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HR Practice in auto component manufacturing Industry -
July 18th, 2009
I. CORPORATE OVERVIEW
Feeding the world, protecting health, and providing the conveniences of life. That is the mission of FMC.
With their superior technology and strong partnerships with customers, FMC's people are finding solutions that are helping to change people's lives for the better. Today, FMC maintains leading positions in three chemical markets: Agricultural, Specialty and Industrial.
Ever since their beginning in California in 1883 when John Bean invented the first piston sprayer for agriculture, FMC has continued a proud heritage of pioneering solutions for their customers. Today, they use an array of advanced technologies in research and development, mining and manufacturing to produce customized products and solutions for the many markets they serve. As a global leader utilizing advanced technologies and customer-focused research and development, FMC provides innovative and cost-effective solutions to food and agriculture, pharmaceutical, healthcare, pulp and paper, textiles, glass and ceramics, rubber and plastics, lubricants, structural pest control, turf & ornamental markets, specialty and related industries.
Today, FMC continues changing lives as the innovative force behind industry and agriculture, where their products maintain leading market positions.
FMC's Spirit of Invention was born in 1883 when founder John Bean created an innovative insecticide spray pump to combat scale, an infestation that was ravaging California's orchards and endangering the livelihood of growers.
Today, FMC continues changing lives as the innovative force behind industry and agriculture, where our products maintain leading market positions.
FMC Corporation is one of the world’s foremost, diversified chemical companies with leading positions in agricultural, industrial and consumer markets. Since its inception in 1883, FMC has been providing solutions to the world’s best companies and their customers. Today, they use an array of advanced technologies in research and development to improve the delivery of medications; enhance foods and beverages; power batteries; protect crop yields, structures and lawns, and advance the manufacture of glass, ceramics, plastics, pulp and paper, textiles and other products.
FMC Corporation has made a number of divestitures over the past several years.
III. THE COMPANY
The company which we visited is GTN Engineering Ltd(GTNEL), a subsidiary of FMC Corporation, California. The manufacturing unit is located at Semmipalayam, Palladam Taluk.
GTNEL manufactures high pressure valves, they employ 452 people in various cadres ranging from administration, shop floor and R & D.
IV. ORGANISATION CHART
Chief Operations Officer Vice President Chief HR Officer MD
Sales & Marketing
Assistant Manager HR
We have restricted ourselves to the HR vertical, as the organization as a whole has more than 28 departments.
1. FUNCTIONS OF HR MANAGER
The basic managerial functions comprises of planning, organizing, directing, controlling and staffing. Several strategies and techniques are used by the HR personnel for the effective implementation of the basic managerial functions.
Different HR policies are designed and implemented in the company by the personnel team. These policies are formulated by identifying the needs of the employees, collecting information from various sources and specifying different alternatives. The HR policies include social responsibility, employment, promotion, development and education.
The firm strongly believes that these policies allow an organization to clear with on the nature of the organization, what they should expect from the company, what the company expects of them, how policies and procedures work at your company, what is acceptable and unacceptable behaviour and the consequences of unacceptable behaviour. All the policies of the company are posted in the common notice board at the entrance of the first floor.
The personnel department of the firm includes 12 members at different levels ranging from general manager to junior manager.
Junior manager→ Senior manager→ Asst. manager→ Manager HR→ GM HR
The HR management occupies the central portion of the organizational chart and is connected to all the other departments. The important functions of the HR department includes recruiting, hiring right person for the right designation, training, policy making, strategic planning, coordinating, motivating, mediating, counseling, housekeeping and legal consulting.
1.1. WORKER RESPECT
FMC believes that all employees have the right to work in an environment that is free from harassment, intimidation and discrimination. All management personnel are responsible and accountable for assuring that the environment at FMC and all its subsidiaries is free of discriminatory conduct. Any form of harassment will not be tolerated. And throughout the world, in the 26 countries in which the company operates, the employees are treated fairly, respecting their collective bargaining rights, consistent with local laws.
Recruitment is the process of attracting qualified applicants for a particular job and stimulating them to apply for that job. In FMC and its subsidiaries, the recruitment is a structured process and also done through consultancies.
Human resource department handles the recruitment process and the department staffs are trained to handle the recruitment procedure in an effective way. Human resource planning is done. They decide the number employees needed. Knowledge, skills and abilities required for that job are prepared. In FMC, the selection process is followed for all the levels from workers to the managerial level.
HR department also makes the decisions regarding the outsourcing, flexible staffing. In certain subsidiaries of FMC the workers are employed on contract basis. This helps the firm to maintain their rules and goals.
The requirement of the employees mentioned in the advertisement, consultancies and also by internet. The candidates are supposed to submit the application which contains all the details about them within a specified date. Later the applicants are directed to attend the selection process.
2.1. RECRUITING SOURCE CHOICES
In FMC and its subsidiaries, there are two recruiting source choices depending on the necessity.
• Internal Recruitment
They recruit within the organisation tapping into the databases, job postings, promotions, and transfers. This provides the means that allow the current employees to move to other jobs. Internal recruitment at FMC usually happens as a part of performance appraisal. They maintain Human resource information systems (HRIS), helps HR staff members to maintain background and KSA information on existing employees. They continually update the employee profile. At FMC the process of internal recruitment is common among the workers level.
• External Recruitment
The company goes for external recruitment. The applicants for the job at FMC should go through the selection process conducted by the respective department heads.
FMC looks for people with a proven track record for:
• Approaching problems analytically.
• Focusing on providing solutions to customers.
• Contributing, regardless of their level in the organization.
• Demonstrating a genuine respect for the diversity of people.
The company employs people across a broad range of occupations in locations across the world. Most often they have openings for experienced professionals and undergraduates with technical degrees. The company provides more benefits and a motivating and positive working environment.
Following the recruitment procedure, the applicants appear for the selection process.
At FMC and its subsidiaries, there is a structured selection process. It consists of the following steps:
• Screening applications
This step is to shortlist only the suitable candidates who have all the required qualifications.
• Written test
The written test is conducted to know about the candidate’s knowledge about the job that they have applied. Written test consists of intelligence test and aptitude tests.
• Selection Interview
It is an oral interview conducted after the written tests and this is to know about the candidates’ skills and job experience. Certain situational questions are also confronted and the response of the candidates is evaluated.
The company also makes reference checks for the candidates who are to be selected. Finally the hiring decisions are made by the department heads and the HR managers based on the overall performance of the candidate in the selection process and also their past work experience.
4. PLACEMENT AND INDUCTION
After the selecting the candidate, he is placed in the suitable job. At FMC this handled by the HR department, the candidate is assigned with a specific rank and responsibility. The candidates selected work on probation for a given period of time, after which their services are confirmed. The probationary period is 240 days per year or 480 days for two years. The performance of the candidate is evaluated at the end of the probationary period. The candidates are made permanent employees only if their work is satisfactory.
Induction or orientation is the task of introducing the new employees to the organisation and its policies, procedures and rules. At FMC and its subsidiaries, all the new employees are given induction training program so that they will become familiar to their working conditions and also the employees in the particular unit. This is given by the respective departments. All the queries of the new employees are answered during this induction program.
The induction programme consists of the following:
1. Company’s history
2. Employee’s title and department
3. Executives of the company
4. Probationary period
5. Policy and rules
6. Codes of conduct
7. Safety measures
• Employee benefits
2. Holidays (festival and national)
5. Insurance, retirement policies and other benefits
• About the job
2. Job location
3. Safety measures
4. Job objectives
1. To department head
2. To co- workers
3. To trainers
At FMC and its subsidiaries, the internal mobility of the employees takes place. It’s common among the worker and staff level, when more man power is required in the other departments during certain projects.
The new employees are given training regarding the specific tasks to which they have assigned. At FMC, the new employees are given adequate training before they are allowed to work independently. They are evaluated continuously throughout their training program. HR department monitors all the new employees and evaluates their performance. This training makes the employees more productive and more useful to the organisation.
The new employees participate in the training program under the responsibility of the Head – HR / IR or Respective Functional Head.
The types of training given at FMC and its subsidiaries are:
• Skills training
The employees are trained in such a way that their existing skills are improved and they handle the situation and the machinery more efficiently. This training is provided to both the new and existing training.
• Refresher training
The employees are trained about the new technologies that have emerged in the recent time. The company organises special training programs once in 3 months to update the employee’s knowledge and help them to face the future challenges.
• Cross-functional training
It involves the training employees to perform operations in area other than their assigned job. This is done to improve the efficiency of the workers in different departments and also to follow flexible scheduling.
5.1. Training assessment
All the training programs provided to the employees at FMC are assessed continually. HR department plays a major role in organizing these programs and makes sure that the objective of the training program is attained.
The need for the training program is determined depending on the productivity and objectives of the company, company’s performance, the skills required for performing a particular tasks and the individual’s ability to do the assigned job. The training program given to the employees at FMC is 8 hours per year and the type of training depends on the analysis using the skill matrices.
5.1.2. Education & Training - Self development
• Multi - skilling employees
• Use of 5 Senses for observation and judgement
• Improving knowledge, skill and morale
• Class room training, Seminars
• On the job training
• To foster excellent personnel and have these personnel display their potential to the utmost degree
• To develop knowledge and skill competent personnel
• To habituate to continuous education & training, as an organizational initiative
5 Stage of Skills
Level 0 Don't know (not educated)
Lack of knowledge
Level 1 Know only in theoretical sense
Shortage of training
Level 2 Can partially do it
Shortage of training
Level 3 Can do it with self-confidence
State of having bodily learned it
Level 4 Can teach others
State of completely mastered it
• Skills generally refer to the capability to do one's job.
• Skills are the ability to act accurately and reflexively, based on acquired knowledge and experience, and to sustain that action for a long time.
• The shorter the time from the detection of abnormalities to action is, the more excellent, the skills are considered to be.
• Identification of training methodology
• Consolidation of training needs identified
• Identification of Faculty - Internal & External
• Develop Knowledge Bank
• Organize training material
• Preparation of Training Calendar
• Organize Training Programs
• Evaluate Training
• Re-train based on the evaluation
6 Step implementation for Operation & Maintenance Skill Development
Step 01 Setting of principles and priority measures based on confirmation of the present status of training.
Step 02 Establishment of a training system for operation and maintenance
Step 03 Execution of Operation and maintenance skill development.
Step 04 Establishment and evaluation of a system for developing and nurturing capabilities.
Step 05 Creation a self-enlightening environment.
Step 06 Activity evaluation and study of future activity methods.
• To be prepared by the Cross Functional Team
• Team to comprise of:
1. Team Leaders
• To involve all concerned people in the Organization
• Focus is on involvement & participation of all
• No body is a "BOSS" - Everybody contributes
• Team Learning & Team Sharing is the underlying principle
Support Facilities Required
• We will have to capture situation "Before" and "After" the exercise. For this, request you to arrange for video shooting & photography.
• A suitable place for review meeting and brainstorming:
1. Seating arrangement
2. Writing Board and other stationary
• During exercise support facilities will be essential to expedite improvements.
• Fabricators – 2~3 (for manufacturing small miscellaneous item: table, racks, stands, trolleys, conveyors etc).
• Fabrication Material such as angles, channels, IVIS sheets, wheels etc.
• Tools if required (Cutting tools / Hand tools, plastic bins etc)
• Machine / Fixtures shifting arrangements.
Types of Training
• Induction Training Knowledge based
• Orientation Training Knowledge based
• On the Job Training Skill based for the intended job
• Multi Skill Training Skills for newly assigned job
• External Training Knowledge based
• Internal Training
1. By Internal Faculty Knowledge based
2. By External Faculty Knowledge based
• General Training Programs Knowledge based
NEED FOR QUALITY TOOLS
"95% of the problem is solved when clearly defined"
We need Quality Tools for:
1. Problem solving - making judgments & decisions
2. For continual improvement
3. For Process measurement
6. JOB ANALYSIS
Job analysis is a formal and detailed examination of jobs. It is a systematic investigation of the tasks, duties and responsibilities necessary to do a job.
6.1. Purpose of Job Analysis
The purpose of Job Analysis is to establish and document the 'job relatedness' of employment procedures such as training, selection, compensation, and performance appraisal.
6.2. Determining Training Needs
Job Analysis is used in "training/needs assessment" to identify or develop:
• Training content
• Assessment tests to measure effectiveness of training
• Equipment to be used in delivering the training
• Methods of training (i.e., small group, computer-based, video, classroom...)
Job Analysis is also used in compensation to identify or determine:
• Skill levels
• Compensable job factors
• Work environment (e.g., hazards; attention; physical effort)
• Responsibilities (e.g., fiscal; supervisory)
• Required level of education (indirectly related to salary level)
6.4. Selection Procedures
Job Analysis is used in selection procedures to identify or develop:
• Job duties that should be included in advertisements of vacant positions
• Appropriate salary level for the position to help determine what salary should be offered to a candidate
• Minimum requirements (education and/or experience) for screening applicants
• Interview questions
• Selection tests/instruments (e.g., written tests, oral tests, job simulations)
• Applicant appraisal/evaluation forms
• Orientation materials for applicants/new hires
6.5. Performance Review
Job Analysis is used in performance review to identify or develop:
• Goals and objectives
• Performance standards
• Evaluation criteria
• Length of probationary periods
• Duties to be evaluated
6.6. Methods of Job Analysis
Several methods are used individually or in combination which are as follows:
• Supervisor Interviews
• Expert Panels
• Structured questionnaires
• Open-ended questionnaires
7. PERFORMANCE APPRAISAL
Performance appraisal is the method of evaluating the behavior of an employee I the workspot. In this company evaluation is carried out with the help of “Skill Matrix”.
Regarding Skill Matrix
• Skill matrix, as the name suggests is a repository of skills, which have been identified for successful completion of Job.
• Specific skills required to complete the job is broken down ( the details to be captured during Job Design ).
• The Skill set of every employee is carefully accessed and logged into the skill matrix.
• The skill matrix comes in handy, to determine the shortfall of Key Skills.
• The skill matrix forms a base for all appraisals, training programes, employee developments, deployments etc.
• The skill matrix to be updated on a regular basis.
• The skill matrix to be shared with HR and Project teams.
• The key to deploying a successful Skill matrix is about identifying and codifying the SKILLS in an acceptable manner. One may refer to the standards laid down by SFIA in this regards.
8. EMPLOYEE COMPETENCY NEED
The following table will clearly explain the level of educational qualification and experience as well as special training that the company expects from a person to be employable in a suitable designation.
9. COMPENSATION ADMINISTRATION
Compensation is what employees receive in exchange for their contribution for the organisation. Generally, employees offer their services for three types of rewards. Pay refers to the base wages and salaries employees receive. Compensation forms such as bonuses, commissions and profit sharing plans are incentives designed to encourage employees to produce results beyond normal expectation. Benefits such as insurance, medical, recreational, retirement etc., represent a more indirect type of compensation. So, the term compensation is a comprehensive one including pay, incentives, and benefits offered by employers for hiring the services of employees. In addition to these, managers have to observe legal formalities that offer physical as well as financial security to employees. All these issues play an important role in any hr department’s effort to obtain, maintain and retain an effective workforce.
9.1.Nature of Compensation
Compensation offered by an organisation can coke both directly through base pay and variable pay and indirectly through benefits:
• Base pay: It is the basic compensation an employee gets, usually as a wage or salary.
• Variable Pay: It is the compensation that is linked directly to performance accomplishments (bonuses, incentives, stock options).
• Benefits: These are indirect rewards given to an employee or group of employees as a part of organisational membership (health insurance, vacation pay, retirement pension etc.)
9.2.Objectives of Compensation Administration
Some of the important objectives that are sought to be achieved through effective compensation management are:
a) Attract talent: Since many firms compete to hire the services of competent people, the salaries offered must be high enough to motivate them to apply.
b) Retain talent: If compensation levels falls below the expectations of employees or are not competitive, they may quit.
c) Ensure equity: Pay should equal the worth of a job. Similar jobs should get similar pay. Likewise, more qualified people should get better wages.
d) New and desired behaviour: Pay should reward loyalty, commitment, experience risks taking, initiative and other desired behaviours to prevent employees going in search of greener pastures.
e) Comply with legal rules: Compensation programmes must invariably satisfy governmental rules regarding minimum wages, bonus, allowances, benefits, etc.
Components of Pay Structure in India
The pay structure of a company depends on several factors such as labour market conditions, company’s paying capacity and legal provisions.
In India, different Acts include different items under wages, though all the Acts include basic wage and dearness allowance under the term wages. The wage structure in India can be examined broadly under the following heads:
The basic wage in India corresponds with what has been recommended by the Fair Wages Committee (1948) and the 15th Indian Labour Conference (1957).The following criterion may be considered while deciding the basic wage:
• Skill needs of the job.
• Experience needed.
• Difficulty of work: mental as well as physical.
• Training needed.
• Responsibilities involved.
• Hazardous nature of job.
Dearness Allowance (DA)
It is the allowance paid to employees in order to enable them to face the increasing dearness of essential commodities. DA is paid to neutralise the effect of inflation.
Other allowances that are occasionally paid include holiday pay, overtime pay, bonus, social security benefit, etc.
An important component of employees’ earnings, besides salary, is bonus. According to The Payment of Bonus Act, 1965 an employee who earns more than Rs.2500 p.m. basic plus DA is eligible for bonus. The minimum bonus to be paid has been raised to 8.33% w.e.f 25.9.75.
Methods of Wage payment
There are two methods of wage payment:
1. Time Wage System.
2. Piece Rate System.
Time Wage System
In this system, the worker is paid on the basis of time spent on the work irrespective of the amount of work done. The basis of this time may be hour, day, week or month.
Piece Rate System
Under Piece rate system, the workers are paid at a stipulated rate per piece or unit of output. Here speed is the basis of payment, instead of time. In this system, the rate is fixed per piece of work and the worker is paid according to the number of pieces completed or the volume of work done by him, irrespective of time taken by him in completing that work. Efficiency, is thus recognised in this system.
Types of Piece Rate System
a. Straight Piece Rate: In this method, payment is made on the basis of a fixed amount per fixed units produced without regard to the time taken.
b. Piece rate with guaranteed time rate: In this system, workers are paid minimum wages on the basis of time rates. In addition, they are paid more for producing more than a prefixed number of units on Piece rate.
c. Differential piece rate: In this scheme, the rate per piece is increased, as the output level is increased. That is, there is more than one-piece rate system. In other words, the increase in rates may be proportionate to the increase in output.
The term ‘fringe benefits’ refers to the extra benefits provided to employees in addition to the normal compensation paid in the form of wage or salary. The main features of fringe benefits are:
• They are supplementary forms of compensation.
• They are paid to all employees based on their membership in the organisation.
• They help raise the living conditions of the employees.
• They may be statutory or voluntary. Provident fund is a statutory benefit whereas transport is a voluntary benefit.
9.4.Wages and Salary Administration in FMC Ltd.
The wages for the workers at FMC Ltd. are paid in the following manner:
• They follow the Time based system on a daily basis. i.e. a prefixed rate per 8 man hour shift.
• In addition, the workers receive Overtime wages at 1.5 times their rate for every extra hour worked.
• Those working in the night shifts receive additional allowances like Night Shift Allowance and Food allowance.
• The workers can avail of incentives in the form of additional remuneration in accordance with the Piece rate system followed by the company.
• Other benefits the workers receive include Stautory benefits like Provident Fund where the Worker and the Company contributes 12% of the basic wage each.
• Employee State Insurance (ESI) is also provided to the workers at 6.75% of gross wages; 1.75% and 4.75% contributed by the both the employee and employer respectively.
• They also receive Bonus at 8.33% as per Government norms, disbursed usually before the Deepavali, to a maximum of Rs. 3500/-.
• They also receive additional incentives for regular attendance and following safety norms.
The staff and other managerial employees receive their prefixed Salary every month, depending on their qualification and experience. They generally are not availed of any allowances. However, their salaries are revised every year after their performance appraisals.
In addition to the above, both the workers and staff are automatically enrolled into the Pension scheme, which they can avail after a minimum of 10 years of service. They are entitled to receive the full pension benefits after a minimum of 25 years of service and after attaining an age of 58 years.
10. EMPLOYEE HEALTH AND SAFETY
The firm has a responsibility to protect the health and safety of employees, their families and the public. Maintaining a safe and healthy work environment is integral to the operation of the business. In addition to protecting the most precious resource – employees – incident prevention sustains the performance of the business, as well as the trust of the communities in which the company operate. The firm believes that all incidents can be prevented and their goal is zero incidents. All the employees in the organization are committed to achieving this goal.
Principles that guide the success of the subsidiary include:
• Occupational safety and health and process safety management are considered in the planning for any new or revised installations, processes, or procedures.
• Safe work practices are promoted through good engineering practices, standards and procedures, employee education, job training, and use of personal protective equipment.
• Participation, partnership, and teamwork are essential. A comprehensive network of safety and health committees provides leadership and direction in setting policies, goals, and objectives, and in getting employees involved in the process. Site management, union leadership and employees, and safety and health professionals work together on these committees to advance loss prevention.
• Units and operations are routinely reviewed for chemical, process, mechanical, and procedural hazards. Identified hazards are promptly addressed.
• Applicable federal, state, and local codes and regulations are followed, and voluntary, self-applied standards that go beyond regulations are often employed in the firm’s efforts to prevent incidents.
• Employee responsibility and accountability are considered essential elements of the safety and health process.
• Innovation is valued. Innovative techniques of safety and health management are utilized, such as the use of behavior-based safety observation and feedback techniques and the application of ergonomic concepts to workstation design.
The subsidiary of FMC strives continuously to incorporate safety and health into the operation, structure and culture of every part of the company.
Pollution Prevention, Employee Health & Safety, Process Safety, Distribution, Product Stewardship and Security.
11. PRIORITY SECURITY MANAGEMENT SYSTEMS
Development of the Priority Security Management Systems began shortly after the events of September 11, 2001, and was issued in fourth quarter 2002 to strengthen security practices already in place. These management systems consist of security practices believed to be essential to protect the firm’s personnel, facilities, and the public. To monitor ongoing compliance, these management systems were added to the Consolidated Auditing Program.
The Priority Security Management Systems cover the following topics:
a) Assignment of site and transportation security coordinators.
b) Security incident reporting procedures.
c) Deterrence of entry by unauthorized personnel.
d) Procedures to clear/escort visitors onto sites.
e) Inclusion of terrorist threats in emergency response plans.
f) Criminal background checks for new hires and Substance abuse programs.
h) Training on workplace violence and IT security assessment.
j) Authentication and authorization to operate computer systems.
k) Management of critical and sensitive information.
l) Site security employee training program.
The study on the role of Human Resource Management in the subsidiary of FMC has given us an exposure to the practical applications of the HRM concepts. It has helped us in understanding the importance of HRD in an organisation. The maintenance of the valuable assets, the human resource is a tedious task that involves a lot of industriousness, dedication, presence of mind and people skills.
• Rao VSP. Human Resource Management. Second edition. New Delhi: Excel books, 2007.
• Mathis, Robert and Jackson, John. Human Resource Management. Tenth edition. Singapore: Thompson Asia Pte Ltd.,