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SUMMER TRAINING PROJECT REPORTON
“INSURANCE SERVICES BY LIC OF INDIA WITH SPECIAL REFERENCE TO CUSTOMER PREFERENCE TOWARDS CHILD
EDUCATION PLAN OF LIFE INSURANCE CORPORATION OF INDIA”AT FINANCIAL GURU , CHANDIGARH”
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE MASTER’S DEGREE IN BUSINESS ADMINISTRATION
OFUTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN
SUBMITTED TO:INTERNAL GUIDE EXTERNAL GUIDE
Name Dr Namrata Prakash Name: Mr G P SharmaDesignation : faculty Guide Designation:DirectorIMS Company Name: Financial guruDehradun Location: chandigarh
SUBMITTED BY:Pooja kapri(MB10A30)
INSTITUTE OF MANAGEMENT STUDIES-DEHRADUN
BATCH 2010-12
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Acknowledgement
In preparation of this report by me, I feel great pleasure because it
gives me extensive practical knowledge in my career. I get idea about
Indian Life Insurance Industry by this project.
I express my deep sense of gratitude to My Company Guide
Mr. G P Sharma for his valuable guidance during my project work. I
also like to all staff of Financial Guru who guide me in project work.
I am thankful to Dr. Kranti Walia for valuable inspiration and
guidance provided me through out the course of this project. They have
patient and critically gone the subject matter.
I would like to take opportunity to express my gratitude towards all
of them who have contributed directly or indirectly in my project work.
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HISTORY &
BACKGROUND
OF LIC
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The story of insurance is probably as old as the story of mankind. The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also. They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security. Though the concept of insurance is largely a development of the
recent past, particularly after the industrial era – past few centuries – yet its
beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year 1818.
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil. All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and Indian natives were not being insured by these companies. However,
later with the efforts of eminent people like Babu Muttylal Seal, the foreign life
insurance companies started insuring Indian lives. But Indian lives were being treated
as sub-standard lives and heavy extra premiums were being charged on them. Bombay
Mutual Life Assurance Society heralded the birth of first Indian life insurance
company in the year 1870, and covered Indian lives at normal rates. Starting as Indian
enterprise with highly patriotic motives, insurance companies came into existence to
carry the message of insurance and social security through insurance to various
sectors of society. Bharat Insurance Company (1896) was also one of such companies
inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more
insurance companies. The United India in Madras, National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were established in
1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The
Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period. Prior to 1912 India had no
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legislation to regulate insurance business. In the year 1912, the Life Insurance
Companies Act, and the Provident Fund Act were passed. The Life Insurance
Companies Act, 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary. But the Act discriminated
between foreign and Indian companies on many accounts, putting the Indian
companies at a disadvantage.
The first two decades of the twentieth century saw lot of growth in insurance business.
From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176
companies with total business-in-force as Rs.298 crore in 1938. During the
mushrooming of insurance companies many financially unsound concerns were also
floated which failed miserably. The Insurance Act 1938 was the first legislation
governing not only life insurance but also non-life insurance to provide strict state
control over insurance business. The demand for nationalization of life insurance
industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative
Assembly. However, it was much later on the 19th of January, 1956, that life
insurance in India was nationalized. About 154 Indian insurance companies, 16 non-
Indian companies and 75 provident were operating in India at the time of
nationalization. Nationalization was accomplished in two stages; initially the
management of the companies was taken over by means of an Ordinance, and later,
the ownership too by means of a comprehensive bill. The Parliament of India passed
the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance
Corporation of India was created on 1st September, 1956, with the objective of
spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country, providing them adequate financial
cover at a reasonable cost.
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LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its
corporate office in the year 1956. Since life insurance contracts are long term
contracts and during the currency of the policy it requires a variety of services need
was felt in the later years to expand the operations and place a branch office at each
district headquarter. re-organization of LIC took place and large numbers of new
branch offices were opened. As a result of re-organisation servicing functions were
transferred to the branches, and branches were made accounting units. It worked
wonders with the performance of the corporation. It may be seen that from about
200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in
the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of
new business. But with re-organisation happening in the early eighties, by 1985-86
LIC had already crossed 7000.00 crore Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 100 divisional
offices, 7 zonal offices and the Corporate office. LIC’s Wide Area Network covers
100 divisional offices and connects all the branches through a Metro Area Network.
LIC has tied up with some Banks and Service providers to offer on-line premium
collection facility in selected cities. LIC’s ECS and ATM premium payment facility is
an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info
Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai,
Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of
providing easy access to its policyholders, LIC has launched its SATELLITE
SAMPARK offices. The satellite offices are smaller, leaner and closer to the
customer. The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future.
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past
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records. LIC has issued over one crore policies during the current year. It has crossed
the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy
growth rate of 16.67% over the corresponding period of the previous year.
From then to now, LIC has crossed many milestones and has set unprecedented
performance records in various aspects of life insurance business. The same motives
which inspired our forefathers to bring insurance into existence in this country inspire
us at LIC to take this message of protection to light the lamps of security in as many
homes as possible and to help the people in providing security to their families.
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OBJECTIVE OF LIC
Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all
insurable persons in the country and providing them adequate financial cover
against death at a reasonable cost.
Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
Bear in mind, in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without losing sight of the interest
of the community as a whole; the funds to be deployed to the best advantage of
the investors as well as the community as a whole, keeping in view national
priorities and obligations of attractive return.
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
Act as trustees of the insured public in their individual and collective
capacities.
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
Promote amongst all agents and employees of the Corporation a sense of
participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.
OBJECTIVES OF LIC OF INDIA
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Spread and provide life insurance to the masses at a reasonable cost.
Spread life insurance widely & in particular to the rural areas & to the
socially & economically backward classes with a view to reaching all
insurable persons in the country & providing them adequate financial cover
against death at a reasonable cost .
Maximize mobilization of people’s savings by making insurance –linked
savings adequately attractive.
Bear in mind , in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without losing sight of the
interest of the community as a whole; the funds to be deployed to the best
advantage of the investors as well as the community as a whole, keeping in
view national priorities & obligations of attractive return.
Conduct business with utmost economy & with the full realization that the
money belong to the policyholders.
Act as trustees of the insured public in their individual & collective
capabilities.
Meet the various life insurance needs of the community that would arise in
the changing social & economic environment.
MISSON & VISION
Mission
"Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns, and by rendering resources for economic
development."
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Vision
"A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India."
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LIC Operate All Over India
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SERVICE LINES OF
THE COMPNAY
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INSURANCE PLANS
As individuals it is inherent to differ. Each individuals insurance needs and
requirements are different from that of the others. LICs Insurance Plans are
policies that talk to you individually and give you the most suitable options that
can fit your requirement.
PENSION PLANS
Pension Plans are Individual Plans that gaze into your future and foresee
financial stability during your old age. These policies are most suited for senior
citizens and those planning a secure future, so that you never give up on the best
things in life.
UNIT PLANSUnit plans are investment plans for those who realise the worth of hard-earned
money. These plans help you see your savings yield rich benefits and help you
save tax even if you don't have consistent income.
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SPECIAL PLANS
LIC’s Special Plans are not plans but opportunities that knock on your door
once in a lifetime. These plans are a perfect blend of insurance, investment and a
lifetime of happiness!
GROUP SCHEMEGroup Insurance Scheme is life insurance protection to groups of people. This
scheme is ideal for employers, associations, societies etc. and allows you to enjoy
group benefits at really low costs.
WITHDRAWN PLAN
KEY EXECUTIVES
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Members On The Board Of The Corporation
Shri T. S. VIJAYAN (Chairman)
Shri. D.K. Mehrotra (Managing Director - LIC)
Shri. Thomas Mathew T. (Managing Director - LIC)
Shri. A.K. Dasgupta (Managing Director - LIC)
Shri. Ashok Chawla (Finance Secretary, Ministry of Finance, Govt. of India)
Shri. G.C. Chaturvedi (Additional Secretary, Department of Financial Services,
Ministry of Finance, Govt. of India.)
Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India)
Shri. T.C. Venkat Subramanian (Chairman & Managing Director. Export Import
Bank of India)
Dr. Sooranad Rajashekhran
Shri. Monis R. Kidwai
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MAJOR PLAYERS
OF THE INDUSTRY
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Life Insurance Companies
Sl.
No.
Insurers Foreign Partners Regn.
No.
Date of
Registration
Year of
Operation
1. HDFC Standard Life
Insurance Co. Ltd.
Standard Life
Assurance, UK
101 23.10.2000 2000-01
2. Max New York Life
Insurance Co. Ltd.
New York Life, USA 104 15.11.2000 2000-01
3. ICICI-Prudential Life
Insurance Co. Ltd.
Prudential , UK 105 24.11.2000 2000-01
4. Om Kotak Life Insurance
Co. Ltd.
Old Mutual, South
Africa
107 10.01.2001 2001-02
5. Birla Sun Life Insurance
Co. Ltd.
Sun Life, Canada 109 31.01.2001 2000-01
6. Tata-AIG Life Insurance
Co. Ltd.
American International
Assurance Co., USA
110 12.02.2001 2000-01
7. SBI Life Insurance Co.
Ltd.
BNP Paribas
Assurance SA, France
111 29.03.2001 2001-02
8. ING Vysya Life Insurance
Co. Ltd.
ING Insurance
International B.V.,
Netherlands
114 02.08.2001 2001-02
9. Allianz Bajaj Life
Insurance Co. Ltd.
Allianz, Germany 116 03.08.2001 2001-02
10. Metlife India Insurance Co.
Ltd.
Metlife International
Holdings Ltd., USA
117 06.08.2001 2001-02
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Sl.
No.
Insurers Foreign Partners Regn.
No.
Date of
Registration
Year of
Operation
11. Reliance Life Insurance
Co. Ltd. (Earlier AMP
Sanmar Life Insurance
Company from 3.1.02 to
29.9.05)
--- 121 03.01.2002 2001-02
12. AVIVA Aviva International
Holdings Ltd., UK
122 14.05.2002 2002-03
13. Sahara Life Insurance Co.
Ltd.
--- 127 06.02.2004 2004-05
14. Shriram Life Insurance Co.
Ltd.
Sanlam, South Africa 128 17.11.2005 2005-06
15. Bharti AXA Life Insurance
Co. Ltd.
AXA Holdings, France 130 14.07.2006 2006-07
16. Future Generali India Life
Insurance Company Ltd.
Pantaloon Retail Ltd.;
Sain Marketing
Network Pvt. Ltd.
(SMNPL), Generali,
Italy
133 04.09.2007 2007-08
17. IDBI Fortis Life Insurance Fortis, Netherlands 135 19.12.2007 2007-08
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Sl.
No.
Insurers Foreign Partners Regn.
No.
Date of
Registration
Year of
Operation
Company Ltd.
18. Canara HSBC OBC Life
Insurance Company Ltd.
HSBC, UK 136 08.05.2008 2008-09
19. Aegon Religare Life
Insurance Company Ltd.
Religare, Netherlands 138 27.06.2008 2008-09
20. DLF Pramerica Life
Insurance Co. Ltd.
Prudential of America,
USA
140 27.06.2008 2008-09
21. Life Insurance Corporation
of India
512
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RECRUITMENT INTRODUCTION
The human resources are the most important assets of an organization. The success
or failure of an organization is largely dependent on the calibre of the people
working therein. Without positive and creative contributions from people,
organizations cannot progress and prosper. In order to achieve the goals or the
activities of an organization, therefore, they need to recruit people with requisite
skills, qualifications and experience. While doing so, they have to keep the present
as well as the future requirements of the organization in mind.
Recruitment is distinct from Employment and Selection. Once the required
number and kind of human resources are determined, the management has to find
the places where the required human resources are/will be available and also find
the means of attracting them towards the organization before selecting suitable
candidates for jobs. All this process is generally known as recruitment. Some
people use the term “Recruitment” for employment. These two are not one and the
same. Recruitment is only one of the steps in the entire employment process. Some
others use the term recruitment for selection. These are not the same either.
Technically speaking, the function of recruitment precedes the selection function
and it includes only finding, developing the sources of prospective employees and
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attracting them to apply for jobs in an organization, whereas the selection isthe
process of finding out the most suitable candidate to the job out of the candidates
attracted (i.e., recruited).Formal definition of recruitment would give clear cut idea
about the function of recruitment.
DEFINITIONS
Recruitment is defined as, “a process to discover the sources of manpower to
meet the requirements of the staffing schedule and to employ effective measures
for attracting that manpower in adequate numbers to facilitate effective selection of
an efficient workforce.” Edwin B. Flippo defined recruitment as “the process of
searching for prospective employees and stimulating them to apply for jobs in the
organization.” Recruitment is a ‘linking function’-joining together those with jobs
to fill and those seeking jobs. It is a ‘joining process’ in that it tries to bring
together job seekers and employer with a view to encourage the former to apply for
a job with the latter.
In order to attract people for the jobs, the organization must communicate the
position in such a way that job seekers respond. To be cost effective, the
recruitment process should attract qualified applicants and provide enough
information for unqualified persons to self-select themselves out.
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Thus, the recruitment process begins when new recruits are sought and ends
when their applications are submitted. The result is a pool of applicants from
which new employees are selected.
PURPOSES AND IMPORTANCE
The general purpose of recruitment is to provide a pool of potentially
Qualified job candidates. Specifically, the purposes are to:
• Determine the present and future requirements of the organization in
conjunction with its personnel-planning and job-analysis activities.
• Increase the pool of job candidates at minimum cost.
• Help increase the success rate of the selection process by reducing the
number of visibly, under qualified or overqualified job applicants.
• Help reduce the probability that job applicants, once recruited and
selected, will leave the organization only after a short period of time.
• Begin identifying and preparing potential job applicants who will be
appropriate candidates.
• Induct outsiders with a new perspective to lead the company.
• Infuse fresh blood at all levels of the organization.
• Develop an organizational culture that attracts competent people to
the company.
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• Search or head hunt/head pouch people whose skills fit the company’s
values.
• Devise methodologies for assessing psychological traits.
• Search for talent globally and not just within the company.
• Design entry pay that competes on quality but not on quantum.
• Anticipate and find people for positions that do not exist yet.
• Increase organizational and individual effectiveness in the short term
and long term.
• Evaluate the effectiveness of various recruiting techniques and
sources for all types of job applicants.
Recruitment represents the first contact that a company makes with potential
employees. It is through recruitment that many individuals will come to know a
company, and eventually decide whether they wish to work for it. A well-planned
and well-managed recruiting effort will result in high-quality applicants, whereas,
a haphazard and piecemeal effort will result in mediocre ones. High-quality
employees cannot be selected when better candidates do not know of job openings,
are not interested in working for the company and do not apply. The recruitment
process should inform qualified individuals about employment opportunities,
create a positive image of the company, provide enough information about the jobs
so that applicants can make comparisons with their qualifications and interests, and
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generate enthusiasm among the best candidates so that they will apply for the
vacant positions.
SUB-SYSTEMS OF RECRUITMENT
The recruitment process consists of the following four sub-functions:-
Finding out and developing the sources where the required number
and kind of employees will be available.
Developing suitable techniques to attract the desirable candidates
Employing the techniques to attract candidates.
Stimulating as many candidates as possible and asking them to apply
for jobs irrespective of the number of candidates required.
Management has to attract more candidates in order to increase the selection
ratio so that the most suitable candidate can be selected out of the total candidates
available. Recruitment is positive as it aims at increasing the number of applicants
and selection is somewhat negative as it selects the suitable candidates in which
process; the unsuitable candidates are automatically eliminated. Though, the
function of recruitment seems to be easy, a number of factors make performance of
recruitment a complex one.
FACTORS AFFECTING RECRUITMENT
The following are the 2 important factors affecting Recruitment.
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The following are the 2 important factors affecting Recruitment:-
1) INTERNAL FACTORS
• Recruiting policy
• Temporary and part-time employees
• Recruitment of local citizens
• Engagement of the company in HRP
• Company’s size
• Cost of recruitment
• Company’s growth and expansion
2) EXTERNAL FACTORS
• Supply and Demand factors
• Unemployment Rate
• Labour-market conditions
• Political and legal considerations
• Social factors
• Economic factors
• Technological factors
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INDUCEMENTS
Organisational inducements are all the positive features and benefit soffered by
an organization that serves to attract job applicants to the organisation. Three
inducements need specific mention here, they are:-
• Compensation: Starting salaries, frequency of pay increases,
incentives and fringe benefits can all serve as inducements to potential
employees.
• Career Opportunities: These help the present employees to grow
personally and professionally and also attract good people to the organization. The
feeling that the company takes care of employee career aspirations serves as a
powerful inducements to potential employees.
• Image or Reputation: Factors that affect an organisation’s reputation
include its general treatment of employees, the nature and quality ofits products
and services and its participation in worthwhile social endeavors.
CASE EXAMPLE (inducements):
INFOSYS: The Software Powerhouse
Infosys Technologies Limited (ITL), one of the country’s best known
software exporting house, treats its employees as partners and co-owners. It
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provides them challenging assignments, allows flexible working hours, rewards
them solely on the basis of performance and conducts regular training programmes
to upgrade their skills. It has an “Employee Stock Option Plan” (ESOP) to share its
wealth with employees on the basis of their performance. Even lower level
employees are proud owners of the prized stock worth 25 to 40 lakh rupees,
according to Narayan Murthy, the CEO of ITL. Apart from increasing shareholder
value, ESOP has greatly enhanced the image of the company in the information
technology industry where employee attrition rates are very high. It is small
wonder companies like
Procter & Gamble, Johnson & Johnson, Citibank have reposed their faith in ESOP
as a way of attracting and retaining talent in a highly competitive environment.
CONSTRAINTS
If a firm has a poor image in the market, many of the prospective candidates
may not even apply for vacancies advertised by the firm. If the job is not attractive,
qualified people may not even apply. Any job that is viewed as boring, hazardous,
anxiety producing, low-paying, or lacking in promotion potential seldom will
attract a qualified pool of applicants. Recruiting efforts require money. Sometimes
because of limited resources, organizations may not like to carry on the recruiting
efforts for long periods of time, this can, ultimately, constrain a recruiter’s effort to
attract the best person for the job. Government policies often come in the way of
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recruiting people as per the rules of the company or on the basis of merit/seniority,
etc. For example, reservations to specific groups (such as scheduled castes,
scheduled tribes, backward castes, physically handicapped and constitutional
provisions while filling up vacancies in government corporations, departmental
undertakings, local bodies, quasi-government organizations, etc.
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Corporate mission, objectives, strategies and tactics
Corporations have started linking their Mission, Objectives, Strategies and Tactics
(MOST) to the functions of recruitment and selection. The economic
liberalizations and consequent competition through quality and services
necessitated the companies to search for and attract competent human resources.
Corporations focusing on new business development will have to seek
entrepreneurial abilities, companies planning to withdraw from diversifications
must look for pragmatists and companies chasing growth alliances should employ
people comfortable in different cultural backgrounds. Above all, companies must
hire for the future, anticipating jobs that may not be in existence yet. Recruitment
managers must focus for attitudes and approaches that fit the corporate goals and
culture
RECRUITMENT POLICY
Recruitment policy of any organization is derived from the personnel policy
of the same organization. In other words the former is a part of the latter. However,
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recruitment policy by itself should take into consideration the government’s
reservation policy, policy regarding sons of soil, etc., personnel policies of other
organizations regarding merit, internal sources, social responsibility in absorbing
minority sections, women, etc. Recruitment policy should commit itself to the
organisation’s personnel policy like enriching the organisation’s human resources
or servicing the community by absorbing the retrenched or laid-off employees or
dependents of present/former employees, etc. The following factors should be
taken into consideration in formulating
recruitment policy. They are:-
• Government policies
• Personnel policies of other competing organizations
• Organisation’s personnel policies
• Recruitment sources
• Recruitment needs
• Recruitment cost
• Selection criteria and preference
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IMPACT OF PERSONNEL POLICIES ON RECRUITMENT
POLICIES
Recruitment policies are mostly drawn from personnel policies of the organization.
According to Dale Yodar and Paul D. Standohar, general personnel policies
provide a wide variety of guidelines to be spelt out in recruitment policy. After
formulation of the recruitment policies, the management has to decide whether to
centralize or decentralize the recruitment function.
CENTRALISED V/s DECENTRALISED RECRUITMENT
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Recruitment practices vary from one organization to another. Some
organizations like commercial banks resort to centralized recruitment while some
organizations like the Indian Railway resort to decentralized recruitment practices.
Personnel department at the central office performs all the functions of recruitment
in case of centralised recruitment and personnel departments at unit level/ zonal
level perform all the functions of recruitment concerning to the jobs of the
respective unit or zone.
MERITS OF CENTRALISED RECRUITMENT
• Average cost of recruitment per candidate/unit should be relatively
less due to economies of scale.
• It would have more expertise available to it.
• It can ensure broad uniformity among human resources of various
Units /zones in respect of education, skill, knowledge, talent, etc.
• It would generally be above malpractices, abuse of powers,
favouritism, bias, etc.
• It would facilitate inter change ability of staff among various
units/zones.
• It enables the line managers of various units and zones to concentrate on their
operational activities by relieving them from the recruiting functions.
• It enables the organization to have centralised selection procedure,
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promotional and transfer procedure, etc.
• It ensures the most effective and suitable placement to candidates.
• It enables centralised training programmes which further brings
uniformity and minimizes average cost of staff
MERITS OF DECENTRALISED RECRUITMENT
• The unit concerned concentrates only on those sources/places wherein
normally gets the suitable candidates. As such the cost of recruitment would be
relatively less.
• The unit gets most suitable candidates as it is well aware of the
requirements of the job regarding culture, traditional, family
background aspects, local factors, social factors, etc.
• Units can recruit candidates as and when they are required without
any delay.
• The units would enjoy freedom in finding out, developing the sources, in
selecting and employing the techniques to stimulate the candidates.
• The unit would relatively enjoy advantage about the availability of
Information, control and feedback and various functions/processes of
Recruitment.
• The unit would enjoy better familiarity and control over the
employees it recruits rather than on employees selected by the central
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recruitment agency.
Both the systems of recruitment would suffer from their own demerits. Hence,
the management has to weigh both the merits and demerits of each system before
making a final decision about centralizing or decentralizing the recruitment.
Alternatively management may decentralize the recruitment of certain categories
of employees preferably middle and top level managerial personnel and centralize
the recruitment of other categories of employee’s preferably lower level positions
in view of the nature of the job sand suitability of those systems for those
categories of positions. The management has to find out and develop the sources of
recruitment after deciding upon centralizing or decentralizing the recruitment
function.
SOURCES OF RECRUITMENT
The sources of recruitment may be broadly divided into two categories:
internal sources and external sources. Both have their own merits and demerits.
Let’s examine these.
Internal Sources:-
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Persons who are already working in an organization constitute the ‘internal
sources’ .Retrenched employees, retired employees, dependents of deceased
employees may also constitute the internal sources. Whenever any vacancy arises,
someone from within the organization is upgraded, transferred, promoted or even
demoted.
External Sources
External sources lie outside an organization.Here the organizationcan have
the services of :
(a) Employees working in other organizations
(b)Jobs aspirants registered with employment exchanges
(c) Students from reputed educational institutions
(d) Candidates referred by unions, friends, relatives and existing employees
(e) Candidates forwarded by search firms and contractors
(f) Candidates responding to the advertisements, issued by the organization; and
(g) Unsolicited applications/ walk-ins.
AS a statutory requirement, companies are also expected to notify(wherever the
Employment Exchanges Act, 1959, applies) their vacancies through the respective
Employment Exchanges, created all over India for helping unemployed youth,
displaced persons, ex-military personnel, physically handicapped, etc.AS per the
Act all employers are supposed to notify the vacancies arising in their
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establishments form time to time – with certain exemptions – to the prescribed
employment exchanges before they are filled. The Act covers all establishments in
public sector and non agricultural establishments employing 25 or more workers in
the private sector.
However, in view of the practical difficulties involved in implementing
the provisions of the Act (such as filing a quarterly return in respect of their staff
strength, vacancies and shortages, returns showing occupational distribution of
their employees, etc.) many organizations have successfully fought court battles
when they were asked to pick up candidates from among those sponsored by the
employment exchanges.
• Gate Hiring and Contractors:-
Gate hiring (where job seekers, generally blue collar employees, present
themselves at the factory gate and offer their services on a dailybasis), hiring
through contractors, recruiting through word-of-mouthpublicity are still in use –
despite the many possibilities for their misuse –in the small scale sector in India.
Unsolicited Applicants / Walk-ins:-
Companies generally receive unsolicited applications from job seeker sat
various points of time; the number of such applications depends on economic
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conditions, the image of the company and the job seeker’s perception of the types
of jobs that might be available etc. Such applications are generally kept in a data
bank and whenever a suitable vacancy arises, the company would intimate the
candidates to apply through a formal channel. One important problem with this
method is that job seekers generally apply to number of organizations and when
they are actually required by the organizations, either they are already employed in
other organizations or are not simply interested in the position.
• Alternatives to Recruitment:-
Since recruitment and selection costs are high (search process, interviewing
agency fee, etc.) firms these days are trying to look at alternatives to recruitment
especially when market demand for firm’s products and services is sluggish.
Moreover, once employees are placed on the payroll, it may be extremely difficult
to remove them if their performance is marginal. Some of the options in this regard
may be listed thus:
• Evaluation of Alternative Sources
Companies have to evaluate the sources of recruiting carefully –looking at cost,
time, flexibility, quality and other criteria – before ear marking funds for the
recruitment process. They cannot afford to fill all their vacancies through a
particular source. To facilitate the decision making process in this regard,
companies rely on the following:
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Time lapse data: They show the time lag between the dates of
requisition for manpower supply from a department to the actual date
of filling the vacancies in that department.
For example, a company’s past experience may indicate that the average number of
days from application to interview is 10, from interview to offer is 7, from offer to
acceptance is 10 and from acceptance to report for work is 15.Therefore, if the
company starts the recruitment and selection process now it would require 42 days
before the new employee joins its ranks. Armed with this information, the length of
the time needed for alternative sources of recruitment can be ascertained – before
pinning hopes on a particular source that meets the recruitment objectives of the
company.
Yield ratios: These ratios indicate the number of leads / contacts needed to
generate a given number of hires at a point at time.
For example, if a company needs 10 management trainees in the next six months, it
has to monitor past yield ratios in order to find out the number of candidates to be
contacted for this purpose. On the basis of past experience, to continue the same
example, the company finds that to hire 10 trainees, it has to extend 20 offers. If
the interview-to-offer is 3:2, then 30 interviews must be conducted. If the invitees
to interview ratios are 4:3 then, as many as 40 candidates must be invited. Lastly, if
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contacts or leads needed to identify suitable trainees to invite are in 5:1 ratio, then
200 contacts are made.
Surveys and studies: Surveys may also be conducted to find out the
suitability of a particular source for certain positions. For example, as pointed out
previously, employee referral has emerged as popular way of hiring people in the
Information Technology industry in recent times in India. Correlation studies could
also be carried out to find out the relationship between different organizational
positions. Before finally identifying the sources of recruitment, the human resource
managers must also look into the cost or hiring a candidate. The cost per hire can
be found out by dividing the recruitment cost by the number of candidates hired.
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SELECTION
Introduction
The size of the labour market, the image of the company, the place of
posting, the nature of job, the compensation package and a host of other factors
influence the manner of aspirants are likely to respond to the recruiting efforts of
the company. Through the process of recruitment the company tries to locate
prospective employees and encourages them to apply for vacancies at various
levels. Recruiting, thus, provides a pool of applicants for selection.
Definition
To select mean to choose. Selection is the process of picking individuals who
have relevant qualifications to fill jobs in an organisation. The basic purpose is to
choose the individual who can most successfully perform the job from the pool of
qualified candidates.
Purpose
The purpose of selection is to pick up the most suitable candidate who would
meet the requirements of the job in an organisation best, to find out which job
applicant will be successful, if hired. To meet this goal, the company obtains and
assesses information about the applicants in terms of age, qualifications, skills,
experience, etc. the needs of the job are matched with the profile of candidates.
The most suitable person is then picked up after eliminating the unsuitable
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applicants through successive stages of selection process. How well an employee is
matched to a job is very important because it is directly affects the amount and
quality of employee’s work. Any mismatched in this regard can cost an
organisation a great deal of money, time and trouble, especially, in terms of
training and operating costs. In course of time, the employee may find the job
distasteful and leave in frustration. He may even circulate ‘hot news’ and juicy bits
of negative information about the company, causing incalculable harm to the
company in the long run. Effective election, therefore, demands constant
monitoring of the ‘fit’ between people the job
The Process
Selection is usually a series of hurdles or steps. Each one must be
successfully cleared before the applicant proceeds to the next one. The time and
emphasis place on each step will definitely vary from one organisation to another
and indeed, from job to job within the same organisation. The sequence of steps
may also vary from job to job and organisation to organisation. For example some
organisations may give more importance to testing while others give more
emphasis to interviews and reference checks. Similarly a single brief selection
interview might be enough for applicants for lower level positions, while
applicants for managerial jobs might be interviewed by a number of people.
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Reception
A company is known by the people it employs. In order to attract people with
talents, skills and experience a company has to create a favourable impression on
the applicants’ right from the stage of reception. Who ever meets the applicant
initially should be tactful and able to extend help in afriendly and courteous way.
Employment possibilities must be presented honestly and clearly. If no jobs are
available at that point of time, the applicant may be asked to call back the
personnel department after some time.
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Screening Interview
A preliminary interview is generally planned by large organisations to cut
the cost of selection by allowing only eligible candidates to go through the further
stages in selection. A junior executive from the Personnel Department may elicit
responses from the applicants on important items determining the suitability of an
applicant for a job such as age, education, experience, pay expectations, aptitude,
location, choice etc. this ‘courtesy interview’ as it is often called helps the
department screen out obvious misfits. If the department finds the candidate
suitable, a prescribed application form is given to the applicants to fill and submit.
Application Blank
Application blank or form is one of the most common methods used to
collect information on the various aspects of the applicants’ academic, social,
demographic, work related background and references. It is a brief history sheet of
employee’s background, usually containing the following things:
• Personal data (address, sex, telephone number)
• Marital data
• Educational data
• Employment Experience
• Extra-curricular activities
• References and Recommendations
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Usefulness of Application Blank or Form
Application blank is highly useful selection tool, in that way it serves
three important purposes:
1. It introduces the candidate to the company in a formal way.
2. It helps the company to have a cross-comparison of the applicants; the company
can screen and reject candidates if they fail to meet the
eligibility criteria at this stage itself.
3. It can serve as a basis to initiate a dialogue in the interview.
Selection Testing
In this section let’ examine the selection test or the employment test that
attempts to asses intelligence, abilities, personality trait, performance simulation
tests including work sampling and the tests administered at assessment centres-
followed by a discussion about the polygraph test, graphology and integrity test.
A test is a standardized, objective measure of a person’s behaviour, performance or
attitude. It is standardised because the way the tests is carried out, the environment
in which the test is administered and the way the individual scores are calculated-
are uniformly applied. It is objective in that it tries to measure individual
differences in a scientific way giving very little room for individual bias and
interpretation. Over the years employment tests have not only gained importance
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but also a certain amount of inevitability in employment decisions. Since they try
to objectively determine how well an applicant meets the job requirement, most
companies do not hesitate to invest their time and money in selection testing in a
big way. Some of the commonly used employment tests are:
• Intelligence tests
• Aptitude tests
• Personality tests
• Achievement tests
• Miscellaneous tests such as graphology, polygraphy and honesty tests.
1. Intelligence Tests: These are mental ability tests. They measure the
Incumbent’s learning ability and the ability to understand instructions and make
judgements. The basic objective of such test is to pick up employees who are alert
and quick at learning things so that they can be offered adequate training to
improve their skills for the benefit of the organization. These tests measure several
abilities such as memory, vocabulary, verbal fluency, numerical ability, perception
etc. Eg.
Standford-Binet Test, Binet - Simon test, The Wechsler Adult
Intelligence Scale are example of standard intelligence test
2. Aptitude Test: Aptitude test measure an individual’s potential to learn
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certain skills- clerical, mechanical, mathematical, etc. These tests indicate whether
or not an individual has the capabilities to learn a given job quickly and efficiently.
In order to recruit efficient office staff, aptitude tests are necessary. An aptitude
tests is always administered in combination with other tests like intelligence and
personality tests as it does not measure on-the-job-motivation
3.Personality Test: Of all test required for selection the personality tests
have generated a lot of heat and controversy. The definition of personality,
methods of measuring personality factors and the relationship between personality
factors and actual job criteria has been the subject of much discussion. Researchers
have also questioned whether applicants answer all the items truthfully or whether
they try to respond in a socially desirable manner. Regardless of these objections,
many people still consider personality as an important component of job success.
4.Achievement Tests: These are designed to measure what the applicant can do on
the job currently, i.e., whether the testee actually knows what he or she claims to
know. A typing test tests shows the typing proficiency, a short hand tests measures
the testee ability to take dictation and transcribe, etc. Such proficiency tests are
also known as work sampling test. Work sampling is a selection tests wherein the
job applicant’s ability to do a small portion of the job is tested. These tests are of
two types; Motor, involving physical manipulations of things(e.g., trade tests for
carpenters, electricians, plumbers) or Verbal, involving problem situation that are
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primarily language-oriented or people-oriented(e.g., situational tests for
supervisory jobs).
Since work samples are miniature
replicas of the actual job requirements, they are difficult to fake. They offer
concrete evidence of the proficiency of an applicant as against his ability to the job.
However, work sample tests are not cost effective and every candidate has to be
tested individually. It is not easy to develop work samples for each job. Moreover,
it is not applicable to all levels of the organisation
5.Simulation Tests: Simulation exercise is a tests which duplicate many of the
activities and problems an employee faces while at work. Such
exercises are commonly used while hiring managers at various levels in an
organisation. To assess the potential of a candidate for managerial
positions assessment centres are commonly used.
6.Assessment Centre: An assessment centre is an extended work sample.
It uses procedures that incorporate group and individual exercises. These exercises
are designed to stimulate the type of work which the candidate will be expected to
do. Initially a small batch of applicants comes to the assessment centre (a separate
room). Their performance in the situational exercise is observed and evaluated by a
team of 6-8 assessors. The assessors’ judgement on each exercise are complied and
combined to have a summary rating for each candidate being assessed.
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Evaluation of Assessment Centre Technique:
The assessment centre technique has a number of advantages. The flexibility of
form and content, the use of variety of techniques, standardised way of interpreting
behaviour and pooled assessor judgements accounts for its acceptance as a
valuable selection tool for managerial jobs. It is praised for content validity and
wide acceptance in corporate circles. By providing a realistic job preview, the
techniques helps an candidate make an appropriate career choice. The performance
ratings are more objective in nature and could be used for promotions and career
development decisions readily. However, the method is expensive to design and
administer. Blind acceptance of assessment data without considering other
information on candidates (past and current performance) is always not advisable.
7. Graphology Test: Graphology involves using a trained evaluator to
examine the lines, loops, hooks, stokes, curves and flourishes in a person’s
handwriting to assess the person’s personality and emotional make-up. The
recruiting company, may, for example, ask the applicants to complete the
application forms and write about why they want a job. These samples may be
finally sent to graphologist for analysis and the result may be put use while
selecting a person. The use of graphology, however, is dependent on the training
and expertise of the person doing the analysis. In the actual practice, questions of
validity and just plain scepticism have limited in use.
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8.Polygraph (Lie-Detector) tests: the polygraph records physical changes
in the body as the tests subject answers a series of questions. It records fluctuations
in respiration, blood pressure and perspiration on a moving roll of graph paper. The
polygraph operator forms a judgement as to whether the subject’s response was
truthful or deceptive by examining the biological movements recorded on the
paper. Critic, however, questions the appropriateness of the polygraphs in
establishing the truth about an applicant’s behaviour. The fact is that the polygraph
records the biological reaction in response to stress and does not record lying or
even conditions necessarily accompanying lying. Is it possible to prove that the
responses recorded by the polygraph occur only because a lie has been told? What
about those situations in which a person lies without guilt (pathological liar) or lies
believing the responses to be true? The fact of the matter is that polygraphs are
neither reliable nor valid. Since they invade the privacy of those tested, many
applicants vehemently oppose the use of polygraph as a selection tool.
Taking the final decision, the organization has to intimate this decision to the
successful as well as unsuccessful candidates. The organization sends the
appointment order to the successful candidates either immediately or after
sometime depending upon its time schedule.
Interviewing Mistakes:
→ Favors applicants who share his own attitudes;
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→ Not be asking right questions and hence not getting relevant
responses;
→ Resort to snap judgments, making a decision as to the applicant’s
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NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
(As on 31st March)
Insurer 2008 2007 2006 2005 2004 2003 2002 2001
Aviva 213 140 110 50 22 12 3 -
Bajaj Allianz 1007 877 567 153 49 33 17 1
Bharti Axa 77 16 1 - - - - -
Birla Sunlife 538 148 97 53 41 29 19 2
Future Generali 9
HDFC Std 569 448 150 90 26 18 4 -
ICICI Pru 1958 583 175 109 69 29 14 6
IDBI Fortis 2
ING Vysya 265 183 68 38 26 16 4 -
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Kotak
Mahindra
151 75 46 43 39 28 9 -
Max NewYork 194 118 84 64 33 23 15 -
MetLife 94 53 43 35 16 8 3 -
Reliance Life 745 159 157 80 48 35 17 -
Sahara 33 33 18 18 2 - - -
SBI Life 200 138 46 31 19 10 5 1
Shriram 53 12 11 - - - - -
Tata AIG 283 89 72 40 26 13 6 3
Private Total 6391 3072 1645 804 416 254 116 13
LIC 2522 2301 2220 2197 2196 2191 2190 2186
Industry Total 8913 5373 3865 3001 2612 2445 2306 2199
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MAJOR
COMPETITIORS
BAJAJ ALLIANZ
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest
Insurance Company and Bajaj Finserv.
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000
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Crores). Allianz SE has over 115 years of financial experience and is present in over
70 countries around the world.
At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business
philosophy is to ensure excellent insurance and investment solutions by offering customised
products, supported by the best technology.
Accelerated Growth
Fiscal Year No. of policies sold New Business in FY
2001-2002(6 mths) 21,37 Rs. 7 cr.
2002-2003 1,15,965 Rs. 63.3 cr.
2003-2004 1,86,443 Rs. 180 cr.
2004-2005 2,88,189 Rs. 857 cr.
2005-2006 7,81,685 Rs. 2,717 cr.
2006-2007 20,79,217 Rs. 4,302 cr.
2007-2008 37,44,742 Rs. 6,674 cr.
ICICI PRUDENTIAL
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -
one of India's foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom. Total
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capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of
74% and Prudential plc holding 26%.
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). Today, our nation-wide
team comprises of 2074 branches (inclusive of 1,116 micro-offices), over 225,000
advisors; and 7 bancassurance partners.
ICICI Prudential is the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a
row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer,
by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted
Brands'. As we grow our distribution, product range and customer base, we
continue to tirelessly uphold our commitment to deliver world-class financial
solutions to customers all over India.
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RECRUITMENT INTRODUCTION
The human resources are the most important assets of an organization. The success
or failure of an organization is largely dependent on the calibre of the people
working therein. Without positive and creative contributions from people,
organizations cannot progress and prosper. In order to achieve the goals or the
activities of an organization, therefore, they need to recruit people with requisite
skills, qualifications and experience. While doing so, they have to keep the present
as well as the future requirements of the organization in mind.
Recruitment is distinct from Employment and Selection. Once the required
number and kind of human resources are determined, the management has to find
the places where the required human resources are/will be available and also find
the means of attracting them towards the organization before selecting suitable
candidates for jobs. All this process is generally known as recruitment. Some
people use the term “Recruitment” for employment. These two are not one and the
same. Recruitment is only one of the steps in the entire employment process. Some
others use the term recruitment for selection. These are not the same either.
Technically speaking, the function of recruitment precedes the selection function
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and it includes only finding, developing the sources of prospective employees and
attracting them to apply for jobs in an organization, whereas the selection isthe
process of finding out the most suitable candidate to the job out of the candidates
attracted (i.e., recruited).Formal definition of recruitment would give clear cut idea
about the function of recruitment.
DEFINITIONS
Recruitment is defined as, “a process to discover the sources of manpower to
meet the requirements of the staffing schedule and to employ effective measures
for attracting that manpower in adequate numbers to facilitate effective selection of
an efficient workforce.” Edwin B. Flippo defined recruitment as “the process of
searching for prospective employees and stimulating them to apply for jobs in the
organization.” Recruitment is a ‘linking function’-joining together those with jobs
to fill and those seeking jobs. It is a ‘joining process’ in that it tries to bring
together job seekers and employer with a view to encourage the former to apply for
a job with the latter.
In order to attract people for the jobs, the organization must communicate the
position in such a way that job seekers respond. To be cost effective, the
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recruitment process should attract qualified applicants and provide enough
information for unqualified persons to self-select themselves out.
Thus, the recruitment process begins when new recruits are sought and ends
when their applications are submitted. The result is a pool of applicants from
which new employees are selected.
PURPOSES AND IMPORTANCE
The general purpose of recruitment is to provide a pool of potentially
Qualified job candidates. Specifically, the purposes are to:
• Determine the present and future requirements of the organization in
conjunction with its personnel-planning and job-analysis activities.
• Increase the pool of job candidates at minimum cost.
• Help increase the success rate of the selection process by reducing the
number of visibly, under qualified or overqualified job applicants.
• Help reduce the probability that job applicants, once recruited and
selected, will leave the organization only after a short period of time.
• Begin identifying and preparing potential job applicants who will be
appropriate candidates.
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• Induct outsiders with a new perspective to lead the company.
• Infuse fresh blood at all levels of the organization.
• Develop an organizational culture that attracts competent people to
the company.
• Search or head hunt/head pouch people whose skills fit the company’s
values.
• Devise methodologies for assessing psychological traits.
• Search for talent globally and not just within the company.
• Design entry pay that competes on quality but not on quantum.
• Anticipate and find people for positions that do not exist yet.
• Increase organizational and individual effectiveness in the short term
and long term.
• Evaluate the effectiveness of various recruiting techniques and
sources for all types of job applicants.
Recruitment represents the first contact that a company makes with potential
employees. It is through recruitment that many individuals will come to know a
company, and eventually decide whether they wish to work for it. A well-planned
and well-managed recruiting effort will result in high-quality applicants, whereas,
a haphazard and piecemeal effort will result in mediocre ones. High-quality
employees cannot be selected when better candidates do not know of job openings,
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are not interested in working for the company and do not apply. The recruitment
process should inform qualified individuals about employment opportunities,
create a positive image of the company, provide enough information about the jobs
so that applicants can make comparisons with their qualifications and interests, and
generate enthusiasm among the best candidates so that they will apply for the
vacant positions.
The negative consequences of a poor recruitment process speak volumes about
its role in an organization. The failure to generate an adequate number of
reasonably qualified applicants can prove costly in several ways. It can greatly
complicate the selection process and may result in lowering of selection standards.
The poor quality of selection means extra cost on training and supervision.
Furthermore, when recruitment fails to meet the organizational needs for talent, a
typical response is to raise entry-level pay scales. This can distort traditional wage
and salary relationships in the organization, resulting in avoidable consequences.
Thus, the effectiveness of a recruitment process can play a major role in
determining the resources that must be expended on other HR activities and their
ultimate success.
SUB-SYSTEMS OF RECRUITMENT
The recruitment process consists of the following four sub-functions:-
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• Finding out and developing the sources where the required number
and kind of employees will be available.
• Developing suitable techniques to attract the desirable candidates
• Employing the techniques to attract candidates.
• Stimulating as many candidates as possible and asking them to apply
for jobs irrespective of the number of candidates required.
Management has to attract more candidates in order to increase theselection
ratio so that the most suitable candidate can be selected out of thetotal candidates
available. Recruitment is positive as it aims at increasing thenumber of applicants
and selection is somewhat negative as it selects thesuitable candidates in which
process; the unsuitable candidates areautomatically eliminated. Though, the
function of recruitment seems to beeasy, a number of factors make performance of
recruitment a complex one.
FACTORS AFFECTING RECRUITMENT
The following are the 2 important factors affecting Recruitment.
The following are the 2 important factors affecting Recruitment:-
1) INTERNAL FACTORS
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• Recruiting policy
• Temporary and part-time employees
• Recruitment of local citizens
• Engagement of the company in HRP
• Company’s size
• Cost of recruitment
• Company’s growth and expansion
2) EXTERNAL FACTORS
• Supply and Demand factors
• Unemployment Rate
• Labour-market conditions
• Political and legal considerations
• Social factors
• Economic factors
• Technological factors
INDUCEMENTS
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Organisational inducements are all the positive features and benefit soffered by
an organization that serves to attract job applicants to the organisation. Three
inducements need specific mention here, they are:-
• Compensation: Starting salaries, frequency of pay increases,
incentives and fringe benefits can all serve as inducements to potential
employees.
• Career Opportunities: These help the present employees to grow
personally and professionally and also attract good people to the organization. The
feeling that the company takes care of employee career aspirations serves as a
powerful inducements to potential employees.
• Image or Reputation: Factors that affect an organisation’s reputation
include its general treatment of employees, the nature and quality ofits products
and services and its participation in worthwhile social endeavors.
CASE EXAMPLE (inducements):
INFOSYS: The Software Powerhouse
Infosys Technologies Limited (ITL), one of the country’s best known
software exporting house, treats its employees as partners and co-owners. It
provides them challenging assignments, allows flexible working hours, rewards
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them solely on the basis of performance and conducts regular training programmes
to upgrade their skills. It has an “Employee Stock Option Plan” (ESOP) to share its
wealth with employees on the basis of their performance. Even lower level
employees are proud owners of the prized stock worth 25 to 40 lakh rupees,
according to Narayan Murthy, the CEO of ITL. Apart from increasing shareholder
value, ESOP has greatly enhanced the image of the company in the information
technology industry where employee attrition rates are very high. It is small
wonder companies like
Procter & Gamble, Johnson & Johnson, Citibank have reposed their faith in ESOP
as a way of attracting and retaining talent in a highly competitive environment.
CONSTRAINTS
If a firm has a poor image in the market, many of the prospective candidates
may not even apply for vacancies advertised by the firm. If the job is not attractive,
qualified people may not even apply. Any job that is viewed as boring, hazardous,
anxiety producing, low-paying, or lacking in promotion potential seldom will
attract a qualified pool of applicants. Recruiting efforts require money. Sometimes
because of limited resources, organizations may not like to carry on the recruiting
efforts for long periods of time, this can, ultimately, constrain a recruiter’s effort to
attract the best person for the job. Government policies often come in the way of
recruiting people as per the rules of the company or on the basis of merit/seniority,
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etc. For example, reservations to specific groups (such as scheduled castes,
scheduled tribes, backward castes, physically handicapped and constitutional
provisions while filling up vacancies in government corporations, departmental
undertakings, local bodies, quasi-government organizations, etc.
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Corporate mission, objectives, strategies and tactics
Corporations have started linking their Mission, Objectives, Strategies and Tactics
(MOST) to the functions of recruitment and selection. The economic
liberalizations and consequent competition through quality and services
necessitated the companies to search for and attract competent human resources.
Corporations focusing on new business development will have to seek
entrepreneurial abilities, companies planning to withdraw from diversifications
must look for pragmatists and companies chasing growth alliances should employ
people comfortable in different cultural backgrounds. Above all, companies must
hire for the future, anticipating jobs that may not be in existence yet. Recruitment
managers must focus for attitudes and approaches that fit the corporate goals and
culture
RECRUITMENT POLICY
Recruitment policy of any organization is derived from the personnel policy
of the same organization. In other words the former is a part of the latter. However,
recruitment policy by itself should take into consideration the government’s
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reservation policy, policy regarding sons of soil, etc., personnel policies of other
organizations regarding merit, internal sources, social responsibility in absorbing
minority sections, women, etc. Recruitment policy should commit itself to the
organisation’s personnel policy like enriching the organisation’s human resources
or servicing the community by absorbing the retrenched or laid-off employees or
dependents of present/former employees, etc. The following factors should be
taken into consideration in formulating
recruitment policy. They are:-
• Government policies
• Personnel policies of other competing organizations
• Organisation’s personnel policies
• Recruitment sources
• Recruitment needs
• Recruitment cost
• Selection criteria and preference
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IMPACT OF PERSONNEL POLICIES ON RECRUITMENT
POLICIES
Recruitment policies are mostly drawn from personnel policies of the organization.
According to Dale Yodar and Paul D. Standohar, general personnel policies
provide a wide variety of guidelines to be spelt out in recruitment policy. After
formulation of the recruitment policies, the management has to decide whether to
centralize or decentralize the recruitment function.
CENTRALISED V/s DECENTRALISED RECRUITMENT
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Recruitment practices vary from one organization to another. Some
organizations like commercial banks resort to centralized recruitment while some
organizations like the Indian Railway resort to decentralized recruitment practices.
Personnel department at the central office performs all the functions of recruitment
in case of centralised recruitment and personnel departments at unit level/ zonal
level perform all the functions of recruitment concerning to the jobs of the
respective unit or zone.
MERITS OF CENTRALISED RECRUITMENT
• Average cost of recruitment per candidate/unit should be relatively
less due to economies of scale.
• It would have more expertise available to it.
• It can ensure broad uniformity among human resources of various
Units /zones in respect of education, skill, knowledge, talent, etc.
• It would generally be above malpractices, abuse of powers,
favouritism, bias, etc.
• It would facilitate inter change ability of staff among various
units/zones.
• It enables the line managers of various units and zones to concentrate on their
operational activities by relieving them from the recruiting functions.
• It enables the organization to have centralised selection procedure,
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promotional and transfer procedure, etc.
• It ensures the most effective and suitable placement to candidates.
• It enables centralised training programmes which further brings
uniformity and minimizes average cost of staff
MERITS OF DECENTRALISED RECRUITMENT
• The unit concerned concentrates only on those sources/places wherein
normally gets the suitable candidates. As such the cost of recruitment would be
relatively less.
• The unit gets most suitable candidates as it is well aware of the
requirements of the job regarding culture, traditional, family
background aspects, local factors, social factors, etc.
• Units can recruit candidates as and when they are required without
any delay.
• The units would enjoy freedom in finding out, developing the sources, in
selecting and employing the techniques to stimulate the candidates.
• The unit would relatively enjoy advantage about the availability of
Information, control and feedback and various functions/processes of
Recruitment.
• The unit would enjoy better familiarity and control over the
employees it recruits rather than on employees selected by the central
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recruitment agency.
Both the systems of recruitment would suffer from their own demerits. Hence,
the management has to weigh both the merits and demerits of each system before
making a final decision about centralizing or decentralizing the recruitment.
Alternatively management may decentralize the recruitment of certain categories
of employees preferably middle and top level managerial personnel and centralize
the recruitment of other categories of employee’s preferably lower level positions
in view of the nature of the job sand suitability of those systems for those
categories of positions. The management has to find out and develop the sources of
recruitment after deciding upon centralizing or decentralizing the recruitment
function.
SOURCES OF RECRUITMENT
The sources of recruitment may be broadly divided into two categories:
internal sources and external sources. Both have their own merits and demerits.
Let’s examine these.
Internal Sources:-
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Persons who are already working in an organization constitute the ‘internal
sources’ .Retrenched employees, retired employees, dependents of deceased
employees may also constitute the internal sources. Whenever any vacancy arises,
someone from within the organization is upgraded, transferred, promoted or even
demoted.
External Sources
External sources lie outside an organization.Here the organizationcan have
the services of :
(a) Employees working in other organizations
(b)Jobs aspirants registered with employment exchanges
(c) Students from reputed educational institutions
(d) Candidates referred by unions, friends, relatives and existing employees
(e) Candidates forwarded by search firms and contractors
(f) Candidates responding to the advertisements, issued by the organization; and
(g) Unsolicited applications/ walk-ins.
AS a statutory requirement, companies are also expected to notify(wherever the
Employment Exchanges Act, 1959, applies) their vacancies through the respective
Employment Exchanges, created all over India for helping unemployed youth,
displaced persons, ex-military personnel, physically handicapped, etc.AS per the
Act all employers are supposed to notify the vacancies arising in their
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establishments form time to time – with certain exemptions – to the prescribed
employment exchanges before they are filled. The Act covers all establishments in
public sector and non agricultural establishments employing 25 or more workers in
the private sector.
However, in view of the practical difficulties involved in implementing
the provisions of the Act (such as filing a quarterly return in respect of their staff
strength, vacancies and shortages, returns showing occupational distribution of
their employees, etc.) many organizations have successfully fought court battles
when they were asked to pick up candidates from among those sponsored by the
employment exchanges.
• Gate Hiring and Contractors:-
Gate hiring (where job seekers, generally blue collar employees, present
themselves at the factory gate and offer their services on a dailybasis), hiring
through contractors, recruiting through word-of-mouthpublicity are still in use –
despite the many possibilities for their misuse –in the small scale sector in India.
Unsolicited Applicants / Walk-ins:-
Companies generally receive unsolicited applications from job seeker sat
various points of time; the number of such applications depends on economic
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conditions, the image of the company and the job seeker’s perception of the types
of jobs that might be available etc. Such applications are generally kept in a data
bank and whenever a suitable vacancy arises, the company would intimate the
candidates to apply through a formal channel. One important problem with this
method is that job seekers generally apply to number of organizations and when
they are actually required by the organizations, either they are already employed in
other organizations or are not simply interested in the position.
• Alternatives to Recruitment:-
Since recruitment and selection costs are high (search process, interviewing
agency fee, etc.) firms these days are trying to look at alternatives to recruitment
especially when market demand for firm’s products and services is sluggish.
Moreover, once employees are placed on the payroll, it may be extremely difficult
to remove them if their performance is marginal. Some of the options in this regard
may be listed thus:
• Evaluation of Alternative Sources
Companies have to evaluate the sources of recruiting carefully –looking at cost,
time, flexibility, quality and other criteria – before ear marking funds for the
recruitment process. They cannot afford to fill all their vacancies through a
particular source. To facilitate the decision making process in this regard,
companies rely on the following:
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Time lapse data: They show the time lag between the dates of
requisition for manpower supply from a department to the actual date
of filling the vacancies in that department.
For example, a company’s past experience may indicate that the average number of
days from application to interview is 10, from interview to offer is 7, from offer to
acceptance is 10 and from acceptance to report for work is 15.Therefore, if the
company starts the recruitment and selection process now it would require 42 days
before the new employee joins its ranks. Armed with this information, the length of
the time needed for alternative sources of recruitment can be ascertained – before
pinning hopes on a particular source that meets the recruitment objectives of the
company.
Yield ratios: These ratios indicate the number of leads / contacts needed to
generate a given number of hires at a point at time.
For example, if a company needs 10 management trainees in the next six months, it
has to monitor past yield ratios in order to find out the number of candidates to be
contacted for this purpose. On the basis of past experience, to continue the same
example, the company finds that to hire 10 trainees, it has to extend 20 offers. If
the interview-to-offer is 3:2, then 30 interviews must be conducted. If the invitees
to interview ratios are 4:3 then, as many as 40 candidates must be invited. Lastly, if
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contacts or leads needed to identify suitable trainees to invite are in 5:1 ratio, then
200 contacts are made.
Surveys and studies: Surveys may also be conducted to find out the
suitability of a particular source for certain positions. For example, as pointed out
previously, employee referral has emerged as popular way of hiring people in the
Information Technology industry in recent times in India. Correlation studies could
also be carried out to find out the relationship between different organizational
positions. Before finally identifying the sources of recruitment, the human resource
managers must also look into the cost or hiring a candidate. The cost per hire can
be found out by dividing the recruitment cost by the number of candidates hired.
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SELECTION
Introduction
The size of the labour market, the image of the company, the place of
posting, the nature of job, the compensation package and a host of other factors
influence the manner of aspirants are likely to respond to the recruiting efforts of
the company. Through the process of recruitment the company tries to locate
prospective employees and encourages them to apply for vacancies at various
levels. Recruiting, thus, provides a pool of applicants for selection.
Definition
To select mean to choose. Selection is the process of picking individuals who
have relevant qualifications to fill jobs in an organisation. The basic purpose is to
choose the individual who can most successfully perform the job from the pool of
qualified candidates.
Purpose
The purpose of selection is to pick up the most suitable candidate who would
meet the requirements of the job in an organisation best, to find out which job
applicant will be successful, if hired. To meet this goal, the company obtains and
assesses information about the applicants in terms of age, qualifications, skills,
experience, etc. the needs of the job are matched with the profile of candidates.
The most suitable person is then picked up after eliminating the unsuitable
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applicants through successive stages of selection process. How well an employee is
matched to a job is very important because it is directly affects the amount and
quality of employee’s work. Any mismatched in this regard can cost an
organisation a great deal of money, time and trouble, especially, in terms of
training and operating costs. In course of time, the employee may find the job
distasteful and leave in frustration. He may even circulate ‘hot news’ and juicy bits
of negative information about the company, causing incalculable harm to the
company in the long run. Effective election, therefore, demands constant
monitoring of the ‘fit’ between people the job
The Process
Selection is usually a series of hurdles or steps. Each one must be
successfully cleared before the applicant proceeds to the next one. The time and
emphasis place on each step will definitely vary from one organisation to another
and indeed, from job to job within the same organisation. The sequence of steps
may also vary from job to job and organisation to organisation. For example some
organisations may give more importance to testing while others give more
emphasis to interviews and reference checks. Similarly a single brief selection
interview might be enough for applicants for lower level positions, while
applicants for managerial jobs might be interviewed by a number of people.
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Reception
A company is known by the people it employs. In order to attract people with
talents, skills and experience a company has to create a favourable impression on
the applicants’ right from the stage of reception. Who ever meets the applicant
initially should be tactful and able to extend help in afriendly and courteous way.
Employment possibilities must be presented honestly and clearly. If no jobs are
available at that point of time, the applicant may be asked to call back the
personnel department after some time.
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Screening Interview
A preliminary interview is generally planned by large organisations to cut
the cost of selection by allowing only eligible candidates to go through the further
stages in selection. A junior executive from the Personnel Department may elicit
responses from the applicants on important items determining the suitability of an
applicant for a job such as age, education, experience, pay expectations, aptitude,
location, choice etc. this ‘courtesy interview’ as it is often called helps the
department screen out obvious misfits. If the department finds the candidate
suitable, a prescribed application form is given to the applicants to fill and submit.
Application Blank
Application blank or form is one of the most common methods used to
collect information on the various aspects of the applicants’ academic, social,
demographic, work related background and references. It is a brief history sheet of
employee’s background, usually containing the following things:
• Personal data (address, sex, telephone number)
• Marital data
• Educational data
• Employment Experience
• Extra-curricular activities
• References and Recommendations
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Usefulness of Application Blank or Form
Application blank is highly useful selection tool, in that way it serves
three important purposes:
1. It introduces the candidate to the company in a formal way.
2. It helps the company to have a cross-comparison of the applicants; the company
can screen and reject candidates if they fail to meet the
eligibility criteria at this stage itself.
3. It can serve as a basis to initiate a dialogue in the interview.
Selection Testing
In this section let’ examine the selection test or the employment test that
attempts to asses intelligence, abilities, personality trait, performance simulation
tests including work sampling and the tests administered at assessment centres-
followed by a discussion about the polygraph test, graphology and integrity test.
A test is a standardized, objective measure of a person’s behaviour, performance or
attitude. It is standardised because the way the tests is carried out, the environment
in which the test is administered and the way the individual scores are calculated-
are uniformly applied. It is objective in that it tries to measure individual
differences in a scientific way giving very little room for individual bias and
interpretation. Over the years employment tests have not only gained importance
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but also a certain amount of inevitability in employment decisions. Since they try
to objectively determine how well an applicant meets the job requirement, most
companies do not hesitate to invest their time and money in selection testing in a
big way. Some of the commonly used employment tests are:
• Intelligence tests
• Aptitude tests
• Personality tests
• Achievement tests
• Miscellaneous tests such as graphology, polygraphy and honesty tests.
1. Intelligence Tests: These are mental ability tests. They measure the
Incumbent’s learning ability and the ability to understand instructions and make
judgements. The basic objective of such test is to pick up employees who are alert
and quick at learning things so that they can be offered adequate training to
improve their skills for the benefit of the organization. These tests measure several
abilities such as memory, vocabulary, verbal fluency, numerical ability, perception
etc. Eg.
Standford-Binet Test, Binet - Simon test, The Wechsler Adult
Intelligence Scale are example of standard intelligence test
2. Aptitude Test: Aptitude test measure an individual’s potential to learn
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certain skills- clerical, mechanical, mathematical, etc. These tests indicate whether
or not an individual has the capabilities to learn a given job quickly and efficiently.
In order to recruit efficient office staff, aptitude tests are necessary. An aptitude
tests is always administered in combination with other tests like intelligence and
personality tests as it does not measure on-the-job-motivation
3.Personality Test: Of all test required for selection the personality tests
have generated a lot of heat and controversy. The definition of personality,
methods of measuring personality factors and the relationship between personality
factors and actual job criteria has been the subject of much discussion. Researchers
have also questioned whether applicants answer all the items truthfully or whether
they try to respond in a socially desirable manner. Regardless of these objections,
many people still consider personality as an important component of job success.
4.Achievement Tests: These are designed to measure what the applicant can do on
the job currently, i.e., whether the testee actually knows what he or she claims to
know. A typing test tests shows the typing proficiency, a short hand tests measures
the testee ability to take dictation and transcribe, etc. Such proficiency tests are
also known as work sampling test. Work sampling is a selection tests wherein the
job applicant’s ability to do a small portion of the job is tested. These tests are of
two types; Motor, involving physical manipulations of things(e.g., trade tests for
carpenters, electricians, plumbers) or Verbal, involving problem situation that are
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primarily language-oriented or people-oriented(e.g., situational tests for
supervisory jobs).
Since work samples are miniature
replicas of the actual job requirements, they are difficult to fake. They offer
concrete evidence of the proficiency of an applicant as against his ability to the job.
However, work sample tests are not cost effective and every candidate has to be
tested individually. It is not easy to develop work samples for each job. Moreover,
it is not applicable to all levels of the organisation
5.Simulation Tests: Simulation exercise is a tests which duplicate many of the
activities and problems an employee faces while at work. Such
exercises are commonly used while hiring managers at various levels in an
organisation. To assess the potential of a candidate for managerial
positions assessment centres are commonly used.
6.Assessment Centre: An assessment centre is an extended work sample.
It uses procedures that incorporate group and individual exercises. These exercises
are designed to stimulate the type of work which the candidate will be expected to
do. Initially a small batch of applicants comes to the assessment centre (a separate
room). Their performance in the situational exercise is observed and evaluated by a
team of 6-8 assessors. The assessors’ judgement on each exercise are complied and
combined to have a summary rating for each candidate being assessed.
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Evaluation of Assessment Centre Technique:
The assessment centre technique has a number of advantages. The flexibility of
form and content, the use of variety of techniques, standardised way of interpreting
behaviour and pooled assessor judgements accounts for its acceptance as a
valuable selection tool for managerial jobs. It is praised for content validity and
wide acceptance in corporate circles. By providing a realistic job preview, the
techniques helps an candidate make an appropriate career choice. The performance
ratings are more objective in nature and could be used for promotions and career
development decisions readily. However, the method is expensive to design and
administer. Blind acceptance of assessment data without considering other
information on candidates (past and current performance) is always not advisable.
7. Graphology Test: Graphology involves using a trained evaluator to
examine the lines, loops, hooks, stokes, curves and flourishes in a person’s
handwriting to assess the person’s personality and emotional make-up. The
recruiting company, may, for example, ask the applicants to complete the
application forms and write about why they want a job. These samples may be
finally sent to graphologist for analysis and the result may be put use while
selecting a person. The use of graphology, however, is dependent on the training
and expertise of the person doing the analysis. In the actual practice, questions of
validity and just plain scepticism have limited in use.
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8.Polygraph (Lie-Detector) tests: the polygraph records physical changes
in the body as the tests subject answers a series of questions. It records fluctuations
in respiration, blood pressure and perspiration on a moving roll of graph paper. The
polygraph operator forms a judgement as to whether the subject’s response was
truthful or deceptive by examining the biological movements recorded on the
paper. Critic, however, questions the appropriateness of the polygraphs in
establishing the truth about an applicant’s behaviour. The fact is that the polygraph
records the biological reaction in response to stress and does not record lying or
even conditions necessarily accompanying lying. Is it possible to prove that the
responses recorded by the polygraph occur only because a lie has been told? What
about those situations in which a person lies without guilt (pathological liar) or lies
believing the responses to be true? The fact of the matter is that polygraphs are
neither reliable nor valid. Since they invade the privacy of those tested, many
applicants vehemently oppose the use of polygraph as a selection tool.
Taking the final decision, the organization has to intimate this decision to the
successful as well as unsuccessful candidates. The organization sends the
appointment order to the successful candidates either immediately or after
sometime depending upon its time schedule.
Interviewing Mistakes:
→ Favors applicants who share his own attitudes;
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→ Not be asking right questions and hence not getting relevant
responses;
→ Resort to snap judgments, making a decision as to the applicant’s