UNIVERSITY OF CENTRAL PUNJAB

PAK ELEKTRON LIMITED

Project: Intro. to Management

BACKGROUND
In 1948, the Saigols migrated from Calcutta and initiated their business in Lyallpur (later named to as Faisalabad), the textile city of Pakistan, under the banner of Kohinoor Industries Limited. The Kohinoor Industries is an umbrella group consisting of the following different companies. KOHINOOR TEXTILE MILLS The Kohinoor Textile Mill has state-of-the-art quality control from raw material to finished product manufacturing. Its laboratory is top rated amongst the best laboratories in Pakistan for testing of textile raw materials, other inputs and yarn.

Initial Capacity:25,000 spindles Current Capacity: 71,648 spindles

PAK ELEKTRON LIMITED (PEL) In 1978, the Saigol Group of Companies purchased major shares of Pak Elektron Limited. At that juncture, the company was only manufacturing transformers and switchgears. With the Saigols in management, PEL started expanding its product range by entering into Air Conditioner manufacturing. PEL has two divisions: Appliances Division Power Division

SARITOW SPINNING MILLS & AZAM TEXTILE MILLS In 1987, the Saritow Spinning Mills and Azam Textile Mills were established under the banner of Saigol Group of Companies. Saritow Spinning Mills is a spinning unit with 25,440 spindles capacity. Facilitated with the most modern and efficient Japanese and European machinery, its knitted yarn is renowned in the Far East and Europe for its fine quality. Azam Textile Mills is reputed for its carded and combed yarn, which is quite popular for premier knitting and weaving. KOHINOOR POWER COMPANY LIMITED In 1991, the first power unit commissioned in Pakistan, in the Private sector, was Kohinoor Power Company Limited. Its present production capacity is 15 MW. KOHINOOR ENERGY LIMITED 1995, another power unit, Kohinoor Energy Limited, was established. Kohinoor Power Limited is a 120 MW power plant located on the outskirts of the city of Lahore. This project has an annual turnover of $80 million.

PROFILE:
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. Pak Elektron Limited alone has a turnover of over 180 million US Dollars. VISION STATEMENT

To excel in providing engineering goods and services through continuous improvement.

MISSION STATEMENTS

To provide quality products & services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources To focus on personal development of our employees to meet future challenges To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility.

SLOGAN Change your Life

The company comprises of two divisions: Appliances Division Power Division

Pak Elektron Limited

Appliances Division

Power Division

APPLIANCES DIVISION
PELs Appliances Division is the flag carrier of the Saigol Group. This Division of PEL consists of home appliances manufacturing. In 1981, PEL window type air conditioners were introduced in technical collaboration with General Corporation of Japan. In 1986-87, the company started manufacturing of refrigerators in technical collaboration with M/s IAR-SILTAL of Italy.

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In 1987, PEL deep freezers were also introduced in technical collaboration with M/s Ariston of Italy. In 2006, the Company started manufacturing of split type air conditioners of various capacities as the customer choice has shifted from window type to split type air conditioners. The product has received good response from the market, which encourages the company to multiply its production in the coming years. Today, PEL has become a household name. Its products are not only in great demand in the local market but the company has also started exporting its appliances to foreign markets. AIR CONDITIONERS PEL window-type air conditioners were introduced in 1981 in technical collaboration with General Corporation of Japan. Ever since their launch, PEL air conditioners have had a leading position in the market. PEL air conditioners cooling performance has been tested and approved by Copeland and ITS USA. With the shift of consumer preference from window type to split type air conditioners, PEL has started manufacturing split type air conditioners. REFRIGERATORS The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s IARSILTAL of Italy. Like the air conditioner, PEL's refrigerators are also in great demand. Today, PEL Crystal has 30% market share. Its cooling performance is tested and approved by Danfoss, Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland. DEEP FREEZERS PEL deep freezers were introduced in 1987 in technical collaboration with M/s Ariston of Italy. Because of durability and high quality, PEL deep freezers are the preferred choice of companies like Unilever.

POWER DIVISION
Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both are equipped with latest technology, state of the art testing facilities and environment friendly production process. PEL Power Division manufactures energy meters, transformers, switchgears, Kiosks, compact stations, shunt capacitor banks etc. All these electrical goods are manufactured under strict quality control and in accordance with international standards. PEL is one of the major electrical equipment suppliers to Water and Power Development Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are the largest power utilities in Pakistan.
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Over the years, PEL electrical equipment has been used in numerous power projects of national importance within Pakistan. PEL has the privilege of getting its equipment approved and certified by well-reputed international consultants such as: Preece, Cardew and Rider, England Harza Engineering Company, USA Snam Progeti, Italy Societe Dumezm, France Miner & Miner International Inc. USA Ensa, France

Strategic partnership with multinationals of repute have enabled the PEL Group to incorporate new technologies into existing product ranges, thus giving the Pakistani market access to innovative, affordable and quality products.

ORGANIZATIONAL HIERARCHY AT TOP LEVEL

DEPARTMENTS AT PEL
HUMAN RESOURCE DEPARTMENT Human resource department of the PEL Company is very conscious of hiring employees for the company. They set the standards for hiring new people. HRM department mainly hires from external sources. This is usually done through newspapers, websites etc. It also sets salaries, packages and TA DA allowances. MARKETING DEPARTMENT The marketing department generally analyzes the needs and wants of the customer. Then communicates customer needs to the company which in turn launches products accordingly. The marketing department is responsible for launching strong campaigns. SALES DEPARTMENT Sales department is responsible for making sales of the product. This department generally takes orders from the market, gives information to the credit control department which forwards it to the Head Office. Head office discuss situation with the finance department who grant authority to area credit control department to settle terms and conditions with dealers. CUSTOMER SERVICE DEPARTMENT This department is very important for the company because it creates the good will of the company. It services the customers who have their claims and through this makes the customer loyal. It also gives the feedback to the head office to provide the required spare parts. CONSUMER MARKETING DEPARTMENT Consumer marketing department gives packages to the low-income bracket consumers to attract them to purchase their products. They have their own area offices. TRADING DEPARTMENT Trading department is involved for importing products. The required parts/products are imported according to the demand of the customer such as split unit. PRODUCTION DEPARTMENT Production department oversees the production of the products. Raw material is purchased from the suppliers and passed on to the factories where they are utilized.

DISTRIBUTION DEPARTMENT The final products from the production department is distributed to the dealers and then ultimately to the consumers. This department is given the responsibility of distributing the products according to the requirement and demand of the product. PROCUREMENT DEPARTMENT PEL has state of the art methods of production and they also obtain the products and raw material not only from Pakistan but also from Asia, America, Europe and Africa. So for this purpose PEL has two different departments for procurement, which are: Local Procurement Foreign Procurement

ADMINISTRATION (IR & A) Key responsibilities of IR & A department are maintenance of attendance, maintenance of stores, checking the material in & out from the factory, maintenance of factory, provision assistance to all departments regarding material. RESEARCH AND DEVELOPMENT DEPARTMENT It is a department of active and professional people, having distinctive characteristics, who always remain engaged in designing goods better than before. These experts fully coordinate with the marketing department and interpret their findings for introducing new features in the same products or designing and launching new products into the market.

HR DEPARTMENT
In PEL, merit selection, improved compensation, training and accountability at each level are being introduced to increase motivation and productivity. This in turn leads to development of quality personnel with leadership attributes to face the challenges ahead. The management has been further strengthened through recruitment of managers with proven professional records and market credibility. They will not only provide the required leadership but also act as Agents of Change to improve the organizational structure. PEL considers its human resource as an asset of the organization and manages it according to the needs of the modern era. The major responsibilities handled by the HR department are: Recruitment and Selection Learning and Development (Training and Development) Compensation and Benefits Manpower Planning Industrial Relations Union Communications Terms and Conditions of Employment

The HR department is headed by the HR manager MR. Ali Kamran. The structure of the HR department is as follows:

HR Manager

TL Learning and Development

TL Recruitment

TL Compensation and Benefits

HR Operations Executive

Trainee (Power)

Trainee (appliances)

TL Recruitment

The HR department handles all the above mentioned activities and more in its operations. The major proportion of theiur work is of the tasks of Recruitment, Training and Performance appraisals. For the smooth operation of these three domains PEL has had developed different management software that has been deployed internally at the PEL office. These three systems are: Recruitment Management System Training Management System Performance Management System

This software has been developed in Microsoft .NET technologies and is specifically tailored to the needs at the HR department at PEL.

MANAGER INTRODUCTION
HR MANAGER: The Human Resource Department is headed by Mr. Ali Kamran. He has a broad experience in the HR sector and has been associated with PEL for more than 15 years. His credentials are as follows: 1. 2. 3. 4. 5. HR Manager 37 years old. 15+ years of experience MBA from University of the Punjab Major experience in HRM

Due to the unavailability of any official endorsement of our visit to PEL from UCP, we were unable to get an appointment with Mr. Ali Kamran. We were directed to a subordinate of Mr. Ali Kamran who directly reported to him on the matters of the department. TEAM LEADER: Our major communication regarding our project was with the Team Lead at the HR department, Mr. Fayaz Qayyum. His credentials are: 1. 2. 3. 4. MBA 2006 Superior University Haier PEL 4 years HR Department

He provided us with some of the organizational information and organizational structure. As we were unable to produce any official letter, he was unable to provide us with the official printed organizational structure as per the company policy. But he was kind enough to provide us with much information regarding the company structure, its hierarchy and specifically the HR department.

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MAJOR CHALLENGES TO HRM:

The HR department is constantly facing many challenges to its operations. Some of the major areas are: 1. 2. 3. 4. 5. 6. Recruitment of Experienced Personnel Training & Development Power Crisis Inflation Economic Recession Performance and Compensation

One very major concern at PEL is recruitment of experienced personnel. As PEL is a highly technical engineering firm, its requirement in human resource tends to be of extremely technical, educated and skilled labor. Such labor is hard to come by. And in the event of the availability of such labor, there is fierce competition in the market. People have the option of going to many of the multinationals that are now operating in Pakistan. Such companies tend to steal away good skilled labor from other companies leaving the company that trained them with a grave loss. This bears a heavy cost to the company both in terms of finances and technical skills lost. Coupled with the ongoing recession and high inflation, employee loyalties are at an all time low. Even a marginally better offer is enough to pull away an employee. PEL recruits from both external and internal sources. Internal recruitment tends to be beneficial because theres really no substitute to already knowing a candidates strengths and weaknesses. It is often much safer to promote employees from within, since youre likely to have a relatively realistic view of the persons skills than you would of an outsiders. Internal candidates may also be more committed to the company. Morale may rise, to the extent that employees see promotions as rewards for loyalty and competence. Internal candidates may also require less orientation and training than outsiders. This process of internal hiring helps to keep the skilled staff within the company.

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CASE STUDY ON MANAGEMENT ISSUES IN PAKISTAN

CHALLENGES AND OBSTACLES Unfortunately, not much heed has been paid to Human Resource Management in Pakistan. We are still in the process of renaming our Personnel Departments as "Human Resources", whereas the developed markets are raising questions: "Is HR a career in crisis?" The fact is, the role of HR is evolving constantly and we need to move away from the traditionally administrative function and consider it as a major contributor in organizations successes by aligning the HR goals with the Organizational Goals. Our situation is different than that of the developed markets because HR here is mainly practiced by multinational companies. A few enlightened Pakistani firms also have HR functions but not so well defined. There is an increasing trend of outsourcing the HR functions like recruitment and selection, training and development. In many organizations various HR models are applied as such ignoring the cultural & infrastructural difference and size of organization. However, the criticisms about HR seem to be the same around the world and this is at the heart of the issue. HR is progressing very fast. More and more companies are now looking for HR Managers to manage their human assets and their issues. Institutes have also emerged teaching HR courses realizing the market demand. Different organizations have different perceptions about Human Resource. In some organizations HR personnel face resistance from old employees and from the top management too. Resistance of top management is that they do not understand the true nature of HR. At one place the top management used to forward every problem to HR whether it had a link with HR or not. Production is not up to the mark or the Security cameras are not working, the problem is forwarded to HR. It was difficult to convince the people at the top that these problems are out of the scope of HR. Then there was a time employees used to disregard HR. In the absence of HR department, its responsibilities are shared by other departments. When HR is created people feel that HR is trying to reduce their authorities and as a result conflicts start arising. What they don't know is that HR will actually benefit them by streamlining the activities and creating a transparent, fair equitable system that could provide equal employment opportunities, justified promotions, tenure track and providing solution to the queries related to insurance, medical etc. They would get an organized organizational structure with proper grading, proper pay structures, promotion plans and employee compensation and benefits plans etc. In most of the organizations in Pakistan the top management suddenly discovered that the solution to all their problems is in establishing an HR department. An HR Manager is hired. First of all he has double pressure on himself. He has to develop an HR department and for that he needs to design all the required formats and flowcharts of processes that fit to that organization. He also has to look into problems that are urgent and need his attention. Then comes the operational side of HR; recruitment and selection, training and development, performance appraisal, compensation and increments etc. All the key people push him from all sides. Top

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management pressurizes him to show quick results. And the HR Person is left with confusion with what to do and what not to. Another major obstacle in the way of HRM advancement is the aptly named Saith culture in Pakistan. This is the sole-proprietorship that is a nightmare for educated HR professionals. The only reason for having an HR department in these companies is to show that the company follows international standards. Some people say they only have this department to fulfill the ISO organizations requirements. Saith is basically a mindset. These people expect the HR manager to save money at all costs. They need a shield from the employees who complain or are dissatisfied with anything from salaries to work environment. The HR department becomes nothing more than a calculator and a front face of the top management to keep employees at bay rather than become a part in strategic decision making. SOLUTIONS/RECOMMENDATIONS The ongoing market trend therefore asks the institutes to develop a corporate academia linkage so as to discover what HR related courses must be taught to the HR students. Just teaching the courses are not enough for preparing them to deal with the professional life issues that may arise. HR students must also be taught that how to deal with the problems mentioned above in professional life. Incoming fresh graduates must be provided training before being released to the waters of the employment world. This training must adhere not only to the emerging trends in the field of HR internationally but be specifically tailored to the needs and issues of the Pakistani market. Awareness should be increased among heads also. The top management needs to be educated that the HR department is more than just a record-keeping, salary disbursing and certificate making department. It must be realized that by aligning HR goals with the organizations goals, the company can greatly benefit from a unified vision and progressive approach.

GENERATION NEXT PROPOSALS New HR professionals feel that HR in Pakistan is slowly evolving and companies are beginning to take it seriously. They feel that HRs true potential will begin to show in the coming decade as better trained professionals will keep entering the market. This will cause the older Saith companies to finally realize that HRM is a science and an art that can bring benefits to organizations in a multitude of forms. How to incorporate HRM in its true form into these companies is a quite the challenege. There usually is resistance to such overall change in the working of the company. It is recommended to move a competent person from inside the organization into new HR department instead of hiring

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a new person. This would be an excellent method to incorporate new HR practices from within the company than having to create a new department from scratch. A person on the inside has inside knowledge and will be better able to bring about the changes that are required. He would already have the understanding of the inner workings of the organization and will be in a position to create and organize an HR department that caters to the specific needs of the company. One of the issues in such a situation is that the person may not have the courage to stand up to the management to implement the changes. Another approach would be to hire services from an HR consultant to support the HR person. The consultant would then become a part of the company and observe its working. After analyzing the company the consultant would present his findings to the HR manager. The consultant can suggest better solutions and would be more useful as he would not have any pressure on him from the top management and the employees.

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