and variations in the value generated
by them. Skill obsolescence, demand for future skills not possessed by the individuals, loss of
human capital and loss of productivity are some examples of uncertainties of return on human
assets. Uncertainties of volume are fluctuations in the demand and supply of the quantity of
human assets, both inside and outside the firm, while uncertainties of combination are unforeseen
changes in deployment of this asset, giving rise to the need for reallocation. Uncertainties of costs
are the variations in the ratio of the total outlay for human assets relative to firm revenues. High
and fixed employee costs and fluctuating firm revenues give rise to uncertainty of costs for
human assets.
2.3.1 UNCERTAINTIES OF RETURNS

The vastness of the individual employee level uncertainty of returns can be judged only through a
detailed work out of each and every factor that comes in the way of the individual employee
performance. Bhattacharya and Wright (2005) try to explain them as it may stem from skill
obsolescence or inability to learn new skills. Employee skills may become obsolete or eroded if
the employee is unable to upgrade skills or learn new skills as demand changes. In today's
economy the pervasiveness of complex technology in all spheres of business and the fast rate of
change in technology create greater risks that an employee will be unable to keep up with these
changes or unable to learn new skills. Therefore the performance of an employee may not remain
the same over the years and return on investments in human capital may be affected. If employees

do not adapt their skills and knowledge to the changed circumstances or are unable to learn fast,
obsolescence of skills become a major risk for the firm.
As stated earlier, the major difference between human assets and other forms of real assets is that
the firms never 'possess' human assets in the true sense Bhattacharya and Wright (2005).
Employees may leave the organization at their will, taking critical skills with them, resulting in
human capital loss. Voluntary turnover has become a major risk for organizations, especially in
the higher management and critical skill category where demand exceeds supply. Bhattacharya
and Wright (2005) quotes Research findings on turnover that individual factors, like overall job
dissatisfaction arising from dissatisfaction with pay / promotion / supervisory relations, as well as
dissatisfaction with job content like autonomy, responsibility, etc., are predictors of voluntary
turnover (Griffeth and Hom, 1995 – Cited by Bhattacharya and Wright, 2005). Therefore we may
identify employee dissatisfaction and lack of commitment as individual-level factors that increase
uncertainty of returns.
Even if employees do not leave the organization, uncertainty of returns from human assets can
arise from loss of productivity due to employee dissatisfaction, lack of motivation and/or lack of
commitment. As Wright et al. (2001) (Cited by Bhattacharya and Wright, 2005) explain,
employee behaviour is extremely important in determining the effect of human capital on firm
performance, and skill and knowledge are worthless unless employees choose to use them
through their behaviour. Only motivated and committed employees can translate their skills into
performance and, to the extent that motivation and commitment vary and employees do not
actually contribute to the level of their potential, uncertainty of returns may arise.
At the firm level, the sources of uncertainty of return are related to the skill profile of the firm, i.e.
the combination of skills or skill sets that the firm possesses. According to Lepak and Snell
(1999), (Cited by Bhattacharya and Wright, 2005), not all groups of human capital are equally
valuable to the firm; some are higher in value and uniqueness than others. The demand for skills
(and, consequently, the value of different skills in different employee groups) is largely
dependent upon the firm's overall strategy. Over time, due to shifts in strategy, and employee
turnover, the skill profile of the firm may become misaligned with that required by the firm's
strategy. For instance, IBM's recent strategic migration from manufacturing to services has
resulted in disengaging human capital through selling divisions and laying off employees in one
area while simultaneously acquiring human capital through hiring and business acquisitions (e.g.
Price Waterhouse Coopers). Additionally, for a firm, a critical skill group may become depleted
due to voluntary or natural turnover. If a firm fails to support adequate learning or generation of
new skills or cannot institutionalize knowledge, then the effect of such skill-profile mismatch or
skill depletion will be profound and uncertainty of returns will be high. Therefore, lack of
employee development can contribute to a skill crisis over time. In addition, a firm's lack of
concern for employees, as manifested in absence of support for work-family balance, a stressful
work environment, etc., can lead to employee dissatisfaction, poor motivation and less
commitment, which may result in loss of productivity due to non-optimum effort on the part of
employees to apply their knowledge, skills and abilities.
Market factors that give rise to uncertainties of return are related to demand for and supply of
skills. The external labour market provides a set supply of various skills that may or may not be
needed by the organization. Critical and new skills may become scarce and uncertain, or there
may be shortage of required skills due to changing career patterns. For instance, within the IT
industry, the year 2000 bug created a short-term demand for programmers with COBOL skills,
but because this programming language was outdated, the market had a low level of supply of
such skills. Recently due to heavy retirement of baby-boomers and increasing need for medical
treatment of ageing population, there is an acute shortage of nurses in the US; however, supply is
not picking up as it is not an attractive career choice in terms of working hours and remunerations

As can be seen, the influence of market forces provides the interface of the supply of the market
with the demand of the firm that creates the uncertainty of returns from human capital.
Environmental forces like fast changes in business conditions, greater complexity in business,
rapid internationalization, changes in technology, new competition and innovation impact on the
skill demand of firms through requiring different skills of employees (rapid learning, global
perspectives, creativity, etc.). For example, Gale et al. (2002) (Cited by Bhattacharya and Wright,
2005), in a study of 2,800 manufacturing establishments, reported that most employers said that,
with increased modernization of technology, skill requirements from employees were growing
rapidly, especially for computer, interpersonal and problem-solving skills. These changes may
create a skill profile mismatch with the market demands, making returns from human capital
highly uncertain.
2.3.2 UNCERTAINTIES OF VOLUME AND COMBINATIONS
Uncertainties of volume arise due to fluctuations of demand and supply of the number of
employees. Individual factors like absenteeism, leave or work stoppages can present the firm with
unexpected short-term losses of human capital. Consequently, given a set volume of production,
the inability to predict the volume of employees at work presents risk. For example, a firm
experiencing a 10 per cent absenteeism rate might set its workforce numbers at a level to maintain
required production with 10 per cent absent. However, on days that only 5 per cent of employees
are absent the firm overpays, and on days that 15 per cent are absent it is unable to produce at the
expected volume (Bhattacharya and Wright, 2005).
Firm factors such as fluctuations in their human capital demands (say, due to changes in
technology), also present uncertainty. When demand is uncertain, employing a large number of
full-time or permanent employees is a risk. (Note that this form of risk assumes a stable skill set
and thus is distinct from risks associated with skill obsolescence, non-availability or capital loss.)
Variations in firm demand may arise from internal scheduling or from market factors like
variations in demand and supply of goods and services. For instance, as Boeing entered a price
war with Airbus in the midst of the recession during the early 1990s, their econometric models
predicted that the demand for planes from airlines would begin its upturn two years later. This led
them to lay off 12,000 employees. However, a faster than expected recovery and Boeing's use of
'sole supplier' contracts resulted in a sudden surge in demand for their products, a level which
exceeded their human capital pool's ability to produce (Bhattacharya and Wright, 2005).
Uncertainties of combination arise when there is a need to reallocate employees or their skills
within the firm due to qualitative/quantitative variations in demand and supply. This is different
from uncertainty of volume because combination may involve change in work location, while
volume is change in numbers. For example, day-to-day scheduling may require shifting of
employees around different operations as required. This may also be necessary for reducing
employee costs or for keeping costs under control. If employees do not have the breadth of skills
or knowledge necessary for redeployment, or if they resist these changes, then uncertainty of
combination of human assets, that is the risk that deployment requirements will not match the
supply, is high. Therefore, at the individual level, uncertainties of combination may arise from
resistances to changes in work arrangement or non-adaptability (Bhattacharya and Wright, 2005).
At the firm level lack of slack/buffer in human capital or high human capital leverage, as well as
variations in demand for number of employees in different units/jobs, may lead to the necessity
for changes in deployment. At the market level, variations in demand for and supply of goods and
services lead to uncertainties of volume and combination. For example, a few years ago Sun
Microsystems faced a variety of challenges across its seven business units. Because they did not
have an internal communications/job posting system in place, they laid off a number of
employees in one shrinking division whose skills matched the needs in other growing divisions.
The lay-offs incurred significant and unnecessary tangib le (severance pay) and intangible (job
insecurity) costs in the shrinking division, while simultaneously incurring tangible (recruitment

and search) and intangible (overwork) costs in the growing division. A reallocation of employees
might have saved costs, while preserving human capital (Bhattacharya and Wright, 2005).
2.2.3 UNCERTAINTIES OF COSTS

Uncertainties of costs are associated with the high and fixed costs of employees, especially when
revenues are volatile. These are manifested through employee cost escalations and the need for
cost reductions. A major constituent of the overall costs of the firm, employee costs, if too high,
are a big drag on the firm's cash flow, especially when revenue fluctuates (as seen in the
semiconductor industry). Additionally, if employee costs are mostly fixed, then a firm with
fluctuating revenue faces the risk of loss in case of downturns in revenues (Bhattacharya and
Wright, 2005).
Lack of awareness of costs or overuse/misuse of benefits, on the part of individual employees,

may lead to high employee costs. For example, in recent years a steep rise in health-care benefits
costs has led to increased employee costs for many firms (although this may not entirely be
attributable to the employees). Many mature companies such as General Motors exemplify
uncertainty of cost through their legacy of pension and health-care obligations. As GM has
downsized over the years, it has created a growing number of retired employees to whom the
company owes pension and health care. High levels of guaranteed pay, bonuses and overtime for
a large group of employees also add to uncertainty of employee costs. In addition, mismatch of
individual human capital to tasks leads to waste and higher costs for example, poor selection
practices, where a company hires someone with more skills than required, or seniority-based
retention during downsizing that can lead to overpaying for skills and experiences that are not
being used (Bhattacharya and Wright, 2005).
At the market level, competitive pressures for cost reduction (when competitors achieve cost
reductions) as well as decrease in profits and cash flow during downturns in business cycles may
lead to greater uncertainties of costs for the firm (Bhattacharya and Wright, 2005).
To summarise, the uncertainties can be categorised as:
Uncertainties Sources of uncertainities

Individual Firm Level Market Level
Uncertainties of return Erosion of Skill profile mismatch Demand for
existing skills with market new skills
requirements
Skill obsolescenc e Inability to learn Turnover of critical Uncertain
new skills skill group supply of new
skills
Demand for future skills Employee Inability to Uncertain
dissatisfaction, generate/accommodate demand for
lack of new skills and existing skills
commitment learning
Human capital loss Voluntary Changing carer
Turnover patterns
Loss of productivity Inability to
institutionalise
Knowledge
Lack of Employee
development
Lack of concern for
employees
Uncertainties of volume and Absenteeism, Variation in demand Variations in
combinations leave for number of demand for and

employees in different supply of
units/jobs goods and
services
Variations in number of Resistance to Lack of slack/buffer,
employees required change in work high human capital
arrangements lever age
Variations in deployment of
human assets
Uncertainties of costs Overuse/misuse Variations in Business cycles
of benefits profitability
Variations in total employee High guaranteed High financial Competitive
outlay vis-a vis cash flow pay/bonuses leverage pressures for
cost reduction
Source: Adapted from Bhattacharya and Wright (2005)
Table IV. Principal Uncertainties associated with human assets
For human assets, the importance and relevance of different sources of uncertainty vary across
levels within the firm, among different organizations and through different time periods. Firms
may experience more different types of uncertainty for different employee groups depending
upon industry, strategy, environment or time periods. Also, different sources of uncertainty may
be interrelated and interdependent so that one leads to the other. Therefore the overall risk of
human capital consists of the effect of different factors at different levels (Bhattacharya and
Wright, 2005).
Having identified risks and quantified and prioritized them, the risk management process is now
about controlling/ mitigating the risks. Risk control consists of planning, resolving issues, and
continuous monitoring. Despite all of these, internal auditors have only recently begun to
consider regularly auditing the HR function.
A common definition of workforce planning is "to have the right number of people, with the right
skills, at the right time to perform the required work." An auditor reviewing workforce-planning
efforts should focus on whether HR is performing adequate analyses and developing action plans
to ensure the organization is not left with a shortage of qualified workers (Smith & Bob, 2003).
Through risk control initiatives such as employee surveys, team building exercises, and
ongoing 360-degree multi-raters, the HR executives can monitor the success of their
efforts. Results can be tracked and benchmarks can be established as each goal is
achieved. The challenges to be faced from the HR perspective as service providers in this
environment include bridging the short term with the long term, the operational with the
strategic. It is necessary to carry top management along, and they may have present a
business case to justify their actions in this respect (Smith & Bob, 2003).
While making a case, the HR managers will have to deal with a concept that Business
risk managers are entirely conversant with: the concept of return on investment (ROI).
We know from experience that ROI usually is not the driver in deciding the employee
benefits or perks or work-life programs of organizations, but it will be useful in valuing
the contribution of such services from an overall risk management perspective. In order
to derive a good outcome from ROI calculations, the "earnings," or benefits, need to be
large compared with the "outlays," or costs. In the absence of dearly articulated or
quantifiable benefits, client organizations must logically seek to drive down costs (Smith
& Bob, 2003).

On the benefit side, the strategic benefits of HR risk management amount to developing
the following (Smith & Bob, 2003) :
* The ability to anticipate change;
* The resilience to cope with the pace and complexity of change; and
* The capacity to generate innovative and alternative solutions to take advantage of

opportunities and meet changing market conditions.
With respect to the short-term operational side, an organization should seek higher
efficiency, productivity, and quality and lower turnover, especially of so-called
"knowledge workers." Costs, meanwhile, are influenced strongly by the context, nature,
and current status of the company and its business strategy. The biggest cost investment
in adopting the HR risk management framework will have to be made in human capacity
building, management knowledge, leadership, and measures directed at changing work
ethics, the work culture, and the work environment (Smith & Bob, 2003).
It may be noted that organizations do not need to make huge investments to achieve these
benefits. As part of an overall HR strategy, an employee benefit or work-life program can
be defined in terms of expenses incurred per head per month. Cost savings can be
identified that accrue over time and eventually can be recognized in tangible ways. These
savings might be things like a 20 percent improvement in efficiency, improved reporting
and scheduling, or greater knowledge about workplace "hot spots," trends, or issues of
conflict. These can lead to targeted expenditures on problems, thereby reducing waste
(Smith & Bob, 2003).
With a pre-program baseline using business costs, surveys, and industry benchmarks and
a monitoring system to record progress, a compelling argument can be made to
management that services add value. HR risk management for companies must presume
inte grated information across the entire enterprise, which means a foundation of
communication for strategic and proactive actions, policy making, and collaboration to
improve company-wide performance in a cost-effective manner. Thus organizations will
have become increasingly sophisticated in their approach to people in the workplace and
adopt formal methodologies and processes to manage their risks. Many of these can be
introduced, coordinated, and supported with HR participation, but HR should attain the
same level of organizational maturity to be a good strategic partner (Smith & Bob, 2003).
Vito (2008) argues that identifying and controlling various kinds of risks have been traditional
drivers for the HR audit because many best practices have sprung up from such audits. The risks
that organizations explore when they conduct HR audits tend to relate to financials, the
organization’s reputation, the employment brand, and the ability to attract and retain top talent,
etc.
The point Vito (2008) is trying to highlight is the increased importance of managing employment
practice liability risk. Such risk management includes audits to systematically assess risk so that
the organization can try to develop ways to remove or eliminate risk. If that is not possible,
organizations should try to mitigate risk or control loss. And if that doesn’t work, then arrange to
finance risk, including the use of insurance .

In this way audits are termed as the excellent ways to learn about risk. They can educate HR and
the entire organization on how to put in place or enhance effective human capital management
practices (Vito, 2008).
Since HR departments often spend significant time recruiting and selecting job candidates, it
becomes imperative that the auditors should assess whether HR is documenting applicant
information accurately and timely and whether records are current. Auditors should also verify
that HR is using suitable recruiting sources that are capable of furnishing adequate numbers of
qualified applicants. For example, risks associated with the interview process include permitting
untrained managers to ask illegal questions, requiring applicant tests that are invalid or illegal,
and documenting inappropriate reasons for selection or nonselection (Vito, 2008).
In reviewing the organization's structure, one finds risks such as first-line supervisors with spans
of control too great to be practical; middle managers with lines of authority over only one other
manager, and chains of command that are not clearly designated or that reflect multiple,
conflicting reporting relationships. Problems in this area can result in conflicts between
departments, inefficiencies, inability to keep up with customer demands, and low employee
morale (Vito, 2008).
In organizations that hire contractors, one should ensure controls are in place to monitor these
individuals or providers. In the United States, contractor duties should be routinely monitored to
ensure they meet contract and labour act requirements for contractor versus employee stat us (Vito,
2008).
HR also has a vital role in analyzing employee turnover. They can review turnover analysis and
the exit interview process to determine whether high turnover is putting a strain on recruiting
efforts and work productivity and whether management is appropriately addressing issues raised
by exiting employees (Vito, 2008).
Training is notoriously one of the first programs to be cut in a budget crunch. However, a
decrease in training can have a direct impact on performance and ultimately on an organization's
bottom line. HR should monitor training needs and make adjustments, offering the appropriate
level of training for different positions, and conducting cost-benefit analysis for training programs
(Vito, 2008).
There are also risks associated with employee counselling and discipline. Management should
document performance problems and actions taken, including acknowledgement that the
employee was made aware of the problem. This is important because disciplined employees may
file an internal grievance or external complaint or lawsuit. Management's documentation should
include support for the decision made because it could become subject to further scrutiny (Vito,
2008).
Employee reward systems, including all compensation and benefits programs, are one of the most
complex HR systems. A reward system should help support the organization's strategic mission,
motivate employees, and reward performance. Compensation systems should be both externally
competitive and provide internal equity. Auditors may want to work with a compensation expert
when reviewing this area. During the audit, auditors can check whether : a compensation
philosophy has been developed that defines how the organization wants to pay people with
respect to its position in the labour market; there are current job descriptions for each position; an
effective market analysis has been conducted; a salary structure has been developed to help
manage pay; and an appropriate job evaluation system is being used to slot jobs into the salary
structure. A review of the organization's salary administration process is also important to
determine how employees are paid throughout their careers, including merit increases, variable
performance pay, promotions, bonuses, stock options, and deferred compensation, to name a few
(Vito, 2008).

On the benefits side, employee benefit programs often include medical insurance, life insurance,
vacation and leave policies, and some form of organization-sponsored retirement or savings plan.
Factors to consider in auditing benefit plans are external competitiveness, cost effectiveness,
management goals, employee needs, and compliance with state laws. In addition to being
financially burdensome, poorly designed benefit plans may not support an organization's
strategies (Vito, 2008).
Much of HR administration deals with the processes related to managing employees throughout
their careers with the organization. There are several employment risks to consider, including
discrimination, harassment, wrongful discharge, negligent hiring, retention, and employee privacy
(Vito, 2008).
Internal auditors should ensure that HR (Vito, 2008) :
• Has comprehensive policies and procedures that are compliant with employment
regulations and reflect best practices.
• Conducts employee attitude surveys and takes action based on survey results.
• Maintains appropriate employment files for each employee, including separate files that
document demographic and medical information.
How an organization handles employee complaints and grievances is an area where a clear audit
trail is necessary. Documentation should include the date, situation, and nature of the grievance or
complaint; the action management has taken; any investigation results; and the final outcome or
settlement. If an organization has a labour agreement, then policy changes, attitude surveys, and
employee complaints and grievances have an added element of review and negotiation (Vito,
2008).
2.4 HR ACCOUNTING AND AUDITING

Talking of Strategic HR, IOMA.com, (2007) suggests that there is significant comparisons
between the financial accounting and accounting of human resources of a firm. The financial
accounting system is based on certain conventions and principles which have evolved over a
period of time as a consequence of soc ial, economic, political and legal influences. The adherence
to some of these conventions and practices limits the usefulness of accounting as a tool for
decision making in certain areas. One such example is that of the human resources which
constitute a valuable organizational asset. However, they are not reflected in financial statements.
The limitation of traditional accounting in this regard has led to the development of a new field of
enquiry in auditing called “human resource valuation”, which seeks to identify and measure data
about human resources and communicates the information to management and other users of
accounting information.
Human resources is one of the five essential resources available to any organization. It is also
considered to be the most significant and valuable asset which a company possesses and on which
its profitability depends, yet accountants have not given adequate attention to developing criteria
to value human resources (assets) and to show these in the balance sheet. If the accounting
profession is to provide meaningful information about the state of affairs of a company, it must
develop standards to measure the value of human resources both for financial reporting and as an
aid to managerial decision making (ioma.com, 2007).
2.4.1 RATIONALE OF HUMAN RESOURCE VALUATION AND AUDITING

Authors at ioma.com, (2007) argue that the primary purpose of the human resource audit is to
help management plan and control the use of human resources effectively and efficiently. Its
purpose is to improve the quality of financial decisions of management on the premise that the
availability of quantitative data on human resources would result in widening the scope of
managerial decision making by permitting consideration of a large set of variables or improving
the basis on which these variables are currently considered. In addition to management, human
resource audit information is also useful to external parties. The purpose of the human resource
audit is to improve the quality of decision making by external users, particularly the investors,
who could benefit from human resource audit through provision of information on how the
human assets of the organization have increased or decreased during the period. The productivity
of investment on human beings in the organization is also evaluated in the process. Human
resource valuation can be defined as the process of identifying, measuring and communicating
information about human resources to the users of the financial statement to permit informed
decision making. The objectives of human resource valuation are (ioma.com, 2007):
• develop methods of measuring human resource cost and values;

• monitor the effectiveness of management’s utilization of human asset;
• develop a theory explaining the nature and determinants of the value of people to
formal organizations – in human resource cast accounting, the expenses incurred in
the acquisition, training the development of human resources are treated as
investments and hence shown in the balance sheet as an asset, and periodical write-
offs out of these investments are charged to the profit and loss account.
The human resource valuation system cannot be considered to be a complete system of

accounting unless it is followed by equally competent system of auditing. The application or use
of human resource accounting, therefore, must also be followed by a separate HR audit to
ascertain whether or not the performance of the managers has been true and fair in the overall
interests of the organization they serve.
In any organization the most important input is the human element. The success or failure of a
company depends on the people who staff the organisation. To find out the productivity of
investment in respect of human beings in any enterprise, human resource accounting (HRA) will
be helpful. Human resource accounting is also a scaling tool that generates and reports
quantitative control information about the contribution of human resources for promoting
industrial productivity. It can help management in taking many vital decisions relating to
selection, lay-off, transfers, training, promotion, etc (ioma.com, 2007).
Authors at ioma.com, (2007) argue that accountants in the past have not given due consideration
to this important asset in the enterprise. In traditional accounting practices, the heavy amount
incurred recruitment, selection, placement, training and development of personnel is generally
treated as a revenue expenditure and hence it is debited from the profit and loss account of the
period during whic h it is incurred. Today, however, it is argued that these expenditures, incurred
by an enterprise to gain the benefit of the services of its manpower force in the future, are against
the accounting principle to treat them completely as revenue. In fact suc h expenditure should be
capitalized and shown in the balance sheet. The failure of professional accountants to treat human
resources as assets attracted the attention of academics and, in the 1970s, the concept of human
resource valuation and the auditing concept was evolved which emphasizes that human resources
should be treated as physical assets and should be shown in the balance sheet of the enterprise
(ioma.com, 2007).
The primary purpose of human resource auditing is to facilitate the management of people as
organizational resources. It can also be called human resource management auditing, i.e. the
application of accounting and auditing to the management of human resources. Likert one of the
earliest proponents of the subject, has listed the followin g objectives of human resource
accounting (ioma.com, 2007):

• to furnish cost value information for making management decisions about acquiring,
allocating, developing and maintaining human resources in order to attain cost
effective organizational objectives;
• to allow management personnel to monitor effectively the use of human resources;
• to provide a sound and effective basis of asset control, i.e. whether assets are
conserved, depleted or appreciated;
• to aid in the development of management principles by classifying the financial
consequences of various practices.
In the Annual Reports of public enterprises and private enterprises in India, the chairman’s report
invariably contains statements highlighting the significance of human resources. The chairman of
these enterprises make their remarks at the annual general meeting of the shareholders that
employees are their most important assets and without their significant contribution the present
growth of the operation would not have taken place. These qualitative pronouncements reflect the
importance of human resources in an enterprise, but the quantitative information relating to their
contribution or their value is not recorded or shown in the financial accounts. However, in
practice a few enterprises value their human resources and report this information in their annual
reports:
The HR accounts report of NTPC for the last ten years as given in the annual report are as follows:
Table V. Average cost per employee in terms of salary and benefits from 1997-98 to 2006-07
(adapted from the annual report of NTPC-2006-07)
The total revenue for the year 2006-07 is Rs. 325,952 million which makes the total employee
cost at 4.7% of the total revenue. For the year 2005-06, the figures are Rs. 267,016 millon and
4.8%. It may however be noted that even if the employee cost is considerable, the average cost
per employee is much less compared to what it is in the private sector due to many reasons. The
key factors which guide the HRM practices of Indian public sector companies can be summarised
as follows:

HRM Practice Observable Features
Job Description Percentage of employees with formally defined work roles is very
high in the public sector.
Recruitment Strong dependence on formal labour market. Direct recruitment from
institutions of higher learning is very common amongst management,
engineering and similar professional cadres.
Compensation Strong emphasis on security and lifetime employment in public sector
including a range of facilities like, healthcare, housing and schooling
for children.
Training and Poorly institutionalised in Indian organisations. Popularity of training
Development programmes and their effect in skill and value development is slowly
catching up.
Performance The practice of formal performance appraisal and rewards or
Appraisal organisational goals is in the developmental stage only.
Promotion and Moderately variable across industries. Seniority systems still
Reward dominate the public sector enterprises. Use of merit and performance
limited mostly to globally orientated industries.
Career Planning Limited in scope. The seniority based escalator system in the public
sector provides stability and progression in career. Widespread use of
voluntary retirement scheme in public sector by high performing staff.
Cross functional career paths uncommon.
Gender Equity Driven by proactive court rulings, ILO guidelines and legislature
provisions.
Reservation System The central government has fixed per cent of reservation for backward
communities.
Adapted from Chatterjee, S. R. (2007).
Table VI: Key factors that guide the HRM Practices in Indian Public Sector Organisations
Beyond government requirements or suggested practices, other reasons to conduct an HR audit

include (ioma.com, 2007):
• To align HR management and employment practices with the organization’s business

goals and objectives.
• To understand and assess the outcomes of employment processes, policies, practices, and
procedures. This relates to the risk management driver discussed above; however, the
focus now is on the results of changes that have been made in response to potential risks,
rather than identifying the risks themselves.
• To gather information about human capital management (HCM).
• To calculate and estimate human capital values and return on investment.
• To enhance the use of metrics, both as subjective and qualitative evaluators.
• As part of due diligence:
— To uncover hidden liabilities and assets.
— To identify activities that will increase the value of human capital.
— To identify where liabilities and vulnerability can be avoided or minimized.
• To identify and respond to HR’s customers, including employees, applicants, retirees,
unions, senior management, the board of directors, managers, supervisors, temporary
workers, contractors, and shareholders.
• To ensure compliance with:
— State, and local employment laws.
— Ethical and professional standards.
— The organization’s business objectives, mission, culture, values, and policies.
— To assess key internal controls. In other words, the audit can ask, “How do we
know things are being implemented as we think they are?”

— For risk management.
2.4.2 WHAT TO AUDIT
HR audits can be broad or narrow. Some common areas being audited now, include (ioma.com,
2007) :
• HR strategies and objectives and how both align with business practices.
• Human capital management, including talent management and succession planning.
• Culture, values, and mission.
• Alignment with the organization’s objectives, budgets, culture, values, and mission.
• Impact on organization activities, competitiveness, revenues, and profitability.
• Organization structure. Audit can explore how structure affects policies and practices
along with their enforcement.
• Employment posters and notices for employees and applicants. These must be current
and easily visible.
• Employment (brand) and image.
• Employee engagement and satisfaction.
• Employee files. A physical inspection can ensure that separate files are in place each
individual process. Such audits can also look at security issues, such as privacy
protections and safe storage.
• Employment policies, practices, and procedures. This includes handbooks, personnel
action forms, and the “virtual” policies that are not written down, but are “what is being
done on the shop floor.” The latter should be scrutinized both for any potential problems
and to discover good practices that you may want to codify for the organization.
• Employee staffing and competencies.
• Contracutal relationships including those with unions, individual contracts,
subcontractors, vendors, outsourcing, and other third parties.
• Process controls, which ask, “Are the things we want to happen actually happening? If
not, what is preventing those things from happening?”
2.4.3 CONDUCTANCE OF THE AUDIT
The following steps are recommended for an efficient HR audit (ioma.com, 2007):
• Collect metrics and measurements of outcomes.

• Develop descriptions. Identify the factors that will be assessed.
• Look at specific management/ employment issue areas/processes, such as:
— Strategic management.
— Organizational development, including mergers and structural change.
— Recruitment and hiring processes.
— Background/reference checks and how the organization will respond to requests
for them. Fear of defamation claims has attracted attention to this area.
— Employee handbook/policy development. Is it up-to-date? Maintained on the
Web site?
— Workplace discrimination, sexual harassment, disability, affirmative action, and
diversity issues.
— Substance abuse and a smoking free workplace.
— Positive employee relations including a workplace conducive to productivity.
— Job performance management.
— Talent management.
— Retention and turnover.
— Conflict resolution.

— Termination process.
— Workplace safety and worker compensation.
— Compensation and employee benefits.
— Governance and ethics, especially in public companies.
— Record retention/management.
2.5 NTPC’S HR AUDIT SYSTEM

NTPC does have a well structured Internal Audit department as well as a periodic system of HR
auditing which is in practice since 1999. The HR audit practice guidelines for NTPC is framed as
follows:
2.5.1 OBJECTIVE OF THE AUDIT
Objective of the audit is defined as:
1. To assess the effectiveness and facilitate uniform implementation of HR policies, systems

and processes.
2. To understand the impact of HR interventions and seek feedback from various internal
stakeholders for improvement.
3. To enhance HR function’s service delivery and effectiveness by identifying the current
strengths, areas of improvement including HR competency gaps.
4. To initiate appropriate preventive as well as corrective measures in HR policies, systems
and processes to enhance customer satisfaction.
5. To align HR policies, systems, and processes to meet the business needs.
6. To capture the internal HR best practices and disseminate across NTPC for learning and
implementation.
2.5.2 SCOPE OF THE AUDIT
The HR audit would cover all HR systems and processes related to recruitment, industrial
engineering, employee benefits, employee relations, employee welfare, employee services,
human resource development, training an d development, HR initiatives, new strategic
interventions, TQM initiatives in HR, HR-IT, special projects such as people soft, HR scorecard
etc., MOU, MIS systems, HR competency etc.
During audit, the auditors would question, probe all events/sequences with regard to
implementation, service delivery including exceptions made and may call for all relevant records
and documents. The Unit HOHR/HR department is required to extend all help and assistance in
this regard. The auditors may also interact with any employee/ stakeholders to understand and
reinforce various issues/problems during HR audit.
2.5.3 AUDIT STRUCTURE & CYCLE
Structure
The audit team consists of a cross-functional team comprising members from Corporate HR,
Region HR, HRD Group, CC/Region and Unit line function preferably from Technical Services
Department as per structure mentioned below: -

SN Team Position
1 Regional Nodal Officer – Corporate HR Member/Leader*
2 Regional HR Head Leader/Member*
3 Nodal Officer – Corporate HR Member & Convener
4 Representative from Unit Technical Services Member
Department at E5/E6 level
* In the HR audit team, if the Regional HR Head is senior to the Corporate Regional Nodal
Officer, the team would be led by Regional HR Head.
Table VII: HR audit team structure at NTPC (adapted from HR audit policy of NTPC)
Audit Cycle
• HR audit would be undertaken every year in NTPC; however, a particular Project/Station

would be covered once in every 3(three) years.
• At least one unit from a Region must be covered for the HR audit every year.
• However depending on the specific issues/problems of a particular unit, the
organizational requirements and concern of top management, the number of units to be
covered for HR audit in a Region may be increased. Corporate HRD would constitute the
team and notify the names of unit for the HR Audit every year after obtaining approval of
Director (HR).
• At the time of obtaining approval of Director (HR), HRD group would indicate the
critical areas for each unit based on the findings of last HR audit, areas of concern thrown
up by various surveys and top management’ s concern related to the unit.
2.5.4 ELEMENTS OF HR AUDIT
The HR audit shall be undertaken by personal interactions/discussions with HR executives,

HOHR, scrutiny of documents/records, personal interactions with HODs / Site Management
Committee members, interaction with office bearers of Unions/Associations, interaction with
BUH, visits to important offices/locations and personal observations. The following tools would
be referred and used by the auditors for conducting the audit:-
Check-list: The check list as enclosed at Annexure-I is a comprehensive compilation of various

dimensions of various activities of HR. It highlights some questions pertaining to an area
having critical importance and also data & documents support required to be furnished by
the respective unit against each question. The checklist is an illustrative guide to the
auditors for conducting the audit in a structured manner. However, the auditors may
explore any other area(s) relevant for understanding the uniform implementation of policies,
effectiveness of HR systems and processes and service delivery of HR.
Guideline for the Auditors: Separate guideline is also incorporated along with the audit checklist
which would be used as a reference by the auditors for the scrutiny of documents, records
and interactions with the HODs/BUH/Unions and Associations.
Visits: The auditors must visit record rooms of HR, key locations in the office, facilities such as
canteen, recreation rooms, EDCs, Recreation Center, Executive Club, Bal Bhawan, Ladies
club, ET hostel and other facilities of the township.
Report Preparation: Report is also to be submitted as per the standard format developed by
corporate HRD for this purpose.
The HR audit team should spend at least 2/3 days for conducting the audit. However, based on
the size of the unit and the issues involved, the HR audit team may spend 1-2 days more to make

in-depth assessment and bring out the local issues/barriers for effectiveness as per the spirit and
intent of the system.
The schedule with targets and responsibility for the various activities pertaining to the audit shall
be as per Table No – 2 mentioned as under :-
SN Activity Target Responsibility

1 Identification, approval, constitution of 30th April Regional Nodal Officer –
team & communication to all concerned Corporate - HR
Unit/Region/Member of the audit team.
2 Conduct of HR audit May- Leader, audit team
September
3 Audit Report with back-up data 15th November Leader, audit team
4 Presentation of findings & Action Plan 31st December Head-HRD Group
to D(HR)
5 Final Action Plan Communication 15th January Head-HRD Group
6 Implementation of action plan & As per plan Concerned HOHR
Corrective Measures
7 Monitoring & Follow-up On continuous Concerned Division Head -
basis & RHOHR/GM(HRD)
Table VIII: HR audit Schedule and activities at NTPC (adapted from HR audit policy of NTPC)
2.5.5 FOCAL PERSON
The Nodal Officer for the respective unit from Corporate Center shall act as the focal person for
coordinating with all members of the audit team and concerned HOHR of the unit for conducting,
completion and submission of report. For the purpose of HR audit in the unit, the concerned HRD
officer shall act as the unit level focal point.
2.5.6 PROCESS
The Regional Nodal officer of corporate HR will firm up the dates of audit and intimate to all the
concerned. The Nodal Officer of Corporate Center before audit shall obtain the following
documents:-
I. A copy of the HR Audit System

II. All relevant papers / documents : including Check-list, Guideline & Report Format
III. Findings of BODH surveys, areas of concern with action plan.
IV. MOU, HR Score card initiatives and targets for the relevant period.
The concerned Nodal Officer shall forward a copy of the check list to the unit HOHR at least
3(three) weeks in advance for preparation. The unit would compile all such data and keep ready
for handing over to the audit team.
After completion of the audit, the report must be submitted as per the schedule and timeline of the
system in the prescribed format with a brief summary of the findings indicating the good work/
achievement, the areas of improvement and suggestions/feedback.
HRD group would compile the audit report of all the units covered in the year and make a
presentation to D (HR) on the findings with brief draft action plan for redressal unit wise and
organizational level. The final action plan as approved would be drawn and circulated for
implementation.

HRD group shall put up the quarterly progress and status report to Director (HR) on the areas of
audit/action plan.
However, these systems run on the fundamental premise that the policies and options in place are
benchmarked best practices and provide optimum risk coverage for the organisation in the HR
area.

CHAPTER 3
3.1 RISK MANAGEMENT AND NTPC

NTPC subscribes to the belief that efficiency, effectiveness and success of the organisation
depends largely on the skills, abilities and commitment of the employees who constitute the most
important asset of the organization. While the installed capacity of NTPC has increased by
56.40% in the last nine years, the employee strength went up by only 3.34%.
NTPC is therefore resolved to provide a framework of policies which will enable the
Organisation to attract the right talent for the jobs and make it available at the right time and in
right number with the ultimate objective of ensuring optimum and effective utilisation of the
human resources in a climate of satisfaction, development and growth.
While considering HR role in risk management, there are two distinct roles in risk management
Human Resources play. First, people are a source of risk, e.g., shortage of employees, people
doing sloppy work, an employee refusin g to take on additional responsibility or a key employee
leaving two months after completion of a one-year training program. Second, people are
important in handling risk, e.g., people using their ingenuity to solve unexpected problems,
employees going the extra mile for the good of the organization, a key employee redesigning her
own job to avoid unnecessary delays in getting work done, or an employee persuading a talented
friend to apply for a position in the business (Valerie Frederickson).
The issues from a Risk Management and HR standpoint are as follows:
Risk: Property Exposure
HR Initiatives:
• Hiring professional engineers and surveyors to minimize the risk of accidents, ensure
infrastructure meets highest standards possible.
Risk: Political Risk
HR Initiatives:
• Training and development of executives charged with running the facility. Ensure they
are sensitive to cultural differences.
• Hiring qualified public relations and local negotiations team.
Risk: Business interruption/ drop in productivity
HR Initiatives:
• Succession planning
• Diversify talent pool to ensure each key executive has a successor
• Management development, team building and executive coaching
Risk: Directors and officers
HR Initiatives:
• Succession planning
• Diversify talent pool to ensure each key executive has a successor
• Management development, team building and executive coaching

• Diversity training
Risk: Employment practices liability
HR Initiatives:
• Human resource handbooks and manuals
• Documented employee hiring and training and termination procedures
• Internal employee surveys
• Outplacement services
• Management, team building and executive coaching
Not all Risk Management issues can be addressed by HR. These issues would include the risk of
natural disaster / accidents as it relates to property. However, hiring appropriately trained
professionals can minimize an organization’s risk of engineering and design defects. In addition,
even the effects of a devastating natural disaster can be minimized by effectively training staff to
efficiently respond to disaster (Valerie Frederickson).
Human resource activities lead to four important implications for risk management.
First, these activities are necessary to keep human resources in harmony with the risk
management tools adopted by the management team. Risk management decisions are carried out
by people. Having the “right” people in place, trained, motivated and rewarded are essential to
success in risk management.
Second, human resource calamities, e.g., chronic illness, accidental death, can hamper carefully
made and appropriate risk management decisions. Risk management should anticipate the
likelihood of human resource calamities. Human resource contingency planning needs to be an
integral part of risk management.
Third, no management team stays together indefinitely. Every concern will eventually have
different managers or be out of business. Management succession is a significant source of risk.
Human resource considerations, plus legal and financial considerations, directly affect success in
management succession and thus risk management. Management succession requires each of the
human resource management activities: job analysis, job descriptions, selection, training,
interaction, performance appraisal, compensation and discipline.
Fourth, human resource performance evaluation should be tied to risk management. Risk
management strategies are carried out through people. Human resource failures can cause the best
planned risk management strategies to fail. Risk management depends on explicit duties being
specified in managers’ job descriptions, delegation of power and authority to manage risk
following indicated guidelines, and responsibility at the action level of risk management (Valerie
Frederickson).
3.2 THE PEOPLE FACTOR – COMMITMENT AND

MOTIVATION
Abraham Maslow's Hierarchy of Needs helps to explain how needs motivate us all. Our most
basic needs are inborn, having evolved over tens of thousands of years. Maslow's Hierarchy of
Needs states that we must satisfy each need in turn, starting with the first, which deals with the
most obvious needs for survival itself. Only when the lower order needs of physical and
emotional well-being are satisfied are we concerned with the higher order needs of influence and
personal development (businessballs.com).
• Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

• Safety needs - protection from elements, security, order, law, limits, stability, etc.
• Belongingness and Love needs - work group, family, affection, relationships, etc.
• Esteem needs - self-esteem, achievement, mastery, independence, status, dominance,
prestige, managerial responsibility, etc.
• Self-Actualization needs - realising personal potential, self-fulfillment, seeking
personal growth and peak experiences.
This is the definitive and original Maslow's Hierarchy of Needs. While Maslow referred to
various additional aspects of motivation, he expressed the Hierarchy of Needs in these five clear
stages. Maslow said that needs must be satisfied in the given order. Aims and drive always shift
to next higher order needs. Levels 1 to 4 are deficiency motivators; level 5, are growth motivators
and relatively rarely found. The thwarting of needs is usually a cause of stress, and is particularly
so at level 4. For example You can't motivate someone to achieve their sales target (level 4) when
they're having problems with their marriage (level 3). You can't expect someone to work as a
team member (level 3) when they're having their house re-possessed (level 2).
Maslow's Hierarchy of Needs is an excellent model for understanding human motivation, but it is
a broad concept. The common broad interpretation of Maslow's famous theory suggests that once
a need is satisfied the person moves onto the next, an d to an extent this is entirely correct.
However people and motivation are more complex. So while it is broadly true that people move
up (or down) the hierarchy, depending what's happening to them in their lives, it is also true that
most people's motivational 'set' at any time comprises elements of all of the motivational drivers.
For example, self -actualizers (level 5) are mainly focused on self-actualizing but are still
motivated to eat (level 1) and socialise (level 3). Similarly, homeless folk whose main focus is
feeding themselves (level 1) and finding shelter for the night (level 2) can also be, albeit to a
lesser extent, still concerned with social relationships (level 3), how their friends perceive them
(level 4), and even the meaning of life (level 5) (businessballs.com).
Maslow's concept of self-actualisation relates directly to the present day challenges and
opportunities for employers and organisations - to provide real meaning, purpose and true
personal development for their employees. The best modern employers and organisations are
beginning to learn that sustainable success is built on a serious and compassionate commitment to
helping people identify, pursue and reach their own personal unique potential. When people grow
as people, they automatically become more effective and valuable as employees.
Herzberg was the first to show that satisfaction and dissatisfaction at work nearly always arose
from different factors, and were not simply opposing reactions to the same factors, as had always
previously been believed. Herzberg wrote the following which helps explain this fundamental
part of his theory, i.e., that the factors which motivate people at work are different to and not
simply the opposite of the factors which cause dissatisfaction:
"We can expand ... by stating that the job satisfiers deal with the factors involved in doing the job,
whereas the job dissatisfiers deal with the factors which define the job context."
high and low attitude (basically satisfaction and dissatisfaction, also defined as motivators and
hygienes or hygiene factors) (businessballs.com).
• short and long term duration of feelings (of high/low attitude effect)
• first and second level factors (i.e., main causal factors, and secondary factors deriving
from the main stimulus, identified by further probing during interviews)
• the interrelationship of factors
According to Herzberg, man has two sets of needs; one as an animal to avoid pain, and two as a
human being to grow psychologically. He illustrated this also through Biblical example: Adam
after his expulsion from Eden having the need for food, warmth, shelter, safety, etc., - the
'hygiene' needs; and Abraham, capable and achieving great things through self -development - the

'motivational' needs. Herzberg's ideas relate strongly to modern ethical management and social
responsibility.
Herzberg's concepts are just as relevant now as when he first suggested them, except that the
implications of responsibility, fairness, justice and compassion in business are now global.
Underpinning his theories and academic teachings, he was basically attempting to bring more
humanity and caring into the workplace. He and others like him, did not develop their theories to
be used as 'motivational tools' purely to improve organisational performance. They sought instead
primarily to explain how to manage people properly, for the good of all people at work.
Herzberg's research proved that people will strive to ac hieve 'hygiene' needs because they they
are unhappy without them, but once satisfied the effect soon wears off - satisfaction is temporary.
Then as now, poorly managed organisations fail to understand that people are not 'motivated' by
addressing 'hygiene' needs. People are only truly motivated by enabling them to reach for and
satisfy the factors that Herzberg identified as real motivators, such as achievement, advancement,
development, etc., which represent a far deeper level of meaning and fulfilment
(businessballs.com).
Examples of Herzberg's 'hygiene' needs (or maintenance factors) in the workplace are:
• policy
• relationship with supervisor
• work conditions
• salary
• company car
• status
• security
• relationship with subordinates
• personal life
Herzberg's research identified that true motivators were other completely different factors,
notably:
• achievement
• recognition
• work itself
• responsibility
• advancement
Where referring to 'growth' or 'personal growth' in terms of Herzberg's primary motivators,

'growth' should be seen as an aspect of advancement, and not the 'possibility of growth'
(businessballs.com).
3.3 TO WHAT EXTENT IS MONEY A MOTIVATOR?

This question commonly arises when considering Herzberg's research and Herzberg addressed
money particularly (referring specifically to 'salary' in his study and analysis). Herzberg
acknowledged the complexity of the salary issue (money, earnings, etc), and concluded that
money is not a motivator in the way that the primary motivators are, such as achievement and
recognition. He concluded that “Viewed within the context of the sequences of events, salary as a
factor belongs more in the group that defines the job situation and is primarily a dissatisfier."
Many people argue nevertheless that money is a primary motivator. For most people money is not
a motivator - despite what they might think and say. For all people there are bigger more

sustaining motivators than money. Surveys and research studies repeatedly show that other
factors motivate more than money. The examples are people who give up their jobs so as to buy
or start and run their own businesses. They are pursuing their dream to achieve something special
for them, whatever that might be. We may conclude that in most cases, money is certainly
important, and a personal driver for a decent civilized existence, but beyond this, money is not for
the vast majority of people a sustainable motivator in itself. (businessballs.com)
From a motivational point of view, personality also becomes important as it can be envisaged as a
system of multiple needs, such as need for achievement, need for power, need for affiliation, etc.
However, people are selective in the way they meet these needs and their response to various
types of situation. The expectancy model of personality, developed by Porter and Lawler captures
these variables and also includes role perceptions as a key factor moderating performance.
Specific aspects of the job and organisational context will cue motivational preferences, with the
result that a latent need will become manifest and reflected in a particular pattern of work
behaviour. (www.assess2perform.com)
HR options or policies are investments in the human capital pool of an organization that provide
the capability to respond to future contingent events. HR policies enable the firm to develop and
deploy human capital in order to limit downside risk and create opportunities for greater retums
in the future. Because of inertia, firms cannot easily adjust the capabilities of its human assets to
changed business conditions; only those who have made investments in appropriate HR
capabilities are able to respond. Therefore the value of HR options lies in allowing the firm to
respond proactively to the uncertainties of human assets (Bhattacharya and Wright, 2005).
Firms try to derive a common sense of purpose through a well spelt out Misson and strategies.
Mission and strategy is what the organization's
• top management believes is and has declared is the organization's mission and
strategy and
• what employees believe is the central purpose of the organization.
Apparently, the mere fact of having a written mission statement is believed to be important to
organizational effectiveness. Strategy is how the organization intends to achieve that purpose
over an extended time scale. Porter links strategy directly to environment (industry structure),
organizational structure, and corporate culture (Burke and L itwin, 1992).
Leadership is executives providing overall organizational direction and serving as behavioral role
models for all employees. When assessing this category we would include followers' perceptions
of executive practices and values. Culture is "the way we do things around here." As per the
simple definition from Deal and Kennedy (1982) (as cited by Burke and Litwin , 1992). To be a
bit more comprehensive in definition, we should add that culture is the collection of overt and
covert rules, values, and principles that are enduring and guide organizational behavior.
Understanding an organization's history, especially the values and customs of the founder(s), is
key to explaining culture. Also, culture provides a "meaning system" for organizational members
(Burke and Litwin, 1992).
Structure is the arrangement of functions and people into specific areas and levels of
responsibility, decision-making authority, communication, and relationships to assure effective
implementation of the organization's mission and strategy. Management practices are what
managers do in the normal course of events to use the human and material resources at their
disposal to carry out the organization's strategy. By practices we mean a particular cluster of
specific behaviors. An example of a behavioral management practice is "encouraging
subordinates to initiate innovative approaches to tasks and projects." As a practice, two managers

may "encourage subordinates" to the same extent, but how specifically each one does it may
differ (Burke and Litwin, 1992).
Systems are standardized policies and mechanisms that facilitate work, primarily manifested in
the organization's reward systems, management information systems (MIS), and in such control
systems as performance appraisal, goal and budget development, and human resource allocation.
This category of the model covers a lot of ground (Burke and Litwin, 1992).
Climate is the collective current impressions, expectations, and feelings that members of local
work units have that, in turn, affect their relations with their boss, with one another, and with
other units. Task requirements and individual skills/abilities are the required behavior for task
effectiveness, including specific skills and knowledge required of people to accomplish the work
for which they have been assigned and for which they feel directly responsible. Essentially, this
box concerns what is often referred to as job-person match (Burke and Litwin , 1992).
Individual needs and values are the specific psychological factors that provide desire and worth
for individual actions or thoughts. Many behavioral scientists believe that enriched jobs enhance
motivation and there is evidence to support this belief, yet as Hackman and Oldham (1980) (as
cited by Burke and Litwin, 1992)have appropriately noted, not everyone has a desire for his or
her job to be enriched. For some members of the workforce, their idea of enrichment concerns
activities off the job, not on the job (Burke and Litwin, 1992).
Motivation is aroused behavior tendencies to move toward goals, take needed action, and persist
until satisfaction is attained. This is the net resultant motivation: that is, the resultant net energy
generated by the sum of achievement, power, affection, discovery, and other important human
motives. Individual and organizational performance is the outcome or result as well as the
indicator of effort and achievement (e.g., productivity, customer satisfaction, profit, and quality)
(Burke and Litwin, 1992).
HR options are generated through certain HR practices. HR practices are routines or processes
through which a firm acquires, mainta ins and motivates its human capital. In other words, a firm
manages its human capital through various HR practices. Many of these practices are aimed at
building a human capital pool able to deliver returns in the current time period under current
conditions (Bhattacharya and Wright, 2005).

Given below are the main types of uncertainties and the HR options that manage them.
UNCERTAINTIES HR OPTIONS
UNCERTAINTIES GROWTH AND LEARNING OPTIONS
OF RETURN - Training for new skills, enhancing leaming
Skill obsolescence abilities
Demand for future - Selectivity in recruitment for broad-based skills
skills - Skill-based pay
Human capital loss TURNOVER AND PRODUCTIVITY
Loss of productivity MANAGEMENT OPTIONS
- Competitive pay
- Employee stock option
- Participation programmes
- Voice mechanisms
- Attractive benefits
UNCERTAINTIES OF VOLUME OPTIONS TO ALTER SCALE/ TIMING
AND COMBINATION OPTIONS
Variations in number - Contingent employees
of employees required - Contractual employees
Variations in - Part-time employees
deployment of human SWITCHING OPTIONS
assets - Job rotation
- Team-based work
UNCERTAINTIES OF COST OPTIONS TO ALTER COSTS
Variations in total - Variable pay
employee outlay vis-avis - Performance-based incentive plans at the
cash flow firm/unit level
- Defmed contribution pension plans
Source: Adapted from Bhattacharya and Wright (2005)
Table IX. HR solutions in terms of options for the Uncertainties (risks) associated with human
assets
Growth options are capabilities that reduce risks of loss of value and create future growth
opportunities while learning options are investments that foster learning. Training for new skills
and improved learning abilities, selectivity in recruitment for broad-based skills and skill-based
pay create growth and learning options to manage the risks of skill obsolescence and demand for
future skills. Management of risks related to skill obsolescence demands that the firm develops a
broad inventory of skills so that there is continual supply of new or different skills, or that" they
foster 'learning'. Training imparting new skills or modified skills that may be required in the
future is suitable for managing this type of risk. Risks of skill obsolescence vary according to the
type of skill. Firms requiring skills that could quickly become obsolete should have more training
programmes geared towards continuously upgrading these skills. These types of training build
future skill capabilities, i.e. growth options, which give the firm choices for minimizing the risks
of skill obsolescence and meet demands for future skills. Similarly, training for improving
learning abilities generates learning options, which prepares the employees to adapt easily
Firms can also invest in growth options for their human assets through recruitment. Selectivity in
recruitment refers to setting higher standards for choosing the employee to hire. Selectivity may
be manifested in several ways: by minimum educational level or professional degree, by
administering selection tests or by collecting a wider pool of applicants. Selecting for broad-based
skills and learning abilities (as tested through general ability tests, etc.), rather than for

specialized skills, creates growth and learning options because such employees are trainable and
can upgrade their skills easily. Selectivity in recruitment for broad-based and learning skills are
considered to be instrumental in generating HR growth and learning options that limit risk of skill
obsolescence and foster future growth opportunities through new skills and learning capabilities
Another HR practice that helps maintain updated and market-specific skills is the skill-based
compensation plan. Researchers have found positive linkages between skill-based pay and firm
performance. Skill-based pay creates opportunities for developing multiple and broad-based skills,
manages risks of skill obsolescence and generates options because employees are rewarded for
learning new skills and developing a broad array of talents (Bhattacharya and Wright, 2005).
Turnover of employees represents risks of human capital loss. Turnover is managed through HR
practices like highly competitive pay, employee stock options, participation programmes, voice
mechanisms and attractive benefits packages. Firms pay competitive salaries in order to attract
and retain the skills they need. The higher the value of the skills, the higher is the competitiveness
in pay. In this sense, firms pay a 'premium' for the skills that are more critical for them. Employee
stock options are a form of deferred pay. Employees are given options for buying stock of the
company on a later date at a price below the expected market price. This is an incentive to the
employee to stay with the company (the stock options may not be exercisable if they leave the
company) (Bhattacharya and Wright, 2005).
Programmes that allow for employee participation in decision-making (participative committees,
quality circles, etc.), voice mechanisms (grievance procedures, suggestion schemes), attractive
benefits packages (plans for retirement with high employer contribution, health insurance, life
insurance, disability insurance, cafeteria, plans for dependant care and medical expenses, health-
club memberships, child-care assistance, tuition remittance for self or dependants, etc. all of
which NTPC subscribes to), as well as flexible work arrangements are all HR practices for
attracting employees and motivating them to stay with the company. There is evidence that many
of these practices improve employee morale and satisfaction with their job. Wager (1997cited by
Bhattacharya and Wright, 2005) found support for the proposition that positive labour-
management relationship, in the form of prompt settlement of grievances, perceived fairness in
employment conditions on the part of employees, joint problem solving by union and
management, management seeking input from the union before initiating changes and the practice
of free exchange of information, has a positive effect on perceived employee performance. These
HR practices build the capability of the firm to attract, motivate and retain employees as well as
to signal to the employees that the firm cares for them.
However, creating these options requires a firm pay a premium in higher short-run costs, but
these costs are incurred in order to manage the risk of loss of productivity and the human capital
asset in the future. It is also difficult to ascertain when these options expire - for practices like
participation programme, or voice mechanisms, the option may expire if the programme is
discontinued. For competitive pay, the capability to retain employees may be lost if market pay
shifts further upwards, unless the firm continues to make market adjustments. For em ployee stock
options, the effect will be lost when options are vested. However, implicit in each of these options
is the psychological contract (of being a good place to work at) that the firm signals to employees,
which may last longer than the actual opt ion itself (Bhattacharya and Wright, 2005).
Uncertainties of volume arise because of fluctuating demands in terms of numbers of employees.

Human capital optimisation can to a good extend alleviate this risk. In NTPC, repositioning of
experienced executives in challenging assignments has been adopted to meet the challenges of
fluctuating demands. Uncertainties of combination arise when there is a need for reallocation of
skills within the firm due to variations in demand and supply. The challenge in developing the
capability to reallocate skills is to identify suitable candidates, to convince them and to induce
them to perform at their best in their new job. HR practices that generate capabilities to manage

uncertainties of combination are job rotation and team-based work. Many companies including
NTPC formally or informally rotate employees among different kinds of jobs in order to develop
multiple skills as well as to create flexibility of skills and behaviours. The broader aim is to be
able to reallocate employees in response to changing demands. Under team-based work,
temporary teams are formed for particular projects or jobs. Thus there is a continuous shifting of
employees that helps the firm maintain its flexibility and manage costs (Bhattacharya and
Wright, 2005).
Another option for containing the uncertainties of volume and combinations can be derived from
job enlargement and job enrichment practices . Job enlargement means increasing the scope of a
job through extending the range of its job duties and responsibilities. This contradicts the
principles of specialisation and the division of labour whereby work is divided into small units,
each of which is performed repetitively by an individual worker . Some motivational theories
suggest that the boredom and alienation caused by the division of labour can actually cause
efficiency to fall. Thus, job enlargement seeks to motivate workers through reversing the process
of specialisation (Bhattacharya and Wright, 2005).
Job enrichment aims to create greater opportunities for individual achievement and recognition by
expanding the task to increase not only variety but also responsibility and accountability. This can
also include greater worker autonomy, increased task identity and greater direct contact with
workers performing servicing tasks. Job enrichment can be contrasted to job enlargement which
simply increases the number of tasks without changing the challenge. As such job enrichment has
been described as 'vertical loading' of a job, while job enlargement is 'horizontal loading'.
Note that these practices incur significant costs. Job rotation requires a significantly greater
number of employees engaging in a significantly greater amount of time in learning new jobs. In
addition, the costs of cross-training among team members are significant. However, both costs are
incurred, as a premium, to manage the uncertainty of combination. However, once the capability
for reallocating employees is developed it is easier to maintain it unless there is turnover or
changes in employment conditions.
Uncertainties related to human capital cost exist when there are high fluctuations in firm
performance but the expenses associated with employees are relatively fixed. In such cases these
firms should create options to manage employee costs through variable compensation plans.
Apart from the extent of variable pay in the total compensation package, variable compensation
plans also entail decisions regarding the choice of parameters for measurement of performance,
extent of variability of these parameters and the level of measurement of these parameters.
Variable compensation plans that are based on performance can range from individual bonus
plans and individual merit pay plans to those based on group/unit/firm perfomance targets, e.g.
profit-sharing and gain-sharing plans. In NTPC, due to its status of being a Government owned
public sector, has to follow the Govt. stipulated pay plan and hence individual performance pay
or gainsharing schemes are not yet in operation. However, the unit level and firm level incentive
plans and the profit sharing are already operational. On the other hand, studies of the perfonnance
impact of individual- level plans have shown mixed results whereas studies on firm-level profit-
sharing and gainsharing plans, however, have generally shown positive impacts on performance.
Firm- or unitlevel variable compensation plans better align employees' interest with that of the
firm, leading to greater transparency, commitment and adaptability on the part of the employees.
This creates the possibility that employees would accept variations in their pay according to
variations in firm performance (Bhattacharya and Wright, 2005).
Note that firms may incur upfront costs in introducing and maintaining these plans, which are the
premiums for the options. However, over the long run, the benefits derived from flexibility of
costs should offset the premium. Also, once set up, these options do not expire unless there are
shifts that change the cost structure (Bhattacharya and Wright, 2005).

CHAPTER 4
4.1 PROBLEM FORMULATION

NTPC Ltd. In coordination with its Internal Audit department, has recently done the development
for implementation an Enterprise Risk Management (ERM) framework with the help of a
consultant. The purpose of this ERM exercise was to assist in identification and management of
critical enterprise wide risks and development of a risk management approach & plan within
NTPC. Even if NTPC has got an Internal Audit department in place and audits were being
undertaken regularly for all departments including HR, these audits were basically meant as
compliance audits only and the risk part of the various enterprise strategies or people policies
never formed part of these audits. The consultant hired was to assist NTPC to identify and
prioritize critical risks through facilitated interviews and workshops with medium and senior level
management.
As a part of this ERM exercise, a survey was carried out involving the HR managers at various
locations of NTPC and the findings of the survey are summarised as follows:
As per the findings of the survey, NTPC has a well formulated vision. Its vision, mission and core
values are framed through an elaborate exercise involving employees of all streams in the
organisation and these are well communicated. The HR department has its role and goals well
defined such as:
1. To enhance organizational performance and commitment of employees by recognizing

and rewarding high performance.
2. To build and sustain an organization of competent world-class professionals.
3. To institutionalize core values and create a culture of team -building, empowerment,
equity, innovation and openness which would motivate employees and enable
achievement of strategic objectives.
4. To enhance organizational performance by institutionalizing an objective and open
performance management system.
5. To align individual and organizational needs and develop business leaders by
implementing a career development system.
NTPC has a well-defined Safety Policy to be practiced at Units/projects while in Operation and
Maintenance phase or during Construction & Erection Phase for both, regular and contract
workers. Each Unit has a Safety department with experienced and qualified safety professionals
posted in these departments to oversee the safety issues related with personnel working in the
plant and proper use of Personal Protective Equipments like safety helmet, ear plugs, apron,
gloves, safety shoe, goggles etc. Guidelines have been formulated for constituting committees to
conduct inquiries in cases of various types of accidents and dangerous occurrences, to prevent
their recurrence in future. A detailed procedure for reporting of accidents and dangerous
occurrences and Detailed Safety Rules for construction and erection, electrical and mechanical
are in place to ensure the safety of the employees.
All NTPC projects/stations are having Disaster Management Plans to ensure the safety of people
and protection of the environment in case of any disaster. Mock drills are organized at regular
intervals to educate the people and keep the system in readiness. The neighborhood community is
also involved in the Disaster Management Plan. Safety training is essentially provided to all the
employees as part of company’s planned interventions. Safety training is also extended to the

ladies in the township & to people from the neighboring communities. Personal protective
equipment is provided to all the employees at projects, who are working in hazardous areas.
Fire Detection and Protection System has been provided at all vulnerable areas. Effective
functioning of the system is ensured through periodical inspection and monitoring.
Comprehensive Safety Clauses have been incorporated in the General Conditions of the Contract
to ensure the safety of the contractors' employees including contract labor workforce. An
Engineer In-charge is always associated with each job contract being carried out by contract labor
which ensures that all safety procedures are being meticulously followed. Regular reporting of
any minor or major accidents taking place at work place is being strictly practiced.
NTPC organizes Safety Audit of all its Projects/Stations every year by panel of Safety officers
selected from different locations. The Safety Audit is also done by external professional agencies
like National Safety Council, Loss Prevention Association of India, Tata Risk Management
Services of India. It is also in the process of getting SA:8000 certification for all its installations.
There are special provisions to take care of employees involved in accidents during and after their
recovery.
There are Executives’ associations in each project / station. However, management interacts with
the apex body of executives’ associations i.e., NEFI. Non-executives have unions. While some
unions are affiliated to central trade unions, independent unions are also there. The apex
participative forum for non-executives is National Bipartite Committee (NBC) which consists of
representative unions from each project / station and management representatives. Local site
management deals with the emergency situations of labour unrest. Usually the problems are
resolved through negotiations and wherever necessary help of local administration is sought.
Contingency plans are in place for dealing with such situations at company / local level. Regional
political influence is limited to political par ties taking up the cause of local people mainly project
affected people demanding various facilities to villages. Normally unions do not interfere in the
engagement of unskilled labour.
Contract labour related issues include Claim of permanent employment by contract workers in
which even though there were few litigations, consequent upon recent judgements on
regularisation of contract labour and formation joint ventures like M/s. UPL has been formed
which mitigated the problem of providing permanent employment to the contract labour. Another
issue of Payment to contract labour has been continuously monitored by the local Project
managements to ensure that contracting agencies are fulfilling all their legal obligations including
making payment to contract labour. Usually contract labour engaged in large numbers during
construction phase of power plants resort to temporary work stoppages etc. which are resolved
with the help of local administration / labour machinery.
There is no scope for any dispute due to environmental damage because all statutory
environmental protection measures are complied with. Disputes arising out of land acquisition
are dealt with as per law.
In order to build a sense of loyalty and commitment towards the organization, NTPC has
developed a distinct Corporate Identity with the help of NTPC Flag and NTPC Song. NTPC
Reward System is also been developed to recognize and motivate people. Township/Family
Welfare activities are conducted from time to time for improving the Quality of Life in the
Project Townships, and provide opportunities for all round development of employees. Top
management also regularly interacts with employees at various formal and informal for a and keep
them motivated about company goals and achievements
NTPC has a formalized and well-defined employer positioning for the labour market. NTPC is
widely recognized as a leading Navratna PSE in India and abroad. NTPC takes part in leading
Exhibitions and Trade fairs at National, State and Local levels in different parts of the country.

The company also participates in various competitions organized by different institutions for
recognition of achievements made by the organization and its employees in various spheres like
company’s business, social responsibility, environment, safety, HR, Quiz, and Business Games
etc. NTPC supports efforts of professional bodies like, AIMA, IIPM, ISTD, NHRD-Network,
Institution of Engineers, CII, FICCI, SCOPE, etc. by active participation and sponsorship of
professional activities. NTPC’s advertisements are another source of employer branding. Due to
huge size of operation, NTPC’s business advertisements are released for various purposes on
regular basis, which provides information about the Organization.
NTPC’s recruitment and training systems are aligned with organizational need for skills. NTPC
subscribes to the belief that efficiency, effectiveness and success of the organisation depends
largely on the skills, abilities and commitment of the employees who constitute the most
important asset of the organisation. NTPC is therefore resolved to provide a framework of
policies which will enable the Organisation to attract the right talent for the jobs and make it
available at the right time and in right number with the ultimate objective of ensuring optimum
and effective utilisation of the human resources in a climate of satisfaction, development and
growth.
In all Divisions and Projects of the Company, before the end of August every year, each
Department will review the adequacy or otherwise of the available manpower with reference to
the tasks and targets and determine the additional requirements of manpower in qualitative and
quantitative terms for the immediately following financial year. Based on the requirements of
additional manpower of the individual departments, the detailed manpower plan for the financial
year will be prepared jointly by the Planning and Personnel Departments for the Division as a
whole giving specific details of each new posts other than casual posts and jus tification there for
and this manpower plan containing details of expenditure involved will form a part of the overall
Manpower Budget of the Division.
The requirements of casual and other contingent staff will not form a part of the Manpower
Budget as the same will be shown only in terms of estimate of expenditure to be incurred in
respect thereof as a part of the Works Budget.
Annual manpower plans including the additional manpower requirements along with all relevant
details and estimated cost involved for all the Divisions/ Projects will be consolidated into an
integrated Company Manpower Plan which will form a part of the annual budget to be submitted
for approval of the Board of Directors.
On approval by the Board, these manpower plans will constitute sanction for creation of posts
including posts of trainees and form the general basis of recruitment during the financial year.
Based on 15 year long term plans and 5 year medium term plans, NTPC arrive at skill
requirements at various places. This leads to manpower and skills forecasts. Depending on yearly
targets, manpower is positioned as per requirements depending on the job roles. The recruitment
and training practices in NTPC are aligned to meet these skill requirements. NTPC recruits
engineers afresh from campuses and train them for one year on power plant technologies before
assigning them on job
NTPC since inception has been laying emphasis on training and development of employees with
a view to productively contribute to the growth and performance of the organisation. A
comprehensive training system covering all aspects of training and development activities have
been evolved for uniform implementation across the organisation. The objectives of the training
policy are defined as:
1. Make learning one of the fundamental values of the Company

2. Ensure value addition through training to the overall business process

3. Institutionalise learning opportunities that supplement work experience
4. Integrate organisational and individual developmental needs
5. Enable employees to keep abreast with the latest knowledge and skills and enable them to
undertake current and future responsibilities in a more effective manner.
6. Provide linkages between the different functionaries of training activity
7. Provide linkages of train ing activity with overall Human Resource function.
Training is provided to enhance knowledge and build on weak areas. Training need analysis
process takes its input from Business Needs, Performance Management Data, Organization wide
Training Need Analysis, Specific development plans, Individual Training Need Analysis,
Development Centre output, Psychometric Tests output, Planned interventions at different levels,
Health & Safety, TQM areas etc. Training needs are updated once every year for executives and
once in two years for non executives. These training interventions are categorised into three such
as:
Planned Intervention: A grade/level/category-wise in-house training programme, normally

based on a template course design, and conducted to improve competency base of
employees as felt necessary by the organisation.
Need-based Programme: A training programme, designed, developed and conducted on the
basis of the developmental needs felt and identified for the employees concerned in the
Training Needs Analysis.
Specified Intervention: An external training programme or an in-house training programme
other than a Planned Intervention or a Need-based Programme, conducted to improve
certain specified competencies, as felt necessary by the organization.
Training needs that can be catered to at local level form a part of the local EDC training calendar,
while others are combined at company level and form a part of PMI training calendar which is
published twice in a year. The training calendars are widely circulated in the company wherein
employee and his reporting officer decide which program to attend as per TNA. Since, minimum
7 maydays training is mandatory, employees plan their training accordingly. NTPC also
maintains an extensive network of training agenc ies such as:
Power Management Institute (PMI): This is the apex-training institute and the nodal
agency for Training for the Company. It cater s to the advanced training needs of all
executives of the Company. In case of employees of Corporate Centre, it caters to the
training needs of both executives and non-executives. It specialises in Management
Development and advanced technical areas including Information Technology and serves
as knowledge dissemination centre for the Company as a whole.
Unit Training Centres: Unit Training Centres cater s to the training and development needs
of the employees of the respective units.
Simulator Training Centres: The Simulator training centres at Korba & Kawas, are
designed to produce real time behaviour of the Thermal and gas modules respectively
and to cater to the needs of the corporation
Regional HR group : The Regional HR group caters to the training and development needs
of the employees of the respective region. Wherever it is not feasible for the Unit
Training Centres to organise a specific programme, Regional HR group organises such
programmes for the employees in the entire region. It also takes an active part in
finalisation of the training calendars of each unit within the region.
Corporate HR Group: HR Group co-ordinates external training programmes for all the
employees of Corporate Centre. It also co-ordinates specified interventions for targetted
groups.
Departmental Training Co-ordinator: The Head of each Department nominates an
executive who, besides his normal functional assignment, co-ordinates the training and
related matters for the employees of the department. It is the responsibility of the
Departmental Training Co-ordinator for conducting Training Need Analysis and so

ensuring nomination of the employees of the department concerned to training
programmes that the Training Target of 7 man-days of training for every employee in a
training year is achieved.
This network of agencies is created and maintained to assure that none of the employees miss the
training program that is designed for their development.
NTPC job rotation policy is designed to provide exposure to employees in various activities and
functions to enable them to gain a rich experience before they assume higher responsibilities, to
ensure an effective match between the employees competencies and strengths and the role
assigned, and to provide job enrichment. Model career growth paths have been developed and are
to be mapped for each executive. Rotation for an executive is to be done based on the Career Path
which has been mutually decided by the individual and his superiors. Based on the career path
chosen by an executive suitable training inputs have to be planned and provided especially to
executives who may choose areas of work with which they may not be very familiar with. Tenure
Postings to derive the benefits from the skills and experience of executives to be gainfully utilized
in staff functions is also done.
Transfer policy is drafted to cater to the changing needs of the organization while matching
individual career development and needs with organizational requirements. The transfer of
employees is invariably done against requirement as per the sanctioned manpower strength of
both the donor and the recipient departments. It is considered desirable to have a healthy mix of
executives from home State and other States in the ratio of 50:50. In case of postings to locations
involving hardships to the employees, special packages of pay and perks are being designed /
introduced in order to attract talent interest in these locations. In case both husband and wife are
employed in PSEs or Govt. service, they are accommodated at the same location. An employee
can also be considered for transfer on personal request, if the situation so warrants
PACE (Performance and Competence for Excellence) is the performance management system of
NTPC. NTPC changed over from `performance appraisal` to `performance management systems`
in the year 2004 which not only tried to address the objective given below such as:
1. To accomplish organizational goals through a system of performance assessment

linked to company's objectives.
2. To facilitate fulfillment of individual aspirations and promotion of professional
excellence.
3. To encourage a two-way communication process between the Appraisee and the
Reporting Officer for bringing objectivity in Performance Appraisal System.
4. To evaluate the potential of the executive to assume higher responsibilities along the
hierarchy.
5. To involve the Appraisee through various stages of Performance Management,
thereby reducing the Performance gaps.
but also encouraged two-way communication between the executive and the reporting
officer and bring about transparency in the overall assessment process.
It is designed to cascade company’s strategic goals to individual level and to provide a framework
of goals and standards from which to measure performance. It also involve the executive to share
the responsibility and become accountable for efficient management of the business for result
oriented performance through mutual involvement.
The PMS takes into consideration The Key Performance Areas of individual, Functional and
Managerial Competencies, Value Assessment and Potential Assessment. Thus, all round
performance of an ind ividual is captured. The year long cycle comprise of the 5 step PACE cycle.
The targets are set by employees in consultation with their reporting officer. The goals are
derived from business plans and the KPAs set are cascaded to lower levels. After assessment the

individual scores are normalized to bring parity and remove bias. This is done through
constituting an independent and heterogeneous Performance Management Committee. Feedback
is given at the end of each cycle which encourages two – way communication between the
executive and the reporting officer and brings about transparency in the performance assessment
process.
NTPC’s Performance Management System is envisaged to have much wider implications than
purely improving individual performance in the given year. PMS provides the basis for achieving
a number of fundamental aims of HR strategy for the organization as mentioned below.
• Linkage with Training and Development system

• Linkage with Rewards System
• Linkage with Career Development System
NTPC has formulated a leadership development program as an HR intervention (LEADS) that

stands for Leadership Assessment and Development System. This is a system that enables
measurement of leadership effectiveness, gap identification against an identified set of leadership
competencies and leadership development. The system has three major initiatives, Assessment
and Development Centres for Senior leadership positions conducted with help of external
consultants, an IT enabled 360 degree feedback system for Senior leadership positions under
which feedback from a selected group closely associated with the executive is taken through an
online method and a psychometric tool to assess the profile of this senior level executives. The
assessments from all the three initiatives are converted into Individual Development Plan
including training interventions for each executive to ensure that the process. Input from this
program is taken for the succession planning at NTPC where minimum three successors are
identified for eac h key leadership position in the organisation.
NTPC has a basket of HR initiatives which are designed to engage the extracurricular interests of
the employees as well as to generate interest in his day to day functioning by providing
opportunities for innovation and development. The Quality circle designed for the non executive
staff is one such initiative where a team of non executives under the leadership of a junior
management level executive and the section head, identifies certain routine problems, study them
in depth and suggest workable solution to them. Their findings are presented at unit level and the
best of them are selected for the regional level and corporate level presentations and awards. For
executives also there are several forums like professional circles at unit levels and competition
opportunities like National Open Competition for Executive Talent (NOCET), Horizon-the
management journal, Management games sponsored by IIMA, competitions in the Power HR
Forum, etc which provides opportunities to expand their areas of interest and bring them
appreciation as well.
In addition to the above policies and initiatives designed to improve the HR climate of the
organisation, jobs in public sector in India invariably comes with the incentives of job security
and even work –life balance except a few exceptional circumstances. All NTPC projects are
designed to have self -contained and well developed townships with all necessary infrastructure
facilities and life amenities which include schools, hospitals, recreation centres, shopping
complexes, etc. Well connected communication network and power and water supply facilities
are hallmarks of NTPC townships. However, the first few employees posted to a new site may
have to undergo certain hardships till the township is established there.
From the input document to the ERM study which forms the basis of the current project, the
major risks the company is facing in today’s business scenario has been identified as:
1. Entry into new business areas like hydro, coal mining and nuclear power

2. Massive expansion targets
3. Competition from private players due to opening up of sector and competitive
bidding
4. Fuel security, especially gas
5. Rising employee attrition rates
6. Supply and procurement of power plant equipment (like boiler, wind mills etc.)
7. Effective implementation of ERP
8. Law and order situation at some NTPC project sites
9. Business process reengineering
10. Environmental concerns and NTPC carbon footprint
11. High inventory holding costs
12. Faster decision making/ Decentralization
13. Sustaining high level of past performance
And the major challenges in front of the HR manager has been spelt out as:
1. Employee attrition
2. Meeting manpower needs at remote and difficult locations
3. Supplying skills and expertise needed in new business areas like hydro, nuclear
power and coal mining
4. Capability building in HR
5. Measuring HR performance
6. Automation/ outsourcing of non-value added HR processes
7. Technical skills shortage at workmen level
8. Designing suitable reward and recognition system
9. Designing an attractive compensation scheme
10. Effective implementation of PMS
11. Designing a career growth system in line with business objectives and employee
expectations
12. Leadership development at all levels
13. Sustaining and building NTPC HR brand
These above factors are considered risk because they represent a challenge for HR department
considering NTPC has ambitious diversification and expansion plans. Since due to opening up of
power sector, private players have also entered the sector; In order to successfully compete,
NTPC will have to overcome organizational inertia and controls to meet the above challenges.
Inability to address these above challenges will hamper organizational ability to attract and retain
talent and will lower employee productivity.
Some depiction of the above risks are coming up in the form of increased employee attrition
which is accelerated due to the opening up of power sector, increased demand for fresh engineers
in IT sector, location advantage such postings hold in terms of proximity to cities, rapid career
progress, exposure to international assignments etc which are not widely available in NTPC due
to the nature of its business.
As can be seen from the analysis data, in spite of having a well developed HR system which
encompass all fields of employee deployment, development, motivation, career progress, work-
life balance etc., NTPC also faces the same kind of HR related risks faced by other organisations
depicted by the growing attrition, lack of influx of sufficient talent in recruitment drives, non-
availability of sufficient willing candidates for challenging locations, increased attrition at
leadership positions, etc. A study of the employee perspective on the NTPC policies and what
provides them with the motivators can throw some more light into the extent of risk the
organisation is facing at this point of time.

In the current project, it is proposed to study the people input through a questionnaire, to find out
which all are the areas which carry potential risk in terms of human resources management as far
as business excellence is concerned in an environment of growing market competition for NTPC.
The method proposed to be adopted is to design a questionnaire in line with the assessment tool
used by the consultant. For the purpose of assessing risk, it is necessary to understand the main
areas which can give rise to a scenario of potential risk. The issues that are likely to arise in these
areas are to be identified. The extent to which these issues are a matter of concern and the effect
these issues are likely to have on the future business prospects of NTPC are to be assessed.
A thorough study of NTPC HR policies shows that they are designed to be in line with the
theories advocating policies of employee motivation and commitment. Except for the factor of
monetary compensation which NTPC cannot match the market due to Government policy
restriction, the host of measures and initiatives in force in NTPC implies that people risk should
be the minimum unless these initiatives have failed to percolate down to the grassroots levels.
The main objective of the study is to ascertain whether these initiatives are well appreciated by
the employees and if not, which of them need attention in order to enhance the acceptability. It is
to be further ascertained which of the factors will improve the risk perspective and which of the
factors may not have any impact even if the current situation continues / deteriorates.
Since Performance measures are

1. Employee behaviour-measured through perception survey
2. Employee Outcome –performance indicators eg. Commitment, Attrition.
The Null hypothesis proposed to be tested in the company in case, NTPC, may be stated as:
1. The HR policies of the company, in case, are sufficient to have no risk due to HR
issues related to employee’s behaviour in terms of commitment.
2. The HR policies of the company in case are sufficient to have no risk due to HR
issues related to employee output (in terms of grievance and employee turnover).
3. The HR policies of the company, in case, like leadership development, training and
performance management are well appreciated by the employees.
4. There no residual risks for the company in terms of people issues other than
identified by the management.

CHAPTER 5
5.1 RESEARCH DESIGN

The method adopted for the research is survey based. As mentioned earlier, NTPC’s attempts to
identify the enterprise risk though a consultant contained a part on the assessment of risk related
to HR area also. The findings of this study is attached at Annexure II. The attempt of the current
research is an effort to find out how these results relate to the employees at various levels in the
organisation. The questionnaire however, is designed in the Likert scale model with a seven point
answer scale.
The target group for the survey selected is Manager level E5 and above who ideally have around
ten years of experience in NTPC. There is a 15% deviation in the criteria compliance among the
respondents. The administration of the survey is through a questionnaire (Annexure III). Attempt
has been made to cover employees posted at Delhi and other offices as well as at stations. The
total strength of the target group in NTPC is around 4000 employees.
The questionnaire consists of three parts: Part I is an asses sment of the extend to which the HR
policies are percolated down to the employees and how these policies are received at the
employee’s end. This questionnaire bears comparison to the study carried out during the ERM
exercise and the out come can make a direct comparison on the people’s perception about the
policies.
Part II carries a standard questionnaire on commitment and tendency for attrition adapted from
(Handbook of Marketing Scales by Bearden and Netemeyer). This measures the commitment of
the employee towards the company and how strong the bond between the company and the
employee is.
Part III consists of a few open ended questions on the employee’s perception of the business risks
the company is facing at this stage and which of them can be related to the HR area. These
questions can provide a basis for the qualitative analysis of the employee perception.
The questions were framed in line with the questionnaire used for the ERM study of NTPC in the
form of a questionnaire in seven point Likert Scale. The response to the questions can directly be
compared to the ERM questions on a one to one basis to compare the employee response to the
questions.
Responses were collected through distributing the questionnaire in person in the offices in Delhi
and in training programs that take place at PMI were majority of participants are from the stations.
Some of the responses were collected through e-mail from acquaintances also.
The first 35 responses were used to test the Cronbach’s alpha. Since it was the initial stages of the
survey and most of the respondents were from PMI itself, invalid responses were got corrected in
person before the data was used for analysis.

The out put of the reliability test is as follows:
Reliability
Case Processing Summary
N %
Cases Valid 35 100.0
Excludeda 0 .0
Total 35 100.0
a. Listwise deletion based on all
variables in the procedure.
Reliability Statistics
Cronbach's
Alpha N of Items
.750 43
Since the Cronbach’s Alpha value has come out as 0.75 which is a good value for reliability, the
questionnaire was further circulated without affecting any substantial changes. Three week’s
efforts at NTPC offices in Noida, training programmes at PMI and efforts via e-mail yielded
around 150 responses. Except on occations where respondents could not be discriminated, care
was taken to see that the respondents meet the criteria of seniority and experience.
The results were tabulated in Excel which was also transferred to SPSS. The main instrument
used for the analysis are the mean, mode, significance analysis and frequency of the responses
which were then correlated with the ERM study and the HR management response. The
descriptive answers on perception of risks and results are tabulated at Annexure IV. The detailed
analysis and conclusions of each point is given below.
The Part II of the questionnaire is divided into three parts:
1. Positive questions on commitment

2. Negative questions on commitment and
3. Attrition
The combined output of the analysis is taken for the analysis and drawing conclusion.
The descriptive replies received are combined to identify risk factors other than identified by the
management. The risk prioritisation is then done by considering w hich risks are more threatening,
which risks are less threatening, w hich ones would be most disruptive to the company if they
were to occur etc. Since there are only limited resources to manage risks it is important that we
prioritize them to help focus the efforts. Then spend time managing the more threatening risks
and do not worry about the others (Witzel, 2005).
The threat level comprises the likelihood and impact of a risk. Likelihood is the chance that the
risk will occur. Impact is the amount of damage that it would do if it occurs as given in the chart
below. The threat level (represented in the boxes) increases as the likelihood and impact increase
(represented by the axes). Choose one of the risks and decide how likely it is to happen and the
impact that it would have. There are methods for determining the likelihood and impact, but do
not worry about that right now. Simply make an educated guess as to whether it would be low,
medium, or high. If a risk has a high likelihood of occurrence and a medium impact on the

company’s business success, the threat is high. This risk should be placed high on the prioritized
list because it is threatening to he business (Witzel, 2005).

CHAPTER 6
6.1 DATA ANALYSIS
The data collected as described earlier is analysed for its distribution among locations to see the
representation pattern. The frequency distribution of locations worked out to be as given:
Location
Cumulative
Frequency Percent Valid Percent Percent
Valid CC 83 58.0 58.0 58.0
MineProje 1 .7 .7 58.7
Statistics NA 16 11.2 11.2 69.9
Location Project 2 1.4 1.4 71.3
N Valid 143 Station 41 28.7 28.7 100.0
Missing 0 Total 143 100.0 100.0
Location
CC
MineProje
NA
Project
Station
It could be seen that around 58% of the samples are from Corporate Centre and 31% of the
samples are from stations including mining projects other project which are stations in the
construction phase. The project sites have the working conditions similar to the stations. Hence
they can be included in the list of stations itself. An 11% of the data which does not contain
information on location is marked as NA. This is due to extreme caution on the part of some
executives that if their frank opinion reaches some higher authorities, they may get penalised for
that. However, it may be presumed to contain samples in the same proportion. The location tilt
towards the CC may be attributed to two reasons:

1. Proportion of E5 and above level executives is much higher at CC than in stations
where their numbers varies from 20 to 50 executives per station to more than 800 in
various departments in CC.
2. The general reluctance by the site executives to oblige the CC people which lead to
very little response from stations.
The analysis of the data to see the proportionate representation of various levels of executives
worked out as:
Designation E1-E8
Cumulative
Valid 0 13 9.1 9.1 9.1
1 4 2.8 2.8 11.9
2 6 4.2 4.2 16.1
Statistics
3 11 7.7 7.7 23.8
Designation E1-E8
N Valid
4 3 2.1 2.1 25.9
143
Missing 0 5 8 5.6 5.6 31.5
Mean 5.21 6 58 40.6 40.6 72.0
Mode 6 7 24 16.8 16.8 88.8
Std. Deviation 2.346
8 16 11.2 11.2 100.0
Minimum 0
Maximum 8 Total 143 100.0 100.0
Designation E1-E8
0
1
2
3
4
5
6
7
8
The spread of the data sows that 74.2% of the respondents are E5 and above while 16.8% are
below E5 level. The zero value of designation were those cases in which the respondent refused
give his designation. Taking the same ratio for this category, we may conclude that 7% of the
respondents out of this 9% may be above E5 while 2% is below E5. Thus the cumulative
percentage of respondents who are E5 or above happen to be 81% while that of respondents
below E5 level is 19% approximately.

6.2 ANALYSIS OF RESPONSES FOR QUESTIONNAIRE PART I
Q. No: 1 I am satisfied that my HR creates a congenial working environment for the
employees so that the company can easily achieve its business objectives.
Atmoshere created by HR
Cumulative
Statistics Frequency Percent Valid Percent Percent
Atmoshere created by HR Valid Srongly Agree 7 4.9 4.9 4.9
Agree 45 31.5 31.5 36.4
N Valid 143
Somewhat Agree 40 28.0 28.0 64.3
Missing 0
Neither Agree Nor
Mean 3.29 19 13.3 13.3 77.6
Disagree
Mode 2 Somewhat Disagree 19 13.3 13.3 90.9
Std. Deviation 1.472 Disagree 8 5.6 5.6 96.5
Minimum 1 Strongly Disagree 5 3.5 3.5 100.0
Maximum 7 Total 143 100.0 100.0
50
40
Frequency
30
20
10
0
Srongly Agree Somewhat Neither Somewhat Disagree Strongly
Agree Agree Agree Nor Disagree Disagree
Disagree
One-Sample Statistics
Std. Error
N Mean Std. Deviation Mean
Atmoshere created by HR 143 3.29 1.472 .123
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
t df Sig. (2-tailed) Difference Lower Upper
Atmoshere created by HR -5.738 142 .000 -.706 -.95 -.46
It can be seen that 31.5% of the people agree with the statement, making the mode value of 2
while 28% of the people slightly agree with the statement. The mean of the observations is 3.29
which may be due to the somewhat higher representation in the 4 and 5 ie, neither agree nor

disagree and somewhat disagree categories which constitute a total of 26.6% of the responses.
The mean is 3.29 and p-value is 0.000.
From the analysis we may safely conclude that majority of people do not have any major
grievance against the role of HR in the organisation.
Q No.: 2 The HR personnel in my company are well versed with the company goals and
objectives
Awareness of Co goals in HR Personnel
Cumulative
Awareness of Co goals in HR Personnel Valid Srongly Agree 10 7.0 7.0 7.0
N Valid Agree 42 29.4 29.4 36.4
143
Missing 0
Neither Agree Nor
Mean 3.20 15 10.5 10.5 78.3
Disagree
Maximum 7 Total 143 100.0 100.0
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Awareness of Co goals
in HR Personnel 143 3.20 1.416 .118

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Awareness of Co goals
-6.794 142 .000 -.804 -1.04 -.57
in HR Personnel
On the awareness of company goals by the HR personnel, 31.5% of the people somewhat agrees
with the fact that HR personnel are aware of the company goals while 29.4% people agree with
the statement which makes a cumulative of 67.8 including the 7% of the people who strongly
agree with the statement. There is a 14% people who somewhat disagree but the cumulative
percentage of people who disagree works out to be only about 20%. The mean is 3.2 and the level
of probability is0.000.
Hence we may conclude that majority of the respondents agree that the HR personnel at NTPC
are well aware of the organizational goals and objectives.
Q No.: 3 The HR personnel in my company work in unision with other departments towards
achieving the organizational goals.
HR works with other depts for Co goals
Cumulative
Statistics Valid Srongly Agree 5 3.5 3.5 3.5
HR works with other depts for Co goals Agree 28 19.6 19.6 23.1
N Valid 143 Somewhat Agree 45 31.5 31.5 54.5
Missing 0 Neither Agree Nor
20 14.0 14.0 68.5
Mean 3.70 Disagree
Maximum 7 Total 143 100.0 100.0
50
40
Frequency
30
20
10
0
Disagree

Std. Error
HR works with other
143 3.70 1.525 .127
depts for Co goals
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
HR works with other
-2.359 142 .020 -.301 -.55 -.05
depts for Co goals
To the question whether HR works with other departments in one forum to achieve the
organizational goals, the response is more divided, even if somewhat agree has the highest
representation with 31.5% forming the mode value, somewhat disagree also has a high value of
16.1% and the cumulative percentage on disagree is as high as 31.5%. In addition to this a high
percentage (14%) of people are undecided or are unaware of HR role in attaining the
organizational goals. The mean of the observations is 3.7 and the probability value is 0.02 where
the defined level of significance is 95%.
This gives the conclusion that HR does play a role in bringing the other departments together and
working with them to achieve the organizational goals and objectives.
Q No.: 4 NTPC business scenario and risks that may arise are properly identified and
documented
Wheter ER is identified in NTPC
Cumulative
Wheter ER is identified in NTPC Valid Srongly Agree 12 8.4 8.4 8.4
Agree 34 23.8 23.8 32.2
N Valid 143
Missing 0
Neither Agree Nor
Mean 3.45 Disagree
20 14.0 14.0 71.3
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree

Std. Error
Wheter ER is
identified in NTPC 143 3.45 1.569 .131
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Wheter ER is
identified in NTPC -4.158 142 .000 -.545 -.80 -.29
To the question whether NTPC business scenario and risks that may arise are properly identified
and documented also the reply is somewhat inconclusive as 25.2% of the respondents somewhat
agree with the statement making 3 as the mode while 23.8% of the people agree with this
statement. The cumulative percentage of response which fall in the three categories of agree work
out to be 57.3 while 14% of the people are undecided or neither agree nor disagree. The mean is
3.45 and the probability value is 0.000.
This can lead to the conclusion that NTPC business risks have been identified and discussed at all
levels.
Q No.: 5 The profiling of NTPC’s business risks (into high moderate and low) are done and
communicated to all.
Risk Profiling done and communicated

Cumulative
Risk Profiling done and communicated Valid Srongly Agree 8 5.6 5.6 5.6
N Valid 143 Agree 18 12.6 12.6 18.2
Missing 0
Neither Agree Nor
Mean 4.31 24 16.8 16.8 53.1
Disagree
Maximum 7 Total 143 100.0 100.0

40
30
Frequency
20
10
0
Disagree
Std. Error
Risk Profiling done
and communicated 143 4.31 1.761 .147
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Risk Profiling done
2.089 142 .038 .308 .02 .60
and communicated
The question on the profiling of NTPC’s business risks (into high moderate and low) and
communication to all has invited a much more scattered response. While the mode is disagree
carrying 24.5% of response, the cumulative percentage on the three shades of disagree is 46.9%
only. There is a considerably large score of 16.8% response on neither agree nor disagree also.
The cumulative percentage of various shades of agree is 36.4 out of which 18.2% is of somewhat
agree. The mean value is 4.31 and the probability value is 0.038.
From these results we may conclude that risk profiling and prioritisation are new concepts to
many and there is only very little awareness among people on this aspect.
Q No.: 6 NTPC management has a well laid out risk mitigation strategy at all levels.

NTPC has a good RM Strategy
Cumulative
NTPC has a good RM Strategy Valid Srongly Agree 5 3.5 3.5 3.5
Agree 18 12.6 12.6 16.1
N Valid 143
Missing 0
Neither Agree Nor
Mean 4.15 27 18.9 18.9 58.0
Disagree
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
NTPC has a
143 4.15 1.598 .134
good RM Strategy
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC has a
good RM Strategy 1.151 142 .252 .154 -.11 .42
The question on NTPC management’s risk mitigation strategy also the results are almost
inconclusive. While the mode 3 carries a 23.1% representation, almost an equal amount of people
(19.6%) disagree with this statement. Further, a high percentage of people (18.9%) are undecided
or are not aware of any such strategy. A cumulative 42% of response fall in the various shades of
disagree while a cumulative 39.2% fall in the various degrees of ‘agree’. The mean is 4.15 and
the probability value is 0.252 which is much above the permissible value of 0.05.
This leads to the conclusion that a good number of people believe that NTPC does not have a risk
mitigation strategy. However, the result is statistically inconclusive and hence could not be taken
as a valid proposition.

Q No.: 7 The initiatives taken in both the business strategies and HR area are sufficient to
mitigate the above mentioned risks.
Initiatives are sufficient to mitigate risk

Cumulative
Valid Srongly Agree 3 2.1 2.1 2.1
Statistics Agree 22 15.4 15.5 17.6
Initiatives are sufficient to mitigate risk Somewhat Agree 25 17.5 17.6 35.2
Neither Agree Nor
N Valid 142 28 19.6 19.7 54.9
Disagree
Missing 1 Somewhat Disagree 29 20.3 20.4 75.4
Mean 4.21 Disagree 26 18.2 18.3 93.7
Mode 5 Strongly Disagree 9 6.3 6.3 100.0
Std. Deviation 1.570 Total 142 99.3 100.0
Minimum 1 Missing System 1 .7
Maximum 7 Total 143 100.0
30
25
20
Frequency
15
10
0
Disagree
Std. Error
Initiatives are sufficient
142 4.21 1.570 .132
to mitigate risk
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Initiatives are sufficient
to mitigate risk 1.603 141 .111 .211 -.05 .47
The response analysis shows that the mode which is 5, carries a response percentage of 20.3.
Closely followed by neither agree nor disagree with a score of 19.6% and disagree with a
percentage of 18.2%. The cumulative response on the various shades of disagree is 44.8 and that
on the agree side is 35.2. The mean is 4.21 and the probability value is 0.111 which is above the
allowed value of 0.05.

We may draw the conclusion from this that quite a good number of people are not aware of any
such initiatives and also most of the people are of the opinion that any such initiatives so far taken
are insufficient to mitigate any such risks. However, the result is statistically inconclusive and
hence could not be taken as a valid proposition.
Q No.: 8 NTPC has sufficient skilled manpower reserves to meet its expansion requirements
adequately.
NTPC has sufficient Manpower
Cumulative
Valid 0 1 .7 .7 .7
Statistics Srongly Agree 19 13.3 13.3 14.0
NTPC has sufficient Manpower Agree 51 35.7 35.7 49.7
Disagree 8 5.6 5.6 78.3
Mean 2.99
Maximum 7 Total 143 100.0 100.0
60
50
40
Frequency
30
20
10
0
0
Sro
Ag
So
Ne
So
Di
Str
sa
ree
me
m
on
ith
ng
gr
ew
er
gly
ly A
wh
ee
ha
Ag
at
Di
gre
tA
ree
Dis
sa
e
gre
gre
ag
No
e
ree
e
rD
isa
gre
e
Std. Error
NTPC has sufficient
143 2.99 1.621 .136
Manpower
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC has sufficient
Manpower -7.430 142 .000 -1.007 -1.27 -.74

The mean is 2.99 and the probability value is 0.000. With a mode of 2 with 35.7% frequency and
a cumulative of 72.7% of People responding in the various shades of agree, the opinion of most
of the employees can be concluded as:
NTPC has sufficient skilled manpower reserves to meet its expansion requirements adequately
and hence its massive expansion targets may not create a crisis situation as far as manpower
reserves are concerned.
Q No.: 9 Attrition of workforce is going to create a real threat to achieving NTPC’s planned
business targets.
Attrition will affect expansion
Cumulative
Attrition will affect expansion Agree 39 27.3 27.3 46.9
Mean 10 7.0 7.0 79.0
2.99 Disagree
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
Attrition will
affect expansion 143 2.99 1.691 .141
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Attrition will
affect expansion -7.171 142 .000 -1.014 -1.29 -.73

To the question whether attrition of workforce is going to create a real threat to achieving
NTPC’s business targets, the response is quite decisive. With a mode of 2 with 27.3%
representation, the next peak is for 3 with a 25.2% representation closely followed by 19.6%. The
cumulative percentage of various shades of ‘agree’ works out to be 72%. The mean is 2.99 and
the probability of 0.000.
It can be concluded that attrition, if continued at the current pace, will create hurdles for NTPC in
achievement of its business targets.
Q No.: 10 Lack of availability of manpower at remote locations is going to create a real hurdle
for NTPC’s massive expansion targets.
Manpower at remote location will be problem
Cumulative
Manpower at remote location will be problem Agree 41 28.7 28.7 58.7
Disagree 9 6.3 6.3 87.4
Mean 2.53
Maximum 7 Total 143 100.0 100.0
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Manpower at remote
143 2.53 1.556 .130
location will be problem
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Manpower at remote
location will be problem -11.289 142 .000 -1.469 -1.73 -1.21

The response has a mode of 1 with 30.1% representation of strongly agree closely followed by
agree with a percentage of 28.7. The cumulative response in the various shades of ‘agree’ works
out to be 81.1%.The mean is 2.53 and the probability works out to be 0.000.
This throws up the conclusion that manpower allocation to remote locations is going to create a
major hurdle in meeting NTPC’s massive expansion targets.
Q No.: 11 NTPC management perceives its compensation package to be one of the best in the
industry and no further benchmarking is required.
Pay is percieved as the best by mgmt
Cumulative
Pay is percieved as the best by mgmt Valid Srongly Agree 12 8.4 8.4 8.4
Agree 30 21.0 21.0 29.4
N Valid 143
Missing 0
Neither Agree Nor
Mean 3.91 23 16.1 16.1 62.2
Disagree
Maximum 7 Total 143 100.0 100.0
30
25
20
Frequency
15
10
0
Disagree
Std. Error
Pay is percieved as
143 3.91 1.876 .157
the best by mgmt
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Pay is percieved as
the best by mgmt -.579 142 .563 -.091 -.40 .22

The response to the question whether NTPC considers tis compensation to be the best and no
further improvement needed, the mean is at 3.91 and the probability level has worked out to be
0.563 which is exceptionally higher than the required confidence level of 95%. The mode is 2
with 21% response followed by 3 with 16.8%. There is a high representation of 16.1% of neutral
response also. The cumulative percentage in the various shades of ‘agree’ turns out to be 46.2
while that on various shades of ‘disagree’ turns out to be 37.8%.
From these responses we may conclude that quite a good number of employees are of the opinion
that NTPC management is not sensitive enough to the issue of employee compensation and a
more proactive approach is needed in this aspect. However, the result is statistically inconclusive
and hence could not be taken as a valid proposition.
Q No.: 12 NTPC is not being able to offer defined (fast track) career growth plans to high
performers due to existing policy restrictions.
Fast track career for high perfomer absent
Cumulative
Fast track career for high perfomer absent Agree 42 29.4 29.4 58.0
12 8.4 8.4 84.6
Mean 2.63 Disagree
Maximum 7 Total 143 100.0 100.0
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Fast track career for
143 2.63 1.604 .134
high perfomer absent

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Fast track career for
high perfomer absent -10.218 142 .000 -1.371 -1.64 -1.11
The response to the question is mainly distributed among the various shades of ‘agree’ giving a
cumulative of 76.2% with a mode at 2 having 29.4% and 1 – strongly agree, having 28.7%. The
cumulative percentage of people who are in the various shades of ‘disagree’ works out to be only
15.4%. The mean of the responses is 2.63 and the t-test shows a probability value of 0.000.
Hence it can be concluded that the statement NTPC is not being able to offer defined (fast track)
career growth plans to high performers due to existing policy restrictions is appreciated by most
of the employees. The lack of fast track career growth options in turn can create a major risk for
NTPC in terms of attrition of high performers.
Q No.: 13 NTPC’s manpower planning is inadequate and non realistic.
NTPC manpower planning inadequate
Cumulative
NTPC manpower planning inadequate Agree 30 21.0 21.0 37.8
Disagree 26 18.2 18.2 75.5
Mean 3.26
Maximum 7 Total 143 100.0 100.0
30
25
20
Frequency
15
10
0
Disagree
Std. Error
NTPC manpower
143 3.26 1.643 .137
planning inadequate

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC manpower
-5.394 142 .000 -.741 -1.01 -.47
planning inadequate
The response analysis shows that 21% of the people agree with the statement giving the mode
value of 2. The cumulative percentage of the various shades of ‘agree’ works out to be 57.3%. A
high representation of 18.2% neither agree nor disagree also is obtained. The cumulative
percentage of ‘disagree’ values is 24.5%. The mean of the responses is 3.26 and the t-test shows a
probability value of 0.000.
The conclusion may be drawn that while many people are not well aware of the NTPC’s
manpower planning process, most of the people are not satisfied with the process as such or
rather the outcome of the process of manpower planning.
Q No.: 14 NTPC is not being able to recruit required number of manpower because of non
availability of candidates with requisite skill sets and experience
Skilled manpwer not available to recruit
Cumulative
Skilled manpwer not available to recruit Valid Srongly Agree 9 6.3 6.3 6.3
Agree 33 23.1 23.1 29.4
N Valid 143
Missing 0
Neither Agree Nor
Mean 3.78 Disagree
18 12.6 12.6 64.3
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
Skilled manpwer not
available to recruit 143 3.78 1.753 .147

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Skilled manpwer not
available to recruit -1.479 142 .141 -.217 -.51 .07
The response analysis shows that the mean is at 3.91 and the probability level has worked out to
be 0.141 which is quite higher than the required confidence level of 95%. The mode is at 2 with a
percentage response of 23.1% closely followed by 3 with a score of 22.4%. A high percentage of
17.5% is also observed in the somewhat disagree point. The cumulative percentage of the three
shades of agree is 51.7 while that in the ‘disagree’ zone is 35.7.
It is a fact that there is a shortage of skilled manpower in the market, however, NTPC can further
refine its recruitment techniques to take maximum advantage of the existing talent pool in the
market. However, the result is statistically inconclusive and hence could not be taken as a valid
proposition.
Q No.: 15 NTPC management is taking adequate steps to improve skilled manpower

availability position.
Steps are taken to improve manpower availability
Cumulative
Steps are taken to improve manpower availability Somewhat Agree 41 28.7 28.9 60.6
N Valid Neither Agree Nor
142 22 15.4 15.5 76.1
Disagree
Missing 1
Somewhat Disagree 20 14.0 14.1 90.1
Mean 3.39
Disagree 11 7.7 7.7 97.9
50
40
Frequency
30
20
10
0
Disagree

Std. Error
Steps are taken to
improve manpower 142 3.39 1.443 .121
availability
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Steps are taken to
improve manpower -5.059 141 .000 -.613 -.85 -.37
availability
28.9% of people ‘somewhat agree’ with the statement while 26.6% people agree. The cumulative
percentage of the various shades of ‘agree’ work out to be 60.6% and ‘disagree’ works out to be
23.9%. There is a high score of 15.4% of neither agree nor disagree also. The mean of the
responses is 3.39 and the t-test shows a probability value of 0.000.
We may conclude that there is a general satisfaction towards NTPC’s efforts to augment the
availability of skilled manpower.
Q No.: 16 NTPC does not have a proper grievance redressal mechanism.
No Grievance redressal mechanism
Cumulative
Agree 30 21.0 21.1 31.7
Statistics
No Grievance redressal mechanism Neither Agree Nor
N Valid 142 Disagree 23 16.1 16.2 73.2
Mean 3.46 Disagree 15 10.5 10.6 95.8

40
30
Frequency
20
10
0
Disagree
Std. Error
No Grievance
142 3.46 1.645 .138
redressal mechanism
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
No Grievance
redressal mechanism -3.878 141 .000 -.535 -.81 -.26
With the mode at 3, 25.2% of the respondents somewhat agree that NTPC does not have a proper
grievance redressal mechanism. This is corroborated further with 21% people agreeing with the
statement. The cumulative score on the various shades of ‘agree’ work out to be 57%. There is a
considerable percentage of the population (16.2%) who are undecided on the issue which may be
because of lack of awareness of the system. The cumulative percentage of people who are in the
various shades of ‘disagree’ are 26.8. The mean of the responses is 3.46 and the t-test shows a
It may be concluded from the above analysis that most of the employees are not satisfied with the
grievance handling system of NTPC as it now exists. A relook into the system and various
procedures with necessary modification and a comprehensive communication campaign may be
needed if the system has provide the required appreciation.
Q No.: 17 NTPC has a fair and satisfactory job rotation and transfers policy.

NTPC has a fair job rotation policy
Cumulative
NTPC has a fair job rotation policy Somewhat Agree 16 11.2 11.3 20.6
N Valid 141 Neither Agree Nor
16 11.2 11.3 31.9
Missing 2 Disagree
Mean 5.07 Somewhat Disagree 30 21.0 21.3 53.2
Mode 6a Disagree 33 23.1 23.4 76.6
Std. Deviation 1.637 Strongly Disagree 33 23.1 23.4 100.0
Minimum 1 Total 141 98.6 100.0
Maximum 7 Missing System 2 1.4
a. Multiple modes exist. The smallest value is shown Total 143 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
NTPC has a fair
job rotation policy 141 5.07 1.637 .138
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC has a fair
7.767 140 .000 1.071 .80 1.34
job rotation policy
The response has two modes one at 6 and the other at 7 both having 23.1% representation each.
Somewhat disagree has a percentage representation of 21% making the cumulative response on
the various shades ‘disagree’ at 67.2. The mean of the responses is 5.07 and the t-test shows a
It may be concluded from this analysis that people are not satisfied with NTPC’s job rotation
policy and a serious rethinking is needed on this aspect.

Q No.: 18 My work/ assignments are always made as per my specific job skills and
competencies.
Work is assigned as per skills
Cumulative
Agree 33 23.1 23.2 31.0
Statistics
Work is assigned as per skills Neither Agree Nor
Disagree 13 9.1 9.2 60.6
N Valid 142
Mean 3.81 Disagree 23 16.1 16.2 92.3
40
30
Frequency
20
10
0
Disagree
Std. Error
Work is assigned
142 3.81 1.822 .153
as per skills
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Work is assigned
as per skills -1.244 141 .216 -.190 -.49 .11
The response as a mean at 3.81 and the t-test shows a probability level that worked out to be
0.216 which is quite higher than the required confidence level of 95%. A cumulative of 51.4% of
the respondents agree to the statement that their job assignments are indeed made according to
their specific job skills and competencies. However, a considerable percentage (16.2%) disagree
while 15.4% somewhat disagree with the statement making a cumulative of 39.4% responses in
the different shades of ‘disagree’.

This shows that even if the general trend is to assign jobs as per the person’s skills and
competencies, there is a considerable proportion of people who believe that their skills and
competencies are not properly assessed before assigning their job responsibilities. This is a
situation which needs serious consideration as an improper assessment of skills and competencies
leads to huge wastage of human potential on the one hand and also create demotivating work
environment for the employee concerned leading to substandard work out put. However, the
result is statistically inconclusive and hence could not be taken as a valid proposition.
Q No.: 19 NTPC management does not make any conscious efforts on employee retention like
the analysis of reasons for separation of employees.
No effort on employee retention by NTPC
Cumulative
No effort on employee retention by NTPC Valid Srongly Agree 23 16.1 16.1 16.1
N Valid Agree 40 28.0 28.0 44.1
143
Missing 0
Neither Agree Nor
Mean 3.15 Disagree
20 14.0 14.0 77.6
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
No effort on employee
143 3.15 1.688 .141
retention by NTPC
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
No effort on employee
-5.994 142 .000 -.846 -1.13 -.57
retention by NTPC

28% of respondents agree with the statement making the mode value of 2. Further 19.6%
somewhat agree while 16.1% strongly agree with the statement making the cumulative
percentage of the various shades of ‘agree’ to 63.6%. While 14% of the people neither agree nor
disagree, the cumulative percentage of the people who disagree with the statement is 22.4. The
mean of the responses is 3.15 and the t-test shows a probability value of 0.000.
It can be conc luded that a majority of people in NTPC feels that the management is not making
any conscious efforts at employee retention like exit interview analysis or follow up action on this
issue. This throws up the risk of demotivating the employee as they feel th at the company does
not care for them or value their service.
Q No.: 20 There is no well laid out process for developing people for leadership roles in NTPC.
No process for developing people for leadership
Cumulative
Statistics
No process for developing people for leadership Agree 39 27.3 27.3 37.8
22 15.4 15.4 74.1
Mean 3.34 Disagree
Maximum 7 Total 143 100.0 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
No process for
developing people 143 3.34 1.596 .133
for leadership

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
No process for
developing people -4.976 142 .000 -.664 -.93 -.40
for leadership
The mode to the response is ‘agree’ or 2 with a percentage representation of 27.3. The cumulative
response in the different shades of ‘agree’ work out to be 58.7 while a cumulative 25.9%
responses fall in the different categories of ‘disagree’. A considerable percentage (15.4) of
respondents neither agreed nor disagreed with the statement. The mean of the responses is 3.34
and the t-test shows a probability value of 0.000.
It may be concluded that most of the employees believe that NTPC does not employ any
systematic and scientific process for developing people for the leadership positions.
Q No.: 21 A series of critical leadership positions are identified in NTPC.
Critical leadership positions identified
Statistics Cumulative
Critical leadership positions identified Valid Srongly Agree 5 3.5 3.5 3.5
N Valid Agree 34 23.8 24.1 27.7
141
Mean 3.57 33 23.1 23.4 75.2
Disagree
Mode 2a Somewhat Disagree 17 11.9 12.1 87.2
Strongly Disagree 4 2.8 2.8 100.0
Minimum 1
Total 141 98.6 100.0
Maximum 7 Missing System 2 1.4
40
30
Frequency
20
10
0
Disagree
Std. Error
Critical leadership
141 3.57 1.460 .123
positions identified

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Critical leadership
positions identified -3.461 140 .001 -.426 -.67 -.18
The response has two modes 2 and three both having 23.8% responses. A cumulative of 51.8% of
responses fall in the various shades of ‘agree’ while on ‘disagree’ the cumulative response is 24.8.
An unusually large response of 23.4% are in the neither agree nor disagree category. The mean of
the responses is 3.57 and the t-test shows a probability value of 0.001.
We may conclude that the critical leadership positions are identified in NTPC even if a good
percentage of employees are not well informed about this process.
Q No.: 22 Identification of competencies, skill sets and experience requirements for filling
critical positions are regularly and systematically done for filling up these positions.
Critical positions are filled mapping skills

Cumulative
Critical positions are filled mapping skills Somewhat Agree 30 21.0 21.1 41.5
142 12 8.4 8.5 50.0
Disagree
Mean 4.15 Disagree 27 18.9 19.0 94.4
40
30
Frequency
20
10
0
Disagree

Std. Error
Critical positions are
142 4.15 1.639 .138
filled mapping skills
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Critical positions are
1.127 141 .262 .155 -.12 .43
filled mapping skills
The analysis of the response shows a mean at 4.15 and the t-test shows a probability level that
worked out to be 0.262 which is quite higher than the required confidence level of 95%. The
frequency distribution shows that 25.4% of the respondents somewhat disagree with the statement
giving a mode at 5. A cumulative of 50% of the respondents ‘disagree’ with the statement while a
cumulative of 41.5% of people agree with the statement.
We may conclude that there is a prevalent feeling among the employees that the leadership
positions are not filled after mapping the skill sets, competencies and experience to see the best
person-job-fit. This if true can be critical to the organisation as the leadership is the key to success
for any organisation in today’s highly competitive business environment. However, the result is
statistically inconclusive and hence could not be taken as a valid proposition.
Q No.: 23 Job rotation is only a process in pa per and never practiced in NTPC.
No job rotation in practice
Cumulative
Agree 45 31.5 31.7 47.2
Statistics
No job rotation in practice Neither Agree Nor
N Valid 142 22 15.4 15.5 78.9
Disagree
Mean 3.05 Disagree 10 7.0 7.0 98.6

50
40
Frequency
30
20
10
0
Disagree
Std. Error
No job rotation in practice 142 3.05 1.572 .132
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
No job rotation in practice -7.204 141 .000 -.951 -1.21 -.69
The mode of 2 has 31.5% representation and the cumulative of all shades of ‘agree’ add up to
63.4%. A considerable number (15.4%) of people are neutral to the statement. On the other hand
21% of the respondents either somewhat disagree or disagree with the statement. Only a very
small percentage of (1.4) people strongly disagree with the statement. The mean of the responses
is 3.05 and the t-test shows a probability value of 0.000.
We may conclude from the above analysis that many people feel tat NTPC does not have an
effective and systematic job rotation policy. This situation is again one that may generate
frustration among employees and also loose management opportunities to explore possibilities of
person-job-fit scenarios.
Q No.: 24 Training & development programs for specialized areas are inadequate to groom
people for these areas.
From the analysis of the data as given below, it comes out that 25.9% of the people somewhat
agree with the statement making the mode 3. 22.4% of the respondents agree with the statement
and the cumulative percentage of the different degrees of agree turns out to be 53.5% and that of
‘disagree’ is 32.4%. 14.1% of the respondents neither agree nor disagree with the statement. The
mean of the responses is 3.64 and the t-test shows a probability value of 0.006.
We may conclude from the analysis that in spite of the elaborate training efforts by NTPC,
training programmes in the specialised area are inadequate to groom people for those activities. In
the emerging scenario of increasing attrition and scarcity of skilled manpower in the market,

NTPC should utilise its existing training setup to provide intensive courses on the fields
concerned to the existing talent pool to augment the availability of specialist manpower.
Training not adequate for specialised jobs
Cumulative
Agree 32 22.4 22.5 27.5
Statistics
Training not adequate for specialised jobs Neither Agree Nor
N Valid 142 20 14.0 14.1 67.6
Disagree
Mean 3.64 Disagree 23 16.1 16.2 99.3
Mode 3 Strongly Disagree 1 .7 .7 100.0
40
30
Frequency
20
10
0
Disagree
Std. Error
Training not adequate
142 3.64 1.536 .129
for specialised jobs
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Training not adequate
-2.786 141 .006 -.359 -.61 -.10
for specialised jobs
Q No.: 25 Labour unions related disturbances are a major hurdle for NTPC’s target
achievements.

Labour unions are a hurdle for target achievement
Cumulative
Agree 6 4.2 4.2 5.6
Statistics Somewhat Agree 13 9.1 9.2 14.8
Labour unions are a hurdle for target achievement Neither Agree Nor
Disagree 16 11.2 11.3 26.1
N Valid 142
Mean 5.30 Disagree 53 37.1 37.3 79.6
60
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Labour unions are
a hurdle for target 142 5.30 1.483 .124
achievement
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Labour unions are
a hurdle for target 10.471 141 .000 1.303 1.06 1.55
achievement
37.1% of people disagree with the statement making the mode 6 while 20.3% strongly disagree.
The cumulative percentage of the responses in the various shades of ‘disagree’ is 73.5% while
that in the various shades of ‘agree” work out to be 14.8%. 11.3% of the respondents are neutral
to the statement. The mean of the responses is 5.30 and the t-test shows a probability value of
0.000.

It can be concluded that in most of the cases the labour unions and the related disturbances are not
a hurdle for NTPC in its target achievement.
Q No.: 26 Local politics and politicians create problems for the smooth day to day functioning
of NTPC.
Politicians create problems for NTPC functioning
Cumulative
Agree 14 9.8 9.9 15.5
Statistics
Politicians create problems for NTPC functioning Neither Agree Nor
24 16.8 16.9 48.6
N Valid 142 Disagree
Mean 4.40 Disagree 39 27.3 27.5 93.0
40
30
Frequency
20
10
0
Disagree
Std. Error
Politicians create
problems for 142 4.40 1.680 .141
NTPC functioning
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Politicians create
problems for 2.847 141 .005 .401 .12 .68
NTPC functioning

The response to the statement sows a mode at 6 with 27.3% score followed by somewhat disagree
with a score of 16.8%. The cumulative score of the different degrees of ‘disagree’ is 51.1% while
that of ‘agree’ is 31.7. A high proportion of 16.8% of respondents are neutral to the statement.
The mean of the responses is 4.40 and the t-test shows a probability value of 0.005.
It may be concluded that even if there are instances of interferences, the day to day functioning of
NTPC is not generally affected by these interferences. However, it will be desirable if these kind
of interferences can be completely dispensed with.
Q No.: 27 NTPC employees have to face several contract labour issues during the conduct of
their duties.
NTPC employees face labour issues
Cumulative
Agree 28 19.6 19.9 24.8
Statistics
NTPC employees face labour issues Neither Agree Nor
N Valid 141 Disagree 24 16.8 17.0 74.5
Mean 3.52 Disagree 15 10.5 10.6 98.6
Minimum 1 Missing System 2 1.4
50
40
Frequency
30
20
10
0
Disagree
Std. Error
NTPC employees
141 3.52 1.427 .120
face labour issues

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC employees
-4.012 140 .000 -.482 -.72 -.24
face labour issues
The response has a mode of 3 with 32.2% representation. The next high is ‘agree’ with 19.6%.
The cumulative percentage of all levels of ‘agree’ responses is 57.4 and that for ‘disagree’
response is 25.2. 16.8% respondents are neutral to the statement a part of which may be from
those employees who do not have to deal with contract labourers directly in their day to day
activities. The mean of the responses is 3.52 and the t-test shows a probab ility value of 0.000.
It can be concluded that even if contract labour problems may not be creating an organisation
level issue, the ground level workforce is dealing with these problems on a day to day basis.
Empowerment of the employees with the detailed terms of the contract and the legal provisions in
this respect may help them tackle the problem more effectively.
Q No.: 28 NTPC has plenty of environmental and land acquisition issues pending creating
problems for the daily conduct of its business.
Envt and land issues create hurdle in NTPC
Cumulative
Agree 28 19.6 19.7 26.8
Statistics
Envt and land issues create hurdle in NTPC Neither Agree Nor
N Valid 142 Disagree 19 13.3 13.4 69.7
Mean 3.58 Disagree 17 11.9 12.0 97.2
50
40
Frequency
30
20
10
0
Disagree

Std. Error
Envt and land issues
142 3.58 1.563 .131
create hurdle in NTPC
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Envt and land issues
create hurdle in NTPC -3.221 141 .002 -.423 -.68 -.16
The response has a mode of 3 with 29.4% response while 19.6% of the executives agree with the
statement. The cumulative of all the values of ‘agree’ work out to be 56.3% and that of ‘disagree’
is 30.1%. 13.3% of respondents neither agree nor disagree with the statement. The mean of the
The conclusion that can be drawn from this response is that there are plenty of environmental and
land acquisition issues with NTPC which are hindering the smooth day to day functioning of the
organisation. NTPC may have to look at these issues at the organisational level if these issues are
to be sorted out in a reasonable span of time period to enhance the target achievement capability
of NT PC.
Q No.: 29 NTPC does not have a leadership development policy.
No leadership dev. policy in NTPC
Cumulative
Agree 28 19.6 19.7 28.2
Statistics
No leadership dev. policy in NTPC Neither Agree Nor
N Valid 142 21 14.7 14.8 69.0
Disagree
Mean 3.61 Disagree 20 14.0 14.1 96.5

40
30
Frequency
20
10
0
Disagree
Std. Error
No leadership dev.
policy in NTPC 142 3.61 1.641 .138
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
No leadership dev.
policy in NTPC -2.813 141 .006 -.387 -.66 -.12
The response has mode at 3 with 25.9% score followed by ‘agree’ with 19.6% responses. The
cumulative score for the different degrees of ‘agree is 52.4% while that for ‘disagree’ is 30.9%.
14.7% people are undecided on the issue. The mean of the responses is 3.61 and the t-test shows a
It may be concluded from the above analysis that a good number of people are of the opinion that
NTPC does not have a leadership development policy.
Q No.: 30 Employees posted at remote project locations are at a great disadvantage in terms of
benefits being provided for countering hardships faced by employee or the security situation.
Remote postings are great disadvantage
Cumulative
Agree 42 29.4 29.6 60.6
Statistics
Remote postings are great disadvantage Neither Agree Nor
N Valid 142 Disagree 11 7.7 7.7 86.6
Mean 2.54 Disagree 7 4.9 4.9 97.2

50
40
Frequency
30
20
10
0
Disagree
Std. Error
Remote postings are
142 2.54 1.592 .134
great disadvantage
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Remote postings are
great disadvantage -10.965 141 .000 -1.465 -1.73 -1.20
The mode of the observations is at 1 with 30.8% of the respondents strongly agreeing with the
statement and 29.4% agreeing. The cumulative of the three shades of agree is 78.9% with a
cumulative of 13.3% in the ‘disagree’ scores. 7.7% are undecided on the issue. The mean of the
The conclusion that could be drawn is that there is a major risk of perception of disadvantages the
postings at remote locations are going to bring to the employee. This is an important aspect of
risk as the major chunk of NTPC’s massive expansion target will need posting of employees to
difficult locations.
Q No.: 31 The reward and recognition policy of the company is designed to reward exceptional
performance at all levels .

High performance is rewarded in R&R policy
Cumulative
High performance is rewarded in R&R policy Somewhat Agree 31 21.7 21.8 40.8
Neither Agree Nor
N Valid 142 19 13.3 13.4 54.2
Disagree
Mean 4.20 Disagree 26 18.2 18.3 90.8
30
Frequency
20
10
0
Disagree
Std. Error
High performance is
142 4.20 1.685 .141
rewarded in R&R policy
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
High performance is
rewarded in R&R policy 1.394 141 .165 .197 -.08 .48
The question has fetched a highly scattered response with a mean of 4.2 and the t-test showing a
probability level that worked out to be 0.165 which is quite higher than the required confidence
level of 95%. A mode at 3 with 21.8% representation while both somewhat disagree and disagree
carry a response percentage of 18.3 each. The cumulative percentage of ‘agree’ scores is 40.8%
while that of ‘disagree’ scores is 45.8%. 13.4% of the people are undecided on the issue.
It may be concluded that many of the people are not convinced about the reward and recognition
policy does actually reward exceptional performance at all levels. However, the result is
statistically inconclusive and hence could not be taken as a valid proposition.

Q No.: 32 Any grievance by any employee is redressed within the stipulated timeframe and a
communication explaining the decision is issued to the employee.
Greivance are redressed and informed on time

Cumulative
Agree 9 6.3 6.3 9.9
Statistics
Neither Agree Nor
30 21.0 21.1 50.7
Greivance are redressed and informed on time Disagree
N Valid 142 Somewhat Disagree 22 15.4 15.5 66.2
Missing 1 Disagree 38 26.6 26.8 93.0
Mean 4.44 Strongly Disagree 9 6.3 6.3 99.3
Mode 6 33 1 .7 .7 100.0
40
30
Frequency
20
10
0
Ag
33
Sr
So
Ne
So
Dis
St
ron
on
ree
me
ag
m
ith
gly
ew
ree
er
gly
wh
Ag
Ag
ha
atA
Di
tD
ree
ree
sa
gre
isa
gre
e
No
gre
e
rD
e
isa
gre
e
Std. Error
Greivance are redressed
142 4.44 1.546 .130
and informed on time

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Greivance are redressed
3.419 141 .001 .444 .19 .70
and informed on time
The response is highly divided on the issue. The mode is 6 with a percentage repres entation of
26.8% while the next highest representation is on neither agree nor disagree with 21.1%
representation. The cumulative of all shades of agree comes out to be 29.6% while that of
disagree stands at 48.6%. The mean of the responses is 4.44 and the t-test shows a probability
value of 0.001.
It may be concluded that most of the people are not in agreement with the statement that all
grievances are addresses in time and written response conveyed to the parties concerned. The
high percentage of neutral response may be due to the fact at as shown in response to question
no.16, many people feel that NTPC does not have a proper grievance redressal mechanism.
Q No.: 33 Employee motivation is never a criteria with the management while framing HR
policies.
HR policies do not target employee motivation

Cumulative
HR policies do not target employee motivation Somewhat Agree 33 23.1 23.2 46.5
N Valid 142 Neither Agree Nor
33 23.1 23.2 69.7
Missing 1 Disagree
Mean 3.73 Somewhat Disagree 16 11.2 11.3 81.0
Mode 3a Disagree 21 14.7 14.8 95.8
Std. Deviation 1.659 Strongly Disagree 6 4.2 4.2 100.0
Maximum 7 Missing System 1 .7
40
30
Frequency
20
10
0
Disagree

Std. Error
HR policies do not target
142 3.73 1.659 .139
employee motivation
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
HR policies do not target
employee motivation -1.972 141 .051 -.275 -.55 .00
The response has a mean of 3.73 and the t-test showing a probability level that worked out to be
0.051 which is marginally higher than the required confidence level of 95%. two modes one at 3
and the other at 4 both having 23.2% each. The cumulative response on ‘agree’ scores is 46.5%
and that on the ‘disagree’ score is 30.3%.
It may be concluded that often the policies enacted in NTPC does not take employee motivation
as a criteria for framing tem. However, the result is statistically inconclusive and hence could not
be taken as a valid proposition.
Q No.: 34 Career growth progresses at snail’s pace at NTPC regardless of one’s performance
levels.
Career growth very slow at NTPC
Cumulative
Career growth very slow at NTPC Somewhat Agree 30 21.0 21.3 63.8
141 17 11.9 12.1 75.9
Disagree
Mean 3.13 Disagree 17 11.9 12.1 98.6

40
30
Frequency
20
10
0
Disagree
Std. Error
Career growth very
141 3.13 1.698 .143
slow at NTPC
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Career growth very
slow at NTPC -6.100 140 .000 -.872 -1.16 -.59
The observations have a mode at 2 with 22.7% representation followed by 3 with 21.3% response.
The cumulative percentage on all ‘agree scores is 63.8% while that for all the disagree scores is
24.1% with 12.1% on neither agree nor disagree. The mean of the responses is 3.13 and the t-test
shows a probability value of 0.000.
It may be concluded that career progress is extremely slow and even a high performer is not
offered a better deal. This perception fosters high potential for attrition as examples of fast track
career growth increase with increasing competition.
Q No.: 35 Work takes priority even if the training program suggested for my individual
development approaches in the training calendar.

Training has only second priority
Cumulative
Agree 45 31.5 31.7 50.0
Statistics
Training has only second priority Neither Agree Nor
N Valid 14 9.8 9.9 87.3
142 Disagree
Mean 2.74 Disagree 6 4.2 4.2 98.6
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Training has only
second priority 142 2.74 1.408 .118
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Training has only
second priority -10.672 141 .000 -1.261 -1.49 -1.03
The response has a mode of 2 with 31.7% response followed by somewhat agree having 27.5%
score. The cumulative score for all ‘agree’ responses falls at 77.5% while for the ‘disagree’
response it is at 12.6%. 9.9% people are undecided on the issue. The mean of the responses is
2.74 and the t-test shows a probability value of 0.000.

The conclusion is that, even if there is a training programme targeting a specific group of
employees, there is no system to ensure that they actually participate in the programme. This area
needs some improvement since if the intended candidate does not get the advantage of the
training, it amounts to a wastage of resources.
Q No.: 36 NTPC’s performance management system functions to my full satisfaction.
PMS working to full satsfaction
Cumulative
PMS working to full satsfaction Somewhat Agree 29 20.3 20.4 33.8
Neither Agree Nor
N Valid 142 17 11.9 12.0 45.8
Disagree
Mean 4.58 Disagree 32 22.4 22.5 83.8
40
30
Frequency
20
10
0
Disagree
Std. Error
PMS working to
142 4.58 1.776 .149
full satsfaction

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
PMS working to
3.875 141 .000 .577 .28 .87
full satsfaction
The response has mode at 6 with 22.5% people disagreeing. The cumulative score of all the three
degrees of ‘disagree’ work out to be 54.2 with 12% respondents neutral on the issue. The
cumulative of all the ‘agree’ scores is 33.8%. The mean of the responses is 4.58 and the t-test
shows a probability value of 0.000.
The conclusion can be drawn that even if NTPC has a well structured performance management
system, its functioning is not satisfactory to many people.
Q No.: 37 NTPC management successfully projects itself as an employer of choice in all

relevant fora.
NTPC projects itself well as employer of choice
Cumulative
Agree 48 33.6 33.8 40.8
Statistics
NTPC projects itself well as employer of choice Neither Agree Nor
N Valid 142 Disagree 15 10.5 10.6 83.8
Mean 3.03 Disagree 5 3.5 3.5 97.9
50
40
Frequency
30
20
10
0
Disagree

Std. Error
NTPC projects itself well
as employer of choice 142 3.03 1.347 .113
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
NTPC projects itself well
-8.596 141 .000 -.972 -1.20 -.75
as employer of choice
The mode of the responses is at 2 with a score of 33.8% followed by somewhat agree with a score
of 32.4%. The cumulative score on all the three degrees of ‘agree’ is 73.2% while that of the
different shades of ‘disagree’ is 16.2%. 10.6% of the respondents neither agree nor disagree with
the statement. The mean of the responses is 3.03 and the t-test shows a probability value of 0.000.
The conclusion is that most of the employees feel that NTPC does successfully project itself as an
employer of choice in all relevant fora.
Q No.: 38 Every year, HR systematically does the mapping of employee skill sets and related
job experience and match them with job requirements prior to allocation of work to each
individual.
Skill-Job maching is regularly done by HR
Cumulative
Skill-Job maching is regularly done by HR Somewhat Agree 14 9.8 9.9 16.2
142 17 11.9 12.0 28.2
Disagree
Missing 1
Mean 5.25 Disagree 43 30.1 30.3 76.8

50
40
Frequency
30
20
10
0
Disagree
Std. Error
Skill-Job maching is
142 5.25 1.540 .129
regularly done by HR
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Skill-Job maching is
regularly done by HR 9.645 141 .000 1.246 .99 1.50
The mode is at 6 with a response of 30.3% closely followed by ‘strongly disagree’ with a score of
23.2%. The cumulative percentage on all the three shades of ‘disagree’ is 71.8% while that for the
three shades of ‘agree’ is 16.2%. 12% of the respondents neither agree nor disagree with the
statement. The mean of the responses is 5.25 and the t-test shows a probability value of 0.000.
The conclusion is that no mapping of employee skill sets or related job experience is done by HR
to match with job requirements prior to allocation of work to each individual by HR.
Q No.: 39 NTPC has a well laid out policy on job rotation and location transfers which is
always followed for these decisions.

Transfers and job rotations strictly follow policy
Cumulative
Valid Agree 7 4.9 4.9 4.9
Statistics
Transfers and job rotations strictly follow policy Neither Agree Nor
16 11.2 11.3 24.6
Mean 5.31 Disagree 45 31.5 31.7 78.9
50
40
Frequency
30
20
10
0
Agree Somewhat Neither Somewhat Disagree Strongly
Agree Agree Nor Disagree Disagree
Disagree
Std. Error
Transfers and job
rotations strictly 142 5.31 1.405 .118
follow policy
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Transfers and job
rotations strictly 11.109 141 .000 1.310 1.08 1.54
follow policy
The mode of the observations is at 6 with a score of 31.7% followed by 5 with a score of 22.5%.
The cumulative response on the various shades of ‘disagree’ works out to be 75.3% while the
cumulative percentage on the ‘agree’ side is 13.4%. Nobody has ‘strongly agreed’ with the
statement while 11.3% of the people remained neutral. The mean of the responses is 5.31 and the
t-test shows a probability value of 0.000.

The conclusion is that no policy is being followed for job rotation or location transfers and the
decisions are on an arbitrary basis as per the majority perception.
Q No.: 40 All employee exits are analysed through exit interviews and the findings and
remedial measures are communicated at all levels.
Exit interviews are analysed and communicated
Cumulative
Agree 11 7.7 7.7 12.0
Statistics
Exit interviews are analysed and communicated Neither Agree Nor
Disagree 27 18.9 19.0 46.5
N Valid 142
Mean 4.63 Disagree 36 25.2 25.4 85.9
40
30
Frequency
20
10
0
Disagree
Std. Error
Exit interviews
are analysed and 142 4.63 1.699 .143
communicated
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Exit interviews
are analysed and 4.446 141 .000 .634 .35 .92
communicated

The mode of the observations is 6 with a percentage frequency of 25.4. This is followed by a
score of 19.0% for ‘neit her agree nor disagree’. The cumulative percentage of the three points of
‘disagree’ is 53.6% while that on the three points of ‘agree’ is 27.5%. The mean of the responses
is 4.63 and the t-test shows a probability value of 0.000.
Even if there is an exit interview system, people are not sure what is being done with the results
and conclusions that emerge from it analysis. This communication gap has to bridged in order to
ensure the employees that the company is concerned about attrition and is taking all possible
steps to combat this inevitable phenomenon.
Q No.: 41 Selection of successors to the critical leadership positions are on arbitrary basis and
positions often remain vacant for long periods for lack of a substitute.
Postings to critical positions are arbitrary
Cumulative
Agree 28 19.6 19.7 26.8
Statistics Somewhat Agree 32 22.4 22.5 49.3
Postings to critical positions are arbitrary Neither Agree Nor
32 22.4 22.5 71.8
Mean 3.62 Disagree 14 9.8 9.9 96.5
Mode 3a
Std. Deviation
1.542
Maximum 7 Missing System 1 .7
40
30
Frequency
20
10
0
Disagree
Std. Error
Postings to critical
142 3.62 1.542 .129
positions are arbitrary

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Postings to critical
positions are arbitrary -2.938 141 .004 -.380 -.64 -.12
There are two modes of 3 and 4 with scores of 22.5% each. The cumulative frequency on the
there points of ‘agree’ add up to 49.3% while that on the three points of ‘disagree’ is 28.2%. A
high percentage of people (22.5%) neither agree nor disagree with the score. The mean of the
The conclusion is that there is a prevailing perception with a considerable number of employees
that the postings to some of the critical leadership positions are indeed ar bitrary. It is essential to
remove this perception in order to provide a sense of security and assurance with the workforce.
Q No.: 42 Labour disputes and unrest are tackled on an arbitrary case to case basis.
Labour problems are tackled in arbitrary fashion
Cumulative
Agree 23 16.1 16.2 19.0
Statistics
Labour problems are tackled in arbitrary fashion Neither Agree Nor
Disagree 45 31.5 31.7 74.6
N Valid 142
Mean 3.73 Disagree 16 11.2 11.3 99.3
50
40
Frequency
30
20
10
0
Disagree

Std. Error
Labour problems
are tackled in 142 3.73 1.315 .110
arbitrary fashion
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Labour problems
are tackled in -2.425 141 .017 -.268 -.49 -.05
arbitrary fashion
The mode for this question is 4 with 31.7% of the respondents choosing neither agree nor
disagree for an answer. The next peak is at 3 with 23.9% representation. The cumulative of all the
tree points of ‘agree’ is 42.9% and that of ‘disagree’ is 25.4%. The mean of the responses is 3. 73
and the t-test shows a probability value of 0.017.
The response to this question shows that the awareness about the issue is quite low. As has come
out in the analysis of response to question no. 27, the necessity to improve the awareness of this
issue exists in the organisation.
Q No.: 43 Safety rules and procedures are complied with at all NTPC locations.
Safety rules are well complied with
Cumulative
Safety rules are well complied with Somewhat Agree 43 30.1 30.3 82.4
142 8 5.6 5.6 88.0
Disagree
Mean 2.73 Disagree 6 4.2 4.2 99.3

60
50
40
Frequency
30
20
10
0
Disagree
Std. Error
Safety rules are
142 2.73 1.267 .106
well complied with
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Safety rules are
well complied with -11.990 141 .000 -1.275 -1.48 -1.06
The response has a mode at 2 with 41.5% of the respondents agreeing with the statement. 30.3%
of the respondents somewhat agree while 5.6% of them neither agree nor disagree with the
statement. The cumulative of all the tree points of ‘agree’ is 82.4% and that of ‘disagree’ is 11.9%.
The mean of the responses is 2.73 and the t-test shows a probability value of 0.017.
We may conclude that safety rules and regulations are generally complied with in NTPC and
there is no major risk to the organisation in this regard.

6.3 ANALYSIS OF RESPONSES FOR QUESTIONNAIRE PART II
The questionnaire has two parts:
1. Measuring commitment
2. Measuring Attrition Tendency
The first part is further divided into two of 9 and 6 variables sets. The nine point set measures
those factors that are favourable for the organisation and the six points are those which are against
the organisation.
The four point questionnaire refers to the employee commitment towards the organisation. For
analysis, questions falling in these three sets are clubbed into three groups and their means in
groups are analysed. The results are as follows:
Set I Commitment on the positive scale: The questions are
Q No.: 1 I am willing to put in a great deal of effort beyond that normally expected in
order to help this organization become successful.
Q No.: 2 I talk of this organization to my friends as a great organization to work for.
Q No.: 4 I would accept almost any type of job assignment in order to keep working for
this organization.
Q No.: 5 I find that my values and the organizations values are similar.
Q No.: 6 I am proud to tell others that I am part of this organization.
Q No.: 8 This organization really inspires the very best in me in the way of performance.
Q No.: 10 I am extremely glad that I chose this organization to work for over others I was
considering at the time I joined.
Q No.: 13 I really care about the fate of this organization.
Q No.: 14 For me this is the best of all possible organizations for which to work.
The combined mean of the responses to these questions were put to t-test and the result
obtained is as follows.
Std. Error
CommitPositive 142 2.6055 .95300 .07997

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
CommitPositive -17.436 141 .000 -1.39446 -1.5526 -1.2364
The result shows that the group mean is 2.6055 and the alpha value is zero.
It may be concluded that people have strong commitment towards NTPC.
Set II Commitment on the Negative scale: The questions are
Q No.: 3 I feel very little loyalty to this organization.
Q No.: 7 I could just as well be working for a different type of organization as long the
type of work was similar.
Q No.: 9 It would take very little change in my present circumstances to cause me to leave
this organization.
Q No.: 11 There is not too much to be gained by sticking with this organization indefinitely.
Q No.: 12 Often I find it difficult to agree with this organization’s policies on important
matters relating to its employees.
Q No.: 15 Deciding to work for this organization was a definite mistake on my part.

The combined mean of the responses to these questions were put to t-test and the result obtained
is as follows.
Std. Error
CommitNegative 142 4.4000 1.05324 .08839
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
CommitNegative 4.526 141 .000 .40000 .2253 .5747
The group mean of 4.4 shows that people disagree with the negative propositions. The probability
value of 0.000 shows that the test is within the acceptable limit of significance.
We may conclude that this test like the previous one shows that employees have strong
commitment towards NTPC.
Set II Attrition Tendency: The questions are
Q No.: 16 I would be willing to change companies if the new job offered a 25% pay
increase.
Q No.: 17 I would be willing to change companies if the new job offered more creative
freedom.
Q No.: 18 I would be willing to change companies if the new job offered more status.
Q No.: 19 I would be willing to change companies if the new job was with people who were
more friendly.
The combined mean of the responses to these questions were put to t-test and the result obtained
is as follows.
Std. Error
Attrition 141 4.0603 1.50561 .12680

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
Attrition .475 140 .635 .06028 -.1904 .3110
The group mean of the observations is 4.0603 and the p-value is 0.635. This shows that e
combined means are highly scattered and the result is inconclusive.
The tests are conducted on individual question responses to derive a conclusion.
Q No.: 16 I would be willing to change companies if the new job offered a 25% pay
increase.
Std. Error
I will switch org if
141 5.21 1.705 .144
offered 25% hike
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
I will switch org if
8.396 140 .000 1.206 .92 1.49
offered 25% hike
The response has a mean value of 5.21 and the p-value of 0.000. It may be concluded that
majority of respondents will not leave the organisation for 25% pay hike.
Q No.: 17 I would be willing to change companies if the new job offered more creative
freedom.
Std. Error
I will switch org for
141 3.57 1.932 .163
more creative freedom
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
I will switch org for
-2.616 140 .010 -.426 -.75 -.10
more creative freedom

I will switch org for more creative freedom
Cumulative
I will switch org for more creative freedom Somewhat Agree 29 20.3 20.6 58.2
Neither Agree Nor
N Valid 141 14 9.8 9.9 68.1
Disagree
Mean 3.57 Disagree 29 20.3 20.6 92.9
40
30
Frequency
20
10
0
Disagree
The result has a mean of 3.57 and a significance value of 0.01. Since the confidence interval is
defined as 95%, the result falls within the limit of acceptability. The frequency distribution shows
that a cumulative of 58.2% responses has fallen in various shades of ‘agree’ and a mode of 2. The
cumulative response of ‘disagree’ works out to be 32%.
We may conclude that quite a number of people are ready to change the organisation for more
creative freedom.
Q No.: 18 I would be willing to change companies if the new job offered more status.
Std. Error
I will switch org
141 3.64 2.175 .183
for better status

One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
I will switch org
-1.974 140 .050 -.362 -.72 .00
for better status
The mean value is 3.64 and the p-value is 0.05. Since the confidence interval is 95%, the result
comes within the acceptable limit. The frequency distribution shows that 56.7% cumulative
frequency is for the various points of ‘agree’ while there is a 32.6% cumulative frequency for the
various shades of ‘disagree’.
It may be concluded that a good number of people are ready to leave the organisation for better
status.
I will switch org for better status
Cumulative
Agree 38 26.6 27.0 37.6
Statistics
Neither Agree Nor
I will switch org for better status Disagree 15 10.5 10.6 67.4
N Valid 141 Somewhat Disagree 13 9.1 9.2 76.6
Missing 2 Disagree 26 18.2 18.4 95.0
Mean 3.64 Strongly Disagree 6 4.2 4.3 99.3
Mode 2 18 1 .7 .7 100.0
40
30
Frequency
20
10
0
Sr
Ag
So
Ne
So
Di
Str
18
on
sa
on
me
m
ithe
ree
gly
gre
ew
gly
wh
rA
Ag
ha
Di
at
gre
ree
tD
sa
Ag
eN
gre
isa
ree
or
gre
e
Dis
e
ag
ree
Q No.: 19 I would be willing to change companies if the new job was with people who were
more friendly.

Std. Error
I will switch org for more
friendly colleagues 141 3.82 2.205 .186
One-Sample Test
Test Value = 4
95% Confidence
Interval of the
Mean Difference
I will switch org for more
-.955 140 .341 -.177 -.54 .19
friendly colleagues
The one sample test shows that The mean is 3.82 with an alpha value of 0.341. This is far above
the significance value for a 95% confidence interval. Hence no conclusion can be drawn from this
result. The frequency distribution shows a mode at 2 with 24.1% response closely followed by
‘somewhat agree’ with a 22.7% response. The cumulative of the different points of ‘agree’ works
out to be 54.6% while that for the ‘disagree’ is 25.5%.
I will switch org for more friendly colleagues

Cumulative
Agree 34 23.8 24.1 31.9
Statistics Neither Agree Nor
Disagree 13 9.1 9.2 63.8
N Valid 141
Missing
Disagree 29 20.3 20.6 94.3
2
Mean 3.82
Mode 2 19 1 .7 .7 100.0
40
30
Frequency
20
10
0
Ag
Sr
So
Ne
So
Dis
St
19
ron
on
ree
me
ag
m
ith
gly
ew
ree
er
gly
wh
Ag
Ag
ha
atA
Di
tD
ree
ree
sa
gre
isa
gre
e
No
gre
e
rD
e
isa
gre
e
The conclusion from these results come out that a good number of people will go for a company
with a more friendly working environment.

The conclusion that we can draw from the analysis of Part II of he questionnaire is that the
employees are highly committed to NTPC. However, they would prefer an organisation which
offers tem more creative freedom, status or a more friendly atmosphere.

CHAPTER 7
7.1 RISK PERCEPTION RESULTS AND INTERPRETATIONS
1. The analysis of the response both by two-tailed distribution shows that, majority of
people do not have any major grievance against the role of HR in the organisation.
2. Analysis by both the methods shows that majority of the respondents agree that the
HR personnel at NTPC are well aware of the organizational goals and objectives.
3. Analysis gives the conclusion that HR does play a role in bringing the other
departments together and working with them to ac hieve the organizational goals and
objectives.
4. Analysis by both two tailed distribution and frequency distribution lead to the
conclusion that NTPC business risks have been identified and discussed at all levels.
5. From the analysis results we may conclude that risk profiling and prioritisation are
new concepts to many and there is only very little awareness among people on this
aspect.
6. The analysis by te frequency distribution leads to the conclusion that a good number
of people believe that NTPC does not have a risk mitigation strategy. The response
however, was statistically inconclusive in the two-tailed distribution and hence not
included in the final list.
7. We may draw the conclusion from the frequency distribution analysis that quite a
good number of people are not aware of any such initiatives and also most of the
people are of the opinion that any such initiatives so far taken are insufficient to
mitigate any such risks. The response however, was statistically inconclusive in the
two-tailed distribution and hence not included in the final list.
8. The analysis of responses shows that NTPC has sufficient skilled manpower reserves
to meet its expansion requirements adequately and hence its massive expansion
targets may not create a crisis situation as far as manpower reserves are concerned.
9. It can be concluded from the analysis that attrition, if continued at the current pace,
will create hurdles for NTPC in achievement of its business targets.
10. The analysis throws up the conclusion that manpower allocation to remote locations
is going to create a major hurdle in meeting NTPC’s massive expansion targets.
11. From the frequency distribution of the responses we may conclude that quite a good
number of employees are of the opinion that NTPC management is not sensitive
enough to the issue of employee compensation and a more proactive approach is
needed in this aspect. The response however, was statistically inconclusive in the
two-tailed distribution and hence not included in the final list.
12. It can be concluded from the analysis that the statement NTPC is not being able to
offer defined (fast track) career growth plans to high performers due to existing
policy restrictions is appreciated by most of the employees. The lack of fast track
career growth options in turn can create a major risk for NTPC in terms of attrition of
high performers.
13. The conclusion may be drawn from the analysis that while many people are not well
aware of the NTPC’s manpower planning process, most of the people are not
satisfied with the process as such or rather the outcome of the process.

14. It emerges from the frequency distribution that there is a shortage of skilled
manpower in the market, however, NTPC can further refine its recruitment
techniques to take maximum advantage of the existing talent pool in the market. The
response however, was statistically inconclusive in the two-tailed distribution and
hence not included in the final list.
15. We may conclude from the analysis that there is a general satisfaction towards
NTPC’s efforts to augment the availability of skilled manpower.
16. It may be concluded from the analysis that most of the employees are not satisfied
with the grievance handling system of NTPC as it now exists. A relook into the
system and various procedures with necessary modification and a comprehensive
communication campaign may be needed if the system has provide the required
appreciation.
17. It may be concluded from the analysis that people are not satisfied with NTPC’s job
rotation policy and a serious rethinking is needed on this aspect.
18. The frequency distribution shows that even if the general trend is to assign jobs as per
the person’s skills and competencies, there is a considerable proportion of people
who believe that their skills and competencies are not properly assessed before
assigning their job responsibilities. This is a situation which needs serious
consideration as an improper assessment of skills and competencies leads to huge
wastage of human potential on the one hand and also create demotivating work
environment for the employee concerned leading to substandard work out put. The
19. It can be concluded from the analysis that a majority of people in NTPC feels that the
management is not making any conscious efforts at employee retention like exit
interview analysis or follow up action on this issue. This throws up the risk of
demotivating the employee as they feel that the company does not care for them or
value their service.
20. From the analysis it may be concluded that most of the employees believe that NTPC
does not employ any systematic and scientific process for developing people for the
leadership positions.
21. We may conclude from the results that the critical leadership positions are identified
in NTPC even if a good percentage of employees are not well informed about this
process.
22. From the frequency distribution we may conclude that there is a prevalent feeling
among the employees that the leadership positions are not filled after mapping the
skill sets, competencies and experience to see the best person-job-fit. This if true can
be critical to the organisation as the leadership is the key to success for any
organisation in today’s highly competitive business environment. The response
however, was statistically inconclusive in the two-tailed distribution and hence not
included in the final list.
23. We may conclude from the analysis that many people feel tat NTPC does not have an
effective and systematic job rotation policy. This situation is again one that may
generate frustration among employees and also loose management opportunities to
explore possibilities of person-job-fit scenarios.
24. We may conclude from the analysis that in spite of the elaborate training efforts by
NTPC, training programmes in the specialised area are inadequate to groom people
for those activities. In the emerging scenario of increasing attrition and scarcity of
skilled manpower in the market, NTPC should utilise its existing training setup to
provide intensive courses on the fields concerned to the existing talent pool to
augment the availability of specialist manpower.
25. It can be concluded from the analysis that in most of the cases the labour unions and
the related disturbances are not a hurdle for NTPC in its target achievement.

26. It may be concluded from the analysis that even if there are instances of interferences,
the day to day functioning of NTPC is not generally affected by these interferences.
However, it will be desirable if these kin ds of interferences can be completely
dispensed with.
27. From the analysis of the response it can be concluded that even if contract labour
problems may not be creating an organisation level issue, the ground level workforce
is dealing with these problems on a day to day basis. Empowerment of the employees
with training on the detailed terms of the contract and the legal provisions in this
respect may help them tackle the problem more effectively.
28. The conclusion that can be drawn from this response is that there are plenty of
environmental and land acquisition issues with NTPC which are hindering the
smooth day to day functioning of the organisation. NTPC may have to look at these
issues at the organisational level if these issues are to be sorted out in a reasonable
span of time period to enhance the target achievement capability of NTPC.
29. It may be concluded from the analysis that a good number of people are of the
opinion that NTPC does not have a leadership development policy. This perception
creates a major risk for NTPC since, as a utility giant, it needs highly competent and
sensitive leadership to see it through changing times. The feeling that the company
does not have a policy to develop future leaders may create a sense of helpless doom
in employees prompting them to leave the ‘sinking ship’ well in time increasing
demotivation and attrition rate.
30. The conclusion that could be drawn from the data is that there is a major risk of
perception of disadvantages the postings at remote locations are going to bring to the
employee. This is an important aspect of risk as the major chunk of NTPC’s massive
expansion target will need posting of employees to difficult locations.
31. From the frequency distribution, it may be concluded that many of the people are not
convinced about the reward and recognition policy does actually reward exceptional
performance at all levels. This perception creates the risk of demotivation of
performers as they feel their extra efforts go unnoticed. The response however, was
statistically inconclusive in the two-tailed distribution and hence not included in the
final list.
32. It may be concluded that most of the people are not in agreement with the statement
that all grievances are addresses in time and written response conveyed to the parties
concerned. The high percentage of neutral response may be due to the fact at as
shown in response to question no.16, many people feel that NTPC does not have a
proper grievance redressal mechanism.
33. From the frequency distribution it may be concluded that often the policies enacted in
NTPC does not take employee motivation as a criterion for framing them. The
34. It may be concluded from the survey data that career progress is extremely slow and
even a high performer is not offered a better deal. This perception fosters high
potential for attrition as examples of fast track career growth increase with increasing
competition.
35. The conclusion from the response is that, even if there is a training programme
targeting a specific group of employees, there is no system to ensure that they
actually participate in the programme. This area needs some improvement since if the
intended candidate does not get the advantage of the training, it amounts to a wastage
of resources.
36. The conclusion can be drawn from the data that even if NTPC has a well structured
performance management system, its functioning is not satisfactory to many people.
37. The conclusion from the analysis is that most of the employees feel that NTPC does
successfully project itself as an employer of choice in all relevant for a.

38. The conclusion from the data is that no mapping of employee skill sets or related job
experience is done to match with job requirements prior to allocation of work to each
individual by HR.
39. The conclusion from the analysis is that no policy is being followed for job rotation
or location transfers and the decisions are on an arbitrary basis as per the majority
perception
40. Te conclusion from the responses even if there is an exit interview system, people are
not sure what is being done with the results and conclusions that emerge from it
analysis. This communication gap has to bridged in order to ensure the employees
that the company is concerned about attrition and is taking all possible steps to
combat this inevitable phenomenon.
41. The conclusion that emerges is that there is a prevailing perception with a
considerable number of employees that the postings to some of the critical leadership
positions are indeed arbitrary. It is essential to remove this perception in order to
provide a sense of security and assurance with the workforce.
42. The response to this question shows that the awareness about the issue is quite low.
As has come out in the analysis of response to question no. 27, the necessity to
improve the awareness of this issue exists in the organisation.
43. We may conclude from the responses that safety rules and regulations are generally
complied with in NTPC and there is no major risk to the organisation in this regard.
7.2 INERPRETATION OF COMMITMENT QUESTIONNAIRE

COMMITMENT
The two parts of the questionnaire namely, the nine point set that highlight points favourable for
the organisation and the six point set that highlight points which are against the organization were
analysed in two sets and the results tat came out are:
It may be concluded from the analysis of the first set of questions that people have strong
commitment towards NTPC. The analysis of the second set of responses also throw up the same
result that employees have strong commitment towards NTPC.
ATTRITION
The group analysis for the four questions for attrition failed to produce any conclusive
answer. The individual questions were analysed from whic h three could produce
conclusive answer but the forth still remained inconclusive.
The result that has emerged from the analysis is that the employees are not ready to leave
NTPC for a pay hike of 25%. However, they would prefer an organisation which offer them
more creative freedom, status or a more friendly atmosphere.
7.3 SUMMARY OF ANALYSIS RESULTS

From the analysis of the responses, the following points have come out that are of concern to
NTPC. Since the survey questionnaire was designed in the form of statements either with a
positive or a negative intent, the responses of ‘disagree’ to the positive statements and the
response of ‘agree’ to the negative statements are taken as the points of concern and listed below.
These are prioritized as per the value of their response mean. These are then compared with the

response points of the ERM study (ANNEXURE II) to find out the extent of difference in
perception.
7.4 POINTS THAT HAS PRODUCED A RESPONSE OF

DISAGREE
S RISK IDENTIFIED AVERAGE ERM STUDY RESPONSE
N FROM THE OF
SURVEY RESPNSES
1 Manpower at remote 2.53 Some special HR policies for hydro region
location will be employees were announced in 2007
problem
2 Remote postings are 2.54 Special benefits for employees posted at hydro
great disadvantage stations have been announced that are not available
to other employees. A special policy for mining
employees is also being designed.
3 Fast track career for 2.63 HR is designing a Career Development system for
high perfomer employees but “Fast Track” growth track for high
absent performers is not being explored so far.
4 Training has only 2.74 Training need analysis process takes its input from
second priority Business Needs, Performance Management Data,
Organization wide Training Need Analysis, Specific
development plans, Individual Training Need
Analysis, Development Centre output, Psychometric
Tests output, Planned interventions at different
levels, and form training calendar which is published
twice in a year. The training calendars are widely
circulated in the company wherein employee and his
reporting officer decide which program to attend as
per TNA.
5 Attrition will affect 2.99 Existing employees have already begun seeking
expansion better opportunities and attrition rates are going up
6 No job rotation in 3.05 Job rotation system exists in NTPC, however, it is
practice not being adequately followed.
7 Career growth very 3.13 No fast track career growth system exists in NTPC.
slow at NTPC
8 No effort on 3.15 • Since 2003-04, NTPC has been witnessing its
employee retention executive attrition rates double every year. Though
by NTPC NTPC is not witnessing any shortages so far due
to the depth of its talent pipeline, but attrition in
some functions and at higher management levels is
a cause of concern. NTPC has an established
system of conducting and analyzing exit
interviews and the reports are submitted to
management.
• Steps are also being taken to address issues
emerging from exit interviews and employee
surveys, and brain storming sessions on attrition.
9 NTPC manpower 3.26 • NTPC has a robust manpower planning system
planning inadequate which is handled by Industrial Engineering Group.
A 5-year manpower plan is developed according
to which recruitment and placement is done.
• The recruitment process is very robust and we are

able to recruit talent from various resources.
10 No process for 3.34 NTPC has a well defined process for management
developing people development and leadership development. For every
for leadership stage in an executive’s career, a planned intervention
is in place to develop competencies needed to deliver
their future role effectively. There also exist a
leadership development system, called LEADS, for
measurement of leadership effectiveness, gap
identification against an identified set of leadership
competencies, and leadership development.
11 No Grievance 3.46 Employee grievances are handled in a time bound
redressal mechanism manner. A single grievance handling system is in
place. Apart from this, individual representations
from employees on various issues are also addressed
by competent authorities.
12 NTPC employees 3.52 Usually contract labour engaged in large numbers
face labour issues during construction phase of power plants resort
temporary work stoppages etc. which are resolved
with the help of local administration / labour
machinery.
13 Envt and land issues 3.58 • There is no scope for any dispute due to
create hurdle in environmental damage because all statutory
NTPC environmental protection measures are complied
with.
• Disputes arising out of land acquisition are dealt
with as per law.
14 No leadership dev. 3.61 • LEADS is an HR intervention that stands for
policy in NTPC Leadership Assessment and Development System.
This is a system that enables measurement of
leadership effectiveness, gap identification against
an identified set of leadership competencies and
leadership development. This consist of A LEAD-
Centre (Assessment and Development Centres), an
IT enabled 360 degree feedback system called
LEAD Circle and A psychometric tool called
Hogan Development Survey to assess the profile
of senior executives at the level of AGMs, GMs
and EDs.
• The assessments from all the three initiatives are
converted into Individual Development Plan for
each executive to ensure that the process of
development and growth is meaningful.
15 Postings to critical 3.62 Succession planning for 28 key leadership positions
positions are in NTPC is done. A pool of high potential individuals
arbitrary is identified through combining inputs from all HR
processes like 360º feedback, Assessment Centre,
PACE, Psychometric tools etc. Then the Succession
Planning Committee that consists of functional
Directors of the company identify the list of potential
successors from this pool.
16 Training not 3.64 NTPC has a formalized training & development
adequate for program. The system envisages a minimum of 7 days
specialised jobs training for each employee annually which is the
international benchmark for training in Power Sector.

Company owned training infrastructure for providing
technical and managerial training is in place. NTPC
also sponsors employees for specialized training to
external training facilities in India and abroad.
17 Labour problems are 3.73 • Local site management deals with the emergency
tackled in arbitrary situations of labour unrest. Usually the problems
fashion are resolved through negotiations and wherever
necessary help of local administration is sought.
• There is a contingency plan for dealing with
dealing such situations at company / local level.
Table X. Points that has produced a response of Disagree
7.4 POINTS THAT HAS PRODUCED A RESPONSE OF

DISAGREE
S RISK AVERAGE ERM STUDY RESPONSE
N IDENTIFIED OF
FROM THE RESPNSES
SURVEY
18 Transfers and 5.31 Policy on transfers is in place. The approved process is
job rotations short. However, a request for transfers may take time
strictly follow since there may not be a vacancy available for posting.
policy
19 Skill-Job 5.25 NTPC’s recruitment and training systems are aligned
maching is with organizational need for skills. Based on our 15
regularly done year long term plans and 5 year medium term plans, we
by HR arrive at skill requirements at various places. This leads
to manpower and skills forecasts. Depending on yearly
targets, manpower is positioned as per requirements
depending on the job roles.
20 NTPC has a 5.07 • NTPC job rotation policy is designed to provide
fair job rotation exposure to employees in various activities and
policy functions to enable them to gain a rich experience
before they assume higher responsibilities. Model
career growth paths have been developed and are to
be mapped for each executive. Rotation for an
executive is to be done based on the Career Path
which has been mutually decided by the individual
and his superiors.
• Tenure Posting to derive the benefits from the skills
and experience of executives to be gainfully utilized
in staff functions is also done.
• If career path demands so, individual is also
transferred to different project or region.
• Transfer policy has been drafted to cater to the
changing needs of the organization while matching
individual career development and needs with
organizational requirements. Employees (other than
specialists/ where special skills are required) with
long stay at one location, say for 10 years or more,
are considered for transfer on priority.
• It is considered desirable to have a healthy mix of
executives from home State and other States in the

ratio of 50:50.
21 Exit interviews 4.63 NTPC is witnessing highest attrition rate in Hydro
are analysed projects. The attrition trend for past 3 years and the
and reasons for attrition are analysed and submitted to
communicated higher management. Some special HR policies for
hydro region employees were announced in 2007
22 PMS working 4.58 PACE (Performance and Competence for Excellence)
to full is the performance management system of NTPC. The
satsfaction PMS takes into consideration the Key Performance
Areas of individuals, Functional and Managerial
Competencies, Value Assessment and Potential
Assessment. Thus, all round performance of an
individual is captured. The targets are set by employees
in consultation with their reporting officer. After
assessment the individual scores are normalized to
bring parity and remove bias. Feedback is given at the
end of each cycle which encourages two – way
communication between the executive and the
reporting officer and brings about transparency in the
performance assessment process.
23 Greivance are 4.44 NTPC has a formal grievance procedure for redressal of
redressed and the grievances of executives and non executives
informed on separately. Grievance can be addressed at three stages
time from immediate reporting officer to the CMD of the
company. In case employee is not satisfied with
response at any stage, he can escalate it to next higher
level. The maximum time for grievance resolution at
any stage is 30 days. The grievances are being handled
in a time bound manner as per the system.
24 Risk Profiling 4.31 NO
done and
communicated
Table XI. Points that has produced a response of Disagree
Except for Point numbers 3,5,6,7 and 24, the survey results are different from the points as argued
in the ERM write up (Annexure II).
7.5 ANALYSIS OF COMMETS THAT WERE EXPRESSED IN

WORDS BY THE RESPONDENTS
Part III of the survey questionnaire consisted of descriptive answers on the employee’s perception
of the enterprise risks. The responses are segregated as per the number of people who raised the
issue. An issue that is raised by three respondents or more are taken as a risk of some potential
likelihood and enumerated. The rest of the responses are segregated and summarized on major
points and the summary of these comments is given at Annexure IV.
7.5.1 Major Enterprise Risks Identified
1. Competition / power at lower costs (46)

2. Exodus of ‘Critical’ manpower (46)
3. Fuel security (Gas, Coal) for power plants (21)
4. Leadership Vacuum (7)
5. Delay in decision making (7)

6. Keeping motivation levels high (6)
7. Problems of land acquisition and other infrastructural tie ups (5)
8. Availability of technically skilled manpower for future ventures (5)
9. Interference from Govt.; Politicians (4)
10. Reduction in emotional attachment to the company due to arbitrary decisions on employees
like transfer, promotion etc. (4)
11. Venturing into new business areas without sufficient experience (4)
12. Induction of new talents with the outflow of existing talent pool (4)
13. Outdated policies and procedures (4)
14. Lack of empowerment commensurate with responsibilities (3)
15. Delays in achievement of targets (3)
16. Delays caused by vendors (3)
17. Ash disposal (3)
18. Project construction on time with quality & cost (3)
19. Better salary and perks in other organizations (3)
7.5.2 Major HR Risks Identified
1. Retaining and nurturing of talent in NTPC (46)

2. High Attr ition of hardworking and experienced manpower (21)
3. Decreasing motivation and morale of the employees (17)
4. Good talent not getting attracted to the company (15)
5. Trust building in HR. Creating Positive image of HR (14)
6. Meeting the aspirations of people in terms of promotions and transfers (13)
7. Leadership Development (9)
8. Establishing competitive pay packages in terms of market trends (8)
9. Training people to take up new Challenges (7)
10. Employee satisfaction towards work (6)
11. Performance Management System; Performe rs and non performers are being treated
equally (6)
12. Keeping employees posted at remote locations satisfied (5)
13. Lack of transparency (4)
14. Lack of planned approach in promotion policy (4)
15. Attracting talent for remote locations (4)
16. Transfer policy not very transparent (4)
17. Talent Management (Role allocation, development) (4)
18. Human Resource planning as per the expansion targets (4)
19. Too many initiatives not percolating down especially to sites (3)
20. Managing employee expectations (3)
21. Bureaucracy (3)
The questionnaire also contains questions on the employee perception on the factors that may
cause any of these risks materialise and the possible effect this scenario may have on the
company. Answers were also sought on the measures the company has in place or planned to
mitigate the damage of such a situation.
Even if, the response to the first set of questions produced some relevant scenarios, answers to the
latter two questions were rather inconclusive and only a few answers like ‘none’ or ‘not aware’
have come out repeatedly.

The answers are segregated in a matrix format to establish a correlation. Only a few points could
be correlated on a one- to-one basis and the points of correlation are not necessarily on those
issues identified as major risks. The matrix is given below.
The matrix helps to establish the fact that there are certain initiatives in NTPC which are
appreciated by the employees as risk mitigation strategies.

7.6 ANALYSIS OF QUESTION NUMBERS 3, 4, 5 AND 6 OF PART
III
Descriptio What could Describe the Describe the key Describe the key
n of risk potentially consequences of business processes / business processes /
cause this risk exposure to actions in place to actions planned to
to crystallize? NTPC? mitigate this risk? mitigate this risk?
(Controls)
Employee Insensible 1. Low morale 1. None; may be a 1. No concrete plan at
Relations handling of and few on paper present
potentially frustration of 2. Decentralisation 2. Not aware
sensitive issues
by HR / Top workforce and higher
Management 2. Loss of delegation of
employee power
productivity 3. Well established
3. Dwindling promotion policy
performance
of NTPC
from
excellent to
average over
a period of
two to three
years
Employee 1. Inferior 1. Manpower Revisit compensation Improved pay package
Attrition package and reward under process
compensation crisis due to
package attrition performers suitably
compared to because of
private sector lower pay
2. Continued 2. Delay in
perception of project
injustice in schedules
promotions 3. Loss of
and transfers profits
and the
resulting
demotivation
of employees
Success in 1. Sudden 1. Losing Attempts to identify Special packages for
new business locational advantages special assignments
areas like
exodus of business and
/ disadvantages
hydro and coal talent leading stagnation
mining to low morale 2. Problems in
2. Delay in capacity
execution of addition
mining /
hydro projects
Table XII. Points that has produced some correlation

CHAPTER 8
8.1 TESTING OF HYPOTHESES

The Null hypotheses that were proposed to be tested in the company in case, NTPC were:
1. The HR policies of the company, in case, are sufficient to have no risk due to HR issues
related to employee’s behaviour in terms of commitment.
As has come out in the analysis of the questionnaire with both positive and negative items,
most of the employees surveyed are strongly committed to NTPC. Hence we may conclude
that the hypothesis that the policies are sufficient to have no risk to the company in terms of
employee commitment can be accepted.
2. The HR policies of the company in case are sufficient to have no risk due to HR issues
related to employee output (in terms of grievance and employee turnover).
As has emerged from the analysis of the question number 16 and 32, most of the employees
are not satisfied with the grievance handling system of NTPC as it now exists. Also most of
the people are not in agreement with the statement that all grievances are addresses in time
and written response conveyed to the parties concerned.
In terms of attrition, the analysis of question numbers 16,17,18 and 19 of Part II, brings up
the result that the employees are not ready to leave NTPC for a pay hike of 25%.
However, it comes out that people are ready to leave NTPC for an organisation which offers
them more creative freedom, status or a more friendly working atmosphere.
Hence we may conclude that the hypothesis ‘HR policies of NTPC are sufficient to have no
risk due to HR issues related to employee output (in terms of grievance and employee
turnover) cannot be accepted.
3. The HR policies of the company, ni case, like leadership development, training and
performance management are well appreciated by the employees.
The questionnaire contains questions on the policies such as training (24, 35), Leadership
development (20, 22, 29) and performance management (36). The response to these questions
can be summed up as:
In spite of the elaborate training efforts by NTPC, training programmes in the specialised area
are inadequate to groom people for those activities. Further, even if there is a training
programme targeting a specific group of employees, there is no system to ensure that they
actually participate in the programme.
Most of the employees believe that NTPC does not employ any systematic and scientific
process for developing people for the leadership positions or NTPC does not have a
leadership development policy. There is a prevalent feeling among the employees that the
leadership positions are not filled after mapping the skill sets, competencies and experience to
see the best person-job-fit which emerged from the frequency analysis even if the
significance test was inconclusive.

The study also reveals that even if NTPC has a well structured performance management
system, its functioning is not satisfactory to many people.
From these results, it emerges that the hypothesis that the HR policies of NTPC like
leadership development, training and performance management are well appreciated by the
employees cannot be accepted.
4. There no risks for the company in terms of people issues other than identified in the ERM
study.
The analysis of responses show that there are a number of points which the employees perceive as
important other than what is listed in the ERM study document. Hence the hypothesis that There
no risks for the company in terms of people issues other than identified in the ERM study cannot
be accepted.
Since it has come out that even if the employee commitment is quite high in NTPC, the
employees are not highly appreciative of policies like leadership development, training and
performanc e management. Further, the dissatisfaction in the grievance handling and the attrition
tendency that has come on creative freedom and social status gives clear indication that the
organisation is not free of HR risks. We have also seen that there are many other aspects of
people risk the company does face as emerged from the survey.
8.2 THE MAJOR RISKS IDENTIFIED FOR THE

ORGANISATION
The risks in the HR area that has emerged out of both Part I and Part III of the survey are listed in
terms of the mean score or the number of people raising the issue.
Sl Points of Risks Response

No. Mean
1 Manpower at remote location will be problem 2.53
2 Remote postings are great disadvantage 2.54
3 Fast track career for high performer absent 2.63
4 Transfers and job rotations strictly follow policy 5.31
5 Training has only second priority 2.74
6 Skill-Job matching is regularly done by HR 5.25
7 Attrition will affect expansion 2.99
8 NTPC has a fair job rotation policy 5.07
9 No job rotation in practice 3.05
10 Career growth very slow at NTPC 3.13
11 No effort on employee retention by NTPC 3.15
12 NTPC manpower planning inadequate 3.26
13 No process for developing people for leadership 3.34
14 No Grievance redressal mechanism 3.46
15 Exit interviews are analysed and communicated 4.63
16 NTPC employees face labour issues 3.52
17 PMS working to full satisfaction 4.58
18 Envt and land issues create hurdle in NTPC 3.58
19 No leadership dev. policy in NTPC 3.61
20 Postings to critical positions are arbitrary 3.62

21 Grievance are redressed and informed on time 4.44
22 Training not adequate for specialised jobs 3.64
23 Labour problems are tackled in arbitrary fashion 3.73
24 Risk Profiling done and communicated 4.31
Table XII. Major Risks identified for the organisation
8.3 OTHER MAJOR HR RISKS IDENTIFIED THROUGH

DESCRIPTIVE ANSWERS
The major risks listed out by most of the employees and which are already projected in the
analysis of Part I are deleted and the rest of the rest of the points are listed here. Similar points
expresses by employees are clubbed and counted together for the purpose of listing out.
SN Points of Risks No of respondents

1 Decreasing motivation and morale of the employees (17)
2 Good talent not getting attracted to the company (15)
3 Trust building in HR. Creating Positive image of HR (14)
4 Meeting the aspirations of people in terms of (13)
promotions and transfers
5 Establishing competitive pay packages in terms of (8)
market trends
6 Leadership Vacuum (7)
7 Delay in decision making (7)
8 Keeping motivation levels high (6)
9 Employee satisfaction towards work (6)
10 Availability of technically skilled manpower for (5)
future ventures
11 Reduction in emotional attachment to the company (4)
due to arbitrary decisions on employees like transfer,
promotion etc.
12 Venturing into new business areas without sufficient (4)
experience
13 Induction of new talents with the outflow of existing (4)
talent pool
14 Outdated policies and procedures (4)
15 Lack of transparency (4)
16 Lack of planned approach in promotion policy (4)
17 Talent Management (Role allocation, (4)
development)
18 Human Resource planning as per the expansion (4)
targets
19 Too many initiatives not percolating down (3)
especially to sites
20 Managing employee expectations (3)
21 Bureaucracy (3)
22 Lack of empowerment commensurate with (3)
responsibilities
Table XIII. Major Risks identified through descriptive answers

The mean value as obtained in case of the quantitative survey are taken in the increasing order
with 4 as the expected mean is taken for the order of likelihood of the occurrence of the incident.
As there are many points identified, for better understanding of the nature of the problems it was
felt that these can be categorised into a few major heads which will help in identifying areas
which need to be looked into for affecting improvements.
The above risks compressed into a few major heads can be listed out as:
• Talent and Leadership Development

• Attrition / Retention
• Remote postings
• Attracting / inducting fresh talent
• Training and development /capability building.
• Employee motivation and satisfaction
• Functioning of PMS
• Redressal of grievances
• Pay / perks / benefits not in line with market trends.
• Manpower planning and utilisation
• Empowerment and decision making
• Site initiatives neglected
• Negative image of HR / Lack of transparency
• Systems like job rotation and transfers.
• IR and Labour issues.

8.4 RISK MATRIX FORMED OUT OF THE IDENTIFIED RISKS
From this compressed list of main points, priority is decided as likelihood on the basis of the
mean or the number of people expressing it as described earlier and the impact on the basis of a
group discussion of each of the identified risks and a risk matrix is formed as given below.
H • Training and development • Talent and Leadership Development

I /capability building. • Attrition / Retention
G • Functioning of PMS • Attracting / inducting fresh talent
H • Systems like job rotation and • Remote postings.
transfers • Employee motivation and satisfaction
L
I
K
• Negative image of HR / Lack of • Pay / perks / benefits not in line with
E L
transparency market trends.
L
O • Redressal of grievances • Manpower planning and utilisation
I
W • IR and Labour issues. • Empowerment and decision making
H
O • Site initiatives neglected
O
D
LOW HIGH
IMPACT
Table XIV. Risk Matrix formed out of the identified risks
8.4.1 POINTS IN THE HIGH-HIGH SEGMENT
There are four points that are placed in the high likelihood / high impact segment. These are
• Talent and Leadership Development

• Attrition / Retention
• Attracting / inducting fresh talent
• Remote postings.
• Employee motivation and satisfaction
These points are considered as high impact as it has come out from the survey, these points are
the ones that most of the employees have pointed out as potential risks. Attrition is a factor that is
going to affect the organisation in almost all areas of operation and maintenance, project
execution, engineering and procurements. This in turn will then affect the MOU target
achievements, generation and in turn the revenue and profit of the organisation.
The situation will be further worsened if the company fails to attract good talent. This problem as
two aspects the first one being the longer the gap generated through the exodus of critical
manpower remains, the company’s performance is bound to go down affecting the revenue and

the profit as described above. The second aspect is that of the huge shortfall of manpower that
NTPC may face in the wake of its massive expansion targets causing unprecedented delays in
project execution. As is stated earlier, NTPC has a target of doubling its generation capacity in
the next four to five years and if this target is to be realised, it has to have a good line up of
excellent workforce. Failure in this aspect may cause unprecedented project delays increasing the
project costs and the power produced in turn. This will not only cause loss for NTPC, in the times
to come, NTPC may lose out in the market due to its uncompetitive generation costs leading to
loss of customer base and market share.
Another factor that goes hand in hand with the phenomenon of attrition is the reluctance of people
for the remote postings. Since almost all of NTPC’s projects are planned at remote pithead
locations or at upper reaches of Himalayas in case of hydel stations. The general sense of neglect
being felt by the station executives adds to the reluctance of the people even if they are not
otherwise averse to the location. This situation is going to create a major impact to NTPC’s target
achievements as manpower crisis is bound to delay project execution and commissioning.
Leadership development is pointed out as the most important factor by many since NTPC has
grown into a mammoth organisation, unless it has good leadership at the helm of affaires, it even
faces the imminent danger of falling apart! Many of the employees feel that this is an aspect often
ignored by the top management while choosing candidates for leadership positions or even at the
lower levels while making decisions on career elevations. The absence of an error free appraisal
system fails to throw up the right candidates and the judgments fall into the trap of elevating the
show-men ignoring the solid citizens who sustain the organisation. This practice as it continued
for years at times assign people who may not be the best fit to positions highly critical to the
organisation. This is a situation which not only affects the immediate business of the organisation
but also the employee morale and even may create a lasting impact o the organisation.
It is a well recognised fact that the strength of an organisation is its people. This is a fact that has
been proved time and again with NTPC. The outstanding track record of NTPC in comparison to
the SEBs which started almost at equal footing is ample proof that people form the core of any
organisation’s success. The fact that its employees find themselves increasingly demotivated is an
alarm sign at NTPC should give serious attention to. Employee motivation and satisfaction
holds key to many of the issues that has come up in the survey including attrition,
reluctance for remote postings, grievances, etc.
These were the reasons why these points were considered to be the most important and
worth consideration in the High – High category of risk.
8.4.2 POINTS IN THE HIGH-LOW SEGMENT
The points that were considered in the High – Low quadrant are those which has invited equally
high degree of disapproval from the employees. However, a close scrutiny of these issues reveal
that even though these are indeed points which do create frustration among employees, these
points may not necessarily create the kind of impact on the company business or the targets on an
imminent scale. The points are:

• Systems like job rotation and transfers
A close examination of these issues reveal that these are the points that if unattended may create a
problem to the company in the long run. However, they may not affect the immediate business
prospects of the company as their effects tend to be secondary than direct in nature. Well laid out
training set up if not utilised properly will generate problem for the organisation in terms of

unwanted waste as well as lack pf self reliance in competency development. Functioning of PMS
if not satisfactory tend to lay credit of the organisational achievements on the wrong person
leaving the real achiever discouraged. The effect of this error depicts in the long term
performance of the organisation rather than form a short term business risk. Same is the case with
job rotation and transfers where people who grow high in the career ladder without he
necessary exposure to all the functional areas of the organisation end to become averse to
responsibility and decision making creating a leadership vacuum for the organisation.
8.4.3 POINTS IN THE LOW- HIGH SEGMENT
The points that are enumerated in this quadrant are those which may not be mentioned repeatedly
by many people but may cause an immediate ripple in the business scenario of NTPC. The points
that are considered under this segment are:
• Pay / perks / benefits not in line with market trends.

These points have been acknowledged as issues by a number of employees but to a lesser degree
compared to the two quadrants as discussed above and hence are categorised under the head of
low likelihood. However, an examination of thes e issues will reveal that these are issues that are
likely to cause serious consequences to NTPC’s business if not tackled promptly. Pay packages
according to the market trends is the order of the day with the supply of skilled manpower
dwindling by the day. A huge difference in pay packages is bound to upset the equilibrium a
public sector service offers of a secure job and a balanced work-life making people take a higher
risk for the handsome return. It is an undisputed fact that the tenfold attrition NTPC is facing
today is a consequence of this gap in pay packages. If not tackled proactively, this problem will
ebb off NTPC’s skilled manpower reserve in no time leaving the company with mediocre
workforce who can’t deliver even on routine commitments.
Manpower planning and utilisation is another area whose importance is only slowly being
recognised. When NTPC was given the target of huge capacity addition, which equalled
four times the expansion momentum of NTPC till now , in the 11th and 12th plan period,
little did the planners foresee the huge requirement of manpower that this target is going
to create. The consequence is already being felt as experience workforce from the older
projects are being deployed elsewhere, nobody is available to step into their shoes and
take charge. This situation is bound to create chaos for NTPC in its efforts of target
achievement.
Empowerment and decision making is another aspect which is going to create or is

already creating a hurdle in the path of NTPC’s target of enhanced growth. Decision
making can be improved only through trust and empowerment. As the company grows
larger and larger, the inertia in decision making is bound to have bigger and bigger
impact on NTPC’s business growth.
The feeling of the site initiatives being neglected is another area of potential risk which is
not being taken seriously by the planners as of today. The longer the fact that the site
workforce are the breadwinners of NTPC remain unrecognised, it is creating a disaster in
the offing.

8.4.3 POINTS IN THE LOW- HIGH SEGMENT
The points in the Low – Low segment namely,
• Negative image of HR / Lack of transparency

• Redressal of grievances
• IR and Labour issues.
Are mentioned by a number of employees but the risk survey part I yielded the result that there is
some agreement that HR does create a congenial environment in the organisation. However, the
mention by the negative image of HR / Lack of transparency combined with the redressal
of grievances may combine to show that HR is not yet being able to achieve the kind of
maturity that is demanded of an organisation in the industry sector of such mammoth
scale. However, as can be seen, this may not have any impact per say, on the profitability
of the organisation. IR and labour issues are again not issues that hold up work in NTPC
but do create difficulties in the work environment for people.
These considerations formed the basis for categorisation of the risk factors. The same was
confirmed through brainstorming in two groups of executives one from HR side and the
other from Engineers.
The purpose of the Risk Matrix is to categorise and highlight immediate risks which are imminent
in nature and need much efforts and monitoring. It may so happen that a risk in the High – High
quadrant becomes of lesser potential at a different scenario. Hence periodic review of the Risk
Matrix is essential in order to assess the scenario and the effect of mitigating actions.
Risk management at NTPC, as suggested by the consultant, also requires that the risks that are
categorised in the High – High segment are to be scrutinised for root causes and mitigating
factors. An action plan is to be drawn on the basis of this assessment. The head of the respective
function is assigned the job of the risk controller who monitors the action plan periodically for
progress and results. A Risk Register is maintained for the ease of reference and monitoring.
Board level review meetings are done on a six monthly basis to reassess the status of the risk
scenario and action results. Often, the Risk Matrix is redesigned on the basis of these findings.

CHAPTER 9
9.1 SUGGESTIONS FOR IMPROVEMENT

As discussed above, the HR Risk Matrix for NTPC is formulated. The risks as prioritised in the
risk matrix contains four categories as
High Likelihood – High Impact

High Likelihood – Low Impact
Low Likelihood – High Impact and
Low Likelihood – Low Impact
The focus of the study is to be from the impact angle as the first category becomes critical for the
organisation. The second category is where, even if the likelihood of occurrence is higher, the
impact on the organisation may not be very high. The third category is where the likelihood may
be low but if occurred, may have a major impact on the organisation. The fourth is where the
likelihood is low and the impact is also low.
The effort here is to find solutions to issues in the H-H and L-H category on priority and to
suggest solutions for issues in the H-L category also. The L-L category may be tackled on a case
to case basis as the likelihood of occurrence and impact is both low.
For the points identified in the H-H category, a risk register is prepared as under for periodic
monitoring and easy follow up for expediting of the matter. The format of the risk register can be
as follows:

NTPC LIMITED
Risk Register – Human Resources
Serial Number 1
Risk Description Talent and leadership development
Risk category Human Resources Development
Key performance indicators Organisational performance
Risk Controller Director HR
Root Causes Mitigating factors Action Plan
Failure to identify key talents Systems and processes in Introduction of assessment
in the organisation place for identifying and centres for 3 to 4 levels of
categorising talent at various executives in place of the
levels current two levels of E5 and
E7A.
Absence of fast track career Identified high potential – • Identification of leadership
growth for high performers high performance candidates positions at all levels. Eg,
should be given challenging section head, group head,
assignments to prove their HOD, etc.
capability. Special growth • Identified and willing
path for such proven talents. talents who fall within the
prescribed band of working
experience in years to be
placed in these positions.
• Selection procedure to be
made impartial and more
and more stringent as the
leadership levels go high.
• Selecting those few
exceptional talent for those
key leadership positions.
Transparency and objectivity Use of standard assessment • Long term tie up with
of the method methods and impartial reputed HR metrics
assessors for the conduct of consultants for obtaining
the assessments versatile tools for
assessments.
• Development of internal
faculties and tool
administrators to meet the
growing requirement of the
organisation.
• The assessment results
should be of enough
weightage of consequence
for the key talent selection
process
Perception of “having the Making the change highly • Ensure rotation of work area
cake” in case of leadership challenging than enjoyable. as well as work location on
positions tempting people to such assignments.
use unethical methods to • Ensure one to one matching
achieve the positions between selection and
requirement.
Table XV. Risk Register Page I

NTPC LIMITED
Serial Number 2
Risk Description Attrition / Retention
Risk category Manpower
Key performance indicators Delay / shortfall in target achievements
Opportunities available Competitive pay and work Systematic review of terms
elsewhere conditions and conditions of employment
to match with the best in the
industry.
Lack of emotional attachment Ownership and pride for the • Providing assurances on the
towards the company work and for the organisation value of the person’s
contribution.
• Employee welfare
programmes like picnics,
stage performances, get-
togethers, etc which make
the individual feel at home
in the organisation.
• Ensure HR attitude to be
pleasant and engaging
instead of aloof and
menacing.
Management not showing Feeling of importance and • Exit interview findings and
concern for the loss of being a valuable contributor in the measures contemplated
manpower the organisation. for the mitigation of causes
to be widely communicated
to all employees.
• A study may be conducted
to assess the effect of
attrition on the department
functioning.
Felling of complacency Strict enforcement of service • Ensuring all rules are being
creeping in among the rules and conditions regardless followed strictly as per the
employees due to the job of the position or image of the letter and spirit.
security making them take the person concerned. • Imposing a loss of a few
organisation for granted year’s seniority in case of
people who want to ‘test the
waters’ on return to the
organisation.
Table XVI. Risk Register Page II

NTPC LIMITED
Serial Number 3
Risk Description Attracting / inducting fresh talent
Risk category Man Power
Key performance indicators Delay / shortfall in target achievements
Opportunities available Competitive pay and work Systematic review of terms
elsewhere conditions and conditions of employment
to match with the best in the
industry.
Pull from IT firms which offer Planning and recruitment of • Multipronged recruitment
relatively hassle free work Manpower taking into account efforts to supplement the
environment with attractive the possible high rate of existing recruitment setup
packages and exposure to attrition like campus selection, walk-
international work experience in interviews arranged with
the help of consultants, etc.
• Bringing parity in
employment terms and
conditions of executives and
non executives which now
has a favourable inclination
for workmen.
• Recruitment of ITI is and
Diploma engineers to
supplement the acute
manpower shortage at
locations.
New generation not interested • People whose genuine • Efforts to enhance
in working in remote location interest lies in the recruitment efforts from
and especially in the infrastructure area. interiors than from cities.
infrastructure field • People brought up in • Efforts to recruit from
villages and service socially and economically
backgrounds not keen on backward areas.
high risk – high pay off • Instituting scholarships for
jobs. candidates identified
through screening at +2
stage for engineering with a
mutual guarantee for certain
minimum service
Table XVII. Risk Register Page III

NTPC LIMITED
Risk Register – Human Resou rces
Serial Number 4
Risk Description Remote postings
Risk category Man Power
Key performance indicators Delay in project execution schedules
Postings to locations far less Making locations postings • Allow benefits like house
attractive compared to equally or even more construction support and
Corporate office postings attractive house rent allowance at
locations similar to Head
Office.
• Compensation for six day
work week with encashable
leaves or working
arrangement similar to oil
platform employees in oil
companies.
• Provision of well furnished
accommodation for self and
family in guest houses
• Free transportation up to
family base from location.
• Arrangement/ tie ups for
rapid medical aid in cases of
medical emergencies
Fear of getting trapped in an Compulsory tenure postings Tenure postings with written
undesirable location for ever assurance of reversion back to
the previous location for
unwilling candidates
Optimisation of manpower at Evaluate the minimum • Evaluate the real
these locations required manpower and requirement of O&M
maintain that level manpower through
benchmarking studies and
maintain these levels.
• Outsourcing of service
functions to RHQs with
only critical minimum staff
at locations.
Table XVIII. Risk Register Page IV

NTPC LIMITED
Serial Number 5
Risk Description Employee motivation and satisfaction
Risk category Human Resources Development
Key performance indicators Downward trend in organisational performance
Rigid and unrealistic HR Making employee feel that he • Brining flexibility in HR
policies and procedures is a part of the organisation. policies and procedures
through periodic review of
these policies taking into
consideration employee
feedback.
• Auditing of policy
functions to ensure they
remain dynamic to the
employee requirements
• Including provision in the
current HR audit system
which cross-checks whether
employees are actually able
to get the benefit of these
policies
Unfriendly attitude of HR staff Repeated attitude training for • The concept of ‘HR as a
HR staff and creation of strategic business partner’
awareness to be given stress.
• HR personnel KPA to carry
points for customer
satisfaction survey
Table XIX. Risk Register Page V
In the process of finding solutions, the use of HR audit is suggested as a major tool for ensuring
both the dynamism in HR policies as well as the extent of reach of these policies to the grassroots
levels. The HR audit formats can be modified as given in the Appendix V – (a) & (b).
Impact of attrition study also can be included in the audit format so that notice is taken of the
issue by the higher management

9.2 ISSUES IN THE HIGH-LOW AND THE LOW-HIGH
QUADRANTS
9.2.1 HIGH – LOW

• Systems like job rotation and transfers
Are the issues that have come up in the High-Low quadrant where, the frequency of occurrence
may be high but may not create a very strong impact on the immediate profitability or the target
achievements for the organisation. Some of these issues can be tackled as follows:
Training and development /capability building : Use the existing training resources for
strategic purpose like imparting training in the new areas to take up challenging assignments in
Hydro, Coal Mining, Nuclear etc where NTPC does not have high levels of core competence
presently. This will help utilise the manpower reserve NTPC has at present fully well. NTPC may
also try tie ups with existing players in these fields to arrange long duration on the job trainings
for selected executives for these new ventures where on return they may be deployed in the
leadership and guidance roles.
Functioning of PMS: The PMS system in NTPC came into existence as a part of the
organisational transformation initiative done in consultation with an external agency. The
initiative had generated a good amount of interest among employees. Many of the employees who
felt that their efforts and contributions to the organisation are not being properly appreciated
because of the attitudinal problems of peers and colleagues, felt the new system will provide them
with a better tool to high light their efforts. However, the system fell short of expectations and is
currently dumped in the same category as the previous highly subjective evaluation tool.
Improvement of the system can be brought about by applying more objective methods like online
monitoring of performance on a daily basis in the form of performance diary which forms the
basis for evaluation. The next step is to segregate the incentive purpose and the career
development purpose and use the evaluation system only for the performance incentives part.
Career development path should follow the leadership development system proposed in the risk
register action plan under the issue on Leadership Development.
Once reward system on an objective basis is started, it may help in a long way in making people
motivated as they could see that their effort is being rewarded.
Systems like job rotation and transfers : NTPC’s policy on job postings necessitates
that there exists a one to one ratio in the number of executives from the home state to
those from other parts of the country. This policy by itself generates a section of
executives who are not comfortable with their current place of posting and are in the look
out for a change of posting. The management finds it difficult to fulfil the wishes of this
section of executives due to
i) Lack of openings at the place requested by the employee

ii) Huge demand for metro postings due to the location advantage
iii) Reluctance of those who are in their home state/ in metros to move out
iv) Reluctance of departments to release an experienced employee fearing target delays.

However, there can be postings on compassionate grounds which are often perceived as being
misused.
Possible solutions to this situation can be
i) The introduction of compulsory tenure postings to locations outside their home state/metros
for all employees with a guarantee to posting back at the end of the tenure to their place of
choice.
ii) Making metro postings less attractive by providing for higher incentives, six day week
compensation in the form of fully encashable ELs, provision for leased accommodation
anywhere in India for the family, working conditions similar to oil platforms like a longer
break after a couple of week’s continued duty, etc.
As in the case of transfers, job rotation also is a major factor for discontent in NTPC, especially in
the O&M area. This is because of the extreme reluctance of the plant / O&M in -charge to
exchange a well trained hand for a new comer for fear of interruption of the generation. This
leads to situations where executives have been doing the same job for more than 15 years making
their experience extremely narrow that they find it difficult taking up challenging assignments as
required as they progress in the career ladder. The situation often gets worse when some of these
employees refuse to adapt to the work requirements once posted to new area after a lengthy stint
at a previous function.
A possible solution to this issue could be detaching the work from the personality of the worker
by building in customised modules in ERP which allow menu guided execution of routine
activities which does not demand a highly experienced hand for the accomplishment of daily jobs.
Introduction of performance based incentives also may motivate the employee to make a
conscious effort to settle down in his new assignment. Another option is to ensure person-job fit
through open process of job rotation and transfers on request.
9.2.2 LOW – HIGH
The points in the Low – High Category are
• Pay / perks / benefits not in line with m arket trends.

These issues have come up in the Low – High quadrant where, the frequency of occurrence may
be low but may create a very strong impact on the immediate profitability or the target
achievements for the organisation. Some of these issues can be tackled as follows:
Pay / perks / benefits not in line with market trends: Being a Public Sector Company, NTPC
does not possess the mandate to decide its own pay scale or remuneration structure as of now.
Since the pay revision takes place only once in ten years, the market scenario changes drastically
by the end of the period, which is the situation today, to have the pay packages competitive. In
addition to this, there is no discrimination in pay for the performers and non performers which
again is mandated in the Public Sector setup. This makes it impossible to have a competitive pay
structure with the private where, the non performers are systematically eliminated from the roles
and only valuable contributors are kept.
Performance based variable incentives are bound to give some satisfaction for the performers
which is envisaged in the current pay revision. As pay revisions are already due, there is hope that
at least for sometime to come, there will be parity with the private.

Manpower planning and utilisation: This is an area which is always in dispute and as NTPC’s
expansion targets quadrupled from the 11th plan (from 1000 MW per year to 45000 MW in the
next ten years), the manpower planning also is thrown out of gear. Two factors which complicate
the situation are (i) the benchmarking NTPC has adopted of having 0.6 person/ MW of capacity
could only be achieved in the O&M area. The total manpower to megawatt ratio still remains 1.05.
The requirement of quality manpower at construction locations will put further pressure on the
O&M functions as more and more people will be drawn from this pool to meet the requirement (i)
The drastic shortfall in the availability of quality manpower in the market failing recruitment
efforts as attrition to IT sector starts from day one after the recruitment process.
Adopting ITIs as proposed by the Government will help NTPC augment its manpower in the
workmen area in the long run but the process is yet to begin. Another problem in this area is the
lack of instruments to augment the performance of the non executives like that of the executives.
The policy in this regard may need a relook into if this source can be of any value to NTPC.
Empowerment and decision making: This is an area that has remained a matter of concern for
NTPC for quite sometime now. The reason is that even if there is a well spelt out and documented
delegation powers available for ready reference, people tend to take advice from superior even in
the matters of routine nature. This practice is being encouraged by many superiors as they feel
being in touch as also they too adopt the same practice. This practice became more of a rule as
CVC became more proactive and insisted on very stringent scrutiny of decisions which lead to
the situation that no one other than the very top man making any decisions even routine in nature
that too unless he has no other option. The main cause of worry in such situations is that the
person’s career gets irretrievably spoilt with his losing a few years of seniority if an enquiry by
the vigilance starts on any of his decisions. This leads to the situation that not only NTPC is not
being able to meet its enhanced targets, but also is not being able to meet its own previous
benchmarks.
The situation again is partially out of control of NTPC management as CVC guidelines are to be
followed by all institutions. However, NTPC may make amendments in its career regulations
such that the en quiry does not affect the individual until malafied intentions are established
beyond doubt giving provision for unintentional mistakes.
Site initiatives neglected: It often happens that the unions based at Corporate Centre demand
compensation equivalent to Field allowances and unit specific incentives ignoring the fact that
amenities like five day work week and self lease on own house are absent is site postings. These
demands are often acceded to by the management also generating further feeling of negle ct in the
field employees. This creates a perception of exploitation as it is common knowledge that the
revenue of NTPC comes totally from the stations.
NTPC may have to evolve higher autonomy to he stations and the station HR may have to be
sensitised to the people issues. Bringing parity or even better terms for location postings is an
immediate requirement that is to be fulfilled if the disillusionment is to disappear.
Further measures that reduce grievances and frustration can be thought about by HR like
community programmes and celebrations, recognitions for extra curricular achievements,
welcome parties, etc. The location HR can arrange periodic interaction meetings of each
department with higher management personnel to improve communication. Programmes like
Mentoring, HR for non-HR executives, Nodal officer and Own a department for HR executives,
Internal Customer Meets and Single Window System for all service functions which are
introduced in NTPC may have to be strengthened and implemented all over the organisation.

9.3 CONCLSIONS
HR is a vital function in any organisation which holds the key to may of the issues the
organisation faces in its quest for business excellence. People factor need the attention and care it
deserves at the hand of the planners if the organisation is to achieve the targets it has set out to
achieve without difficulty. Ignored continuously, the people factor which holds the organisation
together can turn into a major risk factor that threaten to even shake the foundations of the
organisation.
It is important to realise that merely having the desired policies and regulations are not sufficient
for an organisation to succeed in its efforts to excel or to synergise the workforce into productive
output. Most often highly accla imed policies and practices fail to fetch the desired results the
reason being the issues involved are people. As we accept the saying that no two persons are alike,
we accept the fact that customisation is the word of the day as far as people policies are
concerned. Hence people risk mitigation strategies have to be customised to the prevailing
environment and also need constant monitoring and course correction if these strategies are to
yield the desired output.
NTPC is a good example in this context. Its planners had the foresight to frame policies and
practices that nurture and strengthen a work environment bubbling with synergy and quest to
excel. However, as came out from the current study, these policies have started losing relevance
requiring higher level of customisation and augmentation to sustain and improve the out standing
track record of NTPC.
However, risk mitigation can be achieved only when these efforts reach the grass-root level
employee who feels reassured that the company cares for him and values his contribution.
HR Risk is a product of the perception of the employees and the main function of a good HR is to
manage these perceptions so that risks are turned into advantages for the organisation.

REFERENCES
1. Institutionalising Risk Management by Corporate Planning, NTPC.
2. How Risk Management Works Sunday, January 13 2008 Nancy Germond -

http://www.allbusiness.com/company-activities-management/management-risk-
management/6180653-1.html
3. Ref. www.theiia.org – Position Statement, The Institute of Internal Auditors - The Role
of Internal Audit in Enterprise-wide Risk Management
4. BNA policy and practice series , The Bureau of National Affairs, Inc., 1995. -
www.emeraldinsight.com
5. Domingo Verano-Tacoronte and Santiago Melia´n-Gonza´lez University of Las Palmas

de Gran Canaria, Las Palmas, Spain “Human resources control systems and performance:
the role of uncertainty and risk propensity” www.emeraldinsight.com/0143-7720.htm
2007
6. The Human Resources Audit-By Kelli W. Vito-Internal Auditor April 2008
7. Int. J. of Human Resource Management 16:6 June 2005 929-948 |3 Managing human
assets in an uncertain world: applying real options theory to HRM Mousumi
Bhattacharya and Patrick M. Wright.
8. Human resources risk management and EAP services: EAPS can be valuable partners in
helping control and monitor organizational efforts to reduce human capital risks. (EAP
Services To The Organizational Client) - The Journal of Employee Assistance 01-AUG-
03 – Online - Smith, Bob
9. Human Resource Management in India: ‘Where From’ and ‘Where To?’,

Research and Practice in Human Resource Management, 15(2), 92-103.
10. HR Focus June 2007 Volume 84 No. 6 Www.ioma.Com/Hr - Strategic Hr
11. Policy guideline on HR audit system of NTPC
12. Risk Management and the HR Executive: Written by Valerie Freder ickson
13. businessballs.com
14. (www.assess2perform.com)
15. (A causal
model of organizational performance and change Journal of
Management, Sept, 1992 by W. Warner Burke, George H. Litwin)
16. (Handbook of Marketing Scales by Bearden and Netemeyer)
17. http://www.charityvillage.com Blair Witzel, 2005 “Bad things that can happen to good
people: Identifying project risks”

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HR Risk Management of NTPC Nov.

HR RISK MANAGEMENT OF NTPC

Domain: HUMAN RESOURCE

Knowledge Management System

Key Words : Risk Mitigation, Retention, Attrition, Inspiring, Employee

Submitted by : Ms T.M.Devi, Sr.Manager(HRD), PMI, Noida, 9868390843,

A dissertation submitted in partial fulfillment of the requirements

Post-Graduate Diploma in Management

XX National Management Programme

Management Development Institute

A dissertation submitted in partial fulfillment of the requirements

under the guidance of

Shri Ashok Swarup Dr. Tanuja Sharma

XX National Management Programme

Management Development Institute

Dissertation by T M Devi, Roll no 52, NMP 20 Page 2 of 152

Dissertation Examination Committee for evaluation of dissertation

Dissertation by T M Devi, Roll no 52, NMP 20 Page 3 of 152

This is to certify that Ms. T M Devi, a participant of the XX National Management

Dr Tanuja Sharma Shri Ashok Swarup

Dissertation by T M Devi, Roll no 52, NMP 20 Page 5 of 152

I am especially thankful to Sh Ashok Mehra, ES to GM (HR-EOC), Dr R K Sharma, Sr

I am thankful to the seniors in my department Sh A C Chaturvedi GM (HRD & PMI) and Sh

Dissertation by T M Devi, Roll no 52, NMP 20 Page 6 of 152

No amount of words is sufficient to express my gratitude to my guide Sh Ashok Swarup,

Dissertation by T M Devi, Roll no 52, NMP 20 Page 7 of 152

A Study of the Risk Aspects of the HR policies Followed at NTPC

Dissertation by T M Devi, Roll no 52, NMP 20 Page 8 of 152

Dissertation by T M Devi, Roll no 52, NMP 20 Page 9 of 152

2.1 LITERATURE SURVEY 18

3.1 RISK MANAGEMENT AND NTPC 42

4.1 PROBLEM FORMULATION 51

5.1 RESEARCH DESIGN 59

Dissertation by T M Devi, Roll no 52, NMP 20 Page 10 of 152

6.1 DATA ANALYSIS 62

7.1 RISK PERCEPTION RESULTS AND INTERPRETATIONS 122

8.1 TESTING OF HYPOTHESES 132

9.1 SUGGESTIONS FOR IMPROVEMENT 140

Dissertation by T M Devi, Roll no 52, NMP 20 Page 11 of 152

A Study of the Risk Aspects of the HR policies Followed at NTPC

Table No. Description Page

Table I: Envisaged growth chart of NTPC 14

Table II: SWOT analysis of NTPC 16

Table III. Principal characteristics of the control systems 24

Table IV. Principal Uncertainties associated with human assets 29

Table VII: HR audit team structure at NTPC 40

Table VIII: HR audit Schedule and activities at NTPC 41

Table IX. HR solutions in terms of options for the Uncertainties (risks)

Table X. Points that has produced a response of Disagree 127

Table XI. Points that has produced a response of Disagree 130

Table XII. Points that has produced some correlation 132

Table XII. Major Risks identified for the organisation 133

Table XIII. Major Risks identified through descriptive answers 134

Table XV. Risk Register Page I 141

Table XVI. Risk Register Page II 142

Table XVII. Risk Register Page III 143

Table XVIII. Risk Register Page IV 144

Table XIX. Risk Register Page V 145

Dissertation by T M Devi, Roll no 52, NMP 20 Page 12 of 152

A Study of the Risk Aspects of the HR policies Followed at NTPC

Appendix No. Description Pages

I AUDIT CHECK LIST i-xiv

II QUESTIONNAIRE ON ENTERPRICE RISK MANAGEMENT