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Human Resource Management Unit 2
Sikkim Manipal University Page No. 22
Unit 2 HRM in India
Structure:
2.1 Introduction
Objectives
2.2 HRM in India
2.3 Human Relations Movement
2.4 Cultural dimension of the Indian workforce
2.5 Scope of HR in India
2.6 Summary
2.7 Caselet
2.8 Terminal Questions2.9 Answers
2.1 Introduction
You will agree that the evolution of the Indian organizations have happened
at a different pace as compared to what happened in the rest of the world.
You might have read articles in magazines and on the web on the
challenges that multinational company may face while doing business in a
country like India.. MNC faces difficulty in setting up business in India in
terms of paper work related to registration and due to laws of the land.
Organization also faces a lot of challenges in hiring and retaining its
employees. We will spend time in this Unit discussing what Indias
challenges were and how it has overcome them to emerge a winner.
The Indian story for organizational success is one that is deeply rooted in its
history and culture. The Indian value system is rich in terms of joint family
system and has respect for elders. The British rule along with the freedom
struggle has strongly impacted the shaping of the Indian workplace. The
largely agrarian nature of the countrys wealth builds hard work, dignity for
labour, saving for the future and shared responsibility these are the key
attributes of Indian workforce. And these attributes even today are thefoundation of the success of the Indian firm. To add on this, the role of the
countrys democratic governance framework with its sturdy term of Five
Year Plan have enabled policy makers and the financial institutions to set
the stage for Indias success. The far-sightedness of the government in the
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area of education, particularly, has contributed immensely to the control of
population. This together with the assistance from the developed countrieshelped the country create its own value proposition globally. Unique in its
strengths and its weaknesses India today is identified as among the leading
emerging economic in the world sharing space with larger countries (both
in size and scope) like Russia, China and Brazil. India continues to climb the
curve of success even after 60 years of independence, with symbiotic trade
relations with almost every other country in the world.
Objective:
After studying this unit you will be able to:
Recall the history of Indian concepts in human resources management
Identify its uniqueness as compared to the rest of the world
Evaluate the impact of the countrys culture on the organizations culture
2.2 HRM in India
As it stands today the Indian organization could not have hoped for more. In
addition to being strategically positioned on the corporate world map as a
low-cost, highly skilled destination, the Indian corporate is emerging as a
base for committed, intelligent and a knowledgeable workforce. This has
been achieved by the help of a strong foundation provided by the Indian
education system at the primary, secondary, technical and at professionallevel. It is a undisputed fact that the Indian Institute of Technology, the
National Institute of Technology and the famed India Institute of
Management are among the world-class institutions to name a few. Quality
education and research are encouraged on these campuses and across the
country, which mould and contribute to the practices in Indian organizations.
The HRM practices in Indian organizations are a parody of sorts. There is a
strong foundation that is a simple extension of the HR practices from the
established western organizations and the developed countries. However
there is a equally strong cultural impact on the hiring practices,
compensation standards, benefits and statutory benefits, performance
linked rewards and payout, which though in-step with international HRM
practices have a flavour their own. We will discuss a few distinct
differentiators that impact HRM practices in Indian organizations:
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HRM in India however is not structurally well-researched and hence a lack
of theoretical information to track and document its progress. Unlike in theemerged countries like the USA and the UK where the research networks
are mature and well established. Research is yet at its infancy in India and
there is a lot of dependence on the emerged countries in emulating best
practices in the way people are hired and managed. Today the
organizations of Indian origin have their unique HR strategies that work best
for them. Work more and earn more is a common and accepted philosophy
at the Indian workplace. Work is respected and revered and almost
worshipped in Indian organizations. Benefits are basic yet equitable and
adequate. There is a high focus on cash in hand as opposed to benefits and
perks.
Our statutory and legal frameworks, as a result, are a lot more liberal and
less restrictive as compared to the emerged countries. An open society
drives openness at the workplace and hypocrisy is largely discouraged,
leading to well structured policies and processes that drive workplace
behaviour. Diversity for India is a challenge very different from its existence
in the rest of the world. Diversity initiatives in India normally focus around
challenges related to gender diversity. Its only in the past few years that
there is a pattern of women in the Indian corporate. Today this is a key
issue. There is a lot of strategising and initiatives in all Indian MNCs as well
as Indian domestic firms toward wooing this critical potential talent fororganizational advantage.
Self Assessment Questions
1. In India diversity is a concern because we are very conservative and a
closed society (True / False)
2. India is gaining importance because of the quality as well as the cheap
cost of living (True / False)
3. Our legal framework is very advanced, allowing for foreign companies
to work easily in India (True / False)
Activity 1
Speak to your friends or relatives who are working in a public sector
company or in a MNC. Try to compare the HR practices of a public
sector company to a MNC.
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4. Grievance management systems is a common HRM function (True /
False)
2.3 Human Relations Movement
Kautilya provides an account of the techniques of human resources
management as early as 4th century B.C. in the "Artha-Shastra". As per the
book, there existed logical procedures and principles in organizing labour
namely the Shreni or guild system and in the principles of the co-operative
sector. The wages were in terms of quantity and quality of work turned out
and punishment for unnecessarily delaying the work or spoiling it. The
writing of Kautilya provides an excellent discussion on staffing and
personnel management, including the detailing of what today are called jobdescriptions, qualifications for jobs, methods of selection, employee and
supervisor development, formally established incentive methods (Sarasa-
saama- daana- bheda- danda- catura, the Carrot and Stick approach) and
even the science of performance evaluation. The guild system was
pioneered and closely followed by the establishment of the co-operative
sector of craftsmen and traders organizing themselves to promote their
professional interests. Numerous professional societies were similarly
formed each establishing systematic procedures and policies to nurture their
own interests.
Significantly, these practices also respected the principles of the division of
labour, which can easily be traced to the caste system that even today is a
inseparable part of the Indian cultural system. The society got divided into
Individuals engaging themselves in activities such as teaching, sacrifice
or state management were designated as Brahmins
While those specialising in fighting were termed as Kshatriyas.
Individuals engaged in the areas of trade, business and agriculture were
called Vaishyas and
Those devoting themselves in manual work were known as Shudras.
Herein hereditary facilitated the transfer of skills and training from onegeneration to another. Quickly even specialised skills became hereditary
suchas goldsmiths, weavers, potters, blacksmiths, carpenters, hunters,
charioteers, snake charmers, architects, sculptors, armourers identified as
separate communities by themselves. Between the employer and
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employees justice and equity laid a sound foundation for successful
enterprise.During the medieval period, India experienced aggressions for around 700
years, during the Mughal rule. While trade and commerce flourished,
majority of the artisans and the craftsmen remained poor and lived simple
lives compounded by the large and joint family system that prevailed. Low
wages, oppressive political conditions and poor physique characterised the
workplace. Nothing significantly changed during the British rule. Oppression
and poor working conditions prevailed in all industries and intensified in the
tea estates that were the key focus of the British for obvious reasons that
tea was a key export product.
This prevailed till the enactment of the Factory Act of 1881. This coincided
with the waves of industrialization and urban growth that India witnessed.
The Act brought about the first set of formal guidelines and rules that the
industries had to comply with. Workers employed in the factories were
allowed a week off-day and provisions were made for supervision, quality
and hours of work. Sadly the act also established the minimum age of
children for employment to be seven years and the maximum working hours
for them to not exceed seven hours a day and only in the day-shift.
This set the stage for the organization of employees to ensure fair work and
pay and in 1890, the first labour organization Bombay Mill HandsAssociation was established. In 1905, the printers' Union at Calcutta and in
1907, the Postal Union at Bombay were established. The Madras Labour
Union was organized thereafter in 1918. The Central Labour Board was
established in 1922 to bring together the different unions in the Bombay city
and the All India Trade Union Congress was organized. The formal
implementation of the Indian Trade Unions Act took place in 1926, one more
landmark in the history of industrial relations in the country. There was a
large scale expansion of the trade union movement after the Second World
War - especially after the independence. The union-government interactions
significantly stepped up to accommodate for the removal of the war-timerestrictions on strikes, formation of three more central labour organizations
and the competition among them and the use of adjudication rather than
collective bargaining techniques to resolve issues. In 1960, 45 percent of
the total industrial workforce was claimed to be unionised. Today, the total
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membership is estimated to be around 4.3 million i.e., 28 percent of total
workforce.The post-independence period also marked the formation of the Personnel
Department in different public and private sectors. Under the Factories Act,
1948, employers had to employ a Welfare Officer in a factory employing 500
or more workers. Similarly the Mines Act, 1952, empowers the Government
to specify employment of welfare officer/officers. While welfare constituted a
large part of the responsibilities of the Personnel department, there were
other tasks and responsibilities that were assigned as well.
The responsibilities included other varied functions including the
employment of suitable people, workplace safety and driving awareness,
training and wage and salary administration. The Personnel department
however operated in a somewhat isolated manner and executed tasks as
assigned by the head of the organization / core business teams. The
interactions with the other heads of departments were limited and only on a
need-based rationale.
In the past two decades the workforce in India has evolved rapidly to
emerge as a nation of intelligent, skilled and highly aware and mature
professional, who stand shoulder-to-shoulder with the professional from the
world over. The workplace is an equitable one which believes in the values
of respect for the individual and aspiration to be the best in the world. Therole of the Human Resources function can no longer be ignored or sidelined.
It is viewed as a strategic partner and has found a place at the top
management table. The Head of Human Resources function is selected with
as much care and attention as the CEO and is consulted in all business
decisions, irrespective of its direct/ indirect implications to human resources.
Being a HR professional is a conscious decision that a individual takes early
in his / her life and pursues it with dedication and commitment.
Self Assessment Questions
5. Kautilya provides a systematic treatment of management of humanresources as early as 4th century B.C. in his treatise titled .
6. From the 14th century B.C. to the latter half of the 10th century A.D.,
the relationships between the employer and employees were marked
by...
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7. In "Varnashram" or caste system, those devoting themselves in manual
work were known as...8. During early British rule, there prevailed a ..policy towards the
business.
9. The Madras Labour Union was organized in..
2.4 Cultural dimension of the Indian workforce
The foundation for understanding the unique work practices at a country
level can best be understood by first understanding the cultural aspects of
the countrys workforce. The pioneering work done by Dutch scientist, Geert
Hofstede is a useful tool in understanding the cultural differences used to
differentiate countries. He identified five cultural dimensions around whichcountries have been clustered. The dimensions are: power distance,
uncertainty avoidance, individualism, masculinity and long term orientation.
Geert Hofstede dimensions are based on research conducted among over
1000 IBM employees working globally. While there continued to be other
studies like the GLOBE (Global Leadership and Organisational Behaviour
Effectiveness) project and Trompenaars' Framework, Hofstedes model is
most popular.
Power Distance
Power distance is the extent to which less powerful members of institutions
and organisations accept that power is distributed unequally. Countries in
which people blindly obey the orders of superiors have high power distance.
High power distance countries have norms, values and beliefs that support:
Inequality is good; everyone has a place; some are high, some are low
Most people should be dependent on a leader,
The powerful are entitled to privileges, and
The powerful should yield their power.
India scores 77 on power distance, indicating high power distance as a
result of the inequalities both at the level of the society as well as the at the
workplace. Indian organizations typically have hierarchical structures,
position yields power and subordination is acceptable.
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The dimension of high power distance at the workplace can be best
understood as: People dislike work and try to avoid it.
Managers believe that they must adopt Theory X leadership style, that
is, they must be authoritarian, and force workers to perform and need to
supervise their subordinates closely.
Organisational structures and systems tend to match the assumption
regarding leadership and motivation
Decision making is centralised.
Those at the top make most of the decisions. Organisations tend to have
tall structures.
They will have a large proportion of supervisory personnel, and The people at the lower levels often will have low job qualifications
Such structures encourage and promote inequality between people at
different levels.
Uncertainty Avoidance
Uncertainty avoidance is the extent to which people feel threatened by
ambiguous situations, and have created beliefs and institutions that try to
avoid these.
India scores 40 indicating low to average uncertainty avoidance
characteristics. Countries with low uncertainty avoidance have people whoare more willing to accept that risks are associated with the unknown, and
that life must go on in spite of this.
Specifically, high uncertainty avoidance countries are characterised by
norms, values, and beliefs which accept that:
Conflict should not be avoided,
Deviant people and ideas should be tolerated,
Laws are not very important and need not necessarily be followed,
Experts and authorities are not always correct, and Consensus is not
important
Low uncertainty avoidance societies such as ours have organisation
settings with less structuring of activities, fewer written rules, more risk-
taking by managers, higher labour turnover and more ambitious employees.
Such an organisation encourages employees to use their initiative and
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assume responsibility for their actions. Denmark and Great Britain are good
examples of low uncertainty avoidance cultures. Germany, Japan, andSpain typify high uncertainty avoidance societies
Individualism
Individualism is the tendency of people to look after themselves and their
family only. The opposite of this is collectivism which refers to the tendency
of people to belong to groups and to look after each other in exchange for
loyalty. India scores 48 on Individualism, indicating somewhat low scores,
therefore tending towards a more collectivistic society.
Collectivist countries believe that:
One's identity is based on one's group membership,
Group decision making is best, and
Groups protect individuals in exchange for their loyalty to the group.
Organisations in collectivist societies tend to promote nepotism in selecting
managers. In contrast, in individualistic societies, favouritism shown to
friends and relatives is considered to be unfair and even illegal. Further,
organisations in collectivist cultures base promotions mostly on seniority and
age, whereas in individualist societies, they are based on one's
performance. Finally, in collectivist cultures, important decisions are made
by older and senior managers as opposed to individualist cultures, where
decision making is an individual's responsibility.
Individualism is common in the US, Canada, Australia, Denmark, and
Sweden. The people of India, Indonesia, Pakistan and a number of South
American countries exhibit collectivism
Masculinity
Masculinity refers to a situation in which the dominant values in a society
are success, money and other material things. Hofstede measured this
dimension on a continuum ranging from masculinity to femininity. India
scores 56 tending to be closed to masculinity than feminity.
In highly masculine societies, jobs are clearly defined by gender. There aremen's jobs and women's jobs. Men usually choose jobs that are associated
with long-term careers. Women usually choose jobs that are associated with
short-term employment, before marriage.
Ranking of Countries on Hofstede's Cultural Dimensions
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Table 2.1 Comparative table containing the scores
Country
Power
Individualism
Uncertainty
MasculinityDistance Avoidance
Arab countries 80 38 68 53
Argentina 49 46 86 56
Australia 36 90 51 61
Brazil 69 38 76 49
Canada 39 80 48 52
Denmark 18 74 23 16
East Africa 64 27 52 41
France 68 71 86 43
Germany FR 35 67 65 66
Great Britain 35 89 35 66
Greece 60 35 112 57
Hong Kong 68 25 29 57
India 77 48 40 56
Indonesia 78 14 48 46
Iran 58 41 59 43
Israel 13 54 81 47
Japan 54 46 92 95
Malaysia 104 26 36 50
Mexico 81 30 82 69
New Zealand 22 79 49 58
Pakistan 55 14 70 50
Philippines 94 32 44 64
Singapore 74 20 8 48
South Africa 49 65 49 63
South Korea 60 18 85 39
Spain 57 51 86 42
Sweden 31 71 29 5
Switzerland 34 68 58 70
Taiwan 58 17 69 45
Thailand 64 20 64 34Turkey 66 37 85 45
USA 40 91 46 62
West Africa 77 20 54 46
Source: http://www.geert-hofstede.com/hofstede_dimensions.php
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2.5 Scope of HR in India
Contrary to these forces, in India the owner manager / government/publicsector manager was an industry icon and a national hero of sorts. The
Personnel Management practices were dominant of the brick-and-motor
industry. Though the approach was largely welfare oriented and reactive in
nature it served effectively for the large PSU organizations that built the
countrys foundation. A large part of the workforce were migrant from the
rural parts of the country and armed with educational qualifications that
served as their passport to a secure future. Many left the country to study
and pursue career overseas. This phenomenon was called brain drain and
happened during 1990 through to 2005. The best of the Indian talent left the
country. Per present statistics there are close to 1.7 million people of Indianorigin in America according to the US Census Bureau. The Indian American
median family income is $60,093, as against the national median family
income of $38,885., left the country. The estimated buying power of the
Indian Americans in the United States is around US $20 billion. The high
income clearly reflects the advanced educational levels achieved by Indian
abroad.
Its only in the past 10-12 years with the immense growth on account of the
IT industry that winds of change began to blow. It was largely the advent of
the Information Technology era in India that brought with it the western
management practices. MNCs (multinational companies) started up their
operations in India. The FDI (foreign direct investment) went up steeply as
the world saw the potential in the countrys human resources. India became
a preferred location for MNCs primarily from the USA, followed by other
developed countries. It was natural for the MNCs setting up operations in
India to establish their existing and proven management practices that were
successfully working in the organizations back home. It also helped them
manage their business similarly.
This gave birth to a new generation of management as well as HRM
practices. New hiring methods, new ways of paying salaries, newemployment terms and most importantly increased focus on individual
performance and outcomes. There was emphasis on deliverables and
linking individual and team performance to business results and success.
Given the highly educated workforce there was a de-emphasis in the role of
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the trade unions. The era of the trade union dominance gave way to the new
order of individual negotiated salaries and terms and clearly performancelinked assessment systems. Another transformation that the Indian
workplace witnessed was the focus on ethics and ethical practices in doing
business. It was only fair to expect that with the weak legal system, it
needed the support of the government policies and the corporate policies to
beat the corruption that existed. This has significantly contributed to India
emerging as a preferred destination for doing business.
All of this has yielded to give way to the birth of the professional manager.
Professional managers today are a critical and essential part of the Indian
corporate. The professional manager brought about a shift in the culture
from a highly authoritarian approach of getting work done, to a morecollaborative and participative approach. In the traditional Indian culture
where the child is brought up to be dependent on parents and superiors this
shift was breakthrough and took its time to manifest. The entrepreneurs who
earlier operated in a secure, sheltered market and hardly face challenges,
were challenged by the globalization that swept in with the liberalization
policies and measure brought in by the Indian government late 1995 and
onwards. Despite the challenges, the Indian employee and his manager
evolved. Together they stepped up to face the challenge head-on and to
win not only in India but also globally. The levers of (a) low cost, (b) highly
skilled, and (c) English as the medium of education and it being thecorporate-language; were the key drivers that enabled the flow of global
business to India. There was exponential growth in employment both
directly (jobs in the international and domestic companies) as well as
indirectly (as support industries like transport, catering and ancillary
industries). The simultaneous investment of the government in building the
necessary infrastructure did its share of providing impetus towards creating
more jobs for the people of the country.
Hence, human relations movement in India has evolved very differently as
compared to what we see in the developed economies of the USA and the
UK. What is currently acting as a limitation is the enhanced awareness on
the need for research based HRM practices. While there is a lot of work
happening in the Indian education system to promote this, it is going to take
a while before it can create a distinct body of knowledge that is reference-
able. For now the industry relies on emulating westerns HR practices and
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customizing on a as-needed basis for the Indian corporation. For the rest
the Industry forums and consortiums like the NASSCOM act as a hubbringing together organizations on a regular basis to discuss challenges and
share best practices and identify ways and means to overcome them
together. So far this has been successful and working to the advantage of
the Indian corporate. Leading MNC research and consulting firms like
Mercer and Hewitt too contribute to the industry through carrying out
research and sharing reports on a regular basis. The approach however
remains analytical and less prescriptive.
Self Assessment Questions
10. The culture is highly __________________in character.
11. For lack of _________________, the workers cannot and do not have
any say in their jobs or working conditions.
12. ___________________ here means not only the efficient sending and
receiving of messages but also includes sensitivity to the
understanding of feelings, attitudes and cognitions of the subordinate.13. It was the advent of the Information Technology era in India that
brought with it the _________________________ practices.
14. There was exponential growth in employment both ___________ as
well as ______________.
2.6 Summary
o HRM in India has been impacted both by its own history as well as
multinational companies that came and established their operations in
the country.
o The countrys culture has played a critical role in building value for the
country globally.
Activity 2
Identify three practices in Indian companies that you know of that are
specific to the Indian culture. Think of festivals and how they are
celebrated in companies.
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o The caste system and the way it was structured to differentiate between
different categories of jobs remains a basic framework for the way workis distributed at the workplace.
o The coming of the British to India and their administrations brought
immense insights into the country on how to manage labour and work.
o It also gave rise to the trade unions and workplace equality issues.
o The impact of the World War I and II made their own impact on the
Indian organizations.
o The early days of structured HRM activities were largely hygiene
related and focused on the Personnel management principles.
o Human Resources management as it is practiced today is a outcome of
the cultural (local) as well as the global MNC policies.
2.7 Caselet
Indian tech tries to retain top workers
By Jessica Mehroin Irani
At a time when most IT companies are reducing employee numbers to cut
costs, tech majors such as Wipro, TCS and Infosys are rechanellizing their
manpower. Sabbaticals are more common and people on the bench are
being asked to undergo longer and more rigorous training programs.
Wipro has asked some of its non-billable and skilled employees to move tosubsidiary Wipro Infotech on the same pay package as earlier; but they will
continue to be on the payrolls of Wipro Technologies.
"These are not under performers, but talented people we don't want to lose.
The move to Infotech is currently for a year, and this will give them a chance
to be productive," said Pratik Kumar, Wipro executive vice president of
human resources. This will also help the company in sustaining high
utilization rates.
The other option given to employees, who have been on the bench for over
six months, is a special program which allows them to come to work for 10days a month, at half their salary. "This allows them to take up certification
programs, work on innovation projects and help in creating question banks
for domain specific internal tests," said Kumar. "Once we see an opening for
them on a project, we will transfer them immediately."
mailto:[email protected]&Subject=Feedback%20on%20'Indian%20tech%20tries%20to%20retain%20top%20workers'mailto:[email protected]&Subject=Feedback%20on%20'Indian%20tech%20tries%20to%20retain%20top%20workers' -
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TCS has also put its benched employees on high-end training programs in
areas such as enterprise resource planning, business intelligence andanalytics. "We are building a larger skill set as we would like to be ready
when the demand picks up," said a TCS spokesperson. The IT Company
has also invited its employees to write research papers on technology that
can be used by the company.
Reducing employee numbers for saving costs is a short-term solution, said
Nandita Gurjar, head of global HR at Infosys. "When demand picks up, we'll
be hiring skill pools at a higher cost; there will also be the cost of extra
training. Weed out non-performers, but retain talent even if they are not
being utilized currently."
While Infosys has said that 50 employees, at any given point of time, can
take a year off and work for an NGO at half their salaries, its peer Wipro has
introduced project rejuvenate where employees, across all levels, can take a
year-long sabbatical and pursue their hobbies.
This is not restricted to those on the bench, but also for those working on
projects. Even though these people are asked to take a pay cut, it does not
matter.
"As long as you get to keep your job and do fun things to de-stress, a pay
cut doesn't matter," said a Wipro employee.
Source: BusinessWeek, Monday, March 30, 2009 09:22 AM
2.8 Terminal Questions
1. Enumerate the growth of Human Resources Management in India and
its impact on India's ethos.
2. How did the India culture impact workplace HR practices?
3. How are the early HRM challenges different from that of the current?
2.9 Answers
Answers to Self Assessment Questions
1. False,
2. True,
3. False
4. True
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5. Artha- Shastra,
6. By justice and equity7. Shudras,
8. Laissez-faire,
9. 1918
10. Authoritarian,
11. Job-opportunities,
12. Communication,
13. Western management,
14. Directly, indirectly
Answers to Terminal Questions
1. Refer to 2.3
2. Refer to 2.2
3. Refer to 2.4
References
1. Personnel Management by C B Mmoria
2. Human Resources Management : Text and Cases by K Aswathappa
3. International Human Recoruces Management : Text and cases
Aswathappa and Dash