1 INTRODUCTION: Recruitment and Selection Recruitment: “It is the process of finding and attracting capable applications for employment.” Recruitment is a process to discover the sources of manpower to meet requirement of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected. Recruitment represents the first contact that a company makes with potential employees. It is the next step in the procurement function, the first being the manpower planning. Sources of recruitment: Internal External Internal recruitment: It seeks applicants for positions from those who are currently employed. Present employees Direct referrals Former employees New joinee referrals
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INTRODUCTION:
Recruitment and Selection
Recruitment: “It is the process of finding and attracting capable applications for
employment.” Recruitment is a process to discover the sources of manpower to
meet requirement of the staffing schedule and to employ effective measures for
attracting that manpower in adequate numbers to facilitate effective selection of an
efficient working force.
The process begins when new recruits are sought and ends when their applications
are submitted. The result is a pool of applications from which new employees are
selected.
Recruitment represents the first contact that a company makes with potential
employees. It is the next step in the procurement function, the first being the
manpower planning.
Sources of recruitment:
Internal
External
Internal recruitment: It seeks applicants for positions from those who are
currently employed.
Present employees
Direct referrals
Former employees
New joinee referrals
External recruitment: These sources lie outside the organization
Advertisements
Campus recruitments
Walk-ins
Consultants
Job portals
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Internal recruitment:
Recruiting from among the existing workforce refers as internal recruitment and it
offers many advantages. Seeing your employees at work on a day-to-day basis will
enable you to evaluate their particular strengths and weakness accurately and choose
the most suitable person for the position. When the company recruits from within the
organization the employees will feel important and highly valued since it appears that
the organization immediately turns to them whenever a vacancy occurs. Usually it
depends on the post as well to decide whether there is an availability of internal
candidate or an external one.
Advantages
It is less costly
Candidates are already oriented towards the organization.
Organization has better knowledge about the candidates
Enhancement of employee’s morale and motivate them to work more
Good performance is then rewarded
The employee is already familiar with the work culture and the organization’s
environment.
Disadvantages:
It perpetuates the old concept of doing things.
Candidate’s current work may be affected.
Politics play a greater role.
Moral problem, for those who are not been motivated.
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External recruitment:
External recruiting is nothing but recruiting the people in your organization from
outside the company. It will help the company to make best use of other sources that
are laying outside the organization like for example campus recruits is an effective
and efficient way of recruiting when a company wants new minds that are more
creative and go-getters for any task. If a company wants to concentrate only on its
core activities and wants to relieve the burden of the task of recruitment then the more
feasible option would be third party recruiting or recruitment process outsourcing
RPO. The experienced persons but unemployed can be recruited into the company
which may reduce the training cost if they are from same industry. When a company
is involved in large expansions and is more oriented towards achieving high growth
and high market share, with more focus on quality of the product and high customer
satisfaction then it is inevitable for any organization to go for external recruiting.
Advantages:
Benefits of new skills new talents and new experience to the organization
Compliance with reservation policy becomes easy
Scope of jealousy and heartburns avoided.
No politics and biasness involved.
Disadvantages:
It is a very costly affair
Adjustment of new employees to the organization culture takes longer time.
Better moral and motivation associated with internal recruiting is denied to the
organization.
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Selection
Definition: “It is the process of differentiating between applicants in order to identify
those with a greater likelihood of success in a job”.
Selection is the process of picking individuals with requisite qualification and
competence to fill jobs in the organization. It is a long process commencing from the
preliminary interview of the applicants and ending with the contract of employment.
The objective of the process is to determine whether an applicant meets the
qualification for a specific job and to choose the applicant who is most likely to
perform well in that job.
Suitability for a job is typically assessed by looking for skills e.g. communication,
typing, and computer skills. Qualifications may be shown through résumés, job
applications, interviews, educational or professional experience, the testimony of
references, or in-house testing, such as for software knowledge, typing skills,
numeracy, and literacy, through psychological tests or employment testing.
In some countries, employers are legally mandated to provide equal opportunity in
hiring. Business management software is used by many recruitment agencies to
automate the testing process. Many recruiters and agencies are using an Applicant
tracking system to perform many of the filtering tasks, along with software tools for
psychometric testing.
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Objectives of the study
To understand the recruitment procedure with reference to insurance sector.
To find out whether the alternative sources are been able to reduce
dependency on consultancy on the company.
To find out whether the cost has decreased in the last four years by increasing
the dependency.
To compare the recruitment procedure of other companies to improvise on the
present recruitment procedure.
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Research methodology
Research methodology is a way to systematically solve the research problem .it may
be understood as a science of studying how research is done scientifically. The study
of research methodology gives us the necessary training in gathering materials,
arranging them, participating in filed when required and training in techniques for the
collection of data appropriate for a particular problem.
Thus in research we talk not only of the methods used but also the logic behind the
method we use in the context of our research, so the result can be evaluated by the
researcher or others concerned. Research Methodology is the most practical way of
obtaining and analyzing data and it plays an important role in project.
Research methodology followed by TATA-AIG
Methodology adopted:
Questionnaire
Field study
Questionnaire
A structured questionnaire was used to study the recruitment procedure of three
financial companies which consist of understanding of the cost involved in the whole
procedure and various methods by which the sourcing of candidates are done.
Field study
In the field study the actual process of sourcing of candidates and recruitment of the
three companies were examined and witnessed and a comparison was done with the
help of this a comparative study was done.
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Hypothesis
Generally there are two types of hypothesis null and alternate. Null hypothesis
assumes that the difference. If any in the observed data is attributed to random error.
Null hypothesis is denoted as h0 hypothesis should be developed before sample is
drawn. Hypothesis should be specific, it should be fit for testing.
Here in this project the hypothesis is:
“Whether the alternate sources of recruitment like new joinee referrals, placemint,
direct walk-in or job portals reduce the dependency on consultancy.”
Sources of data
Primary data
Secondary data
Primary data:
This data is been collected by the person who is doing the project it is very
accurate as compared to secondary data but it has its demerits like it is time
consuming process and the same time it is a costly affair. Here in this project
the secondary data was collected by using a questionnaire and by visiting the
three companies.
Secondary data:
Information which is been collected by other individuals and when we use it for our
project work that is called as secondary data. Information is collected by various
documents, magazine and also by referring reference books.
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Sample size:
The questionnaire used in report was made considering 3 financial companies into
consideration and then the questionnaire was filled by the HR manager.
Methodology
Interview with hr manager of three companies
Questionnaire
Collection of data
Analysis of data
Interpretation
Conclusion
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Scope and Limitation:
Scope: The recruitment decision is the prime importance in every organization. It is a
vehicle for the best possible person for the post. This can be used by the students and
the organization.
So the scope of this project is to understand the recruitment procedure of an insurance
company and also a comparative analysis between three financial companies to
reduce the cost of the sourcing of candidates.
For the company the scope is that with the help of this project they can implement the
innovative ways of reducing the turnaround time and the cost of the recruitment
procedure.
Limitation: During the tenure of the project at TATA-AIG there were certain
constraints because of which certain points are not described and certain points are
not done in detail.
Time was the most important factor, as time was limited and in which the whole
project had to be completed within the given time.
There was only agency vertical I could do the project because of the vastness of the
company function and the time constraint because of that it was difficult to come to a
conclusion of the project that whether the turnaround time and the cost of the
procedure has reduced.
Because there was more emphasis was on the reducing the dependency on
consultancy through alternate sources the other procedures of the company was not
been studied deeply.
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Indian Insurance Industry
The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972,
Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related
Acts. With such a large population and the untapped market area of this population
Insurance happens to be a very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 per cent annually. Together with banking services, it adds
about 7 per cent to the country’s GDP .In spite of all this growth the statistics of the
penetration of the insurance in the country is very poor. Nearly 80% of Indian
populations are without Life insurance cover and the Health insurance. This is an
indicator that growth potential for the insurance sector is immense in India. It was due
to this immense growth that the regulations were introduced in the insurance sector
and in continuation “Malhotra Committee” was constituted by the government in
1993 to examine the various aspects of the industry. The key element of the reform
process was Participation of overseas insurance companies with 26% capital. Creating
a more efficient and competitive financial system suitable for the requirements of the
economy was the main idea behind this reform. Since then the insurance industry has
gone through many sea changes .The competition LIC started facing from these
companies were threatening to the existence of LIC .since the liberalization of the
industry the insurance industry has never looked back and today stand as the one of
the most competitive and exploring industry in India. The entry of the private players
and the increased use of the new distribution are in the limelight today. The use of
new distribution techniques and the IT tools has increased the scope of the industry in
the longer run.
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Brief History of Insurance in India
The history of life insurance in India dates back to 1818 when it was conceived as a
means to provide for English Widows. Interestingly in those days a higher premium
was charged for Indian lives than the non-Indian lives as Indian lives were considered
more risky to cover.
Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the provident fund Act of 1912. Several frauds during
20's and 30's sullied insurance business in India. By 1938 there were 176 insurance
companies. The first comprehensive legislation was introduced with the Insurance Act
of 1938 that provided strict State Control over insurance business. The insurance
business grew at a faster pace after independence. Indian companies strengthened
their hold on this business but despite the growth that was witnessed, insurance
remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life insurers and
provident societies under one nationalized monopoly corporation and LIC was born.
Nationalization was justified on the grounds that it would create much needed funds
for rapid industrialization. This was in conformity with the Government's chosen path
of State lead planning and development.
Insurance Sector Reforms
In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor
R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend
its future direction.
The committee was set up with the objective of complementing the reforms initiated
in the financial sector. The reforms were aimed at "creating a more efficient and
competitive financial system suitable for the requirements of the economy keeping in
mind the structural changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary to address the
need for similar reforms"
Insurance Business
Life Insurance Non- Life Insurance
Fire Marine Miscellaneous
Covers Fire
Related Risks
Covers transport
related risks and ships
Covers liability, fidelity, motor, crop, personal accident, etc.
Covers death and disability
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While the company submitted its report in 1994, it took another six years before the
enabling legislation was passed in the year 2000, legislation amending the Insurance
Act of 1938 and legislating the Insurance Regulatory and Development Authority Act
of 2000. The same year that the newly appointed insurance regulator - Insurance
Regulatory and Development Authority IRDA -- started issuing licenses to private life
insurers.
Classification of Insurance business- India
In India, insurance business is classified primarily as life and non-life or general. Life
insurance includes all risks related to the lives of human beings and general insurance
covers the rest. General insurance has three classifications viz., Fire (dealing with all
fire related risks), Marine (dealing with all transport related risks and ships) and
Miscellaneous (dealing with all others like liability, fidelity, motor, crop, personal
accident, etc). Personal accident and sickness insurance, which are related to human
beings, is classified as 'non-life' in India, but is classified as `life', in many other
countries. What is 'Non-life' in India is termed `Property and Casualty' in some other
countries.
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Life Insurance
Human Life is an income generating asset which can be lost due to premature death or
become non-functional due to an accident or sickness. Life insurance does not
PROTECT LIFE – it tries to minimize the impact of an untimely death on those
dependent on that income. Life Insurance claims can be made if:
i. Occurrence has to be random
ii. Occurrence has to be Accidental
iii. Not the Deliberate creation of the Insured Person
Innovations in Life Insurance Industry
Economic growth in the emerging markets has time and again outpaced the developed
and industrialized countries. Alongside the rising importance of emerging economies,
their life insurance sectors are also drawing more attention.
It’s been four years since the life insurance sector was opened up for private players
in India. The reasons that prompted the government to bring in reform in this sector
are well known. While the public sector life insurance companies made enormous
contribution in the spread of awareness about insurance, and expanded the market, it
was recognized that their reach was still limited, the range of products offered
restricted and the service to the consumer inadequate. It was also felt that the rapid
economic growth witnessed in the 90s couldn’t be sustained without a thriving
insurance sector.
Today, the private sector accounts for nearly 20% of the market. The market share of
the private players has to be seen in the context of this enlarged market. There has
been a flurry of private players providing a wide range of innovative products,
services and customized solutions. Emerging markets—such as China, India, Mexico
and Russia— are home to some 86% of the world’s population. Collectively, they
account for 23% of world economic output. Yet, insurance business is
underdeveloped in these markets.
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Present Scenario
The Government of India liberalized the insurance sector in March 2000 with the
passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting
all entry restrictions for private players and allowing foreign players to enter the
market with some limits on direct foreign ownership. Under the current guidelines,
there is a 26 percent equity capital for foreign partners in an insurance company.
There is a proposal to increase this limit to 49 percent. Premium rates of most general
insurance policies come under the preview of the government appointed Tariff
Advisory Committee.
The insurance sector in India has come a full circle from being an open competitive
market to nationalization and back to a liberalized market again. Tracing the
developments in the Indian insurance sector reveals the 360-degree turn witnessed
over a period of almost two centuries.
All life insurance companies in India have to comply with the strict regulations laid
out by Insurance Regulatory and Development Authority of India (IRDA). Therefore
there is no risk in going in for private insurance players.
With a huge population base and large untapped market, insurance industry is a big
opportunity area in India for national as well as foreign investors. India is the fifth
largest life insurance market in the emerging insurance economies globally and is
growing at 32-34% annually. This impressive growth in the market has been driven
by liberalization, with new player’s significantly enhancing product awareness and
promoting consumer education and information. The strong growth potential of the
country has also made international players to look at the Indian insurance market.
Moreover, saturation of insurance markets in many developed economies has made
the Indian market more attractive for international insurance players, according to
Booming Insurance Market in India (2008-2011)”.
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Indian Scenario:
Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd
largest in terms of purchasing power parity. With factors like a stable 8-9 per cent
annual growth, rising foreign exchange reserves, a booming capital market and a
rapidly expanding FDI inflows, it is on the hinge of an ever increasing growth curve.
Indians have a tendency to invest in properties and gold followed by bank deposits.
They selectively invest in shares also but the percentage is very small--4-5%. This in
itself is an indicator that growth potential for the insurance sector is immense. It’s a
business growing at the rate of 15-20% per annum and presently is of the order of
$47.9 billion. India is a vast market for life insurance that is directly proportional to
the growth in premiums and an increase in life density. With the entry of private
sector players backed by foreign expertise, Indian insurance market has become more
vibrant. Competition in this market is increasing with company’s continuous effort to
lure the customers with new product offerings. However, the market share of private
insurance companies remains very low -- in the 10-15% range. Even to this day, Life
Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy
hand of government still dominates the market, with price controls, limits on
ownership, and other restraints. The upward growth trend started from 2000 was
mainly due to economic policies adopted by the Indian government. This year saw
initiation of an era of economic liberalization and globalization in the Indian economy
followed by several reforms and long-term policies that created a perfect roadmap for
the success of Indian financial markets. On the basis of several 26 macroeconomic
factors like increase in literacy rate & per capita income, decrease in death rate and
unemployment, better tax rebates, growing GDP etc., we estimate that the Indian
insurance sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a
CAGR of 12.44% and a growth of 59.82%.
The Indian life insurance market generated total revenues of $41.36 billion in 2007,
thus representing a compound annual growth rate (CAGR) of 11.84% for the period
spanning 2000-2007. Life insurance market had a growth of $22.46 billion within a
period of 7 years with a growth rate of 118.24%. Estimated life premiums rose from
INR1, 470,800 million ($36.77 billion) in 2006 to INR1, 301,540 million
($32.54billion) in 2005. We envisage that life premiums in 2011 will be $65.96
billion, a growth larger than they were in 2007. The performance of the market is
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forecast to accelerate, with an anticipated CAGR of 9.78% for the four-year period
2007-2011 expected to drive the market to a value of $65.96 billion by the end of
2011. There would be a growth of $24.6 billion i.e. 59.48% in the next 4 years. Non-
life premiums in India were $6.53 billion in 2007. Gross written premium (GWP) in
the Indian non-life insurance market reached a value of $5.75 billion in 2006, this
representing an annual growth of 13.55% for the period spanning 2006-2007.
Estimated non-life premiums rose from INR230 billion ($5.75 billion) in 2006 to
INR261 billion ($6.53 billion) in 2007. We anticipate that non-life premiums will
grow by a CAGR of 9.40% between 2007-2011. We are looking for non-life
premiums to rise by $405 million over the five years to the end of 2011 with a growth
rate of 62.02%.
The general insurance industry grew by 16% in 2006-07 as private insurers continued
their robust performance, while public sector players like New India Assurance and
Oriental Insurance improved their show. Despite continuous fall in business of
government-owned National Insurance, the 12 non-life insurers collected Rs 20,378
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crore in first year premium in the last fiscal compared to Rs 17,531 crore collected in
2005-06, according to data compiled by regulator IRDA.
New India Assurance collected Rs 4,762 crore in premium and continued to lead the
non-life sector by cornering 23.36% of the market. National Insurance was at the
second spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a
market pie of 17.29%. Oriental Insurance mopped up Rs 3,518 crore in premium
income after logging 16.6% growth in business to corner a market share of 17.26%.
Another PSU insurer United India grew by a modest 6.8% to collect Rs 3,147 crore in
premium and had 15.44% of the market. The eight private players expanded their
business by 52% to collect Rs 5,427 crore in premium income and increased their
combined market share to 26.6% from 20.2% a year ago. 28 ICICI Lombard led the
private players by logging 80% growth in premium at Rs 1,592 crore, followed by
Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in premium. ICICI
Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the market.
Growth of Life Insurance Industry
Total life insurance premium in India is projected to grow Rs 1,230,000 crore by
2010-11. A booming life insurance market has propelled the Indian life insurance
agents into the ‘top 10 country list’ in terms of membership to the Million Dollar
Round Table (MDRT) — an exclusive club for the highest performing life insurance
agents.
Taking into account the changing socio-economic demographics, rate of GDP growth,
changing consumer behaviour and occurrences of natural calamities at regular
intervals, the Indian life insurance market is expected to reach the value of around Rs
1683 Billion in the year 2009.
India's insurance industry has changed significantly in the past two years, as a range
of global European and US insurance companies have been launched in Mumbai and
Delhi. Previously depressed salary rates, limited employee movement and low
penetration in the insurance sector have been replaced with a boom in demand for
talented insurance specialists.
Convergence, globalization, and consolidation - as well as new technologies and
changing demographics - are impacting the pace and level of change in the insurance
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industry. As a result, insurance companies will be challenged to remain competitive,
and ultimately, to thrive. Having talent that can both adapt to change and meet
customer demands, has become a priority.
Insurance companies continue to face challenges in both recruiting skilled
professionals and fully developing home-grown talent. The present situation in India's
insurance sector is a welcome development as it enhances the strength of employers
as well as the career opportunities of insurance industry professionals. However, there
is still a lack of qualified talent to take many positions as actuaries and insurance
specialists which is currently skewing the demand-supply
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2.1.3 Company Profile
Tata Enterprises with 82 companies, spread over seven sectors and with an annual
turnover exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group
has shown over years that it is a value driven company and has pioneering
contributions in various fields including insurance, aviation, iron and steel. In terms of
capital market performance as many as 40 listed Tata companies account for nearly
5% of the total market capitalization of all listed companies. The Group has had a
long association with India's insurance sector having been the largest insurance
company in India prior to the nationalization of insurance.
The Tata Group
Tata is a rapidly growing business group based in India with significant international
operations. Revenues in 2007-08 are USD 62.5 billion (around Rs. 251,543 crores), of
which 61% was from business outside India. The Group’s Net Profit for 2007-08 is
USD 5.4 billion (around Rs. 21,578 crores). The Group employs around 350,000
people worldwide. The Tata name has been respected in India for 140 years for its
adherence to strong values and business ethics. The business operations of the Tata
Group currently encompass seven business sectors - Communications and
Information Technology, Engineering, Materials, Services, Energy, Consumer
Products and Chemicals. The Group's 28 publicly listed enterprises have a combined
market capitalization of around $60 billion, among the highest among Indian business
houses, and a shareholder base of 2.9 million. The major companies in the Group