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Transcript of Main File Recruitment and Selection Process
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1.1 INTRODUCTION TO INSURANCE INDUSTRY
1.1.1 HISTORY OF INSURANCE SECTOR IN INDIA
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
(Manusmrithi), Yagnavalkya (Dharmasastra) andKautilya ( Arthasastra ). The writings talk
in terms of pooling of resources that could be re-distributed in times of calamities such as
fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of insurance in the form of marine
trade loans and carriers contracts. Insurance in India has evolved over time heavily drawing
from other countries, England in particular.
1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta (now Kolkata). This Company however
failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business
in the Madras Presidency.
Insurance in India started without any regulation in the Nineteenth Century. It was a
typical story of a colonial era: a few British insurance companies dominating the market
serving mostly large urban centres. After the independence, it took a dramatic turn. Insurance
was nationalized. First, the life insurance companies were nationalized in 1956, and then the
general insurance business was nationalized in 1972. Only in 1999 private insurance
companies have been allowed back into the business of insurance with a maximum of 26% of
foreign holding. In what follows, we describe how and why of regulation and deregulation.
The entry of the State Bank of India with its proposal of bank assurance brings a new
dynamics in the game. We study the collective experience of the other countries in Asia
already deregulated their markets and have allowed foreign companies to participate. If the
experience of the other countries is any guide, the dominance of the Life Insurance
Corporation and the General Insurance Corporation is not going to disappear any time soon.
I nsurance under the Bri tish Raj
Life insurance in the modern form was first set up in India through a British company
called the Oriental Life Insurance Company in 1818 followed by the Bombay Assurance
Company in 1823 and the Madras Equitable Life Insurance Society in 1829. All of these
companies operated in India but did not insure the lives of Indians. They were there insuring
the lives of Europeans living in India. Some of the companies that started later did provide
insurance for Indians. But, they were treated as "substandard" and therefore had to pay an
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extra premium of 20% or more. The first company that had policies that could be bought by
Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.
The first general insurance company, Triton Insurance Company Ltd., was
established in 1850. It was owned and operated by the British. The first indigenous general
insurance company was the Indian Mercantile Insurance Company Limited set up in Bombay
in 1907. By 1938, the insurance market in India was buzzing with 176 companies (both life
and non-life). However, the industry was plagued by fraud. Hence, a comprehensive set of
regulations was put in place to stem this problem (see Table 1). By 1956, there were 154
Indian insurance companies, 16 non-Indian insurance companies and 75 provident societies
that were issuing life insurance policies. Most of these policies were cantered in the cities
(especially around big cities like Bombay, Calcutta, Delhi and
Madras). In 1956, the then finance minister S. D. Deshmukh announced nationalization of
the life insurance business.
Monopoly Raj
The nationalization of life insurance was justified mainly on three counts :
(1) It was perceived that private companies would not promote insurance in rural areas.
(2) The Government would be in a better position to channel resources for saving and
investment by taking over the business of life insurance.
(3) Bankruptcies of life insurance companies had become a big problem (at the time of
takeover, 25 insurance companies were already bankrupt and another 25 were on the verge of
bankruptcy). The experience of the next four decades would temper these views.
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again. Tracing
the developments in the Indian insurance sector reveals the 360-degree turn
witnessed over a period of almost two centuries. With largest number of life insurance
policies in force in the world, Insurance happens to be a mega opportunity in India. It
is a business growing at the rate of 15-20 percent annually and presently is of the
order of Rs 450 Billion. Together with banking services, it adds about 7 per cent to
the countrys GDP. Gross premium collection is nearly 2 per cent of GDP and funds
available with LIC for investments are 8 per cent of GDP.
Yet, nearly 80 per cent of Indian population is without life insurance cover while
health insurance and non-life insurance continues to be below international
standards. In addition, this part of the population is subject to weak social security
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and pension systems with hardly any old age income security. This is an indicator
that growth potential for the insurance sector is immense. A well-developed and
evolved insurance sector is necessary for economic development as it provides long-
term funds for infrastructure development and at the same time strengthens the risk
taking ability. It has estimated that, over the next ten years India would require
investments of the order of one trillion US dollar. The Insurance sector, to some
extent, can enable investments in infrastructure development to sustain economic
growth of the country.
Insurance is a federal subject in India. Two legislations govern the sector-
1. The Insurance Act- 1938 and
2. IRDA Act- 1999.
The insurance sector in India has come a full circle from being an open competitive
market to nationalization and back to a liberalized market again. Tracing the
developments in the Indian insurance sector reveals the 360-degree turn witnessed
over a period of almost two centuries.
Insurance has a long history in India. Life Insurance in its current form was introduced in
1818 when Oriental Life Insurance Company began its operations in India. General
Insurance was however a comparatively late entrant in 1850 when Triton Insurance company
set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three
eras:
a) Pre Nationalization
b) Nationalization and
c) Post Nationalization.
Life Insurance was the first to nationalize in 1956. Life Insurance Corporation of India was
formed by consolidating the operations of various insurance companies. General Insurance
followed suit and was nationalized in 1973. General Insurance Corporation of India was set
up as the controlling body with New India, United India, National and Oriental as its
subsidiaries. The process of opening up the insurance sector was initiated against the
background of Economic Reform process which commenced from 1991. For this purpose
Malhotra Committee was formed during this year who submitted their report in 1994 and
Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian
Insurance was opened for private companies and Private Insurance Company effectively
started operations from 2001.
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BRIEF HISTORY OF THE INSURANCE SECTOR IN INDIA
insurance company on Indian soil.
-standard lives and heavy extra premiums were
being charged on them.
company in the year 1870, and covered Indian lives at normal rates.
nspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies.
Co-operative Assurance at Lahore were established in 1906.
year 1912, the Life Insurance Companies Act, and the Provident Fund Act were
passed.
and periodical valuations of companies should be certified by an actuary.
he Act discriminated between foreign and Indian companies on many accounts,
putting the Indian companies at a disadvantage.
non-life insurance to provide strict state control over insurance business.
-Indian companies and 75 provident were
operating in India at the time of nationalization.
1.1.2 CURRENT INSURANCE SECTOR IN INDIA
Life insurance can be defined as life insurance provides a sum of money if the person who
is insured dies while the policy is in effect. The life insurance act, 1912 was the first statuary
measure to regulate the life insurance business in India. In 1983, the earlier legislation was
consolidated and amended by the insurance act, 1938, with comprehensive provisions for
detailed effective control over insurance. The union government had opened the insurance
sector for private participation in 1999, also allowing the private companies to have foreign
equity up to 26%. Following the opening up of the insurance sector, 12 private sector
companies have entered the life insurance business.
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An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector
andLife Insurance Corporation (LIC) came into existence in the same year. The LIC
absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies - 245 Indian and
foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.
The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as
a legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the
Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all
classes of general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance
Associaton of India. The General Insurance Council framed a code of conduct for ensuring
fair conduct and sound business practices. In 1968, the Insurance Act was amended to
regulate investments and set minimum solvency margins. The Tariff Advisory Committee
was also set up then. In 1972 with the passing of the General Insurance Business
(Nationalisation) Act, general insurance business was nationalized with effect from 1st
January, 1973.
107 insurers were amalgamated and grouped into four companies, namely National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company
Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of
India was incorporated as a company in 1971 and it commence business on January 1st 1973.
This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last
decade and more has seen it been opened up substantially.
In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former
Governor of RBI, to propose recommendations for reforms in the insurance sector.The
objective was to complement the reforms initiated in the financial sector. The committee
submitted its report in 1994 wherein , among other things, it recommended that the private
sector be permitted to enter the insurance industry. They stated that foreign companies be
allowed to enter by floating Indian companies, preferably a joint venture with Indian
partners.
Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
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regulate and develop the insurance industry. The IRDA was incorporated as a statutory body
in April, 2000. The key objectives of the IRDA include promotion of competition so as to
enhance customer satisfaction through increased consumer choice and lower premiums,
while ensuring the financial security of the insurance market.
The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has
the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from
2000 onwards framed various regulations ranging from registration of companies for
carrying on insurance business to protection of policyholders interests.
In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July,
2002.
For years now, the private players are active in the liberalized environment. The insurance
market have witnessed dynamic changes which includes presence of a fairly large number of
insurers both life and non-life segment. Most of the private insurance companies have formed
joint venture partnering well recognized foreign players across the globe.
There are now 29 insurance companies operating in the Indian market 14 private life
insurers, nine private non-life insurers and six public sector companies. With many more
joint ventures in the offing, the insurance industry in India today stands at a crossroads as
competition intensifies and companies prepare survival strategies in a detariffed scenario.
There is pressure from both within the country and outside on the Government to increase the
Foreign Direct Investment (FDI) limit from the current 26% to 49%, which would help JV
partners to bring in funds for expansion.
There are opportunities in the pensions sector where regulations are being framed. Less than
10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first licence
for a standalone health company in the country as many more players wait to enter. The
health insurance sector has tremendous growth potential, and as it matures and new players
enter, product innovation and enhancement will increase. The deepening of the health
database over time will also allow players to develop and price products for larger segments
of society.
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1.1.3 ROLE & FUNCTIONS OF IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..
(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance
business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the
powers and functions of the Authority shall include :
(A) Issue to the applicant a certificate of registration, renews, modify, withdraw, suspend or
cancel such registration;
(B) Protection of the interests of the policy holders in matters concerning assigning of policy,
nomination by policy holders, insurable interest, settlement of insurance claim, surrender
value of policy and other terms and conditions of contracts of insurance;
(C) Specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents;
(D) Specifying the code of conduct for surveyors and loss assessors;
(E) Promoting efficiency in the conduct of insurance business;
(F) Promoting and regulating professional organizations connected with the insurance and re-
insurance business;
(G) Levying fees and other charges for carrying out the purposes of this Act;
(H) Calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries and
other organizations connected with the insurance business;
(I) Control and regulation of the rates, advantages, terms and conditions that may be offered
by insurers in respect of general insurance business not so controlled and regulated by the
Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
(J) Specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries ;
(K) Regulating investment of funds by insurance companies;
(L) Regulating maintenance of margin of solvency;
(M) Adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
(N) Supervising the functioning of the Tariff Advisory Committee;
(O) Specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f);
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(P) Specifying the percentage of life insurance business and general insurance business to be
undertaken by the insurer in the rural or social sector;
1.1.4 SEVEN (7) PS OF INSURANCE SECTOR
Wherever there is uncertainty there is risk. We do not have any control over uncertainties
which involves financial losses. The risks may be certain events like death, pension,
retirement or uncertain events like theft, fire, accident, etc.
Insurance is a financial service for collecting the savings of the public and providing them
with risk coverage. The main function of Insurance is to provide protection against the
possible chances of generating losses. It eliminates worries and miseries of losses by
destruction of property and death. It also provides capital to the society as the funds
accumulated were invested in productive heads. Insurance comes under the service sector
and while marketing this service, due care is to be taken in quality product and customer
satisfaction. While marketing the services, it is also pertinent that they think about the
innovative promotional measures. It is not sufficient that you perform well but it is also
important that you let others know about the quality of your positive contributions. The
creativity in the promotional measures is the need of the hour. The advertisement,
public relations, word of mouth communication needs due care and personal selling
requires intensive care.
I nsurance Marketing:The term Insurance Marketing refers to the marketing of Insurance
services with the aim to create customer and generate profit through customer satisfaction.
The Insurance Marketing focuses on the formulation of an ideal mix for Insurance
business so that the Insurance organisation survives and thrives in the right perspective.
Marketing --Mix F or I nsurance Companies:The marketing mix is the combination of
marketing activities that an organisation engages in so as to best meet the needs of its
targeted market. The Insurance business deals in selling services and therefore due
weight-age in the formation of marketing mix for the Insurance business is needed. The
marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price,
place, promotion, people, process & physical attraction. The above mentioned 7 P's can be
used for marketing of Insurance products, in the following manner:
1. Product:
A product means what we produce. If we produce goods, it means tangible product and
when we produce or generate services, it means intangible service product. A product is
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both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells
services and therefore services are their product.
In India, the Life Insurance Corporation of India (LIC) and the General Insurance
Corporation (GIC) are the two leading companies offering insurance services to the users.
Apart from offering life insurance policies, they also offer underwriting and consulting
services. When a person or an organisation buys an Insurance policy from the insurance
company, he not only buys a policy, but along with it the assistance and advice of the
agent, the prestige of the insurance company and the facilities of claims and
compensation. It is natural that the users expect a reasonable return for their investment
and the insurance companies want to maximize their profitability. Hence, while deciding
the product portfolio or the product-mix, the services or the schemes should be
motivational. The Group Insurance scheme is required to be promoted, the Crop
Insurance is required to be expanded and the new schemes and policies for the villagers
or the rural population are to be included. The Life Insurance Corporation has intensified
efforts to promote urban savings, but as far as rural savings are concerned, it is not that
impressive. The introduction of Rural Career Agents Scheme
has been found instrumental in inducing the rural prospects but the process is at infant
stage and requires more professional excellence. The policy makers are required to
activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct
investment for rural development. Investment in Government securities should be stopped
and the investment should be channelized in private sector for maximizing profits. In
short, the formulation of product-mix should be in the face of innovative product strategy.
While initiating the innovative process it is necessary to take into consideration the
strategies adopted by private and foreign insurance companies.
2. Pricing:
In the insurance business the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities. With a view of
influencing the target market or prospects the formulation of pricing strategy
becomes significant. In a developing country like India where the disposable income in
the hands of prospects is low, the pricing decision also governs the transformation of
potential policyholders into actual policyholders. The strategies may be high or low
pricing keeping in view the level or standard of customers or the policyholders. The
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pricing in insurance is in the form of premium rates. The three main factors used for
determining the premium rates under a life insurance plan are mortality, expense and
interest. The premium rates are revised if there are any significant changes in any of these
factors.
Mortality (deaths in a particular area): When deciding upon the pricing strategy the
average rate of mortality is one of the main considerations. In a country like South Africa
the threat to life is very important as it is played by host of diseases.
Expenses:The cost of processing, commission to agents, reinsurance companies as well
as registration are all incorporated into the cost of installments and premium sum and
forms the integral part of the pricing strategy
Interest:The rate of interest is one of the major factors which determines people's
willingness to invest in insurance. People would not be willing to put their funds to invest
in insurance business if the interest rates provided by the banks or other financial
instruments are much greater than the perceived returns from the insurance premiums.
3. Place:
This component of the marketing mix is related to two important facets-
i) Managing the insurance personnel, and
ii) Locating a branch. The management of agents and insurance personnel is found
significant with the viewpoint of maintaining the norms for offering the services. This is
also to process the services to the end user in such a way that a gap between the services-
promised and services -- offered is bridged over. In a majority of the service generating
organizations, such a gap is found existent which has been instrumental in making worse
the image problem. The transformation of potential policyholders to the actual
policyholders is a difficult task that depends upon the professional excellence of the
personnel. The agents and the rural career agents acting as a link, lack professionalism.
The front-line staff and the branch managers also are found not assigning due weight-age
to the degeneration process. The insurance personnel if not managed properly would make
all efforts insensitive. Even if the policy makers make provision for the quality upgrading
the promised services hardly reach to the end users.
It is also essential that they have rural orientation and are well aware of the lifestyles of
the prospects or users. They are required to be given adequate incentives to show their
excellence. While recruiting agents, the branch managers need to prefer local persons and
provide them training and conduct seminars. In addition to the agents, the front-line staff
also needs an intensive training program to focus mainly on behavioral
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management. Another important dimension to the Place Mix is related to the location of
the insurance branches. While locating branches, the branch manager needs to consider a
number of factors, such as smooth accessibility, availability of infrastructural facilities
and the management of branch offices and premises. In addition it is also significant to
provide safety measures and also factors like office furnishing, civic amenities and
facilities, parking facilities and interior office decoration should be given proper
attention. Thus the place management of insurance branch offices needs a new vision,
distinct approach and an innovative style. This is essential to make the work place
conducive, attractive and proactive for the generation of efficiency among employees. The
branch managers need professional excellence to make place decisions productive.
4. Promotion:
The insurance services depend on effective promotional measures. In a country like India,
the rate of illiteracy is very high and the rural economy has dominance in the national
economy. It is essential to have both personal and impersonal promotion strategies. In
promoting insurance business, the agents and the rural career agents play an important
role. Due attention should be given in selecting the promotional tools for agents and rural
career agents and even for the branch managers and front line staff. They also have to be
given proper training in order to create impulse buying.
Advertising and Publicity, organisation of conferences and seminars, incentive to
policyholders are impersonal communication. Arranging Kirtans, exhibitions,
participation in fairs and festivals, rural wall paintings and publicity drive through the
mobile publicity van units would be effective in creating the impulse buying and the rural
prospects would be easily transformed into actual policyholders.
5. People:
Understanding the customer better allows to design appropriate products. Being a service
industry which involves a high level of people interaction, it is very important to use this
resource efficiently in order to satisfy customers. Training, development and strong
relationships with intermediaries are the key areas to be kept under consideration.
Training the employees, use of IT for efficiency, both at the staff and agent level, is one of
the important areas to look into.
6. Process:
The process should be customer friendly in insurance industry. The speed and accuracy of
payment is of great importance. The processing method should be easy and convenient to
the customers. Installment schemes should be streamlined to cater to the ever growing
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demands of the customers. IT & Data Warehousing will smoothen the process flow. IT
will help in servicing large no. of customers efficiently and bring down overheads.
Technology can either complement or supplement the channels of distribution cost
effectively. It can also help to improve customer service levels. The use of data
warehousing management and mining will help to find out the profitability and potential
of various customers product segments.
7. Physical Distribution:
Distribution is a key determinant of success for all insurance companies. Today, the
nationalized insurers have a large reach and presence in India. Building a distribution
network is very expensive and time consuming. If the insurers are willing to take
advantage of India's large population and reach a profitable mass of customers, then new
distribution avenues and alliances will be necessary. Initially insurance was looked upon
as a complex product with a high advice and service component.
Buyers prefer a face-to-face interaction and they place a high premium on brand names
and reliability. As the awareness increases, the product becomes simpler and they become
off-the-shelf commodity products. Today, various intermediaries, not necessarily
insurance companies, are selling insurance. For example, in UK, retailer like Marks &
Spencer sells insurance products. The financial services industries have successfully used
remote distribution channels such as telephone or internet so as to reach more customers,
avoid intermediaries, bring down overheads and increase profitability. A good example is
UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of
the largest motor insurance operator. Technology will not replace a distribution network
though it will offer advantages like better customer service. Finance companies and banks
can emerge as an attractive distribution channel for insurance in India. In Netherlands,
financial services firms provide an entire range of products including bank accounts,
motor, home and life insurance and pensions. In France, half of the life insurance sales are
made through banks. In India also, banks hope to maximize expensive existing networks
by selling a range of products. It is anticipated that rather than formal ownership
arrangements, a loose network of alliance between insurers and banks will emerge,
popularly known as bancassurance.
Another innovative distribution channel that could be used are the non-financial
organisations. For an example, insurance for consumer items like fridge and TV can be
offered at the point of sale. This increases the likelihood of insurance sales. Alliances with
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manufacturers or retailers of consumer goods will be possible and insurance can be one of
the various incentives offered.
Life insurance is the only investment option that offers specific products tailormade for
different life stages. It thus ensures that the benefits offered to the customer reflect the needs
of the customer at that particular life stage, and hence ensures that the financial goals of that
life stage are met.
The table below gives a general guide to the plans that are appropriate for different life
stages.
Life Stage Primary Need Life Insurance Product
Young & Single Asset creation Wealth creation plans
Young & Just
marriedAsset creation & protection
Wealth creation and mortgage
protection plans
Married with kidsChildren's education, Asset
creation and protection
Education insurance, mortgage
protection & wealth creation plans
Middle aged with
grown up kids
Planning for retirement &
asset protection
Retirement solutions & mortgage
protection
Across all life-
stagesHealth plans Health Insurance
Benefits of Life Insurance :
Life insurance encourages saving and forces thrift.
It is superior to a traditional savings vehicle.
It helps to achieve the purpose of life assured.
It provides valuable tax relief.
Thus insurance is found to be very useful in the lives of the person both in short term and
long term. Fundamental principles of life insurance contract:-
Principle of almost good faith:-A positive duty to voluntary disclose, accurately
and fully, all facts, material to the risk being proposed whether requested or not.
Principle of insurable interest:-Relationships with the subject matter (a person)
which is recognized in law and gives legal right to insure that person.
http://www.iciciprulife.com/public/Life-plans/Wealth-Creation-Plans.htmhttp://www.iciciprulife.com/public/Life-plans/Wealth-Creation-Plans.htmhttp://www.iciciprulife.com/public/Life-plans/Wealth-Creation-Plans.htmhttp://www.iciciprulife.com/public/Life-plans/Education-Insurance-Plans.htmhttp://www.iciciprulife.com/public/Retirement-Plans/Retirement-Plans-Need.htmhttp://www.iciciprulife.com/public/Health-plans/Whyhealthinsurance.htmhttp://www.iciciprulife.com/public/Health-plans/Whyhealthinsurance.htmhttp://www.iciciprulife.com/public/Health-plans/Whyhealthinsurance.htmhttp://www.iciciprulife.com/public/Health-plans/Whyhealthinsurance.htmhttp://www.iciciprulife.com/public/Health-plans/Whyhealthinsurance.htmhttp://www.iciciprulife.com/public/Retirement-Plans/Retirement-Plans-Need.htmhttp://www.iciciprulife.com/public/Life-plans/Education-Insurance-Plans.htmhttp://www.iciciprulife.com/public/Life-plans/Wealth-Creation-Plans.htmhttp://www.iciciprulife.com/public/Life-plans/Wealth-Creation-Plans.htm -
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India's insurance sector is zooming to show an unprecedented progressive growth of more
than 200% by the period of 2009-12. The Associated Chambers of Commerce and Industry
of India has clocked out the fact that during this period, private players in the industry will
see a growth of about 140 per cent, owing to the adoption of the aggressive marketing
techniques in comparison of the growth rate of 35 per cent-40 per cent achieved by the state
owned insurance companies. The chamber is expected to poise the business of insurance to
reach at Rs.2000 billions in coming 2 years from the present level of Rs. 500 billion. With
the result of adoption of the intense marketing strategies by the private players, the
declination has been witnessed in respect of the share of the state owned insurance
companies captured in the market. The market share fallout has been noticed in context of
such companies like GIC, LIC, which have come down to nearly 70 per cent in the past 4-5
years from the 97 per cent. The experts have fore casted the more severe competition in the
insurance sector likely to be occurred in the near future. Till recently, insurance sector was
majority driven by the government sector players but now many private sector multinational
players have come into the picture. Like HDFC, ICICI, Kotak, Mahindra and Birla Sunlife.
Insurance sector has been characterized as the booming sector of the Indian arena, which has
shown the growth rate of more than 15 per cent to 20 per cent. Insurance in India is put under
the federal subject and is governed by the Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and General Insurance Business(Nationalization) Act, 1972, Insurance
Regulatory and Development Authority(IRDA) Act, 1999 and by various other acts.
1.1.6 LIST OF INSURANCE COMPANIES IN INDIA
Following is the list of all LIFE & GENERAL INSURANCE COMPANIESgranted
permission by IRDA.
Table 1.1 List of Life and General Insurance Companies
LIFE INSURERS Websites
Public Sector
Life Insurance Corporation of India www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited www.birlasunlife.com
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HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com
ING Vysya Life Insurance Company Limited www.ingvysayalife.com
Max New York Life Insurance Co. Limited www.maxnewyorklife.com
DLF Pramerica Life Insurance Co. Ltd www.dlfpramerica.com
Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com
SBI Life Insurance Company Limited www.sbilife.co.in
TATA AIG Life Insurance Company Limited www.tata-aig.com
AMP Sanmar Assurance Company Limited www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com
Reliance Life Insurance Company Limited. www.reliancelife.com
Aviva Life Insurance Co. India Pvt. Ltd. www.avivaindia.com
Sahara India Life Insurance Co, Ltd. www.saharalife.com
Shriram Life Insurance Co, Ltd. www.shriramlife.com
Bharti AXA Life Insurance Company Ltd www.bharti-axalife.com
Future Generali Life Insurance Company Ltd. www.futuregenerli.in
IDBI Fortis Life Insurance Company Ltd. www.idbifortis.com
Canara HSBC Oriental Bank of Commerce Life
Insurance Co. Ltd www.canarahsbclife.com
AEGON Religare Life Insurance Company Limited www.aegonreligare.com
Star Union Dai-ichi Life Insurance Comp. Ltd. www.sudlife.in
MetLife Insurance Company Limited www.metlife.com
GENERAL INSURERS
Public Sector
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National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in
Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
REINSURER
General Insurance Corporation of India www.gicindia.com
Summary of Insurance Sector in India
The insurance sector in India has come a full circle from being an open competitive market to
nationalization and back to a liberalized market again.
The business of life insurance in India in its existing form started in India in the year 1818
with the establishment of the Oriental Life Insurance Company in Calcutta, when it was
introduced for English Widows. Even till the end of the nineteenth century, Insurance
Companies in India were mainly the overseas companies investing in the insurance works in
India. An interesting fact here was that higher premiums were charged for Indian lives, as
they were considered riskier for insurance cover.
Insurance is mainly of 2 types :
1.
LIFE INSURANCE.
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2. GENERAL INSURANCE.
Under life insurance the life of an individual is covered whereby an individual or his family
is assured a particular amount. Life insurance covers only the financial losses and not the
emotional losses.
India General Insurance covers almost everything related to property, vehicle, cash,
household goods, health and also one's liability towards others. The basic difference of
general insurance with the life insurance policy is that it offers protection against
contingencies.
Some of the important milestones in the life insurance business in India are:
1912 - The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
1928 - The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance businesses.
1938 - Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956 - 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz. LIC
Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.
Some of the important milestones in the general insurance business in India are:
1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.
1957 - General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business practices.
1968 - The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company
Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Today Insurance Companies in India have grown manifold. The insurance sector in India has
shown immense growth potential. Even today a giant share of Indian population nearly 80%
is not under life insurance coverage, let alone health and non-life insurance policies. This
clearly indicates the potential for insurance companies to grow their market in India.
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In 1999, various reforms were suggested in the insurance industry in India. This has changed
a lot of things for the insurance companies in India. These reforms were:
o Bringing down of the governments stake holding to 50%.
o Only the private companies with a minimum capital of Rs.100 crores should be
allowed to enter the insurance sector.
o No insurance company can deal in both life and non-life insurance under the same
business entity.
o Foreign Insurance Companies can enter India only in collaboration with domestic
insurance companies.
o Interest should be paid on delays of payments by the insurance companies in case of
non settlement of insurance claims.
o And many more to bring greater freedom and a well-planned regulation to the
insurance companies in India.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance
company, a proposal to increase this limit to 49% is pending with the government. Since
opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have
poured into the Indian market and 22 private companies have been granted licenses.
The various fields covered by insurance companies in India include:
o
Life Insurance: For students, children, family, individual etc.
o Health insurance: For self, for family, accidental insurance premium, medical claim
policies etc.
Non-life insurance: Home or House Insurance and other property insurance, Auto Insurance
(for cars, motorcycle and other two-wheelers, commercial vehicles), Infrastructure Projects
Insurance, Travel Insurance, real estate insurance, mobile insurance etc.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling
private insurance companies to sign up Indian customers faster than anyone expected.
Indians, who had always seen life insurance as a tax saving device, are now suddenly turning
to the private sector and snapping up the new innovative products on offer.
With the largest number of life insurance policies in force in the world, Indias insurance
sector accounted for 4.1 per cent of GDP in 2006-07, up from 1.2 per cent in 1999-2000, far
ahead of China where insurance accounts for just 1.7 per cent of the GDP and even the US
where insurance penetration stands at 4 per cent of the GDP. One area that continues to cause
concern is the number of customer grievances in insurance, especially in a few specific
classes. This calls for more transparency in designing the contract wording and on insisting
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that the applicant is sufficiently informed about the coverage and more particularly the
exclusions. In addition, the legislation itself requires to be transformed to meet the needs of
the emerging markets.
The demand for health insurance covers has seen a healthy increase, and today the sector is
the fastest growing segment in the non-life insurance industry in India, which grew at over
40% last year. It is also emerging as an increasingly significant line of business for life
insurance companies. While this rate of growth appears to be very healthy, it is on a low
base, and health insurance penetration in the country continues to be low. Only about 25
million persons are presently covered for health through commercial insurance, in a country
of over 1.1 billion people. Overall, the Indian health sector is still characterized by the near
absence of any significant risk protection against major health-related expenditure.
1.2 INTRODUCTION TO THE COMPANY
1.2.1 DLF Pramerica Life Insurance Company Ltd. (DPLI)
It is a joint venture between DLF Limited and Prudential International Insurance Holdings,
Ltd. (referred to hereafter as "PIIH"). PIIH is a fully owned subsidiary of Prudential
Financial, Inc. (referred to hereafter as "PFI"). The combination of the strength of the DLF
brand and PFI's insurance expertise provides the strongest possible foundations for DPLI to
succeed in the rapidly growing Indian life insurance market.
Founded in 2007.
Headquartered in Gurgaon, Haryana.
DLF holds 74% equity in the venture while PIIH holds 26% equity as per FDI Norms.
Capital base of over Rs 180 crores.
Expanding at a fast pace with presence currently in Del NCR, Himachal Pradesh,
Punjab, Haryana & Gujrat.
DLF is one of the largest and most respected organisations in the real estate sector in India
with over six decades of experience and a track record of sustained growth, customer
satisfaction, and innovation. In September 2006, DLF Limited was the only real estate firm
to be nominated amongst the "Super brands of India" in the consumer validated category.
After strengthening its position in the core business of residential, commercial and retail
property development, the DLF group has now made forays into the infrastructure, SEZ and
hotel businesses by entering into several strategic alliances with global industry leaders like
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Laing ORourke Plc. and Hilton Hotels Corporation.DLF is committed to quality, trust and
customer sensitivity, and to deliver on promises with agility, financial prudence and in tune
with the highest global standards.
PFI is a U.S. based financial services leader with its headquarters in Newark, New Jersey,
with approximately US$ 638 billion of assets under management as of June 30, 2008 and
operations in the United States, Asia, Europe and Latin America. PFI is focused on helping
its customers achieve financial prosperity and peace of mind.PFI ranks among the Top 100 in
the 2007 Forbes Global 2000 List, an annual tabulation of the world's largest public
companies and ranks 1st on Fortune Magazine's list of World's Most Admired Companies in
the Insurance: Life and Health Insurance Category two years running, in 2007 and 2008.
With more than 130 years in financial services, PFI is focused on helping approximately 50
million individual and institutional customers grow and protect their wealth. The company's
well recognized 'Rock' symbol is an icon of strength, stability, expertise and innovation that
has stood the test of time. PFI's businesses offer a variety of products and services, including
life insurance, annuities, retirement-related services, mutual funds, investment management,
and real estate services. PFI's legacy is based on a long history of social responsibility, strong
leadership, sound investments, and innovative products and services.
VISION: At DLF Pramerica, our vision is to ensure that every life we touch feels secure and
enriched.
MISSION: We shall be a guide and a mentor to people so that they are able to make the
most informed insurance decisions to meet their life goals.
VALUES:
customer focused- Be someone who places customers and their needs at the forefront
while developing and managing their financial solutions.
mutual respect- Build mutual respect by being an equal partner, who knows and
willingly shares, helping people go further rather than walking ahead and leading
them or walking behind and following.
worthy of trust- Build trust by choosing the right path rather than the easy path and
tell the truth the way it is. Be someone who keeps promises, meets commitments and
behaves with integrity at all times.
winning- Be positive and confident; seize every moment, every day, with a winning
perspective, fearlessly facing the uncertainties of life.
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Every organization requires competent employees (Sales Managers) for the successful
functioning of its various departments. To ensure that the staff works efficiently and
effectively, the organization has to continuously evaluate their performance and bridge any
performance gaps by providing appropriate training to them. For, it is the people who make
or breakan organization. Traditionally, the training policy in an organization focused on
enhancing the productivity and effectiveness of the employees so that the medium term and
long term strategies of the organization could be successfully fulfilled. Since upgradation of
skills and knowledge has direct relevance to performance. This necessitates huge investments
in the training programs for providing the requisite skill set to the staff.
The ultimate aim of any training program is to achieve:
- Continuous Improvement.
- Change-in-Attitude.
- Cost Saving.
- Total Productivity.
- Scope for development.
1.2.2 PRODUCTS OF DLF PRAMERICA LIFE INSURANCE
A. PROTECTION PLAN- Currently available products to purchase :
1. DLF Pramerica Family Income Plan-A plan that ensures that in case you
are not there, then your family receives a monthly financial support, the
amount of which you have fixed, until the end of the plan term. Your family
will receive at least 36 monthly installments.
2. DLF Pramerica Family First - It is designed to ensure your family will be
spared the financial gaps in their lives.
3.
DLF Pramerica Tatkaal Suraksha Gold It offers you life insurance
without the hassles of lengthy paperwork and gives assured savings without
the worry of the ups-and-downs of the market.
B. CHILD PROGRESS PLAN -Currently available products to purchase :
1. DLF Pramerica Free Protect + - It is a unique insurance product that
addresses your vital concern as a parent - protecting your childs school
education, come what may.
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2. DLF Pramerica Fee Protect It is a simple, affordable and straightforward
plan that secures the most important priority that any parent hasthe
schooling of your child.
C. SAVING PLAN- Currently available products to purchase
1. DLF Pramerica Dhan Suraksha It is a money back endowment plan, an
ideal savings cum protection plan. With this plan, while you have all the
advantages and benefits of a comprehensive insurance cover, you also have
assurance of a guaranteed return, free from speculation or risk.
2. DLF Pramerica Assure Money + - A plan that gives the assurance of a
minimum guaranteed benefit at maturity along with the advantage of a life
insurance cover.
3. DLF Pramerica Wealth+ Premier -The plan gives you a security that your
family will be safe & secure in case you are not there to support them. The plan
covers the features like-Protection to your family, Potential on higher returns,
flexibility, and withdrawal option, offers you option to continue and avail tax
4. DLF Pramerica Ezee Wealth+ - It is a unit linked plan which offers you life
insurance without the hassle of lengthy paperwork.
1.3 INTRODUCTION TO RECRUITMENT AND SELECTION
HRM is seen by practitioners in the field as a more innovative view of workplace
management than the traditional approach. Its techniques force the managers of an enterprise
to express their goals withspecificity so that they can be understood and undertaken by the
workforce, and to provide the resources needed for them to successfully accomplish their
assignments. As such, HRM techniques, when properly practiced, are expressive of the goals
and operating practices of the enterprise overall. HRM is also seen by many to have a key
role in risk reduction within organisations The Human Resources Management (HRM)
function includes a variety of activities, and key among them is deciding what staffing needs
you have and whether to use independent contractors or hire employees to fill these needs,
recruiting and training the best employees, ensuring they are high performers, dealing with
performance issues, and ensuring your personnel and management practices conform to
various regulations. Activities also include managing your approach to employee benefits
and compensation, employee records and personnel policies. Usually small businesses (for-
profit or nonprofit) have to carry out these activities themselves because they can't yet afford
part- or full-time help. However, they should always ensure that employees have -- and are
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aware of -- personnel policies which conform to current regulations. These policies are often
in the form of employee manuals, which all employees have.
Difference between HRM (a major management activity) and HRD (Human Resource
Development, a profession). HRD includes the broader range of activities to develop
personnel inside of organizations, including, eg, career development, training, organization
development, etc.
There is a long-standing argument about where HR-related functions should be organized
into large organizations, eg, "should HR be in the Organization Development department or
the other way around?"
The HRM function and HRD profession have undergone tremendous change over the past
20-30 years. Many years ago, large organizations looked to the "Personnel Department,"
mostly to manage the paperwork around hiring and paying people. More recently,
organizations consider the "HR Department" as playing a major role in staffing, training and
helping to manage people so that people and the organization are performing at maximum
capability in a highly fulfilling manner.
Human resource management (HRM) is the strategic and coherent approach to the
management of an organization's most valued assets - the people working there who
individually and collectively contribute to the achievement of the objectives of the business.
The terms "human resource management" and "human resources" (HR) have largely replaced
the term "personnel management" as a description of the processes involved in managing
people in organizations. Human Resource management is evolving rapidly. Human resource
management is both an academic theory and a business practice that addresses the theoretical
and practical techniques of managing aworkforce.Features
Feature:
Its features include:
Personnel administration
Personnel management
Manpower management
Industrial management
But these traditional expressions are becoming less common for the theoretical discipline.
Sometimes even industrial relation and employee relations are confusingly listed as
synonyms although these normally refer to the relationship between management and
workers and the behavior of workers in companies.
http://en.wikipedia.org/wiki/Strategichttp://en.wikipedia.org/wiki/Coherenthttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Workforcehttp://en.wikipedia.org/wiki/Workforcehttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Coherenthttp://en.wikipedia.org/wiki/Strategic -
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Definiton
Synonyms such as personnel management are often used in a more restricted sense to
describe activities that are necessary in the recruiting of a workforce, providing its members
with payroll and benefits, and administrating their work-life needs, Torrington and Hall
define personnel management as
a series of activities which: first enable working people and their employing organisations to
agree about the objectives and nature of their working relationship and, secondly, ensures
that the agreement is fulfilled"
".......those decisions and actions which concern the management of employees at all levels in
the business and which are related to the implementation of strategies directed towards
creating and sustaining competitive advantage".
Academic theory
The goal of human resource management is to help an organization to meet strategic goals by
attracting, and maintaining employees and also to manage them effectively. The key word
here perhaps is "fit", i.e. a HRM approach seeks to ensure a fit between the management of
an organization's employees, and the overall strategic direction of the company .
The basic premise of the academic theory of HRM is that humans are not machines, thereforewe need to have an interdisciplinary examination of people in the workplace. Fields such as
psychology,industrial engineering, industrial and organizational psychology,industria
lrelations,sociology,and critical theoriespostmodersition,poststructuring, play a major role.
Many colleges and universities offer bachelor and master degrees in Human Resources
Management.
Function:
One widely used scheme to describe the role of HRM, developed by Dave Ulrich, defines 4
fields for the HRM function
Strategic business partner
Change agent
Employee champion
Administration
However, many HR functions these days struggle to get beyond the roles of administration
and employee champion, and are seen rather as reactive than strategically proactive partners
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for the top management. In addition, HR organizations also have the difficulty in proving
how their activities and processes add value to the company. Only in the recent years HR
scholars and HR professionals are focusing to develop models that can measure if HR adds
value.
Critical Academic Theory
Indeed Karen Legge in 'Human Resource Management: Rhetorics and Realities' possess the
debate of whether HRM is a modernist project or a postmodern discourse). In many ways,
critically or not, many writers contend that HRM itself is an attempt to move away from the
modernist traditions of personnel (man as machine) towards a postmodernist view of HRM
(man as individuals). Critiques include the notion that because 'Human' is the subject we
should recognize that people are complex and that it is only through various discourses that
we understand the world. Man is not Machine, no matter what attempts are made to change it
Critical Theory also questions whether HRM is the pursuit of "attitudinal shaping,
particularly when considering empowerment, or perhaps more precisely pseudo-
empowerment - as the critical perspective notes. Many critics note the move away from Man
as Machine is often in many ways, more a Linguistic (discursive) move away than a real
attempt to recognise the Human in Human Resource Management.
Critical Theory, in particular postmodernism (poststructualism), recognises that because the
subject is people in the workplace, the subject is a complex one, and therefore simplistic
notions of 'the best way' or a unitary perspectives on the subject are too simplistic. It also
considers the complex subject of power, power games, and office politics. Power in the
workplace is a vast and complex subject that cannot be easily defined. This leaves many
critics to suggest that Management 'Gurus', consultants, 'best practice' and HR models are
often overly simplistic, but in order to sell an idea, they are simplified, and often lead
Management as a whole to fall into the trap of oversimplifying the relationship.
Business Practice
Human resources management comprises several processes. Together they are supposed to
achieve the above mentioned goal. These processes can be performed in an HR department,
but some tasks can also be outsourced or performed by line-managers or other departments.
Recruitment (sometimes separated into attraction and selection)
Induction and Orientation
Skills management
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Training and development
Workforce planning
Personnel administration
Compensation in wage or salary
Time management
Travel management (sometimes assigned to accounting rather than HRM)
Payroll (sometimes assigned to accounting rather than HRM)
Employ benefits administration
Personnel cost planning
Performance appraisal
Strategic Workforce Planninginvolves analyzing and forecasting the talent that companies
need to execute their business strategy, proactively rather than reactively, it is a critical
strategic activity, enabling the organization to identify, develop and sustain the workforce
skills it needs to successfully accomplish its strategic intent whilst balancing career and
lifestyle goals of its employees.
Strategic Workforce Planning is a relatively new management process that is being used
increasingly to help control labour costs, assess talent needs, make informed business
decisions, and assess talent market risks as part of overall enterprise risk management.
Strategic workforce planning is aimed at helping companies make sure they have the right
people in the right place at the right time and at the right price
Through Strategic Workforce Planning organizations gain insight into what people the
organization will need, and what people will be available to meet those needs. In creating this
understanding of the gaps between an organizations demand and the available workforce
supply, organizations will be able to create and target programmes, approaches and develop
strategies to close the gaps
Workforce analytics approach
The focus is to analyse current and historical employee data to identify key relationships
among variables and use this to provide insight into the workforce they need for the future..
Modeling approach
This approach incorporates forecasting and scenario planning. Forecasting uses quantitative
data to create forecasts incorporating multiple what-if and modeling the future. Scenario
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Planning being the more useful tool where there are uncertainties, therefore incorporating
quantitative and qualitative.
Segmentation approach
Breaking the workforce into segments along the lines of their jobs and determining relevance
to strategic intent. Provides a technique for prioritizing.
Steps in Workforce Planning
Though there is no definitive Start here activity for any of the approaches to Strategic
Workforce Planning, there are five fundamentals activities that most Workforce Plan models
have:
Environment Scan
Current Workforce Profile
Future Workforce View
Analysis and Targeted Future
Closing the gaps
Envoriment scanning
Environment Scanning is a form of business intelligence. In the context of Workforce
Planning it is used to identify the set of facts or circumstances that surround a workforcesituation or event.
Current Workforce Profile
Current State is a profile of the demand and supply factors both internally and externally of
the workforce the organization has today.
Future Workforce View
Future View is determining the organizations needs considering the emerging trends and
issues identified during the Environment Scanning.
Future View is often where the different approaches identified above are applied:
Quantitative futuring: understanding the future you are currently tracking to by forecasting;
Qualitative futuring: scenario planning potential alternative futures in terms of capabilities
and demographics to deliver the business strategy.
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Analysis and Targeted Future
Qualitative and quantitative futuring creates the content for an organizational unit to analyse
and identify critical elements. As the critical elements are identified the Targeted Future
begins to take form. The targeted future is the future that the organization is going to target as
being the best fit in terms of business strategy and is achievable given the surrounding factors
(internal/external, supply/demand).
Closing the Gaps
Closing the gaps is about the people management (human resources) programs and practices
that deliver the workforce needed for today and tomorrow. The process is about determining
appropriate actions to close the gaps and therefore deliver the targeted future.
There are 8 key areas that Closing the Gaps needs to focus on -
Resourcing, Learning and Development, Remuneration, Industrial Relations, Recruitment,
Retention, Knowledge Management, Job design.
Recruitment refers to the process of sourcing, screening, and selecting people for a job or
vacancy within an organization. Though individuals can undertake individual components of
the recruitment process, mid- and large-size organizations generally retain profesional
recruities.
The recruitment industry has four main types of agencies. Their recruiters aim to channel
candidates into the hiring organisations application process. As a general rule, the agencies
are paid by the companies, not the candidates. The industries practice of information
asymmetry and recruiters' varying capabilities in assessing candidate quality produces the
negative economic impacts described by The Market for Lemons.
PURPOSES AND IMPORTANCE:
In general purposes of recruitment is to provide a pool of potencially qualifide job
candidates. Specifically the purposes are to;
1. Determining the present and future recruitment of the organization in conjunction
with its personel planning and job-analysis activities.
2. Increase the pool of job candidates at minimum cost.
3.
Help increase the suscess rate of the selection process by reducing the number of
visibley under qualified or ovetqualified job application.
4. Help reduce the probability that job applicants, once recruited and selected ,will have
the organazation only after a short period of time.
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5. Meet organazations legal and social obligations regarding the composition of its
workforce.
TRADITIONAL RECRUITMENT
Also known as a employment agencies, recruitment agencies have historically had a physical
location. A candidate visits a local branch for a short interview and an assessment before
being taken onto the agencys books. Recruitment Consultants then endeavour to match their
pool of candidates to their clients' open positions. Suitable candidates are with potential
employers.
Remuneration for the agency's services usually takes one of two forms:
A contingency fee paid by the company when a recommended candidate accepts a job with
the client company (typically 20%-30% of the candidates starting salary), which usually has
some form of guarantee, should the candidate fail to perform and is terminated within a set
period of time.
An advance payment that serves as a retainer, also paid by the company.
It may still be legal for an employment agency to charge the candidate instead of the
company, but in most places that practice is now illegal, due to past unfair and deceptivepractices.
Online recruitment websites
Such sites have two main features: job boards and a rsum/Curriculum Vitae (CV) database.
Job boards allow member companies to post job vacancies. Alternatively, candidates can
upload a rsum to be included in searches by member companies. Fees are charged for job
postings and access to search resumes.
In recent times the recruitment website has evolved to encompass end to end recruitment.
Websites capture candidate details and then pool then in client accessed candidate
management interfaces (also online). Key players in this sector provide e-recruitment
software and services to organisations of all sizes and within numerous industry sectors, who
want to e-enable entirely or partly their recruitment process in order to improve business
performance.
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The online software provided by those who specialise in online recruitment helps
organisations attract, test, recruit, employ and retain quality staff with a minimal amount of
administration.
Online recruitment websites can be very helpful to find candidates that are very actively
looking for work and post their resumes online, but they will not attract the "passive"
candidates who might respond favorably to an opportunity that is presented to them through
other means. Also, some candidates who are actively looking to change jobs are hesitant to
put their resumes on the job boards, for fear that their current companies, co-workers,
customers or others might see their resumes.
Headhunters
Headhunters are third-party recruiters often retained when normal recruitment efforts have
failed.
Headhunters are generally more aggressive than in-house recruiters. They may use advanced
sales techniques, such as initially posing as clients to gather employee contacts, as well as
visiting candidate offices. They may also purchase expensive lists of names and job titles, but
more often will generate their own lists. They may prepare a candidate for the interview, help
negotiate the salary, and conduct closure to the search. They are frequently members in good
standing of industry trade groups and associations. Headhunters will often attend trade shows
and other meetings nationally or even internationally that may be attended by potential
candidates and hiring managers.
Headhunters are typically small operations that make high margins on candidate placements
(sometimes more than 30% of the candidates annual compensation). Due to their higher
costs, headhunters are usually employed to fill senior management and executive level roles,
or to find very specialized individuals.
While in-house recruiters tend to attract candidates for specifisc jobs, headhunters will both
attract candidates and actively seek them out as well. To do so, they may network, cultivate
relationships with various companies, maintain large databases, purchase company
directories or candidate lists, and cold call.
In-house recruitment
Larger employers tend to undertake their own in-house recruitment, using their Human
Resources department. In addition to coordinating with the agencies mentioned above, in-
house recruiters may advertise job vacancies on their own websites, coordinate employee
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referral schemes, and/or focus on campus graduate recruitment. Alternatively a large
employer may choose to outsource all or some of their recruitment process (Recruitment
process outsourcing).
There are the main recruiting stages:
Sourcing
Sourcing involves 1. advertising, a common part of the recruiting process, often
encompassing multiple media, such as the Internet, general newspapers, job ad newspapers,
professional publications, window advertisements, job centers, and campus graduate
recruitment programs; and 2. recruiting research, which is the proactive identification of
relevant talent who may not respond to job postings and other recruitment advertising
methods done in. This initial research for so-called passive prospects, also called name-
generation, results in a list of prospects who can then be contacted to solicit interest, obtain a
resume/CV, and be screened .
Screening & selection
Suitability for a job is typically assessed by looking for skills, e.g. communication, typing,
and computer skills. Qualifications may be shown through rsums, job applications,
interviews, educational or professional experience, the testimony of references, or in-house
testing, such as for software knowledge, typing skills, numeracy, and literacy, through
psychological tests or employment testing.
In some countries, employers are legally mandated to provide equal opportunity in hiring.
Agencies are particularly suitable for recruitment of executives and specialists. It is also
known as RPO (Recruitment Process Outsourcing)
SOURCES OF RECRUIMENT
Employment exchanges
Government establishes public employment exchanges throughout the country. These
exchanges provide job information to job seekers and help employers in identifying suitable
candidates.
Labour contractors
Manual workers can be recruited through contractors who maintain close contacts with the
sources of such workers. This source is used to recruit labor for construction jobs.
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Unsolicited applicants
Many job seekers visit the office of well-known companies on their own. Such callers are
considered nuisance to the daily work routine of the enterprise. But can help in creating the
talent pool or the database of the probable candidates for the organization.
EMPLOYEE REFERRALS / RECOMMENDATIONS
Many organizations have structured system where the current employees of the organization
can refer their friends and relatives for some position in their organization. Also, the office
bearers of trade unions are often aware of the suitability of candidates. Management can
inquire these leaders for suitable jobs. In some organizations these are formal agreements to
give priority in recruitment to the candidates recommended by the trade union.
RECRUITMENT AT FACTORY GATE
Unskilled workers may be recruited at the factory gate these may be employed whenever a
permanent worker is absent. More efficient among these may be recruited to fill permanent
vacancies. Factors Affecting Recruitment
Effective human resource planning helps in determining the gaps present in the existing
manpower of the organization. It also helps in determining the number of employees to be
recruited and what qualification they must possess.
RECURITMENT PROCESS DLF PRAMERICA HAMIRPUR
Here the company adopted to system for recruited their staff and worker .for staff member
the company adopted generally the traditional process like by the test , G.D , interview and
for the worker level the company adopted the flowing process.
On gate
By the contractor
By the camp
On the reference
Thus the recruitment process of the DLF in as like as the other company but one thing
different the camp based selection process .I think this a different kind of process and unique
it self . The company run the camp in the rural and remote area in state for the
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Recruitment they conducts one week program and this time interval the select number of
candidate. This helps not only the company but also the life of rural people who cut of the
rest world due to several reasons. This also helps increasing the economic and social
condition of the remote area which ultimately helps the nation development.
By this process the company also full fills the social objective of the company.
FACTOR AFFECTING THE RECRUITMENT PROCESS:
SIZE OF THE FIRM
The size of the firm is an important factor in recruitment process. If the organization is
planning to increase its operations and expand its business, it will think of hiring more
personnel, which will handle its operations.
COST
Recruitment incur cost to the employer, therefore, organizations try to employ that source of
recruitment which will bear a lower cost of recruitment to the organization for each
candidate.
Influence the recruiting efforts of the organization. If there is surplus of manpower at the
time of recruitment, even informal attempts at the time of recruiting like notice boards
display of the requisition or announcement in the meeting etc will attract more than enough
applicants.
IMAGE / GOODWILL
Image of the employer can work as a potential constraint for recruitment. An organization
with positive image and goodwill as an employer finds it easier to attract and retain
employees than an organization with negative image. Image of a company is based on what
organization does and affected by industry. For example finance was taken up by fresher
MBA's when many finance companies were coming up.
POLITICAL-SOCIAL- LEGAL ENVIRONMENT
Various government regulations prohibiting discrimination in hiring and employment have
direct impact on recruitment practices. For example, Government of India has introduced
legislation for reservation in employment for scheduled castes, scheduled tribes, physically
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handicapped etc. Also, trade unions play important role in recruitment. This restricts
management freedom to select those individuals who it believes would be the best
performers. If the candidate can't meet criteria stipulated by the union but union regulations
can restrict recruitment sources.
UNEMPLOYMENT RATE
One of the factors that influence the availability of applicants is the growth of the economy
(whether economy is growing or not and its rate). When the company is not creating new
jobs, there is often oversupply of qualified labor which in turn leads to unemployment.
COMPETITORS
The recruitment policies of the competitors also affect the recruitment function of the
organizations. To face the competition, many a times the organisationsS have to change their
recruitment policies according to the policies being followed by the competitors.
RECENT TREND:
Company need not plan for human resources much in advance.
Value creation, operational flexibility and competitive advantage
turning the management's focus to strategic level processes of HRM
Company is free from salary negotiations, weeding the unsuitable resumes/candidates.
Company can save a lot of its resources and time
POACHING/RAIDING
"Buying talent" (rather than developing it) is the latest mantra being followed by theorganisations today. Poaching means employing a competent and experienced person already
working with another reputed company in the same or different industry; the organisation
might be a competitor in the industry. A company can attract talent from another firm by
offering attractive pay packages and other terms and conditions, better than the current
employer of the candidate. But it is seen as an unethical practice and not openly talked about.
Indian software and the retail sector are the sectors facing the most severe brunt of poaching
today. It has become a challenge for human resource managers to face and tackle poaching,as it weakens the competitive strength of the firm.
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E-RECRUITMENT
Many big organizations use Internet as a source of recruitment. E- recruitment is the use of
technology to assist the recruitment process. They advertise job vacancies through worldwide
web. The job seekers send their applications or curriculum vitae i.e. CV through e mail using
the Internet. Alternatively job seekers place their CV's in worldwide web, which can be
drawn by prospective employees depending upon their requirements.
Advantages internal of recruitment are:
Low cost.
No intermediaries
Reduction in time for recruitment. Recruitment of right type of people.
Efficiency of recruitment process.
RECRUITMENT POLICY
1. The recruitment policy of an organization specifies the objectives of recruitment and
provides a framework for implementation of recruitment programmed. It may involve
organizational system to be developed for implementing recruitment programmed and
procedures by filling up vacancies with best qualified people.
2. Recruitment is a positive process i.e. encouraging more and more employees to apply
WHEREAS selection is a negative process as it involves rejection of the unsuitable
candidates.
3. Recruitment is concerned with tapping the sources of human resources whereas selection
is concerned with selecting the most suitable candidate through various interviews and tests.
4. There is no contract of recruitment established in recruitment whereas selection results in a
contract of service between the employer and the selected employee.
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REVIEW OF LITERATURE
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REVIEW OF LITERATURE
Janifer A Chatman (2008)according to him to investigate how the fit of an employee with
his or her organization a a whole is established and maintained and what the consequencesare in organizations, this study tracked the early careers of 171 entry-level auditors in eight of
the largest U.S. public accounting firms and assessed the congruence of their values with
those of the organization. Person-organization fit is shown to be created, in part, by selection
(assessments of who the person is when he or she enters the organization) and socialization
(how the organization influences the person's values, attitudes, and behaviors during
membership. Results show some support for three general hypotheses: First, recruits whose
values, when they enter, match those of the firm adjust to it more quickly; second, those who
experience the most vigorous socialization fit the firm's values better than those who do not;
and third, recruits whose values most closely match the firm's feel most satisfied and intend
to and actually remain with it longer.
Methews (2009) concluded that organizations devote substantial resources to establishing
and maintaining a "good fit" between people and their jobs because they assume that certain
people are better suited to perform some jobs than others . Numerous fit theories have been
advanced, focusing on careers, job choice and organizational climate. These theories draw on
interactional psychology in that they consider how individual and situational characteristics
combine to influence a focal individual's response in a given situation. Pervasive influences
on individual behaviors and attitudes may also arise from the organization's social