IMPACT OF REWARDS AND RECOGNITION ON LABOUR …

I

IMPACT OF REWARDS AND RECOGNITION ON LABOUR

PRODUCTIVITY

A STUDY OF SELECTED STEEL INDUSTRIES IN INDIA

DISSERTATION SUBMITTED

TO

D. Y. PATIL UNIVERSITY, NAVI MUMBAI,

DEPARTMENT OF BUSINESS MANAGEMENT

IN

PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR AWARD OF DEGREE OF

MASTER OF PHILOSOPHY

IN

BUSINESS MANAGEMENT

SUBMITTED

BY

ANIKET. M. KAMBLE

(ENROLLMENT NO: DYP-M.Phil-11008)

RESEARCH GUIDE

DR. R. GOPAL

DIRECTOR, DEAN & HEAD OF THE DEPARTMENT

D.Y. PATIL UNIVERSITY, NAVI MUMBAI

DEPARTMENT OF BUSINESS MANAGEMENT,

SECTOR 4, PLOT NO. 10,

CBD BELAPUR, NAVI MUMBAI – 400 614

JUNE 2014

II

IMPACT OF REWARDS AND RECOGNITION ON LABOUR

PRODUCTIVITY

A STUDY OF SELECTED STEEL INDUSTRIES IN INDIA

SUBMITTED

BY

ANIKET. M. KAMBLE

(ENROLLMENT NO: DYP-M.Phil-11008)

III

DECLARATION

I hereby declare that the thesis titled ―Impact of rewards and recognition on labour

productivity- A Study of selected steel industries in India.‖ Submitted for the Award of

Master of Philosophy (M. Phil) in Business Management at D. Y. Patil UniversityNavi

Mumbai, Department of Business Management is my original work and the Dissertation has

not formed the basis for the award of any degree, associateship, fellowship or any other

similar titles. The material borrowed from other sources and incorporated in the thesis has

been duly acknowledge. I understand that I myself could be held responsible and accountable

for plagiarism, if any, detected later on

The research papers published based on the research conducted out of an in the course of the

study are also based on the study and not borrowed from other sources.

Date:

Signature of the student

ENROLLMENT NO: DYP-M.Phil-11008)

IV

CERTIFICATE

This is to certify that the dissertation entitled “IMPACT OF REWARDS AND

RECOGNITION ON LABOUR PRODUCTIVITY- A STUDY OF SELECTED STEEL

INDUSTRIES IN INDIA" is a bonafide research work carried out by Mr. Aniket Kamble

student of Master of Philosophy, at D. Y. Patil University's Department of Business

Management, Navi Mumbai, in partial fulfillment of the requirements for the award of the

Degree of Master of Philosophy in Business Management and that the dissertation has not

formed the basis for the award previously of any degree, diploma, associate ship, fellowship

or any other similar title of any University or Institution.

Place: Navi Mumbai

Date:

Dr. R. Gopal Dr. R. Gopal

(Head of the department) (Research Guide)

V

ACKNOWLEDGEMENT

In the first place, I am indebted to the D.Y. Patil University Department of Business

Management, which has accepted me for the program and provided me with an excellent

opportunity to carry out the present research project. I would like to thank all persons who

have been instrumental in making this dissertation see the light of the day directly or

indirectly. I owe my deepest gratitude to my mentor and guide, Dr. R. Gopal without whose

insights and guidance, my work would never have been completed. He helped me retain my

focus during the course of this study and guided me in prioritizing the different phases of this

research.

I would like to acknowledge the help of Mr. NitinTekade (VP-HR–JSW Tarapur) for detailed

discussions on Labour productivity, Dr. DhanrajUchil Director - Investment Banking &

Compliance, YES Bank Ltd.; Mr. Surendrapawar Deputy Director at Industrial Safety And

Health (Govt. of India); Dr. Shanti Suresh (Professor– SIES college) and Ms. K.S. Usha and

my friend Amarjeet Kumar for the their advice and support throughout research process.

I thank my sister and parents for their perseverance and patience while I was busy completing

this research.

Place: Navi Mumbai

Date: Mr. Aniket M Kamble

VI

TABLE OF CONTENTS

Chapter No. Title Page No.

Cover Page I

Title II

Declaration III

Certificate IV

Acknowledgement V

Table of Content VI

List of tables VII

List of Figures X

List of Abbreviations XII

Executive Summary XIII

1 Introduction to Labour productivity 1

2 Literature Review 16

3 Objective and Research Methodology 27

4 The Indian Steel Industry 41

5 Data Analysis and Interpretation 59

6 Conclusion 110

7 Suggestion and Recommendation 112

8 Limitation of the study 115

Annexure 1 Bibliography 2 Articles 3 Wibliography 4 Questionnaire

116

VII

LIST OF TABLES

Serial

No.

Table

no.

Table Name Page No.

1 3.1 Classification as per 11th

five year plan 37

2 3.2 Determination of sample 38

3 4.1 Indian steel industry production 43

4 4.2 Indian steel industry imports 44

5 4.3 Indian steel industry exports 45

6 4.4 Trends in production and consumption of finished steel (plan

wise)

53

7 4.5 The company wise performance during plan period 55

8 4.6 Import & Export of finished steel during 11th

plan (2007-12) 57

9 5.1 Labour productivity for designing rewards and recognition

programmes

59

10 5.2 Adequacy of rewards and recognition programmes to

increase labour productivity

60

11 5.3 Rewards and recognition programmes to evaluate labour

productivity

61

12 5.4 Rewards and recognition spending to increase labour

productivity

62

13 5.5 Recognition of creativity and innovation to enhance labour

productivity

63

14 5.6 Changing environment leads to changing rewards and

recognition schemes

64

15 5.7 Periodic evaluation of rewards and recognition schemes to


65

16 5.8 Revision in rewards and recognition to increase labour

productivity

66

17 5.9 Monetary and nonmonetary rewards for increasing labour 67

VIII

productivity

18 5.10 Impact Of monetary incentives in increasing labour

productivity

68

19 5.11 Analysis of labour productivity in SAIL 70

20 5.12 Calculation of chi square value for SAIL 70

21 5.13 Analysis of labour productivity in RINL 72

22 5.14 Calculation of chi square value for RINL 73

23 5.15 Analysis of labour productivity in TATA Steel 74

24 5.16 Calculation of chi square value for TATA Steel 75

25 5.17 Analysis of labour productivity in JSW Steel 76

26 5.18 Calculation of chi square value for JSW Steel 77

27 5.19 Analysis of labour productivity in JSW Ispat 79

28 5.20 Calculation of chi square value for JSW Ispat 79

29 5.21 Analysis of labour productivity in ESSAR Steel 81

30 5.22 Calculation of chi square value for ESSAR Steel 81

31 5.23 Analysis of labour productivity in JSPL 83

32 5.24 Calculation of chi square value for JSPL 83

33 5.25 Analysis of labour productivity in BHUSHAN Steel 85

34 5.26 Calculation of chi square value for BHUSHAN Steel 86

35 5.27 Analysis of labour productivity in UTTAM Steel 87

36 5.28 Calculation of chi square value for UTTAM Steel 87

37 5.29 Analysis of labour productivity in MUKUND Steel 89

38 5.30 Calculation of chi square value for MUKUND Steel 90

39 5.31 Impact of rewards and recognition on labour productivity in

SAIL

92


VIZAG

94


TATA Steel

96


JSW Steel

98


JSW ISPAT

99

IX


ESSAR Steel

101


JSPL

102


BHUSHAN Steel

104


UTTAM Steel

105


MUKAND Steel

107

X

LIST OF FIGURES

Serial

no.

Figure

no.

Figure Name Page no

1 5.1 Labour productivity for designing rewards and recognition

programmes

59

2 5.2 Adequacy of rewards and recognition programmes to increase

labour productivity

60

3 5.3 Rewards and recognition programmes to evaluate labour

productivity

61

4 5.4 Rewards and recognition spending to increase labour

productivity

62

5 5.5 Recognition of creativity and innovation to enhance labour

productivity

63

6 5.6 Changing environment leads to changing rewards and

recognition schemes

64

7 5.7 Periodic evaluation of rewards and recognition schemes to


65

8 5.8 Revision in rewards and recognition to increase labour

productivity

66

9 5.9 Monetary and nonmonetary rewards for increasing labour

productivity

67

10 5.10 Impact Of monetary incentives in increasing labour productivity 68

11 5.11 Labour productivity trend and index in SAIL during 11th

five

year plan(2007-12)

71

12 5.12 Labour productivity trend and index in VIZAG during 11th

five

year plan(2007-12)

73

13 5.13 Labour productivity trend and index in TATA Steel during 11th

five year plan(2007-12)

75

14 5.14 Labour productivity trend and index in JSW Steel during 11th


78

15 5.15 Labour productivity trend and index in JSW ISPAT during 11th


80

XI

16 5.16 Labour productivity trend and index in ESSAR Steel during 11th


82

17 5.17 Labour productivity trend and index in JSPL during 11th

five

year plan(2007-12)

84

18 5.18 Labour productivity trend and index in BHUSHAN Steel during

11th


86

19 5.19 Labour productivity trend and index in UTTAM Steel during 11th


88

20 5.20 Labour productivity trend and index in MUKAND Steel during

11th


90

21 5.21 Rewards and Recognition spending and labour productivity in

SAIL during 11th


93


VIZAG during 11th


95


TATA Steel during 11th


97


JSW Steel during 11th


98


JSW ISPAT during 11th


100


ESSAR Steel during 11th


101


JSPL during 11th


103


BHUSHAN Steel during 11th


104


UTTAM Steel during 11th


106


MUKAND Steel during 11th


108

XII

LIST OF ABBREVIATIONS

CAGR = COMPOUNDED ANNUAL GROWTH RATE

DEPB = DUTY ENTITLEMENT PASSBOOK SCHEME

FYP = FIVE YEAR PLAN

GDP = GROSS DOMESTIC PRODUCT

IISI = INTERNATIONAL IRON AND STEEL INSTITUTE

IIP = INDEX OF INDUSTRIAL PRODUCTION

INSDAG = INSTITUTE OF STEEL DEVELOPMENT AND GROWTH

ISA = INDIAN STEEL ALLIANCE

JSW = JINDAL STEEL WORKS

JSPL = JINDAL STEEL AND POWER LIMITED

RINL = RASHTRIYA ISPAT NIGAM LIMITED

SAIL = STEEL AUTHORITY OF INDIA LIMITED

XIII

EXECUTIVE SUMMARY

XIV

EXECUTIVE SUMMARY

PROFILE OF STEEL INDUSTRIES IN INDIA

Steel is crucial to the development of any modern economy and is considered to be the

backbone of the human civilization. All major industrial economies are characterized by the

existence of a strong steel industry and the growth of many of these economies has been

largely shaped by the strength of their steel industries in their initial stages of

development. The current global steel industry is in its best position in comparing to last

decades. The price has been rising continuously. The demand expectations for steel

products are rapidly growing for coming years. The shares of steel industries are also in a

high pace. The steel industry is enjoying its 6th

consecutive years of growth in supply and

demand. And there is many more merger and acquisitions which overall buoyed the

industry and showed some good results. The countries like China, Japan, India and South

Korea are in the top of the above in steel production in Asian countries. China accounts for

one third of total production i.e. 419m ton, Japan accounts for 9% i.e. 118 m ton, India

accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes

more than 50% of global production.

The Indian steel industry has entered into a new development stage from 2007-08,

riding high on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 4th largest producer of

crude steel and the largest producer of sponge iron or DRI in the world.

As per the report of the Working Group on Steel for the 12th Plan, there exist many

factors which carry the potential of raising the per capita steel consumption in the

country, currently estimated at 55 kg (provisional). These include among others, an

estimated infrastructure investment of nearly a trillion dollars, a projected growth of

XV

manufacturing from current 8% to 11-12%, increase in urban population to 600

million by 2030 from the current level of 400 million, emergence of the rural market

for steel currently consuming around 10 kg per annum buoyed by projects like Bharat

Nirman, PradhanMantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among

others.

At the time of its release, the National Steel Policy 2005 had envisaged steel

production to reach 110 million tonnes by 2019-20. However, based on the

assessment of the current ongoing projects, both in greenfield and brown field, the

Working Group on Steel for the 12 th Plan has projected that the crude steel capacity

in the county is likely to be 140mt by 2016-17 and has the potential to reach 149mt if

all requirements are adequately met.

The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid

developments in the domestic steel industry (both on the supply and demand sides) as

well as the stable growth of the Indian economy since the release of the Policy in

2005.

CONCEPTUAL FRAMEWORK OF LABOUR PRODUCTIVITY

The term 'Productivity' was probably first mentioned by the FrenchMathematician Quesnay

in an article in 1766. In 1883, another Frenchman, Littre, defined productivity as the "faculty

to produce". In 1950, the Organization for European Economic Cooperation (OEEC), one of

the oldest organizations espousing productivity enhancement, particularly in the Europe,

issued a formal definition: "Productivity is the quotient obtained by dividing output by one of

the factor of production. In this way it is possible to speak of the productivity of capital,

investment, or raw materials, according to whether output is being considered in relation to

capital, investment or raw materials, etc."

XVI

LABOUR PRODUCTIVITY

From the above, it is clear that the Labour Productivity is a partial productivity ratio though

in the productivity context many other elements such as materials, machines, capital,

technology etc. exist, most of the researchers recognize the relative importance of the human

factor (i.e., Labour Productivity).

What is a reward?

An item given to an individual or team for meeting a pre-determined goal.

What is Recognition?

After-the-fact display of appreciation for individual or team efforts. Can be tangible or

intangible, and range from a thank-you email to travel

"Recognition" is more of an activity (a social or interpersonal activity), while a "Reward" is

more of a thing (money, merchandise, travel etc.).

REWARDS V/S RECOGNITION

Although these terms are often used interchangeably, reward and recognition systems should

be considered separately. Employee reward systems refer to programs set up by a company to

reward performance and motivate employees on individual and/or group levels. They are

normally considered separate from salary but may be monetary in nature or otherwise have a

cost to the company. While previously considered the domain of large companies, small

businesses have also begun employing them as a tool to lure top employees in a competitive

job market as well as to increase employee performance.

As noted, although employee recognition programs are often combined with reward programs

they retain a different purpose altogether. They are intended to provide a psychological—

reward a financial—benefit. Although many elements of designing and maintaining reward

XVII

and recognition systems are the same, it is useful to keep this difference in mind, especially

for small business owners interested in motivating staffs while keeping costs low.

SIGNIFICANCE OF THE STUDY

The above study is made for the participants who are involved in the routine activities of the

industries. The participants are as follows. Management, investor‘s, creditors, government,

employees and trade unions, societies and others.

The various actors mentioned above can take decisions on the basis of labour productivity of

the organizations for strategy formulation.

SCOPE OF THE STUDY

Analysis of labour productivity and rewards and recognition of Steel manufacturing

Companies in India of the above selected companies covered in the present study is fully

examined. The conclusion and suggestions attempted will provide practical guidance to the

management of the companies to promote for improvement of Labour productivity, as well as

Designing rewards and recognition in the organization for taking decision related to their own

regards of interest.

OBJECTIVE OF THE STUDY

In the context of Indian steel manufacturing companies the performance is declining as one of

the reason for this problem identified by planning commission of India is labour productivity.

Labour productivity is a big threat for the organizations which affects business and hence has

a wider scope for study. It is dependent on many factors such as ,the reward or compensation,

working conditions, decision making opportunity, job satisfaction, feeling of belonging etc.

XVIII

Among these factors the reward or Recognition is very important. The major challenge before

Indian steel manufacturing companies is to frame strategies to increase labour productivity.

Based on the above stated problem the following objectives have been formulated.

1) To analyze trends of Labour Productivity in Classified Steel Industries.

2) To study the impact of rewards and recognition on labour productivity in classified

steel industries.

3) To find the correlation between Rewards and recognition on labour Productivity in

steel industries.

4) To make Policy Recommendations & Evolved HR practices for inducing

Productivity.

RESEARCH METHODOLOGY

The research was conducted using secondary data with selected steel industries which

includes SAIL, VIZAG STEEL, TATA STEEL, JSW STEEL, JSW ISPAT, ESSAR STEEL,

JSPL, BHUSHAN STEEL, UTTAM STEEL, MUKUND STEEL. Discussions also held with

certain Officials with the objective of studying whether there is any correlation between the

rewards and recognition that are given and the labour productivity especially in large capital

industries like steel industries.

For this purpose necessary data was collected from steel industries as well as planning

commission for the last five years.

The data was analyzed using different statistical tools like chi square test, T-test and

correlation.

The data analyzed suggest that there exist a correlation between rewards and recognition and

improvement in labour productivity.

XIX

ANALYSIS OF LABOUR PRODUCTIVITY

LABOUR PRODUCTIVITY

The term ‗Labour Productivity‘ is generally defined as ―the ratio of physical amount of

output achieved in a given period to the corresponding amount of labour expended‖. It may

be true that any business organization all wage payments are directly or indirectly based on

the skill and productivity of the workers, therefore labour productivity is considered as the

most important factors in productivity computations. There are various types of methods for

calculating the labour productivity. Very simple method describe in the above definition.

‗Output divided by input‘ another method the output per man-years of man-hour and the

input per man-years or per man-hour. In the present research study labour input calculated by

cost/expenses labour productivity and capacity of utilization could be general indices, which

are easily understandable and could be the basis for measurement of the employees.

CONCLUSION

Based on the study the following conclusions were evolved.

The ultimate objective of every organization is to improve productivity and to maximize

profit which is possible through optimum utilization of the inputs used in the organization

which can be labour, material, Technology, land, energy, Process, System etc.

In the development process of the country steel sector is one of the biggest source to earn

revenue and it is foundation for any development activity which is needed everywhere in

India.

Labour productivity plays an important role in any organization as employees are only

responsible from start to end process of any business activity if labour productivity is higher

it helps to increase overall productivity of the organization.

XX

Reward and recognition is always considered as crucial element in the organization if it is not

managed properly it can affect productivity of the organization.

SUGGESTIONS AND RECOMMENDATIONS

The detailed discussion with knowledgeable person in steel industry and the analysis

conducted as mentioned above indicated that the following needs to be looked into in order to

improve labour productivity.

India needs to upgrade its technology to be at par with international market and improve its

productivity. India has a major scope to expand its market by improving the production and

quality by performing some changes in its dynamics of labour relations.

The management should emphasize on rewards and recognition programmes to increase

labour productivity. Rewards and Recognitions should be innovative and they should be

based on the socio psychological needs of the employees. Promoting innovative ideas for

rewards and recognition practices should be encouraged in order to increase productivity.

LIMITATIONS OF THE STUDY

External factors such as financial crisis, natural disaster, political climate and availability of

resources can also be responsible for labour productivity.

Demand fluctuations and competition can also affect labour productivity

Only cost is taken as input for calculation of labour productivity where as other aspects like

working conditions, motivation , satisfaction level etc. can also affect labour productivity.

Lack of access to technology can hamper labour productivity.

Only Rewards and Recognition is considered for correlating with labour productivity where

in other Elements are also related with it.

1

CHAPTER 1

LABOUR PRODUCTIVITY

CONCEPT OF PRODUCTIVITY

―Productivity is the basic mission of any organization to provide the maximum

welfare for the maximum number. Productivity as a measure of efficiency and

effectiveness and as a means of improving the quality of life is generic from achieving

the highest output from the limited resources. Productivity implies the certainty of

being able to do better than yesterday and keeping the tempo continuously to improve

upon. Such continuous improvements are to be generated through the research for

new technique, methods, process, materials, software, and expertise coupled with

vision and dedicated leadership having the ultimate faith in the welfare in the welfare

of human system.‖ ―Productivity means different things to different stake holders. To

workers‘ productivity means a speed up in their work pattern. To union leaders it

means the opportunities to negotiate for higher wages. To management, it means

increased profitability. To customer, it betters goods after costs. To marketing

directors productivity improvement increases the firm‘s competitiveness abroad by

reducing the coat of good sold in foreign market and to economists; it means an

increase in country‘s standard of living field to gain in output per man-hour.‖

Productivity is simply the ratio of output to input. When this ratio is calculated in

based price it indicates the change in productivity efficiency over the base year. As

the input consist of a number of production factors and elements. Productivity can

also be determined separately for each of these factors. Both the output and the input

may be expressed in terms of physical units or interims of money. Productivity is

measured as the ratio between the output of a given commodity or service and the

2

inputs used for that product. Productivity ratio is the ratio of output of wealthy

produced to the input of resources used in the process.

DEFINITION OF LABOR PRODUCTIVITY

The experts, consultants, academician and practitioners have expressed their views on

productivity. Some of the accepted definitions of productivity are given below:

(i) Productivity is a measure relating a quantity or quality of output to the inputs

required to produce it. Often means labor productivity, which is can be measured by

quantity of output per time spent or numbers employed. Could be measured in

monetary term like rupees per hour— Dictionary

(ii) From Wikipedia, the free encyclopedia, productivity is a measure of output

from a production process, per unit of input. For example, labor productivity is

typically measured as a ratio of output per labor-hour, an input. Productivity may be

conceived of as a metric of the technical or engineering efficiency of production.

(iii) Relative measure of the efficiency of a person, machine, factory, system, etc., in

converting inputs into useful outputs. Computed by dividing average output per

period by the total costs incurred or resources (capital, energy, material, personnel)

consumed in that period, productivity is a critical determinant of cost efficiency. --

`Business Dictionary

OBJECTIVES OF PRODUCTIVITY

Productivity is a measure of efficiency and defined as a ratio of output t to input use.

There are not differences over this definition among scholars, consultants, experts,

3

and practitioners. There are different measures of productivity. The objectives of

productivity are also general and not special. These are explained below:

SEARCH FOR SUITABLE TECHNOLOGY

Technology can be defined as a tool, technique, system, design and a process that has

been utilized for production of products or services. It has been utilized to convert the

resources into outputs (products and services) as planned by the management of the

company. There are three components of technology. These are hardware, software

and brain ware. These three elements together are utilized to get the finished output.

To do this work the search is there is find out the suitable method that can meet the

requirement in the present competitive situation so that the company can get

competitive edge in the business .The technology giving or contributing in providing

the higher productivity is the only choice. For that reason also the productivity is

measured. The technology needs a huge capital to invest and if proper care is not

taken then it may not meet the requirement of the company. In future it becomes very

difficult to replace it. Further, the existing technology productivity is also measured to

find out whether it is as per the requirement of time. If not meeting the required

level of productivity then the existing technology might be replaced by the new

one. Due to these reasons the productivity has been measured.

IMPROVE WORKING EFFICIENY

The present scenario across the world is drastically changing. In this situation the

changes are taking place very rapidly. The condition is very risky and uncertain. Over

and above stiff competition is being faced in the market worldwide. Every firm is

putting its best efforts to perform the work better and before other. This is the only

mantra in present situation for survival, grow, stabilize and excel in the business.

4

Efforts are put to increase the quality, quantity, decrease the time taken and cost

involved. This improves the efficiency. To know whether their efficiency is high or

low, it is measure. The productivity is the measure of efficiency. Efficiency is the

ability to perform the tasks with available resources i. e. manpower, machine, money

and materials .With the help of productivity measurement the remedial and

improvement actions can be planned by the management so that their working ability

stay in tune with the need of the time to fulfil the objectives. That is why the

productivity is measured.

REDUCE PRODUCTION COSTS

For carrying out a smallest task resources are needed. Without resources the tasks

cannot be completed. In every organization different types of big and small jobs are

being performed. The list of those jobs is very big. All these need resources like

manpower, machines, money, materials and information. In purchasing or acquiring

these resources a lot of capital is need Now the question arises how these resources

are being used. If the resources are used properly then total cost would go high and it

would have effect on the profitability of the company. When the resources are utilized

properly, there is not waste of any type then the total cost would be less. When the

production cost is high, the products or services would be available in the market at

the higher price .But we may get products of competitors at lower prices in the

market. This situation would not be favourable for the company because it would

have deterrent effect on the sales of the company. To improve the profitability the

costs are to be reduced. The costs can be reduced by finding out the productivity of

every person, system, plant and job. The unwanted activity and unwanted time are to

be identified and eliminated. This is possible by measuring the productivity of all

5

concerned persons and system. That is why it is needed to reduce the total operation

costs. This is a step ahead of cost control.

BENCHMARK PRODUCTION PROCESS

In competitive markets there is need to improve the production quantity and quality.

A comparative study in the industry is being carried out to find out the inefficiencies

in the total production system. A leading company from the global or national market

is selected. The products, production system, employees‘ performance and facilities

are compared with the selected company. The products and production system of the

selected company is considered as bench mark in the market. With the help of the

comparison the company finds out the position of the products of the company in the

market. On the basis of comparison the weak areas are identified and management

takes remedial action for improvement. To do all these things the productivity is to be

measured otherwise this comparative study cannot be carried out. That‘s why the

productivity is measured.

ASSESSMENT OF LIVING STANDARDS

To find out the living standard at national level the level of per capita income is to be

found out. The income of individual reflects the living standard level. As per income

everyone spend on the requirement of life. The per capita income is the measure for

living standards. When the productivity of the individual is high their earning also go

high. Out of higher income a person spends on their day to day requirement like food,

clothes, shelter, education, medical, entertainment and luxury items .It reflects on the

living standards. The higher living standard would affect the growth of the economy

also. When the authority is interested to know the level of living standard the

productivity at individual, division, department and organizational level are required

6

to be measured. For having the clear idea of income and living standards of people the

need for productivity measure is strongly felt. The living standard of different

countries‘ people is measured on the basis of productivity and income level. This is

the clear indicator of living standard.

WHAT IS A REWARD?

An item given to an individual or team for meeting a pre-determined goal.

WHAT IS RECOGNITION?

After-the-fact display of appreciation for individual or team efforts. Can be tangible

or intangible, and range from a thank-you email to travel.

"Recognition" is more of an activity (a social or interpersonal activity), while a

"Reward" is more of a thing (money, merchandise, travel etc.).

WHY REWARDS?

In a competitive business climate, more business owners are looking at improvements

in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight

job market. So while small businesses need to get more from their employees, their

employees are looking for more out of them. Employee reward and recognition

programs are one method of motivating employees to change work habits and key

behaviors to benefit a small business.

REWARDS V/S RECOGNITION

Although these terms are often used interchangeably, reward and recognition systems

should be considered separately. Employee reward systems refer to programs set up

by a company to reward performance and motivate employees on individual and/or

7

group levels. They are normally considered separate from salary but may be monetary

in nature or otherwise have a cost to the company. While previously considered the

domain of large companies, small businesses have also begun employing them as a

tool to lure top employees in a competitive job market as well as to increase employee

performance.

As noted, although employee recognition programs are often combined with reward

programs they retain a different purpose altogether. They are intended to provide a

psychological—reward a financial—benefit. Although many elements of designing

and maintaining reward and recognition systems are the same, it is useful to keep this

difference in mind, especially for small business owners interested in motivating

staffs while keeping costs low.

DIFFERENTIATING REWARDS FROM MERIT PAY & THE

PERFORMANCE APPRAISAL

In designing a reward program, a small business owner needs to separate the salary or

merit pay system from the reward system. Financial rewards, especially those given

on a regular basis such as bonuses, profit sharing, etc., should be tied to an employee's

or a group's accomplishments and should be considered "pay at risk" in order to

distance them from salary. By doing so, a manager can avoid a sense of entitlement

on the part of the employee and ensure that the reward emphasizes excellence or

achievement rather than basic competency.

Merit pay increases, then, are not part of an employee reward system. Normally, they

are an increase for inflation with additional percentages separating employees by

competency. They are not particularly motivating since the distinction that is usually

8

made between a good employee and an average one is relatively small. In addition,

they increase the fixed costs of a company as opposed to variable pay increases, such

as bonuses, which have to be "re-earned" each year. Finally, in many small businesses

teamwork is a crucial element of a successful employee's job. Merit increases

generally review an individual's job performance, without adequately taking into

account the performance within the context of the group or business.

FACTORS TO CONSIDER IN THE ESTABLISHMENT OF A PROGRAM

The rewards and recognition programmes has to be designed very carefully and with

the motive of improving performance and productivity. The objective for establishing

recognition programmes has to be clearly defined and to be communicated to all in

the organization.

The areas on which the rewards and recognition programmes to be given includes

time ,money and energy saving ideas and suggestion, customer compliments, solution

to critical problems, attendance records and improvements in efforts by the

employees,.

DESIGNING A REWARD PROGRAM

While designing a reward program the organization must taken into account the work

environment and the work life of the employee. They must provide them with

compensations and benefits to develop their professional as well as personal life. The

organization must aim to motivate the employees, attract new employees and retain

them for the well-being of the organization.

The keys to developing a reward program are as follows:

9

Identification of company or group goals that the reward program will support.

Identification of the desired employee performance or behaviors that will

reinforce the company's goals.

Determination of key measurements of the performance or behavior, based on

the individual or group's previous achievements.

Determination of appropriate rewards.

Communication of program to employees.

In order to reap benefits such as increased productivity, the entrepreneur designing a

reward program must identify company or group goals to be reached and the

behaviors or performance that will contribute to this. While this may seem obvious,

companies frequently make the mistake of rewarding behaviors or achievements that

either fails to further business goals or actually sabotage them. If teamwork is a

business goal, a bonus system rewarding individuals who improve their productivity

by themselves or at the expense of another does not make sense. Likewise, if quality

is an important issue for an entrepreneur, the reward system that he or she designs

should not emphasize rewarding the quantityof work accomplished by a business unit.

Properly measuring performance ensures the program pays off in terms of business

goals. Since rewards have a real cost in terms of time or money, small business

owners need to confirm that performance has actually improved before rewarding it.

Often this requires measuring something other than financial returns: reduced defects,

happier customers, more rapid deliveries, etc.

When developing a rewards program, an entrepreneur should consider matching

rewards to the end result for the company. Perfect attendance might merit a different

reward than saving the company $10,000 through improved contract negotiation. It is

10

also important to consider rewarding both individual and group accomplishments in

order to promote both individual initiative and group cooperation and performance.

Lastly, in order for a rewards program to be successful, the specifics need to be

clearly spelled out for every employee. Motivation depends on the individual's ability

to understand what is being asked of her. Once this has been done, reinforce the

original communication with regular meetings or memos promoting the program.

Keep your communications simple but frequent to ensure staff members are kept

abreast of changes to the system.

RECOGNITION PROGRAMS

For small business owners and other managers, a recognition program may appear to

be merely extra effort on their part with few tangible returns in terms of employee

performance. While most employees certainly appreciate monetary awards for a job

well done, many people merely seek recognition of their hard work. For an

entrepreneur with more ingenuity than cash available, this presents an opportunity to

motivate employees.

Nor will the entrepreneur be far off the mark. As Patricia Odell reported, writing for

Promo, "Cash is no longer the ultimate motivator." Odell cited data from the Forum

for People Performance Management and Measurement at Northwestern University—

which had discovered that non-cash awards tend to be more effective; the exception

was rewarding increasing sales. "The study found," Odell wrote, "that non-cash

awards programs would work better than cash in such cases as reinforcing

organizational values and cultures, improving teamwork, increasing customer

satisfaction and motivating specific behaviors among other programs."

11

In order to develop an effective recognition program, a small business owner must be

sure to separate the program from the company's system of rewarding employees.

This ensures a focus on recognizing the efforts of employees. To this end, although

the recognition may have a monetary value (such as a luncheon, gift certificates, or

plaques), money it is not given to recognize performance.

Recognition has a timing element: it must occur so that the performance recognized is

still fresh in the mind. If high performance continues, recognition should be frequent

but cautiously timed so that it doesn't become automatic. Furthermore, like rewards,

the method of recognition needs to be appropriate for the achievement. This also

ensures that those actions which go farthest in supporting corporate goals receive the

most attention. However, an entrepreneur should remain flexible in the methods of

recognition, as different employees are motivated by different forms of recognition.

Finally, employees need to clearly understand the behavior or action being

recognized. A small business owner can ensure this by being specific in what actions

will be recognized and then reinforcing this by communicating exactly what an

employee did to be recognized.

Recognition can take a variety of forms. Structured programs can include regular

recognition events such as banquets or breakfasts, employee of the month or year

recognition, an annual report or yearbook which features the accomplishments of

employees, and department or company recognition boards. Informal or spontaneous

recognition can take the form of privileges such as working at home, starting late/

leaving early or long lunch breaks. A job well done can also be recognized by

providing additional support or empowering the employee in ways such as greater

choice of assignments, increased authority, or naming the employee as an internal

12

consultant to other staff. Symbolic recognition such as plaques or coffee mugs with

inscriptions can also be effective, provided they reflect sincere appreciation for hard

work. These latter expressions of thanks, however, are far more likely to be received

positively if the source is a small business owner with limited financial resources.

Employees will look less kindly on owners of thriving businesses who use such

inexpensive items as centerpieces of their reward programs.

Both reward and recognition programs have their place in small business. Small

business owners should first determine desired employee behaviors, skills, and

accomplishments that will support their business goals. By rewarding and recognizing

outstanding performance, entrepreneurs will have an edge in a competitive corporate

climate.

Recognition is most effective when it takes place on a regular basis and in a variety of

different ways. It is also important that recognition activities be aligned with the

culture of the workplace. To this end, some organizations‘ provides three different

opportunities for acknowledging co-workers and peers and has given each area

considerable freedom to customize their own activities.

The Appreciation Awards - Informal, on-the-spot, day-to-day recognition,

administered and delivered in local areas.

The Infinite Mile Awards- Typically more formal, semi-annual or annual awards

administered and presented in local areas.

The Excellence Awards- Formal, Institute-wide awards presented at an annual

ceremony, administered by central HR.

http://hrweb.mit.edu/rewards/reward-programs/appreciation-award

http://hrweb.mit.edu/rewards/reward-programs/infinite-mile-award

http://hrweb.mit.edu/rewards/excellence

13

EMPLOYEE PERFORMANCE IMPROVEMENT PROGRAMS

Attendance

Training / Certification

Suggestions / Ideas

Participation

Compliance

Product or Service Quality

Productivity

Safety

Wellness

Teamwork

Referrals

Customer Service

New Sales, Up-Sell, Cross-Sell

Any measurable behavior or activity

Employee Recognition Programs

Our Human Resources application suite is designed to foster employee recognition

through engagement. With features including components like service awards, and

spot recognition, managers can effectively motivate their workforce and track and

improve performance.

Our HR module can be compared to an internal social media network, and can be

used to build a recognition culture.

The HR suite can include several or all of the following components:

Service Awards

Birthday Acknowledgement

Spot Recognition

Peer-To-Peer Recognition

Nomination Process

Suggestion Awards

Associate Referral Program

14

Sales Referral Program

Training

Surveys And Quizzes

Performance Management

RECOGNITION AND REWARD PROGRAMS ACCORDING TO

DEPARTMENT OF HUMAN RESOURCE MANAGEMENT (DHRM)

Employees not only want good pay and benefits, they also want to be valued and

Appreciated for their work, treated fairly, do work that is important, have

advancement Opportunities and opportunities to be involved in the agency.

Recognition and rewards play an important role in work unit and agency programs to

attract and retain their employees. It is the day-to-day interactions that make

employees feel that their contributions are appreciated and that they are recognized

for their own unique qualities. This type of recognition may contribute to high morale

in the work environment. So, it‘s extremely important that managers, who

communicate the agency goals to employees, are Included in the development of

recognition programs.

Recognition programs according to:

TO SENIOR MANAGEMENT:

1. Increases productivity

2. Produces Return On Investment (ROI)

3. Improves attitudes

4. Builds loyalty and commitment

5. Generates positive feedback

6. Empowers the workforce

15

7. Assures efficiency

TO EMPLOYEES:

1. Satisfies recognition Needs

2. Creates positive recognition experience

3. Provides a wide selection of attractive, personalized awards

4. Provides timeliness of recognition

5. Guarantees quality of award

6. Fosters open communication of appreciation

TO MANAGERS OF PROGRAM:

1. Includes Efficient

2. Administration

3. Excites Employees

4. Creates Pride

5. Pleases Management

6. Involves All Employees

16

CHAPTER 2

LITERATURE REVIEW

Knowledge is of two kinds. We know a subject ourselves, or we know where we

can find information on it- Samuel Johnson.

Mehta Has indicated the productivity growth of 8.8 per cent in the Indian steel

industry during the period 1953 to1965. He also found the evidence of capital

deepening in the production process of steel during this period.

Brahmananda has Proposed that the single and total factor productivity for the

sectors and sub-sectors of Indian economy, he found that the capital productivity

declined by as much as 40 per cent, but the labour productivity went up to 2¼

times in the registered Indian manufacturing sector. He estimated that this sector

witnessed an increase in the total factor productivity at an annual rate of 0.70 %

Ahluwalia studied the productivity growth in Indian manufacturing. He applied

both Solow and Tran slog measures and found that the results of both the

measures were similar. The study identified that rubber products and

miscellaneous manufacturing industries suffering a sharp decline in the total factor

productivity growth whereas the footwear‘s and furniture industries registered a

high growth rate at around 2.00 and 3.00 per cent per annum. The study estimated

the declining total factor productivity growth at a rate between 0.2 and 1.3 per

cent per annumDuringmid-60s and 70s.

Romer recommended that the technological change has been an important factor

to contribute output growth. Technological change arises in large part because of

intentional actions taken by people who respond to market incentives and hence

the technical change happens more to be endogenous rather than exogenous. In his

17

study, he concluded that the stock of human capital (levels of education and

experience) accelerated the growth but the growth did not depend on total size of

labour force or the population. He found that international trade facilitates free

flow of new ideas and technologies and reduces the idea-gap, which was a major

source of spillovers and growth. Most of the new ideas and technologies were

developed in developed countries and trade with them helped in realizing these

dynamic gains to promote productivity. He further found that the use of non-

rivalry nature (use of a blue print of a technology or new idea by one agent does

not preclude use by other agents) of technological change was a source of

increasing returns to scale and sustained long run growth.

Kumari estimated total and partial factor productivity and elasticity of factor

substitution of public sector enterprises for 11 groups of industries in India. In the

estimation, she applied the three basic measures of productivity estimation,

Kendrick, Solow and Divisia index. The study found significant variations in the

growth levels of factor productivity and substitution. For chemical industries, the

study estimated the annual growth of total factor productivity at 4.19 percent, 4.93

per cent and 4.80 per cent in Kendrick, Solow and Translog measures

respectively. The annual growth of labour productivity at 8.39 and capital

productivity at 2.82 percent was also estimated by the study. In the estimation of

factor substitution, the Cobb-Douglas production function estimated constant

returns to scale and the CES production function estimated unit elasticity of factor

substitution for chemical industries in the Indian public sector.

18

Majumdar studied the pattern of productivity growth of Indian Industrial sector.

The study empirically proved the positive impact of liberalization measures on

productivity. The reforms process was not exacerbated entry threats for the sitting

incumbents in Indian industry, but the environment was equally competitive for

the new entrants.

Attainment of efficiency was a key survival criterion in such situations and the

Indian firms had so far yielded positive efficiency out comes. The adoption of

technological and organizational innovations had a very large impact on

productivity at the firm level. The policy changes that took place in India in the

1990s did significantly enhance potential opportunities on one hand and increase

the uncertainties and ambiguities levels on the other.

Desai studied the problems in the technological transfers in India. According to

him, technological transfers did not take place properly. He highlighted the major

problems in the technological transfers, the inadequacy of knowledge and skills to

exploit the existing technology, lack of confidence in the successful exploitation

of the projects on commercial basis and poor R&D activities. Bureaucratic

inefficiency, high price of technology and import restrictions are some of the

impediments to the effective technological transfers.

Mongia and Sathaye studied the productivity trends in selected 6 energy intensive

industries including Steel industry with an elaborate survey on productivity during

the period 1947-1998. They applied Kendrick, Solow and Translog index to

estimate productivity growth and found the total factor productivity in steel

industry was in the range of -1.6 per cent and 0.07 per cent.

19

Mahadevan and Kalirajan examined the criticism leveled against Singapore for

experiencing insignificant total factor productivity (TFP) growth. This paper

examines whether this criticism is valid in the context of the manufacturing sector

of Singapore. Using new data and the stochastic production frontier approach,

TFP growth is decomposed into technological progress and changes in technical

efficiency. While the results could not reject the hypothesis that Singapore‘s

output growth is mostly input-driven, they show that, despite technological

progress, technical inefficiency is the cause for the low and declining TFP growth

in the manufacturing sector.

Goldar in his paper studied the effect of ownership on efficiency of engineering

firms in India with a comparison of technical efficiency among three groups of

firm viz., firms with foreign ownership, domestically owned private sector firms

and public sector firms. The study explained that the foreign ownership firms had

greater efficiency than the domestic firms. It was so because, in a developing

country, the foreign firms had relatively better access to advanced technology.

The study concluded that the foreign firms in Indian engineering sector had

greater technical efficiency than that of domestic firms and there was no

significant variation in technical efficiency between private and public sector

firms. The study pointed out a fact that there were indications of a process of

efficiency convergence, that is, the domestic firms tended to 'catch-up' with

foreign firms in terms of technical efficiency. Among the various factors

responsible for inter firm variation in technical efficiency, the import intensity

played a significant role. The liberalization of imports increased the access of firm

20

to imported inputs and capital goods and thus contributed considerably to increase

the efficiency of engineering firms.

Sampath Kumar examined the assumption of homogeneity in the estimation of

total factor productivity at the aggregate level in the Indian chemical sector. He

classified the entire sector into five major sub-sectors and each subsector has

further been divided into small and large firms. The study further found that there

are productivity variations as the size of the firms differs. It was found in his study

that large firms tend to have higher level of TFPG than the small firms.

Kim decomposed total factor productivity (TFP) growth into technical progress

(TP), technical efficiency change (TEC), allocative efficiency change (AEC) and

scale efficiency change (SEC) to Malaysian manufacturing data from 2000 to

2004. The paper also identified the factors that determine each TFP component.

Empirical results show that TFP was driven mainly by TP, but plagued by

deteriorating TEC. The skill and quality of workers represent the most important

determinants of TE, whereas foreign ownership, imports and employee quality

represent those of TP. The impact of firm size on SEC differed across industries,

and AEC determinants were identified.

David McClelland (1953) worked on Maslow's need theory and condensed it to

three main needs for power, affiliation and achievement. Here again the need for

recognition is manifested in all the three forms of needs suggested by McClelland.

Frederick Herzberg opined that human needs were derived either from animal

instincts of humans (survival, hunger, etc.)or from an individual's urge to realize

21

potential. He and his associates developed a framework of two factor theory called

motivation and hygiene theory which categorized factors associated with work as

either motivators (driven from intrinsic needs) or movers (driven from extrinsic

needs). Recognition was found in Herzberg's study as a source of motivation when

given in the form of direct feedback.

Ryan and Deci propose the Self-determination theory which states that an

individual has three psychics needs i.e. need for competence, autonomy and

relatedness. Whenever the three psychic needs of humans are provided by the

environment, they support individual's self-determination and as such his/her

intrinsic motivation to do the activity increases and also the overall sense of well-

being. Whenever these needs are thwarted, motivation diminishes. Thus when

rewards are given as a source of satisfying these needs an individual's motivation

increases or else it decreases.

Fisher and Hostland found that while the relationship was stable over the period

1956 to 2001, labour productivity growth had significantly outpaced real wage

growth from 1994 to 2001. These recent developments could potentially call into

question the stability of the relationship going forward. They concluded that the

divergence in recent years was little cause for concern since labour and non-labour

income shares tend to revert to their respective means over the long term. With the

benefit of several more years of data, part five of this report largely confirms the

findings of Fisher and Host land and offers possible explanations for the observed

divergence between labour productivity and real wage.

22

Banga (2005) found that higher export intensity of an industry is associated with

lower wage inequalities. Higher exports in an industry have reduced wage most of

the exports take place from low skill and labour intensive industry, as a result

higher exports by raising the demand of these labour increases their return so as to

subsequently reduce the wage gap. However, as technological progress is skilled

biased, a higher extent of technology acquisition is found to be associated with

higher wage inequalities.

Kraay (1997) found that controlling for past firm‘s performance and unobserved

firm‘s characteristics, past exports are as significant indicators of an enterprises

current performance. The estimated co-efficient indicate that a ten percentage

point increase in a firm‘s export to output ratio in a given year causes thirteen

percent increase in labour productivity.

In a recent exploratory study, relations with superior emerged as an important

determinant of employees' perception of non-monetary rewards. Sonawane

(2007) it was claimed that it was critical for employees to share good relations

With superior or else the rewards bestowed would appear phony.

Attitude of supervisor is said to be the most common factor that is overlooked in

Motivating employees. It is asserted by Bessler et al (2002) that if a supervisor

approaches the workplace with a positive upbeat attitude about the work project,

that attitude gets transferred to the subordinates and thus created a better work

environment.

Duncan Brown and John Purcell (2007) did an extensive survey

(535organizations) and combined it with an in-depth study(5 organizations)

toconclude that lack of line management skills was the main barrier for

23

theSuccessful operation of the organization's rewards strategy. It is suggested

thatthe HR professionals must involve, support, skill and enable front line

managersto create a totally rewarding environment at work; the reward policy and

strategywould thus result in a highly committed and high performance workforce

withhigh business returns.

Jones and Lloyd (2005) assert through illustrations from leadership theories thatan

individual's motivation depends upon the nature of his/her relationship withthe

leader. As such they explored how employee behavior was influenced by

theemployee perception of senior management. It was found that 80% of those

whocontributed an idea had a positive attitude towards their line manager.

Theresults however also indicated that recognition from line managers was not

animportant factor in motivating desired behavior, but a poor perception of

linemanagers had a negative impact on employee behavior. That is, good

relationshipwith line managers had become a 'hygiene factor' for employees to

perform suchthat a mere absence of it would lead to dissatisfaction at work place

with anunhealthy work climate. "In the context of ideas generation and the two-

factormodel, the conclusion is that the relationship with the line manager in

thecontemporary context has ceased to be a motivator. Most contributors

appearnot to need line manager's recognition when it comes to motivating them

tocontribute ideas. However, a poor perception of the line manager has a

strongnegative impact on employee willingness to contribute ideas. This prompted

thethought that managerial recognition determines the climate within which work

isundertaken, and has become a major hygiene factor in the

contemporaryemployment context." (Jones and Lloyd, 2005, P- 938)

24

'Positive visibility' of senior management is said to be a 'high level satisfier'.

Theopportunity to speak with managers and executives provides employees

anopportunity to address their concerns and comments directly to the top,

andimmediate actions taken to resolve the issues show the employee that

theorganization cares. (Clive 2007)

Gallup conducted a study in 2004 findings of which suggested that if a

managerignores an employee, the chances of employee disengagement are 40%. If

themanager focuses on employee weaknesses, the chances of disengagement

are22%. And if the manager focuses on an employee's strengths, the chances of

theemployee being disengaged drops to just 1%. In a subsequent study in

2007,Gallup found it to be not uncommon for between one-fifth and one-third

ofemployees to say, "Not only have I not received any praise recently, my

bestefforts are routinely ignored." It is thus implied that providing

strategicrecognition satisfies a dire need of employees and also helps them in

betterengagement with the organization which eventually leads to better

productivity.

Jeffrey and Shaffer (2007) further emphasize the motivational characteristics

oftangible non-cash incentives that are contingent on performance by

elaboratingthe psychological concepts of justifiability, social reinforcement,

separability andevaluability. Non-cash incentives are said to have justifiability,

that is, they allowthe recipient to justify the consumption of that reward. A trip to

Hawaii, which may be affordable by the employee, may not be justified if taken

otherwise,however as a reward it becomes justified as there is no guilt indulging

in thatlevel of luxury.

25

Tangible non-cash incentives are also said to involve 'social reinforcement' thatis,

in addition to the 'consumption value' of reward, employees also tend to enjoythe

acknowledgement and recognition form peers, supervisors, family andfriends.

"The value of this "social reinforcement" comes from others knowingabout the

good performance rather than the receipt of the incentive‖

Pragya Sonawane (2008) conducted an exploratory study on non-monetary

rewards comparing organizational practices and employee perceptions in

theFMCG sector of India. Two analogous organizations, one Indian

multinationaland another American multinational were selected; qualitative

interviews wereconducted with the use of an interview guide understanding

employeeperceptions of organizational practices. Separate interviews were

conducted withorganizational representatives (HR managers handling Rewards

and Recognitionand Organization heads) and employees across different

functions.

The research emphasized the role of non-monetary rewards in the presentcontext

of hyper competition and soaring retention problems. The findingsindicated a gap

between what employees preferred and what was offered to them.Employers

emphasized formal platforms while employees stressed on formal andinformal

programs evenly. Another important finding emerged with respect tothe

differences between the two organizations; it was observed that the

Indianorganization was not keen on practicing non-monetary recognition as

extensively

as the American organization. Top management from the Indian

organizationrarely praised their employees and were not enthusiastic about

recognitionplatforms. This feeling was reciprocated by the employees from the

26

Indianorganization who referred to the recognition attempts by organization as

'mereadd-ons' and not important to their work. In contrast to this was the

Americanorganization which fostered a culture of recognition and appreciation.

Topmanagers actively participated in all recognition forums and likewise was

thefeeling responded by employees who emphasized the role of non-

monetaryrecognition to their work-life. A plausible rationale of different growth

patterns of

the two organizations was given for these differences. It was elucidated that the

Indian organization which had witnessed competition only since the opening up of

Indian economy was governed by traditional thinking and as such nontraditional

Rewards were not perceived as critical to them. While the American organization

had transcended the nascent stage, and had thus incorporated newstrategies of

ensuring employee wellbeing and performance. Other importantrelationships that

emerged from the qualitative analysis are as follows:

When the top management belief in the power of recognition is high, then

the organization will support an extensive non-monetary reward

configuration.

A manager, who believes in the power of recognition towards employee

motivation, will use it with his/her subordinates.

Sharing good relations with the superior tends to increase the perceived

value of the recognition (reward/ appreciation).

Employees perceive rewards as valuable when the organization supports a

culture of recognition and celebration and provides for an extensive

nonmonetary rewards configuration.

27

CHAPTER 3

OBJECTIVE AND RESEARCH METHODOLOGY

PROBLEM IDENTIFICATION

Productivity is a vital component in every organization and its people are the effective

means for improving productivity. Without a dedicated, committed and enthusiastic

workforce, the objective of optimum level of productivity cannot be achieved. But

these traits cannot be bought from the market. They have to be developed in the

people comprising the organization. Therefore, the enlightened and progressive

management has to create conductive work environment where people are

continuously motivated to realize their potentialities. That‘s why human resource

development seeks to achieve in an organization. Liberalization in the Indian

insurance sector has opened the sector to private competition. A number of Steel

companies have set up representative offices in India and have also tied up with

various asset management companies. All these developments have forced the Steel

companies to be competitive. What makes a firm best is not just technology, bright

ideas, masterly strategy or the use of tools, but also the fact that the best firms are

better organized to meet the needs of their people; to attract better people who are

more motivated to do a superior job. In this manner the management of human

resources becomes very crucial.

India is currently the world's fourth largest producer of crude steel after China, Japan

and the US. It accounts for 4.5 % in global trade Indian steel Industry is backbone of

country‘s development. 2007-2012 was watershed year of Indian Steel Industry. The

28

center of the focus is that the demands will reach110 million metric tons by the year

2020. To sustain this growth the industry should work on challenges studied by

researchers in India, which includes endemic deficiency, high cost of capital and most

importantly labour productivity. The steel is the most common constituent in

manufacturing sector, which helps to incorporate new technology at low cost.

There are approximately 18 small, Medium and large scale Steel

Manufacturing companies in India.

The production capacity of Indian Steel Industry accounts for 74 million

metric tone

In fiscal 2012-13, growth in domestic steel demand is expected to be around

5.5 percent.

In 2013-14, demand is expected to be higher at around 7%.

Compared to the global average per capita consumption of 150 kgs, India‘s

per capita consumption of steel is still a mere 39 kgs per head.

Technologically, the main hurdles before Indian steel industry are

the cost of power and non-availability of metallurgical coke.

In India, the advantages of cheap labour gets offset by low labour

productivity

High administered price of essential inputs like electricity puts Indian

steel industry at a disadvantage; about 45% of the input costs can be

attributed to the administered costs of coal, fuel and electricity

The Indian rural sector remains fairly unexposed to their multi-faceted use of

steel.

29

Excellent potential exist for enhancing steel consumption in other sectors

such as automobiles, packaging, engineering industries, irrigation, and

water supply in India.

Compared to the global average per capita consumption of 150 kgs,

India‘s per capita consumption of steel is still a mere 39 kgs per head.

Even by Asian standards India have a long way to go in the consumption of

steel. Technologically, the main hurdles before Indian steel industry

are the cost of power and non-availability of metallurgical coke.

Un-remunerative Prices

Stagnating demand, domestic oversupply, and falling prices in the last four

years have hit Indian steel makers. Barring the sporadic rise in demand in

the recent months, it has suffered from un-remunerative prices to the

extent that companies have been finding it difficult to maintain capital costs.

Endemic Deficiencies

These are inherent in the quality and availability of some of the essential raw

materials available in India, example, high ash content of indigenous coking

coal adversely affecting the productive efficiency of iron-making and is

generally imported. Advantage of high Fee content of indigenous ore is often

neutralized by high basic index. Besides, certain key ingredients of steel

making, eg, nickel, ferro-molybdenum is also unavailable indigenously.

Systemic Deficiencies

However, most of the weaknesses of the Indian steel industry can be

classified as systemic deficiencies. Some of these are described here.

High Cost of Capital

30

Steel is a capital intensive industry; steel companies in India are charged an

interest rate of around 14% on capital as compared to 2.4% in Japan and 6.4% in

USA.

Low Labour Productivity

In India, the advantages of cheap labour gets offset by low labour productivity;

e.g. at comparable capacities labour productivity of SAIL and TISCO is 75 t/man

year and 100 t/man year, for POSCO, Korea and NIPPON, Japan the values are 1345

t/man year and 980 t/man year.

High Cost of Basic Inputs and Services

High administered price of essential inputs like electricity puts Indian steel

industry at a disadvantage; about 45% of the input costs can be attributed to the

administered costs of coal, fuel and electricity, e.g. cost of electricity is 3 cents

in the USA as compared to 10 cents in India; and freight cost from Jamshedpur to

Mumbai is $50/ton compared to only $34 from Rotterdam to Mumbai. Added to

this are poor quality and ever increasing prices of coking and non-coking coal.

Besides these Indian steel makers also lacked in international

competitiveness on determinants like product quality, product design, on-

time delivery, post sales service, distribution network, managerial initiatives,

research and development, information technology and labor productivity

etc.

SCOPE OF THE STUDY

India is currently the world's fourth largest producer of crude steel after China, Japan

and the US. It accounts for 4.8% in global trade Indian steel Industry is backbone of

31

country‘s development. 2007-2012 was watershed year of Indian Steel Industry. The

center of the focus is that the demand will reach 110 million tones by the year2020.

To sustain this growth the industry should work on challenges studied by researchers

in India, which includes endemic deficiency, high cost of capital and most importantly

labour productivity. The steel is the most common constituent in manufacturing

sector, which helps to incorporate new technology at low cost.

There are approximately 18 small, Medium and large scale Steel

Manufacturing companies in India.

The production capacity of Indian Steel Industry accounts for 74 million

metric tones.

In fiscal 2012-13, growth in domestic steel demand is expected to be around

5.5 percent.

In 2013-14, demand is expected to be higher at around 7%.

Compared to the global average per capita consumption of 150 kgs, India‘s

per capita consumption of steel is still a mere 39 Kgs per head.

Technologically, the main hurdles before Indian steel industry are

the cost of power and non-availability of metallurgical coke.

In India, the advantages of cheap labour gets offset by low labour

productivity

High administered price of essential inputs like electricity puts Indian

steel industry at a disadvantage; about 45% of the input costs can be

attributed to the administered costs of coal, fuel and electricity

The Indian rural sector remains fairly unexposed to their multi-faceted use of

steel.

32

Excellent potential exist for enhancing steel consumption in other sectors

such as automobiles, packaging, engineering industries, irrigation, and

water supply in India.

Compared to the global average per capita consumption of 150 kgs,

India‘s per capita consumption of steel is still a mere 39 kgs per head.

Even by Asian standards India have a long way to go in the consumption of

Steel. Technologically, the main hurdles before Indian steel industry

are the cost of power and non-availability of metallurgical coke.

Besides these Indian steel makers also lacked in international competitiveness on

determinants like product quality, product design, on-time delivery, post sales

service, distribution network, managerial initiatives, research and development,

information technology and labor productivity etc.

The back bone of any economy is the industrial sector in any country. It is the

industrial growth of a country that contributes to the faster growth of the

economy. This realization has made the economic planners and PR actioners to

implement various policies and programmes that are highly favorable for the

development of industries. In the context of India, there are a few traditional

industries which contribute to the faster industrial development and the steel

industry is one. The government framed and implemented National Steel Policy in

2005. The long term strategic goal of NSP is that India should have a modern and

efficiency steel industry of world standards, catering to diversified steel demand.

The study on productivity becomes important in view of the limited availability of

factors of production, particularly the capital. The proportion of the factors of

production or the inputs will be different in the different industries depending on

33

the nature of product. The labour intensive industries with the abundant labour

and relatively low wages, the emphasis is on the increasing capital productivity.

On the other hand, in the capital intensive industries, the concern is to increase the

labour productivity. The productivity growth is the only plausible route to increase

the standard of life of the society. Economic and industrial growth is the result of

the interaction of two prime factors: the investment capabilities, which are a

function of savings and the productivity with which these capabilities are utilized.

Productivity is a major source of high levels of production. It is a measure of the

efficiency of factors or inputs in production. An increase in the levels of

productivity in an economy implies that its factors of production and commodity

inputs are manifesting increase in their output efficiency. The prosperity of new

developed nations has been attributed mainly to the sustained growth of its total

factor productivity. The performance of an industry can be understood with the

estimation of Total Factor Productivity Growth (TFPG) and its behaviour over a

period of time. Productivity growth is an indicator of the utilization of the factor

inputs and in turn a measure of performance of the firm or industry concerned.

SIGNIFICANCE OF THE STUDY

The above study is made for the participants who are involved in the routine activities

of the industries. The participants are as follows. Management, investors, creditors,

government, employees and trade unions, societies and others.

MANAGEMENT’S VIEW

The above study plays a vital role in providing such information. This in turn would

create foundation for its decision making and will also control the activities.

Management can construct its future plan based on the facts and the figures of the

34

report. Management can also do the analysis of what worked and what not based on

the output achieved. Irrespective of changing needs, cost, financial conditions,

availability of resources, technologies etc. employees are only responsible for the

higher productivity in the organization. If employees are engaged, satisfied and

motivated; labour productivity will also be higher.

INVESTORS

The financial position of the company which is reflected in earning per share ROI

(Return on Investment) helps to attract investors. The labour productivity plays a

crucial role to gain the recognition and confidence in market.

CREDITORS

Creditors who are involved in the business with the company studies its performance

by credit ratio, acid test ratio, equity and capitalization. Etc. The study of it describes

real features of the business organization to creditors.

GOVERNMENT

Government has significant role to study labour productivity and financial efficiency

of individual organization. As it is involved in taxation, revenue control, sanction and

other activities.

EMPLOYEES AND TRADE UNIONS

Human resources are most important and valuable resources for any organizations

that are involved and interested to study financial position and profit of the company.

They analyze comparison of past and present actors to find growth and opportunities

in the organization.

35

Productivity acts as an effective tool for assessing employee performance and

evaluation of machine, system, team, section, division, industry and national

economy.

Productivity plays a role of yardstick for comparing the effectiveness at work.

Productivity helps to guide to find problematic unit and which further helps to

identify possible remedial measures.

Organizations can have competitive advantage if productivity is high.

It helps to create benchmark which further helps to increase market share and

higher sales can be achieved.

The ultimate goal of any business is to earn goodwill in the market and to

become leader in the market which is possible through increasing productivity.

The contribution to excel in the performance, profits, progress and goodwill is

possible through improving productivity.

OBJECTIVE OF THE STUDY

1) To analyze trends of Labour Productivity in Classified Steel Industries.

2) To Study the Impact of rewards and recognition on labour productivity in

classified steel industries.

3) To find the correlation between Rewards and recognition on labour

Productivity in steel industries.

4) To make Policy Recommendations & Evolved HR practices for increasing

Productivity.

Please Note: Classification given by Planning Commission of India

36

RESEARCH METHODOLOGY

The research was conducted using secondary data with selected steel industries which

includes SAIL, VIZAG STEEL, TATA STEEL, JSW STEEL, JSW ISPAT, ESSAR

STEEL, JSPL, BHUSHAN STEEL, UTTAM STEEL, MUKAND STEEL

Discussions Were also held with certain Officials with the objective of studying

whether there is any correlation between the rewards and recognition that are given

and the labour productivity especially in large capital industries like steel industries.

For this purpose necessary data was collected from steel industries as well as planning

commission for the last five years.

This data then analyzed using different statistical tools like chi square test, T-test and

correlation.

The data analyzed suggest that there exist some correlation between rewards and

recognition and improvement in labour productivity.

DETERMINATION OF SAMPLE

Target population: Steel manufacturing Companies

Sample size: 100 employees from HR department was contacted from classified steel

manufacturing companies as per the classification given by planning commission.

The sample for the research work have been chosen for the year as per 11th

five year

plan of planning commission i.e. (2007-2012) Which has classified Steel

manufacturing companies into three group i e Group A ,B and C according to the

criteria given below.

37

CLASSIFICATION AS PER 11TH

FIVE YEAR PLAN

Table 3.1: Classification as per 11th five year plan

Producer/Group 11th

Plan (2007-12)

Production of Crude Steel 1.Main Producer (A) 2006-07 2007-08 2008-09 2009-10 2010-11 (P)

SAIL 13.51 13.96 13.41 13.51 13.76

RINL 3.50 3.13 2.96 3.21 3.24

TATA STEEL 5.17 5.01 5.65 6.56 6.86

TOTAL (1) 22.18 22.10 22.02 23.28 23.85

2. Major (B)

JSWL 2.64 3.15 3.22 5.26 5.85

ISPAT 2.76 2.83 2.20 2.69 2.38

ESSAR 3.01 3.56 3.34 3.47 3.37

JSPL - - 1.46 1.96 2.27

TOTAL(2) 8.41 9.54 10.22 13.38 13.87

3. Other Producer (C)

EAF Units/ COREX-BOF

*

4.84 5.28 8.15 9.36 9.79

INDUCTION

FURNACE*

15.39 16.93 18.05 19.82 22.07

TOTAL (3) 20.23 22.21 26.20 29.18 31.86

GRAND TOTAL(1+2+3) 50.82 53.86 58.44 65.84 69.58

Source: Joint Plant Committee *Provisional 2011

DATA COLLECTION

Primary Data

Through detailed discussion with knowledgeable persons in steel industry especially

with HR and also with selected employees. A total of 100 HR Personnel were

contacted from the selected steel industries. The sample size was restricted to 100 due

to lack of access and interest of employees and due to location of the industry. The

38

table mentioned below depicts name of the steel company, no of persons contacted in

each company and location.

Table no 3.2 Determination of sample

Name of the company No of persons contacted Location

SAIL 5 MUMBAI

TATA STEEL 7 MUMBAI

RINL 5 MUMBAI

JSW 15 TARAPUR

JSW ISPAT 5 MUMBAI

ESSAR STEEL 5 MUMBAI

JSPL 15 THANE

BHUSHAN STEEL 15 KHOPOLI

UTTAM STEEL 13 PUNE

MUKAND STEEL 15 THANE

The primary objective ofthe discussion was to identity role and importance of rewards

and recognition in increasing productivity and also to find out contribution of various

factors in improving labour productivity.

Questionnaire was designed to find the contribution of various factors in increasing

labourproductivity which includes investment on employees, research activities to

study and analyze the environmental change, audit, appraisal and identification of best

practices for improving efficiency.

39

Secondary Data

The Secondary data for the research have been collected from various sources which

include Websites, Journals, Annual Reports, and Government Reports etc.

STATISTICAL TOOLS USED

Chi Square Test

Chi Square test is a statistical measure used in the context of sampling analysis for

comparing a variance to a theoretical variance.It is also known as Non Parametric

test.Chi Square test is used when the research has categorical variables.It is used to

determine whether categorical data shows dependency or independency in research.

The comparison between theoretical and actual data is possible through chi square

test.In the present research the two categorical variables used for testing are rewards

and recognition and labour productivity.This test answers the question how well does

the theoretical data fit to the observed data. If the calculated chi square is less than the

table value at certain level of significance then it is considered to be a good fit and the

fluctuation may be due to sampling but if the value is more than table value then it is

not a good fit.In this research the calculated chi square value is found to be less than

table value and therefore the fit is considered as good and the fluctuations are due to

sampling.

40

Trend Analysis

Trend analysis means collecting information and attempting to spot a particular trend

or pattern under study.This analysis is also used to predict future events and to

estimate events in past.

The method of least square is used to find the trend for selected companies in this

research for comparison of actual and expected output in terms of labour productivity

Correlation Analysis

This technique is used in research to find the extent and degree of dependency among

the variables. Correlation analysis in this research among rewards and recognition and

labour productivity will help to measure and analyze the degree and extent to which

two or more variables fluctuate with reference to each other.This analysis denotes the

interdependence among the two variables.The study shows that rewards and

recognition is not related with labour productivity so fluctuations in labour

productivity may be due to other environmental factors.

T Test

This Test is also known as parametric test.T test is used when the sample size is less

than 30. This test is used for comparing means. In the present research this test has

been used to find the significance of correlation coefficient.

41

CHAPTER 4

INTRODUCTION OF STEEL INDUSTRY

Steel forms a bedrock of the developmental phase. All major economies are

characterized by the growth and development of steel industries. The level of per

capita consumption of steel is treated as one of the important indicators of socio-

economic development and living standard of the people in any country.

The countries like China, Japan, India and South Korea are in the top of the above in

steel production in Asian countries. China accounts for one third of total production

i.e. 419m ton, Japan accounts for 9% i.e. 118 m ton, India accounts for 53m ton and

South Korea is accounted for 49m ton, which all totally becomes more than 50% of

global production.

HISTORY & BACKGROUND

After independence, successive governments placed great emphasis on the

development of an Indian steel industry. In Financial Year 1991, the six major

plants, of which five were in the public sector, produced10 million tons. Rest of the

4.7 million tons came from private sector which was constituted by 180 small

plants. India's Steel production more than doubled during the 1980s but still did not

meet the demand in the mid-1990s, The commissioning of Tata Iron & Steel

Company's production unit at Jamshedpur, Bihar in 1911-12 was a milestone of

modern steel industry in India. At the time of Independence in 1947 India's steel

production was only 1.25 Mt of crude steel. Following independence and the

commencement of five year plans, the Government of India decided to set up four

integrated steel plants at Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant

42

was commissioned in 1972. The most recent addition is a 3 Mt integrated steel

plant with modern technology at Visakhapatnam. Steel Authority of India (SAIL)

accounts for over 40% of India's crude steel production.

The New Industrial policy adopted has opened up the iron and steel sector for

private investment, it has removed from the list of industries reserved for public

sector and exempting it from compulsory licensing. Imports of foreign

technology as well as foreign direct investment are freely permitted up to certain

limits under an automatic route. This, along with the other initiatives taken by the

Government has given a definite impetus for entry, participation, and growth of

the private sector in the steel industry. While the existing units are being

modernized / expanded, a large number of new / green field steel plants have also

come up in different parts of the country based on modern, cost effective, state of-

the-art technologies. Soaring demand by sectors like infrastructure, real estate, and

automobiles, at home and abroad, has put India's steel industry on the world map.

Dominating the Indian horizon is steel giant Tata Steel, whose takeover of the UK-

Dutch steel company Corus is the country's biggest buyout. Meanwhile, the LN

Mittal-owned Mittal Steel acquired French steel company Arcelor to create the

world's number one steel company, Arcelor Mittal; and Korean steel giant POSCO

is pumping money into mines and steel plants in Orissa to emerge as one of the

biggest steel plants in the state.

Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.

Today, India is the 4th

largest crude steel producer of steel in the world.

In 2011-12, production for sale of total finished steel (alloy + non alloy) was 73.42

mt.

43

Production for sale of Pig Iron in 2011-12, was 5.78 mt.

India is the largest producer of sponge iron in the world with the coal based route

accounting for 76% of total sponge iron production in the country (20.37 mt in 2011-

12; prov.):

Last five year's production for sale of pig iron, sponge iron and total finished steel

(alloy + non-alloy) are given below:

Table 4.1: Indian steel industry production

Indian steel industry : Production for Sale (in million tonnes)

Category

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12*

Pig Iron 5.28 6.21 5.88 5.68 5.78

Sponge Iron 20.37 21.09 24.33 25.08 20.37

Total Finished Steel (alloy + non

alloy)

56.07 57.16 60.62 68.62 73.42

Source: Joint Plant Committee; *provisional 2011

EXPORT AND IMPORT OF STEEL FROM INDIA

The steel exports of India over the decade have the compounded annual growth rate

(CAGR) of 22.27% against CAGR of imports of steel, which accounted 14.20%

44

in the respective period. In 1991-92, very inception of the Liberalization, the steel

exports amounted to 368 thousand tons, which increased year-by-year and reached

to 5221 thousand tonnes in 2003-04. It accounted for thirteen-fold increase over

the period. The Annual growth rates of exports of steel for the period showed the

fluctuating trend, which ranged between -14.41% in 1994-95 and 101.36 in 1992-93.

In 2003-04, the growth rate was 15.87 %.

IMPORTS

Iron & steel are freely importable as per the extant policy.

Table 4.2: Indian steel industry imports

Indian steel industry : Imports (in million tonnes)

Category

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12*


alloy)

7.03 5.84 7.38 6.66 6.83


EXPORTS

Iron & Steel are freely exportable.

Advance Licensing Scheme allows duty free import of raw materials for exports.

Duty Entitlement Pass Book Scheme (DEPB) was introduced to facilitate exports.

45

Under this scheme exporters on the basis of notified entitlement rates, are granted due

credits which would entitle them to import duty free goods. The DEPB benefit on

export of various categories of steel items scheme is currently applicable for steel

exports.

Table 4.3: Indian steel industry exports

Indian steel industry : Exports (in million tonnes)

Category

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12*


alloy)

5.08 4.44 3.25 3.64 4.04


DOMESTIC SCENARIO

The Indian steel industry has entered into a new development stage from 2007-08,

riding high on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 4th largest producer of

crude steel and the largest producer of sponge iron or DRI in the world.

As per the report of the Working Group on Steel for the 12th Plan, there exist many

factors which carry the potential of raising the per capita steel consumption in the

country, currently estimated at 55 kg (provisional). These include among others, an

46

estimated infrastructure investment of nearly a trillion dollars, a projected growth of

manufacturing from current 8% to 11-12%, increase in urban population to 600

million by 2030 from the current level of 400 million, emergence of the rural market

for steel currently consuming around 10 kg per annum buoyed by projects like Bharat

Nirman, PradhanMantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among

others.

At the time of its release, the National Steel Policy 2005 had envisaged steel

production to reach 110 million tonnes by 2019-20. However, based on the

assessment of the current ongoing projects, both in greenfield and brown field, the

Working Group on Steel for the 12th

Plan has projected that the crude steel capacity in

the county is likely to be 140mt by 2016-17 and has the potential to reach 149mt if all

requirements are adequately met.

The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid

developments in the domestic steel industry (both on the supply and demand sides) as

well as the stable growth of the Indian economy since the release of the Policy in

2005.

CURRENT SCENARIO

The demand for steel in India is expected to rise 7 percent in the next financial year

beginning April 1 as compared to the sluggish 5.5 percent projected growth in 2012-

13. The overall outlook for the steel sector is positive and the demand was likely to

pick up in the next financial year on the back of revival in economic growth and the

government's measures to ease infrastructure investment rules.

47

In fiscal 2012-13, growth in domestic steel demand is expected to be around 5.5

percent. Total demand is expected to be around 75 million tonnes, up from 71 million

tonnes in 2011-12. In 2013-14, demand is expected to be higher at around seven

percent. India is currently the world's fourth largest producer of crude steel after

China, Japan and the US. Major public as well as private sector firms including Tata

Steel, SAIL and JSW Steel are expanding production capacity. The steel

production is expected to reach 200 million tonnes by 2020 as compared to 71

million tonnes recorded last year. In steel production, India is expected to leave

behind USA and Japan in a couple of years. However, it will substantially lag

behind China that produces almost 700 million tonnes of steel per year.

CHALLENGES AND OPPORTUNITIES OF INDIAN STEEL INDUSTRY

CHALLENGES

India‘s per capita consumption of steel is still a mere 39 kgs per head Compared to

the global average per capita consumption of 150 kgs, Even by Asian standards India

have a long way to go in the consumption of steel.

UN-REMUNERATIVE PRICES

Stagnating demand, domestic oversupply, and falling prices in the last four years

have hit Indian steel makers. Barring the sporadic rise in demand in the recent

months, it has suffered from un-remunerative prices to the extent that companies

have been finding it difficult to maintain capital costs.

48

ENDEMIC DEFICIENCIES

These are inherent in the quality and availability of some of the essential raw

materials available in India, example, high ash content of indigenous coking

coal adversely affecting the productive efficiency of iron-making and is generally

imported. Advantage of high Fee content of indigenous ore is often neutralized by

high basic index. Besides, certain key ingredients of steel making, eg, nickel, ferro-

molybdenum is also unavailable indigenously.

SYSTEMIC DEFICIENCIES

However, most of the weaknesses of the Indian steel industry can be

classified as systemic deficiencies. Some of these are described here.

HIGH COST OF CAPITAL

Steel is a capital intensive industry; steel companies in India are charged an interest

rate of around 14% on capital as compared to 2.4% in Japan and 6.4% in USA.

LOW LABOUR PRODUCTIVITY

In India, the advantages of cheap labour gets offset by low labour productivity;

e.g., at comparable capacities labour productivity of SAIL and TISCO is 75 t/man

year and 100 t/man year, for POSCO, Korea and NIPPON, Japan the values are 1345

t/man year and 980 t/man year.

HIGH COST OF BASIC INPUTS AND SERVICES

High administered price of essential inputs like electricity puts Indian steel

industry at a disadvantage; about 45% of the input costs can be attributed to the

administered costs of coal, fuel and electricity, e.g., cost of electricity is 3 cents in

49

the USA as compared to 10 cents in India; and freight cost from Jamshedpur to

Mumbai is $50/ton compared to only $34 from Rotterdam to Mumbai. Added to

this are poor quality and ever increasing prices of coking and non-coking coal.

TECHNOLOGICAL

Besides these Indian steel makers also lacked in international competitiveness on

determinants like product quality, product design, on-time delivery, post sales

service, distribution network, managerial initiatives, research and development,

information technology and labor productivity etc. As is evident in Table 4, the

weaknesses gets reflected in India‘s poor standing in the global

competitiveness as measured in terms of indicated parameters.

OPPORTUNITIES

The biggest opportunity before Indian steel sector is that there is enormous scope

for increasing consumption of steel in almost all sectors in India. The following graph

gives a glimpse of untapped potential of increasing steel consumption in India; eg,

even to reach the comparable developing and lately developed economies like China

and other Europe, a quantum jump in steel consumption will be required. India has

rich mineral resources. It has abundance of iron ore, coal and many other raw

materials required for iron and steel making. It has the fourth largest iron ore

reserves (10.3 billion tonnes) after Russia, Brazil, and Australia. Therefore, many

raw materials are available at comparatively lower costs. It has the third largest pool

of technical manpower, next to United States and the erstwhile USSR, capable of

understanding and assimilating new technologies. Considering quality of

workforce, Indian steel industry has low unit labor cost, commensurate with skill.

50

This gets reflected in the lower production cost of steel in India compared to many

advanced countries.

UNEXPLORED RURAL MARKET

The Indian rural sector remains fairly unexposed to their multi-faceted use of steel.

The rural market was identified as a potential area of significant steel consumption

way back in the year 1976 itself. However, forceful steps were not taken to

penetrate this segment. Enhancing applications in rural areas assumes a much

greater significance now for increasing per capital consumption of steel. The usage

of steel in cost effective manner is possible in the area of housing, fencing,

structures and other possible applications where steel can substitute other materials

which not only could bring about advantages to users but is also desirable for

conservation of forest resources.

OTHER SECTORS

Excellent potential exist for enhancing steel consumption in other sectors such as

automobiles, packaging, engineering industries, irrigation, and water supply in

India. New steel products developed to improve performance simplify

manufacturing/installation and reliability is needed to enhance steel consumption in

these sectors. Main objective here have to be improvement of quality for value

addition in use, requirement of less material by reducing the weight and

thickness and finally reduction in overall cost for the end user.

Latest technology must be adopted by Indian steel manufacturers for production of

superior quality of steel for these applications. For example, pre-coated sheets

can be used in manufacture of appliances, furnishings, electric goods and public

transport vehicles. Production and supply of superior grades of steel in desired

51

shapes and sizes will definitely increase the steel consumption as this will reduce

fabrication need; thereby reduce cost of using steel.

EXPORT MARKET PENETRATION

It is estimated that world steel consumption will double in next 25 years. Quality

improvement of Indian steel combined with its low cost advantages will definitely

help in substantial gain in export market.

PERFORMANCE OF INDUSTRY DURING 11TH

YEAR PLAN (2007-2012)

Present status of Indian Steel Industry and its performance during the 11th

Five Year

Plan (2007-12).

GLOBAL STATUS OF INDIAN STEEL INDUSTRY

Indian Iron and steel industry with its strong forward and backward linkages

contributes significantly to overall growth and development of the economy. As per

official estimates, the Industry today directly contributes 2 per cent of India‗s Gross

Domestic Product (GDP) and its weightage in the official Index of Industrial

Production (IIP) is 6.2 per cent. Globally also, over the last two decades, the

industry has been able to carve out a niche for itself.From a country with a

fledgling status of one million tonnes of capacity at the time of Independence, it

has today become the world‗s 4th

largest producer of crude steel preceded only by

China, Japan and USA.

In spite of being one of the largest producers of steel in the world, India has been

lagging behind other major steel producing countries in terms of intensity of steel

usage in overall economic activities (i.e., per unit of GDP) or per capita

consumption of steel. In 2010 our per capita consumption of steel was only 51.7 kg

52

as against the world average of 202.70 kgs. There is a tremendous potential for

improvement in the domestic steel consumption given the economy‗s large untapped

markets especially in rural areas.

India also remains the world‗s largest producer of sponge iron since 2002. As per

latest available information (Table- 1.3), during 2010 total global production of

sponge iron was 71.3 million metric tonnes - of which India alone accounted for

26.3 million metric tonnes or 36.9% of the total.

TRENDS IN PRODUCTION AND CONSUMPTION OF STEEL DURING 11TH

PLAN (2007-12)

For the domestic steel industry, the 10th

five year Plan (2002-07) was a period of fast-

paced growth with significant increases in both steel production and

consumption. Therefore, business expectations at the time of formulation of the 11th

plan (2007-12) were largely optimistic and this was justified in the

performance of the industry in the initial years of the plan period. In fact, the first

year of the Plan i.e. 2007-08 had been a year of high growth for the industry.

However, with onset of the global economic downturn the same pace could not be

maintained in the second year i.e. 2008-09. Like all other manufacturing

industries, steel making is also largely market driven and therefore was affected

directly by the adverse global market conditions. Fortunately, the sector was able

to contain the rate of deceleration thanks to the timely policy interventions and

counter-cyclical stimulus of fiscal and monetary packages announced by the

government and more importantly by the inherent stability of the Indian economy

itself. As a result, by the beginning of the third year i.e. 2009-10 there were signs

of recovery with stable and strong growth rates in both steel production and

53

consumption. The growth rates have, since then, remained steady and over the last

two years i.e. Since 2009-10, have matched the pre-crisis levels in both production

and consumption with simultaneous acceleration in capacity additions An analysis of

sector level performance during the first four years of the 11th

Plan, show that

growth rate in both production and consumption of steel recorded during this

period was lower than that achieved during the 10th

Plan. While finished steel

production for sale and real consumption (i.e. production + imports-exports adjusted

for stock variation/double counting) increased by below 5.8% and by 8.8%,

respectively, the corresponding growth rates during the 10th

Plan were much higher

at 9.4% and 10.4%. However, despite the slowdown, performance of the Indian

steel industry during the 11th

Plan period has been better not only in comparison to

the levels achieved in the 9th

Plan but to that of the entire decade preceding

liberalization. The relative periodic growth performance of the Indian steel

industry is placed at Table - 1.6. In fact, if we ignore the crisis year of 2008-09 then

the average growth rates during the 11th

Plan in production and consumption do not

actually show any significant deceleration compared to the earlier period.

Table 4.4: Trends in production and consumption of finished steel (plan wise)

No Five Year Plan Production

(Million

Tonnes)

CAGR

(%)

Consumption

(Million

Tonnes)

CAGR

(%)

1 9th

Plan (1997-98 to 2001-02) 27.42 -33.38 4.9 23.81 to 28.52 4.1

2 10th

Plan (2002-03 to 2006-07) 37.17 -52.53 9.4 30.68 to 46.78 10.4

3 11th

Plan (2007-08 to 2010-11)* 56.07-66.01 5.8 52.12 to 65.61 8.8

54

4 Decade preceding deregulation

(1982-83 to 1991-92)

8.48 14.23 5.9 9.26 - 14.84 5.3

5 Post De-regulation Period

(1992-93 to 2010-11)

16.89-66.01 8.4 15.81 to 65.61 8.1


Note:

(1) *First four years

(2) For calculating growth rates (CAGR) for a five year plan, the terminal year of

previous plan has been taken as the base year One striking feature to be noted in

sectoral performance is the relatively higher growth in domestic demand for steel

vis-à-vis that of availability during this period. With growth in demand overtaking

supply the country has in fact become a net importer of steel since 2007-08, i.e.

beginning of the 11th

Plan.

Capacity utilization rates achieved during the 11th

plan (2006-07 to 2011-12)

ranged between 88% and 90% (Table-1.8). Operation at such high capacity

utilization levels is also a strong indicator of the need for going in for capacity

additions for meeting potential future demand.

The producer/group/company-wise performance during the Plan period, as

presented in the Table - 1.9 indicates that the rate of growth of Majors and Other

Producers‗ was higher than that of the BF-BOF based Main producers (SAIL,

RINL, Tata Steel). The combined share of this group has increased from 66.5% in

2006-07 (end of the 10th

Plan) to 72.3% in 2010-11. However, the future scenario

55

may be different with the implementation of substantial capacity expansion projects

by the main producers.

Table 4.5: The company wise performance during plan period

Producer/Group 11th

Plan (2007-12)

Production of Crude Steel 1.Main Producer 2006-07 2007-08 2008-09 2009-10 2010-11 (P)

SAIL 13.51 13.96 13.41 13.51 13.76

RINL 3.50 3.13 2.96 3.21 3.24

TATA STEEL 5.17 5.01 5.65 6.56 6.86

TOTAL (1) 22.18 22.10 22.02 23.28 23.85

2. Major

JSWL 2.64 3.15 3.22 5.26 5.85

ISPAT 2.76 2.83 2.20 2.69 2.38

ESSAR 3.01 3.56 3.34 3.47 3.37

JSPL - - 1.46 1.96 2.27

TOTAL(2) 8.41 9.54 10.22 13.38 13.87

3. Other Producer

EAF Units/ COREX-BOF * 4.84 5.28 8.15 9.36 9.79

INDUCTION FURNACE* 15.39 16.93 18.05 19.82 22.07

TOTAL (3) 20.23 22.21 26.20 29.18 31.86

GRAND TOTAL(1+2+3) 50.82 53.86 58.44 65.84 69.58


TRENDS IN INTERNATIONAL TRADE IN IRON & STEEL

Prior to deregulation, imports of steel were permitted under a rigorously defined

Foreign Trade Policy designed to bridge the gap between domestic demand and

domestic availability. Like most other industries the steel industry was also

insulated from foreign competition by high import tariffs and quantity restrictions

via canalization and import licensing. As for exports- it took place primarily to

take care of surplus availability if any.

56

Deregulation brought about far-reaching changes in the international trading

scene for the globally integrated Indian steel industry. Import duty rates were

progressively reduced from above 150% to 5% with abolition of all quantitative

controls. Protection from unfair import competition is currently being provided

through the mechanism of Trade Actions (Anti-Dumping, Anti-Subsidy and

Safeguard actions) as permitted under the WTO. Most importantly, during the 10th

Five Year Plan (2002-07) there was substantial reduction in the peak duty rates i.e

from then existing 25% to 5%. In the case of seconds and defective steel products,

however, a higher import duty rate of 20 per cent continues to be maintained.

Liberalization of the foreign trade regime has had a favorable effect on Indian

exports as it is no longer subject to availability of surplus. In fact between 1991-92

and 2002-03 our exports grew fast at a rate exceeding 25% per annum.

Thereafter, till 2005-06 export levels stagnated at around 4-4.5 Million Tonnesper

year. During this period, the country‗s export basket also changed in favourof more

value added and sophisticated products. The export destinations also got widened

with Indian steel reaching a very large number of countries across the world.

During the first four years of the 11th

plan period (i.e. up to 2010-11), additions to

existing capacities have not been adequate to meet the growing demand. Further,

with the onset of global financial crisis, there was significant decline in global

demand and International Steel Producers had to substantially scale down their

operations. Under such conditions margins on export sales had also come

under pressure and domestic producers had to opt for domestic sales to contain their

losses. As a result finished steel exports declined from 5.24 million tonnesin 2006-

07 to 3.46 million tonnes in 2010-11 (Table - 1.11). Exports of semis have also

showed a similar declining trend during the period

57

Table 4.6: Import & Export of finished steel during 11th

plan (2007-12)

Year Total Finished Steel Semis

Import Export Import Export

2006-07 4.927 5.242 0.435 0.665

2007-08 7.029 5.077 0.367 0.373

2008-09 5.839 4.437 0.598 0.746

2009-10 7.382 3.251 0.443 0.625

2010-11$ (P) 6.798 3.461 0.339 0.35

Source: JPC $ as estimated in September, 2011

As regards steel Imports -it remained static around the pre-liberalization level of 1- 2

million tonnes per annum till 2003-04 but thereafter almost doubled between 2003-04

and 2005-06 i.e., from 1.7 million tonnes to 4.1 million tonnes. This surge has

continued during the 11th

plan also - primarily to bridge the gap between

domestic demand and availability as well as due to price considerations.

From 4.93 million tonnes in 2006-07 steel imports peaked to 7.38 million tonnes in

2009-10 before declining marginally to 6.8 million tonnes in 2010-11. An

important reason for the high level of imports during the 11th

Plan has been the

domestic non-availability or limitedavailabilityofsophisticated/specialized steel

products like the following:

CR Sheets / Coils for Auto Sector

CRGO and High Grades of CRNO

Over Dimensional Plates, Quenched and Tempered Plates, Special grades of

Boiler Quality Plates, etc.

Organic coated, Vinyl coated sheets.

Prime quality Tinplate (OTSC Grade)

58

FUTURE OF INDIAN STEEL INDUSTRY

Though in recent years the growth rate of stainless steel in the country has been

much higher than that of carbon steel, the per capita consumption has reached about

700 grams as compared to 12.15 kilograms in the western world. There is a great

scope of increasing the domestic consumption. The Indian steel industry came a

long way from the days when steel market suffered from both fund crunch and

supply shortage. After the government decided to stop funding any green field steel

plant the changing face of the steel industry of the country became clearer. Back

to back the policy reforms, private investments started pouring in and production

was up like never before. This trend prompted the industry to export in larger

quantity after meeting the domestic demand. In the last financial year the country‘s

exports of steel were more than 3 million tonnes. The government is in favour of

exporting steel to the foreign countries.

The investment in the economy at present is on the other fronts while the need

of the hour remains gross amount of investment in the infrastructure. Till now,

either the government agencies companies on their own supplied the necessary

infrastructure of this sector. But as new avenues are being opened up for investment

in various sectors, ideally the steel companies would concentrate more on steel

making now. The state is gradually being designated to arrange necessary funds

for the infrastructural developments of the steel industry.

59

60%

30%

10%

0% 0%

Should Labour productivity be the primary objective while

designing Rewards and recognition programmes in your organization?

SA

A

N

D

SD

CHAPTER 5

DATA ANALYSIS & INTERPRETATION

1. Should Labour productivity be the primary objective while designing

Rewards and recognition programmes in your organization?

Table 5.1: Labour productivity for designing rewards and recognition programmes

Strongly agree 60

Agree 30

Neutral 10

Disagree 0

Strongly disagree 0

Figure 5.1: Labour productivity for designing rewards and recognition programmes

INTERPRETATION

From the above pie chart we can conclude that for most of the companies (60%)

labour productivity is the primary objective while framing rewards and recognition

policy in the organization.

60

50%

30%

20%

0% 0%

Is the current Rewards and recognition programmes adequate to increase labour productivity?

SA

A

N

D

SD

2. Is the current Rewards and recognition programmes adequate to increase

labour productivity?

Table 5.2: Adequacy of rewards and recognition programmes to increase labour

productivity.

Strongly agree 50

Agree 30

Neutral 20

Disagree 0

Strongly disagree 0

Figure 5.2:Adequacy of rewards and recognition programmes to increase productivity

INTERPRETATION

It has been clearly observed from the above pie chart that only few companies agreed

that their current rewards and recognition programmes are adequate to increase labour

productivity.

61

40%

30%

30%

0% 0%

Does Rewards and Recognition contributes to evaluation of labour productivity in the organization?

SA

A

N

D

SD

3. Does Rewards and Recognition contribute to evaluation of labour

productivity in the organization?

Table 5.3: Rewards and recognition programmes to evaluate labour productivity.

Strongly agree 40

Agree 30

Neutral 30

Disagree 0

Strongly disagree 0

Figure 5.3: Rewards and recognition programmes to evaluate labour productivity.

INTERPRETATION

From the above findings we can conclude that contribution of rewards and recognition

is less in evaluating labour productivity which suggests that other factors can also

influence labour productivity.

62

10%

30%

40%

20%

0%

Does an increase in Rewards and Recognition Spending results in increasing labour productivity?

SA

A

N

D

SD

4. Does an increase in Rewards and Recognition Spending results in increasing


Table 5.4: Rewards and recognition spending to increase labour productivity.

Strongly agree 10

Agree 30

Neutral 40

Disagree 20

Strongly disagree 0

Figure 5.4: Rewards and recognition spending to increase labour productivity.

INTERPRETATION

The above pie chart suggests that increase in spending on rewards and recognition

programmes does not necessarily impact labour productivity in the organization.

63

5. Does increase recognition of creativity and innovation helps to enhance labour

productivity?

Table 5.5: Recognition of creativity and innovation to enhance labour productivity.

Strongly agree 20

Agree 10

Neutral 50

Disagree 20

Strongly disagree 0

Figure 5.5:Recognition of creativity and innovation to enhance labour productivity.

INTERPRETATION

The above finding states that incorporating changes in rewards and recognition

programmes does not attract labour productivity.

20%

10%

50%

20%

0%

Does increase recognition of creativity and innovation helps to enhance labour productivity?

SA

A

N

D

SD

64

6. Does changing environment leads to change in Rewards and Recognition

schemes?

Table 5.6: Changing environment leads to changing rewards and recognition scheme.

Strongly agree 50

Agree 40

Neutral 10

Disagree 00

Strongly disagree 00

Figure 5.6: Changing environment leads to changing rewards and recognition scheme.

INTERPRETATION

It has been clearly observed from the above findings that changes in environment has

moderate impact on bringing change in rewards and recognition programmes in the

organization.

50%

40%

10%

0% 0%

Does changing environment leads to change in Rewards and Recognition schemes?

SA

A

N

D

SD

65

7. Does periodic evaluation of Rewards and Recognition programmes helps to

enhance effectiveness of labour productivity?

Table 5.7:Periodic evaluation of rewards and recognition to increase labour

productivity.

Strongly agree 10

Agree 30

Neutral 50

Disagree 10

Strongly disagree 0

Figure 5.7: Periodic evaluation of rewards and recognition to increase productivity.

INTERPRETATION

From the above pie chart we can conclude that periodic evaluation of rewards and

recognition programmes has moderate impact on labour productivity.

10%

30%

50%

10%

0%

Does periodic evaluation of Rewards and Recognition programmes helps to enhance effectiveness of labour

productivity?

SA

A

N

D

SD

66

8. Does increase in Rewards and Recognition revision helps to increase labour

productivity in your organization?

Table 5.8: Revision in rewards and recognition to increase labour productivity.

Strongly agree 0

Agree 30

Neutral 60

Disagree 10

Strongly disagree 0

Figure 5.8: Revision in rewards and recognition to increase labour productivity.

INTERPRETATION

The increase in revision of rewards and recognition programmes has greater impact

on increasing labour productivity.

60%

30%

10%

0% 0%

Does increase in Rewards and Recognition revision helps to increase labour productivity in your organization?

SA

A

N

D

SD

67

9. Rewards and recognition comprises of monetary and non-monetary benefits

in increasing labour productivity?

Table 5.9: Monetary and non-monetary rewards for increasing labour productivity.

Strongly agree 23

Agree 31

Neutral 27

Disagree 19

Strongly disagree 0

Figure 5.9: Monetary and non-monetary rewards for increasing labour productivity.

INTERPRETATION

It has been clearly observed that rewards and recognition comprises of monetary and

non-monetary and sometimes mix of both at different proportions to increase

productivity.

23%

31%

27%

19%

0%

Rewards and recognition comprises of monetary and non monetary benefits in increasing labour productivity?

68

10. Monetary incentives give higher impact than non-monetary incentives in

increasing labour productivity?

Table 5.10:Impact Of monetary incentives in increasing labour productivity

Strongly agree 70

Agree 20

Neutral 10

Disagree 0

Strongly disagree 0

Figure 5.10:Impact Of monetary incentives in increasing labour productivity

INTERPRETATION

From the above findings we can conclude that monetary incentives giver higher

impact than non-monetary incentives so incentives acts as a driving force to improve

performance thereby increasing productivity.

70%

20%

10%

0% 0%

Does increase in Rewards and Recognition revision helps to increase labour productivity in your organization?

SA

A

N

D

SD

69

ANALYSIS OF LABOUR PRODUCTIVITY

Labour Productivity

The term ‗Labour Productivity‘ is generally defined as ―the ratio of physical amount

of output achieved in a given period to the corresponding amount of labour

expended‖. It may be true that any business organization all wage payments are

directly or indirectly based on the skill and productivity of the workers, therefore

labour productivity is considered as the most important factors in productivity

computations. There are various types of methods for calculating the labour

productivity. Very simple method describe in the above definition. ‗Output divided by

input‘ another method the output per man-years of man-hour and the input per man-

years or per man-hour. In the present Research study labour input calculated by

cost/expenses labour productivity and capacity of utilization could be general indices,

which are easily understandable and could be the basis for measurement of the

employees.

70

ANALYSIS OF LABOUR PRODUCTIVITY IN SAIL

Table 5.11: Analysis of Labour Productivity in SAIL

Year AS per 11th

five year plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 46175.85 7919.28 5.83 100 106.1 0.17

2008-2009 49331.47 8401.73 5.87 100.69 108.83 0.17

2009-2010 44059.72 5417 8.13 139.45 111.56 0.12

2010-2011 47156.25 7530.24 6.26 107.37 114.56 0.15

2011-2012 51036.16 7932.05 6.43 110.29 117.02 0.15

Total 237759.4 37200.3 32.53 557.8 558.07 0.77

Average 47551.89 7440.06 6.50 111.56 111.614 0.15

Standard

deviation

1.06

Source: Compiled from annualreports of the company from 2007 – 12

Table 5.12: Calculation of chi square value for SAIL

Observed

Values

Expected (O-E) (O-E)2 (O-

E)2/E

100 106.1 -6.1 37.21 0.35

100.69 108.83 -8.14 66.25 0.60

71

0

20

40

60

80

100

120

140

160

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year as per 11th Five year Plan(2007-2012)

SAIL

Labour Productivity Index

Labour Productivity Trend

139.45 111.56 27.89 777.85 6.97

107.37 114.56 -7.19 51.69 0.45

110.29 117.02 -6.73 45.29 0.38

Chi

Square Value

8.77

The above table describes the labour productivity ratio and index of labour

productivity average of labour indices, co-efficient of variation and value of chi-

square for selected Steel manufacturing companies in India under study.

Figure 5.11: Labour productivity trend and index in SAIL during 11th

five year (2007-

12)

The above table described that the labour productivity in selected Company for the

specified year. It reveals that the Sales of SAIL counted to Rs. 46175.85 crores during

the year of 2007-08, which has increased to Rs. 49331.47 crores in 2008-09. The

trend of labour productivity fluctuated during the study period. The employee cost

expanded from Rs.7919.28 crores to Rs.8401.73 crores during the study period. The

72

ratio was highest in 2009-10. The ratio was the lowest in 2007-08. The average ratio

was 6.51 which were greater than the years except 2009-10. Thus the ratio decreased

in the last two years. The co-efficient of variance shows 17.601 percent and standard

deviation also indicated 1.06 percent, so the trend was fluctuated during the study

period. Computed value of chi-square describes 8.77 which less than the critical value

of 11.07 therefore null hypotheses is accepted and alternative hypothesis is rejected. It

means that labour productivity indices follow the trend value. From the above table

we can see that labour productivity index fluctuated than the labour productivity trend

during the specified study period it showed steep decline in 2009-2010 as the

employee cost was also decreased in the same year. Further above table showed the

input required per Rupees of output was lowest in 0.12 in 2009-10 and the highest of

0.17 in 2007-08.

ANALYSIS OF LABOUR PRODUCTIVITY IN RINL

Table 5.13: Analysis of labour productivity in RINL

Year AS per

11th five year

plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 10433.07 1030.72 10.12 100 90.74 0.09

2008-2009 10411 1156.68 9.00 88.93 90.41 0.11

2009-2010 10463.63 1399.74 7.48 73.91 90.08 0.13

2010-2011 11516.99 1272.95 9.05 89.43 89.75 0.11

2011-2012 14570.19 1466.67 9.93 98.12 89.42 0.00

Total 57394.88 6326.76 45.58 450.39 450.4 0.46

73

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year As Per 11Th Five Year Plan

RINL



Average 11478.97 1265.35 9.11 90.078 90.08 0.09

Standard

Deviation

2.91

Source: Compiled from annual reports of the company from 2007-12

Table 5.14: Calculation of chi square value for RINL

Observed

Values

Expected (O-E) (O-E) (O-E)/E

100 90.74 9.26 85.75 0.94

88.93 90.41 -1.48 -2.19 0.02

73.91 90.08 -16.17 -261.45 2.9

89.43 89.75 -0.32 -0.1 0.001

98.12 89.42 8.7 75.69 0.85

Chi Square Value 4.715

Figure 5.12: Labour productivity trend and index in RINL during 11th

five year plan 2007-12

74


specified year. It reveals that the Sales of RINL counted to Rs. 10433.07 crores during

the year of 2007-08, which has decreased to Rs. 10411 crores in 2008-09. The trend

of labour productivity fluctuated during the study period. The employee cost


productivity ratio was 10.12 in 2007-08 which decreased to 9.00 in 2008-09. The ratio

was highest in 2007-08. The ratio was the lowest in 2009-10. The average ratio was

9.11. Thus the ratio increased in the last two years. The co-efficient of variance shows

17.601 percent and standard deviation also indicated 2.91 percent, so the trend was

fluctuated during the study period. Computed value of chi-square describes 4.17

which less than the critical value of 11.07 therefore null hypotheses is accepted and

alternative hypothesis is rejected. It means that labour productivity indices follow the

trend value.From the above table we can see that labour productivity index fluctuated

than the labour productivity trend during the specified study period it showed steep

decline in 2009-2010 as the employee cost was also increased in the same year.

Further above table showed the input required per Rupees of output was lowest in

0.006 in 2011-12 and the highest of 0.13 in 2009-10.

ANALYSIS OF LABOUR PRODUCTIVITY IN TATA STEEL

Table 5.15: Analysis of labour productivity in TATA Steel

Year AS per

11th five

year plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 22191.43 1589.77 13.95 100 92.19 0.071

2008-2009 26843.53 2305.81 11.64 83.38 89.97 0.085

75

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year as per 11th Five year Plan (2007-2012 )

TATA STEEL



2009-2010 26757.6 2361.48 11.33 81.16 87.75 0.088

2010-2011 31901.94 2618.27 12.18 87.25 85.53 0.082

2011-2012 37005.71 3047.26 12.14 86.96 83.31 0.082

Total 144700.21 11922.59 61.25 438.75 438.75 0.410

Average 28940.042 2384.518 12.25 87.75 87.75 0.082


Table 5.16: Calculation of chi square value for TATA Steel

Observed

Values

Expected (O-E) (O-E)2 (O-E)

2/E

100 92.19 7.81 60.99 0.66

83.38 89.97 -6.59 43.42 0.482

81.16 87.75 -6.59 43.42 0.494

87.25 85.53 1.72 2.95 0.034

86.96 83.31 3.65 13.32 0.159


Figure 5.13: Labour productivity trend and index in TATA Steel during 11th

FYP

76


specified year. It reveals that the Sales of TATA Steel counted to Rs. 22191.43 crores

during the year of 2007-08, which has increased to Rs. 26843.53 crores in 2008-09.

The trend of labour productivity fluctuated during the study period. The employee

cost expanded from Rs.1589.77 crores to Rs 3047.26.crores during the study period.

The productivity ratio was 13.96 in 2007-08 which decreased to 11.64 in 2008-09.

The ratio was Highest in 2007-08. The ratio was the lowest in 2009-10. The average

ratio was 12.25. Thus the ratio decreased in the last two years. The co-efficient of

variance shows 17.601 percent and standard deviation also indicated 5.13 percent, so

the trend was fluctuated during the study period. Computed value of chi-square

describes 1.83 which less than the critical value of 11.07 therefore null hypotheses is

accepted and alternative hypothesis is rejected. It means that labour productivity

indices follow the trend value.

From the above table we can see that labour productivity index fluctuated than the

labour productivity trend during the specified study period it showed steep decline in

2009-2010 even though employee cost was increased in the same year. Further above

table showed the input required per Rupees of output was lowest in 0.07 in 2007-08

and the highest of 0.08 in 2009-10.

ANALYSIS OF LABOUR PRODUCTIVITY IN JSW STEEL

Table 5.17:Analysis of labour productivity in JSW Steel

Year AS per

11th five year

plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 12628.91 273.98 46.09 100 104.3 0.02

77

2008-2009 15,179.29 288.75 52.56 114.06 107.55 0.01

2009-2010 19,456.64 365.2 53.27 115.6 110.79 0.01

2010-2011 25,130.76 534.47 47.01 102.1 114.03 0.02

2011-2012 34,671.85 615.59 56.32 122.2 117.27 0.01

Total 107067.5 2077.99 255.28 553.96 553.94 0.09

Average 21413.49 415.59 51.056 110.79 110.78 0.01


Table 5.18: Calculation of chi square value for JSW Steel

Observed

Values


2/E

100 104.3 -4.3 18.49 0.17

114.06 107.55 6.51 42.38 0.39

115.6 110.79 4.81 23.13 0.20

102.1 114.03 -11.93 142.32 1.24

122.2 117.27 4.93 24.30 0.20


Source: Compiled from annual reports of the company from 2007-12.

78

Figure 5.14: Labour productivity trend and index in JSW Steel during(2007-12)


specified year. It reveals that the Sales of JSW STEEL counted to Rs. 12628.91 crores

during the year of 2007-08, which has increased to Rs. 15179.29crores in 2008-09.


cost expanded from Rs.273.98 crores to Rs.615.59 crores during the study period. The

productivity ratio was 46.1 in 2007-08 which increased to 52.56 in 2008-09. The ratio

was highest in 2011-12. The ratio was the lowest in 2007-08. The average ratio was

51.05 which were greater than the previous years. Thus the ratio decreased in the last

two years. The co-efficient of variance shows 17.601 percent and standard deviation

also indicated 32.56 percent, so the trend was fluctuated during the study period.

Computed value of chi-square describes 2.23 which less than the critical value of

11.07 therefore null hypotheses is accepted and alternative hypothesis is rejected. It

means that labour productivity indices follow the trend value.

0

20

40

60

80

100

120

140

Lab

ou

r P

rod

uct

ivit

y

Year as per 11th Five Year Plan

JSW STEEL



79



2010-2011 as the employee cost was increased in the selected years.

ANALYSIS OF LABOUR PRODUCTIVITY IN JSW ISPAT

Table 5.19:Analysis of labour productivity in JSW Ispat

Year AS per

11th five year

plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 9,478.75 202.6 46.78 100 95.27 0.021

2008-2009 9,181.29 207.6 44.22 94.53 93.97 0.022

2009-2010 11,079.40 273.36 40.53 86.64 92.67 0.024

2010-2011 9,100.50 234.81 38.75 82.85 91.37 0.025

2011-2012 12,123.55 260.86 46.47 99.34 90.07 0.021

Total 50,963.49 1179.23 216.77 463.36 463.35 0.115

Average 10192.7 235.846 43.35 92.672 92.67 0.023


Table 5.20:Calculation of chi square value for JSW Ispat

Observed

Values


2/E

100 95.27 4.73 22.37 0.23

94.53 93.97 0.56 0.31 0.00

80

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year as per 11th Five year Plan (2007-2012)

JSW ISPAT



86.64 92.67 -6.03 36.36 0.39

82.85 91.37 -8.52 72.59 0.79

99.34 90.07 9.27 85.93 0.95


Figure 5.15:Labour productivity trend and index in JSW ispat during 11th

FYP


specified year. It reveals that the Sales of JSW ISPAT counted to Rs. 9478.75 crores

during the year of 2007-08, which has decreased to Rs. 9181.29 crores in 2008-09.



productivity ratio was 46.78 in 2007-08 which decreased to 44.22 in 2008-09. The

ratio was highest in 2007-08 the ratio was the lowest in 2010-11. The average ratio

was 43.35. Thus the ratio decreased in the last two years. The co-efficient of variance

shows 17.601 percent and standard deviation also indicated 27.12 percent, so the

trend was fluctuated during the study period. Computed value of chi-square describes

2.38 which less than the critical value of 11.07 therefore null hypotheses is accepted

81

and alternative hypothesis is rejected. It means that labour productivity indices follow

the trend value.



2009-2010 even though the employee cost was also increased in the same year

ANALYSIS OF LABOUR PRODUCTIVITY IN ESSAR STEEL

Table 5.21:Analysis of labour productivity in ESSAR Steel

Year AS per

11th five year

plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 11,910.66 223.2 53.36 100 104.59 0.01

2008-2009 12,703.78 227.81 55.76 104.5 99.19 0.01

2009-2010 11,388.31 215.86 52.75 98.87 93.79 0.01

2010-2011 13,345.85 309.27 43.152 80.86 88.39 0.02

2011-2012 17,561.42 388.51 45.20 84.7 82.99 0.02

Total 66,910.02 1364.65 250.24 468.93 468.95 0.10

Average 13382 272.93 50.04 93.78 93.79 0.02


Table 5.22:Calculation of chi square value for ESSAR Steel

Observed

Values


2/E

100 104.59 -4.59 21.06 0.20

104.5 99.19 5.31 28.19 0.28

82

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year as per 11th Five Year Plan (2007-2012)

ESSAR STEEL

Labour Productivity index


98.87 93.79 5.08 25.80 0.27

80.86 88.39 -7.53 56.70 0.64

84.7 82.99 1.71 2.92 0.03


The above table described that the labour productivity in selected company for the

specified year. It reveals that the Sales of ESSAR STEEL counted to Rs. 11910.66

crores during the year of 2007-08, which has increased to Rs. 12793.78 crores in

2008-09. The trend of labour productivity fluctuated during the study period. The

employee cost expanded from Rs.215.86 crores to Rs.388.51 crores during the study

Figure 5.16: Labour productivity trend and index in ESSAR steel during 11th

FYP

period. The productivity ratio was 53.36 in 2007-08 which increased to 55.76 in 2008-

09 which was highest in the study period. The co-efficient of variance shows 17.601

percent and standard deviation also indicated 31.85 percent, so the trend was

fluctuated during the study period. Computed value of chi-square describes 1.43

which less than the critical value of 11.07 therefore null hypotheses is accepted and

83

alternative hypothesis is rejected. It means that labour productivity indices follow the

trend value.

ANALYSIS OF LABOUR PRODUCTIVITY IN JSPL

Table 5.23:Analysis of labour productivity in JSPL

Year As per 11th

five year plan

Sales Employee

Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 6131.63 132.2 46.38 100 98.98 0.02

2008-2009 8,433.81 181.46 46.47 100.21 93.48 0.02

2009-2010 7,895.58 219.72 35.93 77.47 87.98 0.02

2010-2011 10,460.43 282.65 37.00 79.77 82.48 0.02

2011-2012 14,741.81 385.44 38.24 82.47 76.98 0.02

Total 47663.26 1201.47 204.04 439.92 439.9 0.12

Average 9532.65 240.29 40.80976 87.984 87.98 0.02


Table 5.24: Calculation of chi square value for JSPL

Observed Values Expected (O-E) (O-E)2 (O-E)

2/E

100 98.98 1.02 1.0404 0.010511

100.21 93.48 6.73 45.2929 0.48452

77.47 87.98 -10.51 110.4601 1.255514

79.77 82.48 -2.71 7.3441 0.089041

84

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y


JSPL



82.47 76.98 5.49 30.1401 0.391532

Chi Square Value

2.231117

Figure 5.17: Labour productivity trend and index in JSPL during 11th

FYP


specified year. It reveals that the Sales of SAIL counted to Rs. 6131.63 crores during

the year of 2007-08, which has increased to Rs. 8433.81 crores in 2008-09. The trend

of labour productivity fluctuated during the study period. The employee cost


productivity ratio was 46.38 in 2007-08 which increased to 46.47 in 2008-09. The






85


the trend value.



2009-2010 even though the employee cost was increased in the same year.

ANALYSIS OF LABOUR PRODUCTIVITY IN BHUSHAN STEEL

Table 5.25:Analysis of labour productivity in BHUSHAN Steel

Year AS per 11th

five year plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivit

y index

Labour

Productivity

Trend

I/0

2007-2008 4672.73 73.87 63.25 100 83.68 0.01

2008-2009 5,409.55 100.86 53.63 84.78 84.29 0.01

2009-2010 6,003.07 140.94 42.59 67.32 84.9 0.02

2010-2011 7,576.28 222.14 34.10 53.9 85.51 0.02

2011-2012 10,792.6

4

143.98 74.95 118.5 86.12 0.01

Total 34454.27 681.79 268.54 424.5 424.5 0.10

Average 6890.85 136.35 53.70 84.9 84.9 0.02


86

0

20

40

60

80

100

120

140

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y


BHUSHAN STEEL



Table 5.26: Calculation of chi square value for BHUSHAN Steel

Observed

Values


2/E

100 83.68 16.32 266.34 3.18

84.78 84.29 0.49 0.24 0.00

67.32 84.9 -17.58 309.05 3.64

53.9 85.51 -31.61 999.19 11.68

118.5 86.12 32.38 1048.46 12.17

Chi Square

Value

30.68

Figure 5.18: Labour productivity trend and index in BHUSHAN steel during 11th

FYP


specified year. It reveals that the Sales of BHUSHAN STEEL counted to Rs. 4672.73

crores during the year of 2007-08, which has increased to Rs. 5409.55 crores in 2008-

87

09. The trend of labour productivity fluctuated during the study period. The employee









the trend value.



2009-2010 as the employee cost was also decreased in the same year. Further above

table showed the input required per Rupees of output was lowest in 0.12 in 2009-10

and the highest of 0.17 in 2007-08.

ANALYSIS OF LABOUR PRODUCTIVITY IN UTTAM STEEL

Table 5.27:Analysis of labour productivity in UTTAM Steel

Year AS per 11th

five year plan

Sales Employe

e Cost

Labour

Productivity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 3290.58 33.29 98.84 100 97.6 0.01

2008-2009 4553.47 50.09 90.90 91.96 92.81 0.01

2009-2010 4695.46 57.55 81.58 82.55 88.02 0.01

88

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

year as per 11th five year Plan (2007-2012)

UTTAM STEEL



2010-2011 5324.38 61.8 86.15 87.16 83.23 0.01

2011-2012 5475.38 70.62 77.53 78.45 78.44 0.01

Total 23339.2 273.35 435.02 440.12 440.1 0.05

Average 4667.85 54.67 87.00 88.02 88.02 0.01


Table 5.28:Calculation of chi square value for UTTAM Steel

Observed

Values


2/E

100 97.6 2.4 5.76 0.05

91.96 92.81 -0.85 0.7225 0.00

82.55 88.02 -5.47 29.9209 0.33

87.16 83.23 3.93 15.4449 0.18

78.45 78.44 0.01 0.0001 1.27E-06


Figure 5.19: Labour productivity trend and index in UTTAM steel during 11th

FYP

89


specified year. It reveals that the Sales of UTTAM STEEL counted to Rs. 3290.58

crores during the year of 2007-08, which has increased to Rs. 4553.47 crores in 2008-



productivity ratio was 98.84 in 2007-08 which decreased to 90.90 in 2008-09. The co-

efficient of variance shows 17.601 percent and standard deviation also indicated 57.98

percent, so the trend was fluctuated during the study period. Computed value of chi-

square describes 0.59 which less than the critical value of 11.07 therefore null

hypotheses is accepted and alternative hypothesis is rejected. It means that labour

productivity indices follow the trend value.From the above table we can see that

labour productivity index fluctuated than the labour productivity trend during the

specified study period it showed steep decline in 2009-2010 as the employee cost was

also increased in the same year.

ANALYSIS OF LABOUR PRODUCTIVITY IN MUKAND LTD

Table 5.29:Analysis of labour productivity in MUKAND Steel

Year AS per 11th

five year plan

Sales

(Crores)

Employee

Cost

(Crores)

Labour

Producti

vity

Labour

Productivity

index

Labour

Productivity

Trend

I/0

2007-2008 2204.79 85.3 25.84748 100 98.34 0.038

2008-2009 2154.94 88.68 24.30018 94.04 93.87 0.041

2009-2010 2128.8 96.25 22.1174 85.56 89.4 0.045

2010-2011 2770.34 125.47 22.0797 85.45 84.93 0.045

90

0

20

40

60

80

100

120

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

Lab

ou

r P

rod

uct

ivit

y

Year As Per 11Th Five Year Plan

MUKAND LTD



2011-2012 2790.91 131.85 21.16731 81.92 80.46 0.047

Total 12049.78 527.55 115.5121 446.97 447 0.217

Average 2409.956 105.51 23.10241 89.394 89.4 0.043


Table 5.30:Calculation of chi square value for MUKAND Steel

Observed Values Expected (O-E) (O-E)2 (O-E)

2/E

100 98.34 1.66 2.75 0.028

94.04 93.87 0.17 0.02 0.000

85.56 89.4 -3.84 14.74 0.16

85.45 84.93 0.52 0.27 0.003

81.92 80.46 1.46 2.13 0.026

Chi SquareValue 0.22

Figure 5.20: Labour productivity trendand index in MUKAND Steel during 11th

FYP


specified year. It reveals that the Sales of MUKAND LTD counted to Rs. 2204.79

crores during the year of 2007-08, which has decreased to Rs.2154.94 crores in 2008-

91










the trend value.



2009-2010 as the employee cost was also increased in the same year.

92

ANALYSIS OF REWARDS AND RECOGNITION AND ITS IMPACT ON

LABOUR PRODUCTIVITY

Rewards and recognition

Reward is considered as a thing which is given to employees for their performance

which can be monetary as well as non-monetary and recognition is considered to be

an activity (social or interpersonal) for the performance and for the achievement.

The labour in any organization likes to feel appreciated and honored and one of the

modes of expressing this to labour is rewards and recognition. The labour should be

continuously rewarded and recognized for their good performance by giving praise

and positive feedback which also creates healthy competition and which acts as a

motivator for all the employees in the organization.

In any organization all wage payments are directly or indirectly based on skills and

productivity of the workers therefore labour productivity is considered as most

important factor in productivity computation.in the present research study the

investment in rewards and recognition programmes and labour productivity is

compared and correlated to find significance of rewards and recognition programmes.

Analysis of impact of rewards and recognition on labour productivity in

SAIL

Table 5.31:Impact of rewards and recognition on labour productivity in SAIL

Year AS per 11th five year plan R&R COST LP INDEX

2007-2008 336.93 100

2008-2009 473.95 100.69

93

0

20

40

60

80

100

120

140

160

0 100 200 300 400 500 600 700 800

Lab

ou

r P

rod

uct

ivit

y

Rewards and recognition cost

SAIL

LP INDEX

2009-2010 522.47 139.45

2010-2011 670.68 107.37

2011-2012 440.63 110.29


Figure 5.21: Rewards and recognition spending and labour productivity in

SAIL during 11th

FYP

The above table describes rewards and recognition cost for the particular year

and labour productivity.

It reveals that rewards and recognition cost was higher 670.68cr in 2010-2011

and it was lowest in 2007-2008 i.e. 336.93 cr. The labour productivity

fluctuated during study period it was highest in 2009-2010 and lowest in 2007-

2008. The correlation of rewards and recognition and labour productivity

which accounted for 0.27.

To find significant correlation t test has been used at 5% level of significance.

94

The result shows that the investment in rewards and recognition programmes

has not influenced the motivation and productivity of employees as the

organizations has failed to attract employees to perform through rewards and

recognition schemes which resulted in low labour productivity.

The employee in this particular organization has different socio-cultural

background so their expectations are difficult to identify and satisfy hence

rewards and recognition does not have much impact on labour productivity.


VIZAG

Table 5.32:Impact of rewards and recognition on labour productivity in VIZAG


2007-2008 129.39 100

2008-2009 209.74 88.93

2009-2010 245.74 73.91

2010-2011 171.49 89.43

2011-2012 100.58 98.12


95

0

20

40

60

80

100

120

0 50 100 150 200 250 300

Lab

ou

r P

rod

uct

ivit

y


VIZAG STEEL

LP INDEX

Figure 5.22:Rewards and recognition spending and labour productivity in

VIZAG Steel during 11th

FYP



It reveals that rewards and recognition cost was higher 245.74crin 2009-2010

and it was lowest in 2011-2012 i.e.; 100.58cr. The labour productivity

fluctuated during study period it was highest in 2007-2008 and lowest in 2009-

2010. The correlation of rewards and recognition and labour productivity

which accounted for -0.92




96



The rewards and recognition programmes does not matches with requirements

of the employees in this organization and work flexibility and more no. of

leaves attracts their attention more than rewards and recognition. Even though

organizations have earned profits but rewards and recognition does not have

much impact on labour productivity.


TATA STEEL

Table 5.33:Impact of rewards and recognition on labour productivity in TATA Steel


2007-2008 234 100

2008-2009 252 83.38

2009-2010 331 81.16

2010-2011 239 87.25

2011-2012 101.76 86.96


97

0

20

40

60

80

100

120

0 50 100 150 200 250 300 350

Lab

ou

r P

rod

uct

ivit

y


TATA STEEL

LP INDEX


TATA STEEL during 11th FYP.


and labour productivity. It reveals that rewards and recognition cost was higher

331cr in 2009-2010 and it was lowest in 2011-2012 i.e. 100.58cr. The labour

productivity fluctuated during study period it was highest in 2007-2008 and

lowest in 2009-2010. The correlation of rewards and recognition and labour

productivity which accounted for -0.25.





recognition schemes which resulted in low labour productivity.The country

faced recession and had major elections during this period which resulted in

unstable political and economic environment as employees experienced

insecurity for their job which affected performance thereby productivity.

98

0

20

40

60

80

100

120

140

0 5 10 15 20

Lab

ou

r P

rod

uct

ivit

y


JSW STEEL

LP INDEX


JSW STEEL

Table 5.34:Impact of rewards and recognition on labour productivity in JSW Steel


2007-2008 16.68 100

2008-2009 15.85 114.06

2009-2010 15.05 115.6

2010-2011 9.73 102.1

2011-2012 13.83 122.2


Figure 5.24:Rewards and recognition spending and labour productivity in JSW

steel during 11th

FYP



It reveals that rewards and recognition cost was higher 16.68 crin 2007-2008

and it was lowest in 2010-2011 i.e. 9.73cr. The labour productivity fluctuated

during study period it was highest in 2009-2010 and lowest in 2007-2008. The

99

correlation of rewards and recognition and labour productivity which

accounted for 0.16.





The Rewards and recognition programmes found to be monotonous and

repetitive hence there was no creativity and innovation to attract and influence

employees to perform which ultimately resulted in low labour productivity.


JSW ISPAT

Table 5.35:Impact of rewards and recognition on labour productivity in JSW ISPAT


2007-2008 28.22 100

2008-2009 27.58 94.53

2009-2010 33.21 86.64

2010-2011 28.03 82.85

2011-2012 29.77 99.34


100

0

20

40

60

80

100

120

0 5 10 15 20 25 30 35

Lab

ou

r P

rod

uct

ivit

y


JSW ISPAT

LP INDEX

Figure 5.25: Rewards and recognition spending and labour productivity in JSW

ISPAT during 11th

FYP.




and it was lowest in 2008-2009 i.e. 27.58 cr. The labour productivity fluctuated



accounted for -0.27






101

0

20

40

60

80

100

120

17 17.5 18 18.5 19 19.5 20

Lab

ou

r P

rod

uct

ivit

y


ESSAR STEEL

LP INDEX

Unhealthy practices and favoritisms has led to partial allotment of rewards and

recognition programmes which resulted in negative message and demotivation

among employees hence affected performance.


ESSAR STEEL

Table 5.36:Impact of rewards and recognition on labour productivity in ESSAR Steel


2007-2008 17.57 100

2008-2009 18.01 104.5

2009-2010 19.4 98.87

2010-2011 18.59 80.86

2011-2012 19.72 84.7

Source: Compiled from annual reports of company from 2007-12.

Figure 5.26: Rewards and recognition spending and labour

productivityESSAR Steel during 11th

FYP .

102







accounted for -0.49

To find significant correlation t test has been used at 5% level of significance





The Organization has failed to create competitive environment to earn rewards

and recognition and therefore employees has failed to meet the expectations of

the employer as labour productivity found to be low in this organization,


JSPL

Table 5.37:Impact of rewards and recognition on labour productivity in JSPL


2007-2008 5.34 100

2008-2009 7.09 100.21

2009-2010 6.89 77.47

103

0

20

40

60

80

100

120

0 2 4 6 8 10 12 14 16

Lab

ou

r P

rod

uct

ivit

y


JSPL

LP INDEX

2010-2011 9.01 79.77

2011-2012 14.88 82.47



JSPL during 11th

FYP.




and it was lowest in 2007-2008 i.e5.34 cr. The labour productivity fluctuated



accounted for -0.46




104

0

20

40

60

80

100

120

140

0 100 200 300 400 500

Lab

ou

r P

rod

uct

ivit

y


BHUSHAN STEEL

LP INDEX


recognition schemes which resulted in low labour productivity.The rewards and

recognition programmes were not in line with the requirements of the

employees as both monetary and non-monetary schemes have different

weightage in their minds so it has not excited them to perform which affected

performance and ultimately low labour productivity.


BHUSHAN STEEL

Table 5.38:Impact of rewards and recognition on labour productivity in BHUSHAN Steel


2007-2008 1.8 100

2008-2009 1.9 84.78

2009-2010 2.4 67.32

2010-2011 3.3 53.9

2011-2012 3.9 118.5



BHUSHAN STEEL during 11th

FYP.

105



It reveals that rewards and recognition cost was higher 395.16 in 2011-2012




accounted for 0.15.


UTTAM STEEL

Table 5.39:Impact of rewards and recognition on labour productivity in UTTAM Steel


2007-2008 3.2 100

2008-2009 3.87 91.96

2009-2010 4.47 82.55

2010-2011 5.34 87.16

2011-2012 5.65 78.45


106

0

20

40

60

80

100

120

0 1 2 3 4 5 6

Lab

ou

r P

rod

uct

ivit

y


UTTAM STEEL

LP INDEX

Figure 5.29: Rewards and recognition spending and labour productivity.



It reveals that rewards and recognition cost was higher 5.65 crin 2011-2012 and

it was lowest in 2007-2008 i.e. 3.2 cr. The labour productivity fluctuated during

study period it was highest in 2007-2008 and lowest in 2011-2012. The


accounted for -0.87






107

The employees in this particular organization are much influenced by

interference of trade union and intermediaries which affected performance

hence rewards and recognition does not have much impact on labour

productivity.


MUKAND STEEL

Table3:Impact of rewards and recognition on labour productivity in MUKAND Steel


2007-2008 6.48 100

2008-2009 6.69 94.04

2009-2010 7.56 85.56

2010-2011 9.96 85.45

2011-2012 11.14 81.92


108

0

20

40

60

80

100

120

0 2 4 6 8 10 12

Lab

ou

r P

rod

uct

ivit

y


MUKAND

LP INDEX


MUKAND during 11th

FYP




and it was lowest in 2007-2008 i.e6.48 cr. The labour productivity fluctuated



accounted for -0.83






109

The employees in this particular organization has different socio-cultural

background so their expectations are difficult to identify and satisfy hence

rewards and recognition does not have much impact on labour productivity.

110

CHAPTER 6

CONCLUSION

Analysis of Rewards and recognition and labour productivity of Steel Industry in

India of the above companies covered in the present study is fully examined. The

conclusion drawn and suggestions attempted will provide practical guidance to the

management of the companies to promote for improvement of Performance of their

companies and workers for taking decision related to their own regards of interest.

The attempt has been made to analyze trends of labour productivity and to study the

impact of rewards and recognition on labour productivity.

The ultimate objective of every organization is to improve productivity and to

maximize profit which is possible through optimum utilization of the inputs used in

the organization which can be labour, material, Technology, land, energy, Process,

System etc.In the development process of the country steel sector is one of the biggest

source to earn revenue and it is foundation for any development activity which is

needed across India. This highlights the role of steel sector in India.

The organizations effectiveness and efficiency is not only dependent on technological

and non-technological factors but also on the efficiency of labour. The employees are

responsible and involved for all the movements in the organization therefore their

effective utilization and control has to be primary objective of the organization.

There are many challenges that steel Industries are facing currently such as Un –

Remunerative prices , endemic deficiencies , systemic deficiencies, high cost of

capital low labour productivity etc., out of which labour productivity plays very

crucial role and can be targeted and improved through taking some proactive

measures.

111

Labour productivity plays an important role in any organization as employees are

involved from the beginning till the end of any business process activity .if labour

productivity is higher it ultimately boost the overall productivity of the organization.

Labour productivity can be achieved through Rewards and recognition which is

Obligatory for the employers to motivate their employees and provide opportunities

for them for their growth and development.The study has shown that the increase in

revision of rewards and recognition programmes has greater impact on increasing

labour productivity.

Labour productivity is useful to increase overall productivity of any organization,

every employee should give their best performance for which motivation and sense of

belongingness is very necessary which can be created through healthy environment.

Reward and recognition is always considered as crucial element in the organization if

it is not managed properly it can affect productivity of the organization.Policy

recommendations and evolved HR practices are the major tools which provides the

scope for creativity and innovation.

In manufacturing sector productivity is important factor for the success of business.

Enhancement of labour productivity remains single largest challenge among steel

manufacturing companies.Increasing Labour productivity is win win approach for the

development of the organization. As rewards and recognition provides satisfaction to

the employees which also result in minimum interference of trade unions therefore

causes minimum disruption in work process.

112

CHAPTER 7

SUGGESTIONS AND RECOMMENDATIONS

India needs to upgrade its technology to be at par with international market and

improve its productivity .The organizations should focus on increasing productivity

by continuous analysis and observation of changing external environment so that it

can withstand the changes and cope up with it. India has a major scope to expand its

market by improving the production and quality by performing some changes in its

dynamics of labour relations.

It can be achieved through the management which can build sense of responsibility,

achievement, participation among the employees In order to increase employee

productivity in the organizations The employees should undergo necessary training

which is scientifically designed to improve efficiency. The training should be relevant

and made compulsory, Employees need to be motivated to go through the training at

least once in a year by making it a significant factor in their promotion, also necessary

leaves needs to be sanctioned to them for taking up the training . Good infrastructure

needs to be provided for training centers and skilled trainers needs to be appointed.

The management should emphasize on rewards and recognition programmes to

increase labour productivity. Rewards and Recognitions should be innovative and

they should be based on the socio psychological needs of the employees. They should

be treated as matter of pride among employees. The rewards should boost the

motivation level of the employees for the mutual growth.

The management should identify the most effective practices in organization which

helps in increasing labour productivity to utilize it for improving productivity.The

113

organization should revise policies from time to time as per the change in

environment to get the better results .Which will help it to face changes and

challenges. Best HR practices and policy formulations are very effective tools for

executing the reward processes in working environment. Promoting innovative ideas

for rewards and recognition practices should be encouraged in order to increase

productivity. Time management is very crucial so that employee doesn‘t treat the

criteria for achievements as cumbersome process and works on effectively utilizing

the time and performing the tasks at hand more efficiently. The productivity based

incentive should be the same for all the employees.

The organization should conduct audit to find out the effectiveness of the rewards and

recognition programmes in the organization. Effective grievance redressal mechanism

and feedback process is very important for achieving the targets set by organisation.

Emphasis should be given to the organization for effective delegation of authority and

accountability.

Labour productivity in the organization can also be increased by adopting modern

manufacturing processes and by implementing wage policy in the organization.To

improve labour productivity in the organization Industrial engineering and behavioral

science should be studied carefully and scientific management should be incorporated

as well.

Appraisal is extremely important for employees and employers as single point

evaluation process of the working trajectory of the employees. There should be clear

and effective appraisal system differentiating performance and it should be

progressive not regressive. There should be 360 degree feedback provision for the

employees to review the performance appraisal system.The awareness about

114

evaluation criteria and the factors to be considered for the appraisal of the employees

should be clearly communicated to the employees beforehand. Favoritism should be

strictly avoided and it should be based on merit. Therefore the appraisal system

should be transparent and more participative. The appraisal system should have scope

for collecting information on all rewards and recognitions of the employee. And it

should also focus on giving valuable feedback to all employees for them to aspire for

better performance.

The employee participation in the decision making is very crucial.The job should be

assigned to the eligible person, it should be clearly defined, responsibilities should be

well assigned and deadlines should be set tight but realistic.The management should

give employees scope for improvement and growth through succession management,

also their aspirations should always be considered and set.

115

CHAPTER 8

LIMITATIONS OF THE STUDY

While attempting this project to study the correlation between the employee

motivation and rewards and recognition External factors such as financial crisis,

natural disaster, political climate and availability of resources which are also

responsible for labour productivity are not taken in purview. Many external factors

such as Demand fluctuations and competition can also affect labour productivity, In

this study Only cost is taken as input for calculation of labour productivity where as

other aspects like working conditions, motivation , satisfaction level etc. can also

affect labour productivity.

It was also noticed that Lack of access to technology can hamper labour productivity.

Only Rewards and Recognition is considered for correlating with labour productivity

where in other Elements are also related with it like Fluctuation in policies has not

been incorporated in this study.Leadership training needs to be given to supervisors as

they are the motivators for the employees and have close relationship with workers,

also they are primary in monitoring and regulating the work.

In this report the conclusion is based on the data observed in 11th

FYP. The sample

size of the steel companies was kept as 10. Based on the study it‘s clear that good

reward management is not the only way to increase labour productivity, but other

options needs to be explored too.

116

ANNEXURE

BIBLIOGRAPHY

1. Ashok Chanda and Shlipa Kabra, HR Strategy (Architecture for Change),Response

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2. Chinchankar P.Y, Wages and Productivity in Indian Industries, Vora &

Co.Publisher\ (P) Ltd Bombay-2.

3. David A hume, Improving Employee Performance, Motivation and Pay-

ThroughReward Management, Infinity Books, 2000.

4. KULSHRESTHRA R.S.: Profitability in India‘s steel industry during the decade

1960-70, a thesis submitted for the degree of Ph. D Dept. Of E.A.F.M, University

of Rajasthan. Jaipur, 1973.

5. KOTHARI C.R.: Research Methodology –methods and techniques,

WishwaPrakashan, in New Delhi, 1997.

6. Michael Armstrong and Helen Murlis, The Art of HRD. Reward Management-

(Set ol 9 Volumes), Remuneration Strategy and Practice, Vo1.9,

KoganPage(London), (:rest Publishing House, Delhi, 1999

7. MICHAELV.P: Research Methodology in management. Himalayan Publication

House, Bombay, 1958.

8. SRIVASTAVE J.P: Labour productivity, (New Delhi: oxford and I.H.B Publishing

co.1982).

9. SINAGAL AND BANSAL: Statistical methods for research workers, central

publishers, Ludhiana, 1986.

10. Satyanarayana J, Incentives and Productivity in Public Enterprises,

BombayPopular Prakashan.

117

11. SINHA D.K.: Economics of industrialization in India–productivity

industrialization and economic development‖ Deep and Deep Publications, New

Delhi, 1988,

12.

ARTICLES

1. Anita Kumari, Productivity in Public Sector, Analysis at Industrial Group

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Vo1.4 No. 10, March 2001

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Labour Productivity in Indian Organised Manufacturing Industries in

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118

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Contribution of Industrial Relations Research to the Understanding of Pay

Determination - British Journal of Industrial Relations November 26:3.

PERIODICALS

1. Annual reports of selected companies from 2007-2012.

2. Business India

3. Bombay Stock exchange Official directory

4. Financial express Mumbai and Delhi (India)

5. Indian Journal of public enterprise

6. Manorama year book

WIBLIOGRAPHY:-

http://www.cci.gov.in

www.cptgl.com

http://planningcommission.gov.in

http://steel.nic.in

www.ipcindiansteel.nic.in

www.ibef.org

http://www.cci.gov.in/

http://www.cptgl.com/

http://planningcommission.gov.in/

http://steel.nic.in/

http://www.ipcindiansteel.nic.in/

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119

www.indiastat.com

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NEWSPAPERS:-

1. The Economic Times

2. The Financial Express

3. The Indian Express

4. The Times of India

http://www.indiastat.com/

http://www.pib.nic.in/

http://www.moneycontrol.com/

http://www.bse.com/

120

QUESTIONNAIRE

Q1) Should Labour productivity be the primary objective while designing

Rewards and recognition programmes in your organization?

A) Strongly Agree B) Agree C) Neutral D) Disagree

E) Strongly Disagree

Q2) Is the current Rewards and recognition programmes adequate to increase




Q3) Does Rewards and Recognition contributes to evaluation of labour

productivity in the organization?



Q4) Does an increase in Rewards and Recognition Spending results in increasing




121

Q5) Does increase recognition of creativity and innovation helps to enhance




Q6) Does changing environment leads to change in Rewards and Recognition

schemes?



Q7) Does periodic evaluation of Rewards and Recognition programmes helps to

enhance effectiveness of labour productivity?



Q8) Does increase in Rewards and Recognition revision helps to increase labour

productivity in your organization?



Q9) Rewards and recognition comprises of monetary and non-monetary benefits

in increasing labour productivity?



122

Q10) Monetary incentives give higher impact than non-monetary incentive in

increasing labour productivity?



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