Ijrcm 4 Ivol 1 - Issue 1kmagt
Ijrcm 4 Ivol 1 - Issue 1kmagt
Ijrcm 4 Ivol 1 - Issue 1kmagt
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IINTERNATIIONAL JOURNAL OF RESEARCH IIN COMMERCE,, IIT AND MANAGEMENT NTERNAT ONAL JOURNAL OF RESEARCH N COMMERCE T AND MANAGEMENT
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CHIEF PATRON
PROF. K. K. AGGARWAL
Chancellor, Lingayas University, Delhi Founder Vice-Chancellor, Guru Gobind Singh Indraprastha University, Delhi Ex. Pro Vice-Chancellor, Guru Jambheshwar University, Hisar
PATRON
SH. RAM BHAJAN AGGARWAL
Ex. State Minister for Home & Tourism, Government of Haryana Vice-President, Dadri Education Society, Charkhi Dadri President, Chinar Syntex Ltd. (Textile Mills), Bhiwani
COCO-ORDINATOR
AMITA
Faculty, E.C.C., Safidon, Jind
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PROF. M. S. SENAM RAJU
Director A. C. D., School of Management Studies, I.G.N.O.U., New Delhi
PROF. M. N. SHARMA
Chairman, M.B.A., Haryana College of Technology & Management, Kaithal
PROF. S. L. MAHANDRU
Principal (Retd.), Maharaja Agrasen College, Jagadhri
EDITOR
PROF. R. K. SHARMA
Dean (Academics), Tecnia Institute of Advanced Studies, Delhi
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DR. BHAVET
Faculty, M. M. Institute of Management, Maharishi Markandeshwar University, Mullana, Ambala, Haryana
ii
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DR. SAMBHAVNA
Faculty, I.I.T.M., Delhi
MOHITA
Faculty, Yamuna Institute of Engineering & Technology, Village Gadholi, P. O. Gadhola, Yamunanagar
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PROF. NAWAB ALI KHAN
Department of Commerce, Aligarh Muslim University, Aligarh, U.P.
PROF. A. SURYANARAYANA
Department of Business Management, Osmania University, Hyderabad
DR. V. SELVAM
Divisional Leader Commerce SSL, VIT University, Vellore
S. TABASSUM SULTANA
Asst. Professor, Department of Business Management, Matrusri Institute of P.G. Studies, Hyderabad
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AMITA
Faculty, E.C.C., Safidon, Jind
MOHITA
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Advocate, Punjab & Haryana High Court, Chandigarh U.T.
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SURENDER KUMAR POONIA
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Books
Bowersox, Donald J., Closs, David J., (1996), "Logistical Management." Tata McGraw, Hill, New Delhi. Hunker, H.L. and A.J. Wright (1963), "Factors of Industrial Location in Ohio," Ohio State University.
Contributions to books Sharma T., Kwatra, G. (2008) Effectiveness of Social Advertising: A Study of Selected Campaigns, Corporate Social Responsibility, Edited by David Crowther & Nicholas Capaldi, Ashgate Research Companion to Corporate Social Responsibility, Chapter 15, pp 287-303.
Schemenner, R.W., Huber, J.C. and Cook, R.L. (1987), "Geographic Differences and the Location of New Manufacturing Facilities," Journal of Urban Economics, Vol. 21, No. 1, pp. 83-104.
Conference papers
Chandel K.S. (2009): "Ethics in Commerce Education." Paper presented at the Annual International Conference for the All India Management Association, New Delhi, India, 1922 June.
Website
Kumar S. (2006): "Customer Value: A Comparative Study of Rural and Urban Customers," Thesis, Kurukshetra University, Kurukshetra.
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KNOWLEDGE INERTIA AND ITS RELATIONSHIPS WITH ORGANIZATIONAL LEARNING AND ORGANIZATIONAL INNOVATION HAMIDEH SHEKARI LECTURER MANAGEMENT DEPARTMENT PAYAME NOOR UNIVERSITY TAFT, YAZD I. R. OF IRAN DR. S. ALI AKBAR AHMADI ASSOCIATE PROFESSOR & HEAD OF HUMAN RESOURCE DEVELOPMENT AFFAIRS MANAGEMENT DEVELOPMENT PAYAME NOOR UNIVERSITY TEHRAN I.R. OF IRAN ABSTRACT
Knowledge has become a significant asset both for individuals and organizations. Thus, successful knowledge management can be the chief determinant for the survival of an enterprise in a knowledge-based economy. Nevertheless, hurdles to efficient and effective knowledge management are many. One of these hurdles is knowledge inertia which may inhibit an organizations capability to learn and solve problems. However, when facing problems, people generally resort to their prior knowledge and experience for solutions. Such routine problem-solving strategy is termed "knowledge inertia". This study aims to establish the constructs of knowledge inertia and examine the relationships between knowledge inertia, organizational learning and organizational innovation. Structural equation modeling is employed to discuss the degree of influence each construct has on others. A questionnaire survey was conducted to collect data from 3 different Universities. A total of 495 valid responses were collected. Our results reveal that when a firms members have either less learning inertia or experience inertia, the performance of the organizational learning and organizational innovation will be better.
KEYWORDS
Knowledge inertia, Organizational learning, Organizational innovation, Structural equation modeling.
INTRODUCTION
nowledge has been considered the most important asset for individuals and organizations (Fugate, 2009). As the size of organization grows it becomes very hard to know each other, share experiences and ideas. Likewise, to find appropriate solutions of the problems and store knowledge for future use, therefore, a proper strategy is needed to store and retain this most important intellectual asset i.e. knowledge of organization. Besides, organizations are also facing difficulties when an expert leaves an organization because the expert knowledge is lost. Therefore they have to hire new people which require more trainings and time, thus there is need to retain and manage effectively expert knowledge to be used in future (Dingsoyr and Conradi, 2002). Knowledge management has been proposed as a methodology that can manage the knowledge of the organization. Knowledge Management is the process of sharing, distributing, organizing, creating, storing and understanding of knowledge about organization policies, processes and products (Ahmad and Khan, 2008). Cumulative evidence from past research in organization and management suggests that knowledge management is critical element of success of organizations (Fugate, 2009). Successful knowledge management can be the chief determinant for the survival of an enterprise in a knowledge-based economy. Several factors that contribute to the importance of managing knowledge are referenced below (Ahmad and Khan, 2008): Competitive Advantage - Knowledge can be an organization's most competitive advantage. Wealth results when an organization uses its knowledge to create customer value by addressing business problems. A firm's competitive advantage depends more than anything on its knowledge, or to be slightly more specific, on what it knows, how it uses what it knows and how fast it can know something new. Technology - Because of the tremendous advances in technology, enormous amounts of information can be disseminated to people regardless of their geographic location or time zone. The speed of transmission and frequency in which this information is received requires an adaptable, skilled and educated workforce. From a knowledge management perspective, the complexities associated with these technological changes will cause us to think differently about the manner in which people learn. Organizational Change - Due to organizational changes, restructuring, mergers and acquisitions, companies have lost some of their valued history and cultural norms. An organization's ability to create, acquire, process, maintain and retain old and new knowledge in the face of complexity, uncertainty and rapid change is critical. Enhanced Decision-Making - Learning from and applying past experiences can accelerate the completion of future work and enhance the decision-making process. Workforce Demographics - An aging workforce, coupled with retiring baby boomers and the loss of intellectual capital or institutional memory are creating a new sense of urgency for organizations. Although predicting employee separations is at times challenging, knowledge transfer is vital to sustaining critical business functions. While many employees may continue employment beyond retirement eligibility, these employees will inevitably leave the workforce. Some of the benefits of an effective knowledge management program are as following (Hislop, 2005): Cultivating innovation by encouraging the free flow of ideas Improving customer service by streamlining response time Improving employee retention rates by recognizing the value of employees' knowledge and rewarding them for it Streamlining operations and reduce costs by eliminating redundant or unnecessary processes enhancing customer responsiveness by creating and delivering innovative products or services managing or enhancing relationships with existing and new customers, partners and suppliers Administering or improving more efficient and effective work practices and processes Most knowledge management initiatives, however, fall short of their goals. Some surveys alert us to a grim reality. For example, Ruggles (1998) studied 431 US and European companies with knowledge management initiatives under way, and found that only 13 percent of the respondents felt they were successful in
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transferring knowledge from one part of the firm to the other, whereas only 46 percent ranked their firm high on the ability to generate new knowledge. A primary reason for this is the view that IT is a silver bullet. Although it can enable people to transcend distance and time barriers through the use of tools such as e-mail and group support systems, it cannot motivate people to share knowledge. The biggest hurdle to knowledge management is not implementing a cuttingedge IT solution, but getting people to talk and share their know-how. Knowledge originates in the minds of individuals, so we must realize that unless organization members are motivated to share, no IT solution can deliver the desired goals (Desouza, 2003). Desouza believes that some barriers prevent effective and efficient knowledge management. These barriers are (Desouza, 2003): Lack of expert managers for motivating employees Requisite knowledge too hard to capture and categorize Lack of adequate communication and action Forcing employees Rosen, Furst and Blackburn identified six barriers to knowledge Management (Rosen et al., 2007): Lack of trust among team members Time constraints and competing deadline pressures Technology constraints on knowledge sharing Team leader constraints on knowledge sharing Failure to develop a transactive memory system Cultural constraints on information sharing Lin, Tan and Chang classified knowledge management barriers into five categories (lin et al., 2008): 1. Knowledge characteristics: Causal ambiguity and non-validated knowledge hinder knowledge flow. The first occurs when the reasons for success or failure in replicating a capability cannot be determined. Tacit knowledge involves human skills and is difficult to measure. In addition, knowledge without a record of past usefulness is likely to be questioned by the recipient. 2. Knowledge source barriers: Efficient sharing depends on people being willing to contribute material to the organization. However, they often have invested resources in building a competence feel it is theirs unless incentives are given. 3. Knowledge receiver barriers: A precondition for knowledge transfer is that the receiver has sufficient related knowledge to assess its value, and does not resist using material from outsiders. 4. Contextual barriers: During problem-solving, people develop and modify their understanding, and the context emerges and transforms. Context influences peoples attitudes and choices, thus, context influences what problems are considered to be solvable or are solved. knowledge inertia 5. Inadequate/lack of mechanisms: Knowledge flow mechanisms are either intangible, such as mentoring, formal meetings and informal occasions or tangible, such as journals and IT. Nevertheless, hurdles to efficient and effective knowledge management are many. Using the principles of inertia in physics to knowledge management, Liao (2002) states that knowledge inertia is a barrier to knowledge management and may inhibit an organizations capability to learn and solve problems. Often routine problem-solving procedures are adopted to save time and effort as well as to avoid risks. Stagnant knowledge sources and obsolete prior experience result in the same solutions and approaches being employed to deal with problems. Such predictability in management behavior may make an enterprise more risk in a highly vulnerable competitive environment. Inertia not only has negative impact on knowledge utilization, but may also disclose an enterprises commercial secrets and strategies. In other words, organizations showing inertia in thinking and policy-making may suffer loss and failure. This further highlights the importance of innovations in knowledge management and that enterprises should devote efforts to avoid inertia.
KNOWLEDGE INERTIA
In physics, the principle of inertia states that objects continue in a state of rest or uniform motion unless acted upon by forces. Unless interrupted, an objects motion is subject to physical constraints and objects will move in the predicted trajectory. Human(s) can track and reach moving objects by predicting where the objects are going. This phenomenon suggests that human cognition also has inertia. The overall procedure explains several things. Firstly, prediction is based on the understanding that there is a trajectory if objects move then we can track and reach them according to their inertia. Secondly, changes in moving trajectory only happen if objects are interrupted by outside forces. This means that any change of inertia is caused by outside forces. Thirdly, change does not spontaneously, but must be implemented (Liao, 2002). In human cognition, there is an explanatory process, which derives understanding from a view that other things have already been done. Our past knowledge helps us predict what we will hear next, disambiguate words, resolve pronouns, and make connections between the various things being discussed. This implies that our past knowledge of what has happened in some situations allow us to infer similar things and to explain it. There is evidence that a phenomenon similar to inertia, exists in knowledge use in both individuals and organizations. In individuals and organizations, a high degree of the solution of a problem is generated by the knowledge acquired from past experience and its extension to fit new situations. People use a memory of past experiences and knowledge as a guide to generate planning for new problems. Re-using past knowledge to solve a new problem becomes a law or principle that similar things will remain static or uniform until the situation is no longer feasible and then is changed by outside forces. Applying the concept of inertia to human behavior shows that individuals often resort to constant methods for dealing with problems (Liao et al., 2008). Organizational inertia is defined in the literature as: Huff et al. (1992) describe inertia as an overarching concept that encompasses personal commitments, financial investment sand institutional mechanisms supporting the current ways of doing things. Okeefe and Wright contend that inertia is defined as the degree of the level of commitment to the organisations current strategy, will grow over time as current ways of operating become deeply emdded in an organization, regardless of, and generally without reference to, developments in the environment (Okeefe and Wright, 2009). Barnett and Pontikes (2008) believe that inertia describes the tendency to remain with the status quo and the resistance to strategic renewal outside the frame of current strategy. Inertia in organization may take many forms such as the rational suppression of potentially valuable information in organizations (Friebel and Raith, 2004), rigid rules and lack of flexibility (Boyer and Robert, 2006, p: 324). Inertia and flexibility are for all practical purposes antonyms in the literature on organizations (Boyer and Robert, 2006, p: 324). However, the theory of organizational inertia does imply that the deleterious impact of that inertia can be long lasting, enduring for decades (Baker and Collins, 2009, p: 1944). KNOWLEDGE INERTIA, ORGANIZATIONAL LEARNING AND ORGANIZATIONAL INNOVATION Organizational learning in is defined here as some combination of improving actions and acquiring new knowledge, whether these are new products or processes (Saka- Helmhout, 2009). Organizational learning is the process of acquisition, dissemination, interpretation, implementation and storage of new knowledge in organization (Au et al., 2009, p: 9). Organizational innovation is the creation of valuable and useful new products/services within an organizational context (Johannessen, 2008, p: 409). Organizational innovation is the tendency of the organization to develop new or improved products/services and its success in bringing those products/services to the market (Gumusluoglu and Ilsev, 2009, p: 464). Knowledge inertia may pose significant barriers to organizational learning; for example reduce the options considered feasible and inhibit the development of more appropriate strategies (Baker and Collins, 2009, p: 1944). Knowledge inertia may also be a significant barrier to change, innovation and adaptation in turbulent economic environments (Collinson and Wilson, 2006, p: 1361)
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Routine problem-solving approaches and similar reasoning will be adopted to save time and effort and also avoid risks. Everything stemming from past experience and knowledge without revision and updating would imply predictable management behavior and problem- solving strategy of an enterprise (Liao, 2002). That is to say, inertia would result in lack of innovation and expected behavior, which may jeopardize the survival or undermine the advantage of an enterprise in a highly competitive environment (Liao et al., 2007). Hence, it is important for an organization or enterprise to avoid the negative impact of inertia on its capability to learn and it should utilize knowledge efficiently and effectively. Organizational learning would enhance the innovative capacity of an organization. Innovation is a result of individual and organizational learning and the only source of lasting competitive advantage in a knowledge intensive industry (Liao et al., 2008).
RESEARCH HYPOTHESES
From the literature we state research hypothesis as follows: H1: Knowledge inertia is negatively related to organizational learning. H2: Knowledge inertia is negatively related to organizational innovation. H3. Organization learning is positively related to organizational innovation. H4: Organizational learning is the mediating variable between knowledge inertia and organizational innovation Figure 1 displays the theoretical framework of this research which summarizes our four hypotheses.
H3
Knowledge Inertia
H1
Organizational learning
H2
Organizational innovation
RESEARCH METHODOLOGY
The data used in this study consist of questionnaire responses from employees in 3 different Universities in Yazd, namely Islamic Azad University, Payam e Noor University and Yazd University. The questionnaire included items of Knowledge inertia, organizational learning and organizational innovation. A total of 600 questionnaires were sent out, 200 to each university. A total of 495 valid responses were received. The questions for measuring knowledge inertia were classified under two constructs: learning inertia and experience inertia. Learning inertia means Members of organization are influenced by inertia in knowledge learning. Experience inertia means Members of organization are influenced by inertia in solving problems with past knowledge and experience. The questions for measuring organizational learning were classified under three constructs: Commitment to learning (Organization regards learning as its most important basic value), Shared vision (Organization chiefs share future vision with its members) and Open-mindedness (Organization does not stick to its old way of thinking but embrace innovative ideas). The Variable organizational innovation was measured directly. Reliability of constructs was evaluated by Cronbachs. Table 1 list the Cronbachs of the constructs. As can be seen, all constructs have Cronbachs above 0.7, which indicates high reliability (Nunnally, 1978). TABLE 1 - CRONBACHS A OF THE CONSTRUCTS Construct Cronbachs a learning inertia Experience inertia Commitment to learning 0.755 0.741 0.809
Variable
Shared vision 0.789 Open-mindedness 0.765 organizational innovation organizational innovation 0.817
DESCRIPTIVE STATISTICS
Table 2 displays the means, standard deviations and correlations of constructs. TABLE 2 - DESCRIPTIVE STATISTICS AND CORRELATIONS OF CONSTRUCTS Learning Experience Commitment to Shared Openinertia inertia learning vision mindedness 1.000 0.326** 1.000 -0.225** -0.070 1.000
Constructs
Means
S.D.
organizational innovation
Learning inertia 3.56 0.65 Experience inertia 2.90 0.81 Commitment to 3.22 0.87 learning Shared 2.64 0.98 -0.188** -0.306** 0.257** 1.000 Vision Open-mindedness 3.41 0.68 -0.227** -0.189** 0.537** 0.140** 1.000 organizational 3.43 0.73 -0.397** -0.527** 0.163** 0.376** 0.144** 1.000 innovation Note: *p-value <0.05, N =495. As can be seen learning inertia and experience inertia are negatively related to organization learning, which implies that more learning and experience inertia among members will reduce the capacity for organizational learning. Learning inertia and experience inertia are also negatively related to organization innovation, which implies that more learning and experience inertia among members will reduce the capacity for organizational innovation. Commitment to learning, shared vision and open-mindedness are positively related to organizational innovation. This implies that high organizational learning can foster organizational innovation.
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-0.29
Learning inertia
Commitment to learning
0.19 -0.24
Shared vision
-0.16
0.22
Organizational innovation
-0.17
Experience inertia
-0.09
Experience inertia -0.26 Commitment to learning 0.19 Shared vision Open-mindedness 0.22 0.09
TABLE 4 - INDIRECT EFFECTS OF KNOWLEDGE INERTIA ON ORGANIZATIONAL INNOVATION Construct Through Through Through Total Indirect Commitment to learning Shared vision Open-mindedness effect Learning inertia -0.0551 -0.0352 -0.0225 -0.1128 Experience inertia ---0.0374 -0.0081 -0.0455 As seen in Table 3 and 4, the direct effects of learning inertia and experience inertia on organizational innovation are more significant than indirect effects; hence H4 is not supported and knowledge inertia directly affects the organizational innovation
CONCLUSION
Our results find evidence that learning inertia and experience inertia are directly and negatively related to organizational innovation, implying that knowledge inertia does affect the innovation behavior both of individual members and the organization as a whole. To promote organizational innovations, organizations should reduce knowledge inertia by encouraging members to acquire new ideas and methods. The sharing of accumulated experience can also enhance organizational learning ability and foster better performance in organizational innovation. Some of the strategies and best practices for over- coming knowledge inertia are:
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Team leaders should be responsible to facilitate knowledge sharing by creating a team culture in which members feel safe to share ideas, offer constructive criticism, and ask other team members for help when needed. Leaders must develop team trust through shared visions, passion for the task, face to face contact and the like. Perhaps even more important, leaders must create a culture in which members are willing to and even encouraged to admit their mistakes. Leaders can be models who encourage employees. Leaders need to clarify norms surrounding expectations for and use of knowledge sharing communication technologies, train members in their use, and continually reinforce and reward members who adhere to agreedupon knowledge sharing practices. Coping with the time constraints and deadline pressures that frequently block knowledge sharing Helping employees improve knowledge sharing focused on providing the right communication technology. Some of knowledge sharing support systems includes shared web sites, document repositories, electronic bulletin boards, and meeting management. Building sensitivity to cultural diversity and overcoming cultural barriers to knowledge sharing. Identifying and addressing cultural differences is a gradual process.
REFERENCES
Ahmad, Arshad and Khan, Hashim (2008), The Importance of Knowledge Management Practices in Overcoming the Global Software Engineering Challenges in Requirements Understanding, Master Thesis in Software Engineering, School of Engineering, Blekinge Institute of Technology, Sweden. Au, Yoris A., Carpenter, Darrell, Chen, Xiaogang and clark, Jan G. (2009), Virtual organizational learning in open sourse software development projects, Information & Management 46, 9-15. Baker, Mae and Collins Michael (2009), English Commercial Banks and Organizational Inertia: The Financing of SMEs, Enterprise & society Advance Access, August, 1944-1960. Barnett, William P. and Pontikes, Elizabeth G. (2008), The Red Queen, Success Bias and Organizational Inertia, Management Science, Vol. 54, No. 7, July, 12371251. Boyer, Marcel and Robert, Jacques (2006), Organizational inertia and dynamic incentives, Journal of Economic Behavior & Organization, Vol. 59, 324-348. Collinson, Simon and Wilson, David c. (2006), Inertia in Japanese Organizations: Knowledge Management Routines and Failure to Innovate, Organization Studies, Vol. 27, No. 9, 1359-1387. Desouza, Kevin C. (2003), Knowledge management barriers: Why the technology imperative seldom works, Business Horizons, January-February, pp. 25-29. Dingsoyr, T. and Conradi, R. (2002), A survey of case studies of the use of knowledge management in software engineering, International Journal of Software Engineering and Knowledge Engineering, vol. 12, no. 4. Friebel, G. and Raith, M. (2004), Abuse of authority and hierarchical communication, RAND Journal of Economics 35, 224244. Fugate, Brian S., Stank, Theodore P. and Mentzer, John T. (2009), Linking improved knowledge management to operational and organizational performance, Journal of Operations Management 27, 247264. Gumusluoglu, Lale and Ilsev, Arzu (2009), Transformational leadership, creativity and organizational innovation, Journal of Business Research 62, 461-473. Johannessen, Jon-Arild (2008), Organizational innovation as part of knowledge management, International Journal of Information Management 28, 403-412. Hislop, D. (2005), Knowledge Management in Organizations: A Critical Introduction, Oxford University Press. Huff, J.O., Huff, A.S., and Thomas H. (2005), Strategic renewal and the intraction of cumulative stress and inertia, Strategic Management Journal 13, 55-75. Liao, shu-hsien (2002), Problem Solving and knowledge Inertia, Expert Systems with Applications 22, 21-31. Liao, S.H., Fei, W.C., Chen, C.C. (2007), Knowledge sharing, absorptive capacity, and innovation capability: an empirical study on Taiwans knowledge intensive industries, Journal of Information Science 33 (3), 340359. Liao, shu-h sien, Fei, Wu-chen, Liu, chih- Tang (2008), Relationships between knowledge inertia, organizational learning and organization innovation, Technovation 28, 183-195. Lin, Chinho, Tan, Bertram and Chang, Shofang (2008), An exploratory model of knowledge flow barriers within healthcare organizations, Information & Management, Vol. 45, PP. 331339. Nunnally, J.C. (1978), Psychometric Theory, second ed., McGraw-Hill, New York. Rosen, Benson, Furst, Stacie and Blackburn, Richard (2007), Overcoming Barriers to Knowledge Sharing in Virtual Teams, Organizational Dynamics, Vol. 36, No. 3, pp. 259273. Okeefe, Matthew and Wright, George (2009), Non-receptive organizational contexts and scenario planning interventions: A demonstration of inertia in the strategic decision making of a CEO despite strong pressure for a change, Futures. Ruggles, Rudy (1998), State of the notion: Knowledge management in practice, California Management Review 40/3 (Spring), 80-89. Saka-Helmhout, Ayse (2009), Organizational learning as a situated routine-based activity, Journal of world Business.
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A STUDY OF HUMAN RESOURCE PERFORMANCE APPRAISAL SYSTEM WITH SPECIAL REFERENCE TO THE OUTSOURCES SKILED AND UNSKILLED WORKERS OF INTERNATIONAL TOBACCO COMPANY LIMITED, GHAZIABAD DR. RAGHVENDRA DWIVEDI ASST. PROFESSOR ITS MANAGEMENT & IT INSTITUTE GHAZIABAD KUSH KUMAR RESEARCH SCHOLAR C/O DR RITU KUMAR, HOUSE NO: 0A/2N.H.C FLATS DODOMA UNIVERSTY TANZANIA ABSTRACT
One of the widely used human resource development mechanism that goes a long way is systematically improving the performance level of an individual as well as organization is the performance appraisal system (P.A.S). Performance appraisal has become a very significant activity in most of the enterprise; it provides data about past, present and expected performance of the employees which is helpful in taking decision on selection training and development. I.T.C. being a giant sized industrial enterprise has adopted a scientific system of performance appraisal of its human resource the most widely used technique is the self appraisal system. The evaluation process comprises Establish performance standards, Communicate performance expectations to employees, Measure actual performance, Compose actual performance with standards, Discuss the appraisal with the employee, If necessary initial corrective action. Achievements have been received for the training and result have been obtained on the basis of Questionnaire related to work environment and personal motivation from outsources of skilled and unskilled workers for a total number of 400 skilled and 300 unskilled workers making a total of 700. Response indicates the Training program have been well organized and perceived by both at senior and junior levels generating a vibrant work culture. The survey indicated that the integrated approach has brought about a radical change in the overall performance of the employees particularly with reference to Clarity of role and responsibility at various levels; Inter personal relations and job relation have improved significantly, Motivation level and morale have gone up considerably, The program has helped the participants to introspect and modify their behavior and improved communication approach at various levels. These training programs and workshop have not only improved the overall climate and culture of the organization but also generated better quantity of life and satisfaction amongst the supervisors and workers in their personal lives.
KEYWORDS
Performance Appraisal System, Human, Tabacoo, Workers.
INTRODUCTION
teering a public enterprise in to-day highly turbulent business environment marked by unexpected crisis situation and changing economic market phenomena is indeed a difficult proposition it becomes all the more difficult when the enterprise is a large multi product and multi divisional one dealing with diverse markets and operating from locations situated for and wide, to survive and grow in a company has constantly review and innovatie H.R.D strategies. The evaluation of the performance of employees is a key part of the function of staffing as the evaluation serves as a basis for judging the contribution and weaknesses of employees so that continuing efforts can be made to build a stronger and more effective organization. Human resource are key organizational assets since organization performance depends on the quality of employee effort on their ability and motivation by raising the quality of individual employees contributions to production, organizations can make significant improvements in their performance. Performance appraisal is a systematic way of evaluating a workers performance and his/her potential for development, this continuous monitoring of the performance and periodic evaluation helps in retaining promotional and retraining policies. Performance can be appraised against some set standards to meet the needs of the organization and the employee, hence the technique must be sufficiently sensitive to pick up the difference between an effective and ineffective employee. Appraisal has four major purposes 1. To let employees knows formally how their current performance is being rated 2. To identify employees who deserve merit raises 3. To locate employees who need additional training 4. To identify candidates for promotion I.T.C limited has a long history of 90 years the leader of Indian cigarette industry is a conglomerate of many diversified businesses having a overall turnover of Rs. 5000 crore form hotels & tourism, agro, paper, etc, it was an ideal case worth studying for any good manager or researcher.
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Performance can be appraised against some set standards According to McGregor the format performance appraisal plans are designed to meet three needs, one of the organization and the other two of the individual. These are : They provide systematic judgment to back up promotions, transfers, salary increments etc. They let the subordinate know where he stands and whether any changes are required in his behavior attitudes, skill or job knowledge. They are used as a base for coaching and counseling of the subordinates. A sound performance appraisal system can be useful in: Improving employee job performance by pinpointing the area or aspects that need improvement. Encouraging employees to express their views or to seek clarification on job duties. Serving as a predictor for future responsibilities. Serving as a key input for administering a formal organizational reward and punishment system. Preventing grievances, since the employees will know where they stand relative to their achievements Increasing the analytical ability of the supervisors, since they will be directly involved in making judgment about their works performance level.
RESEARCH METHODOLOGY
The most effective performance appraisal system has the following characteristics: The system must be bias-free. The evaluator must be objective and the methods of appraisal must be fair and equitable. The atmosphere must be that of confidence and trust. It must be relevant. It should only measure behaviors that are relevant to the successful job performance and not any other personal traits. It should be acceptable to all. The performance standards as well as the appraisal methods should be developed by joint participation and joint collaboration. It should be reliable, dependable, stable and consistent. High reliability is essential for correct decision making and validation studies. It should be sufficiently scientific, so that if an employee is evaluated by two difference evaluators, than the result should be significantly the same. It must be able to objectively differentiate between a good employee and an ineffective employee. Rating an employee average does not adequately indicate the degree of effectiveness. Performance appraisal has become a very significant activity in most of the enterprises. It provides data about past, present and expected performance of the employees which is helpful in taking decisions on selection, training and development, increase in pay, promotion, transfers, and the like. These days a large amount of money is spent on performance appraisal by most organizations. The benefits of performance appraisal are as follows: It helps the supervisor to evaluate the performance of his employees systematically and periodically. It also helps him to assign that work to individuals for which they are best suited. Rating helps in guiding and correction of employees. The supervisor may use the result of the purpose of constructively guiding the employees in the efficient performance of work. The ability of the staff is recognized and can be adequately rewarded by giving them special increments. Performance appraisal can be used as a basis of sound personnel policy in relation to transfer and promotion. If the performance of an employee is better than other, he can be recommended for promotion, but if a person is not doing well on a job, he may be transferred to some other job. Ratting can also be used to evaluate the training programmes. Weaknesses of employees are revealed by merit rating and the training programmes can he modified accordingly. Performance appraisal provides an incentive to the employees to better their performance in a bid to improve their rating over others. If the performance rating is done scientifically and systematically it will prevent grievances and develop a confidence amongst the employees because they are convinced of the impartial basis of evaluation. The recoards of merit rating are available in permanent form to protect the management against subsequent charges of discrimination which might be filed by the trade union leaders.
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After reconstruction of the buildings, ITC started manufacturing on SKODA machines. The factory ultimately went into commercial production from 1967 against manufacturing charges of the GPI brands. D. MACROPOLO was a limited company and ITC became a limited company after take over. Over a period of time even D. MACROPOLO merged with GPI and ITC became a subsidiary of GPI. Since then there has been a continuous technological up-gradation in the factory which started increasing the filter cigarette production gradually and also started wrapping the cigarette packs. Also new generation tobacco cutting machines were installed to improve the quality. In 1970 the IMPERIAL TOBACCO COMPANY of India changed its name to INTERNATIONAL TOBACCO COMPANY LTD. This holds a new programme of diversification, which was aligned to national priorities and the phased disinvestment in foreign equity. QUESTIONAIRE PERTAINING TO WORKING ENVIRONMENT AND PERSONAL MOTIVATION FOR OUTSOURCING AND OTHER PERCENTAGE WITH PIE DIAGRAM TECHNIQUES & METHODS OF PERFORMANCE APPRAISAL MODERN TECHNIQUES QUESTIONNAIRE FOR OUT SOURCE SKILLED & UNSKILLED (Total No. 400 skilled & 300 Unskilled = 700 ) Question pertaining to work Environment. Skilled 400 (Unskilled 300) Q1. Do you have the proper equipments and space to do the job? Skilled % Yes 380/95% No 20/5%
5%
7%
Unskilled 280/20/-
% 93.333% 6.666%
93%
95%
Q2.
Is the work bad distributed equally between various people in the department among some cader employee? Skilled % Unskilled % Yes 375/9.75% 278/92.666% No 25/6.25/- 22/7.333%
6%
7%
94%
93%
Q3.
Do some people go beyond their authority in issuing order or delaying order? Skilled % Unskilled Yes 378/94.5% 285/No 22/5.55% 15
6%
% 95% 5%
5%
94%
95%
Q4.
If you have a good idea to your boss would you get credit for it or not. Skilled % Yes 388/97% No 12 3.0%
3%
Unskilled 273/27/-
% 91% 9%
9%
97%
91%
Skilled 357/43/% 89.25% 10.75% Unskilled 250/50/% 83.333% 16.666%
17%
Q5.
89%
83%
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88%
Q7. Are you proud of your organisation and its work culture? Skilled Yes 357/No 43/11%
85%
% 89.25% 10.75%
Unskilled 280/20/-
% 93.333% 6.666%
7%
89%
93%
Q8.
Does the management provide you training opportunities? Skilled Yes 372/No 28/7%
% 93% 7%
Unskilled 273/27/-
% 91% 9%
9%
93%
Q9. Do you know what the maximum salary is for your job today? Skilled % Yes 385/96.25% No 15/3.75% Unskilled 287/13/% 95.666% 4.333%
91%
4%
4%
96%
Q10. Do your family members and friends like to hear about the things that happen in your co? Skilled % Unskilled % Yes 388/97% 190/96.666% No 12/3% 10/3.333/3%
96%
3%
97%
97%
Q11.
Do you feel that various development programme are being curried on at proper time in the organisation? Skilled % Unskilled % Yes 372/93% 281/93.666% No 28/7% 19/6.333%
7%
6%
93%
94%
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5%
Q13.
97% Are you playing a vital role in the group, you are a member of a team? Skilled % Yes 387/96.75% No 13/3.25%
95%
Unskilled 273 17/% 91% 9%
3%
9%
97%
Q14. What is the better way of training in your opinion (A) on job (Yes) (B) off the job (No) Skilled % Unskilled % Yes 388/97% 281/93.666% No 12/3% 19/6.333% 3%
91%
6%
97%
Q15. Do you find it helpful to known your role in well manner with the help of case studies related to your work? Skilled % Unskilled % Yes 381/95.25% 289/96.333% No 19/4.75% 11/3.666% 5%
94%
4%
Q16.
95% Have you required the knowledge up to a level that you want to use this knowledge in your practical working? Skilled % Unskilled % Yes 391/97.75% 283/94.333% 9% No 09/2.25% 17/5.6666%
96%
37%
Q17.
91% Do you feel that you can stay / working in this co for a long period? Skilled % Yes 378/94.5% No 22/5.5% 6%
63%
Unskilled 282/18/% 94% 6%
6%
94%
94%
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4%
4%
96%
Q19. Do you senior solve your day today problems? Yes No Skilled 388/20/% 97% 5% Unskilled 287/20/% 95.666% 6.666%
96%
3%
4%
97%
Q20. Does the management of the company care about the welfare of workers? Skilled % Unskilled Yes 391/97.75% 282/No 9/2.25% 18/% 94% 6%
96%
2%
6%
98%
94%
FINDINGS
HRD IN I.T.C. In ITC, HRD is an approach to the systematic expansion of peoples work related abilities, focused on the attainment of both organizational and personal goals. The focus is on people, who are perceived as possessing skills, potential and who have ability to grow, change and develop. While the accent is on increasing talent and abilities, HRD in ITC works towards development of people in their organisational setting. The effort are balanced between the organisations need the individual development although this ideal is obviously difficult to achieve, but every attempt in being made to get as near to it as possible. While the diversity of circumstances of individual public enterprises would dictate circumstances of training of individual manager in variety of ways, the essential pattern are applicable in appropriate forms to all public enterprises, what ever their size. Hence this study of ITC also provides positive direction and guidance to other in the area of Human Resource Development. To sum up the findings of the data collected and analysed, the researcher proceeds on the basis conclusion, as revealed by the study, that both the management and executives recognize the importance and need of HRD in ITC and company is taking due interest and care to this effect. EXECUTIVE DEVELOPMENT POLICIES ITC has clear policy objectives to ensure continuous development of competent management personnel and make best use of both the human and material resources of the business. The training and development policy provides opportunities of advancement and growth to the executives and of promotion from within. It also provide of time both on the job and off the job. Majority of the executives in the middle cadre have been exposed to training and development programmes. PERFORMANCE APPRAISAL ITC has a formal performance appraisal and counselling skills system. The target setting programme coupled with the performance appraisal and counselling programme provide formal processes to ensure manager/employee contact for development and counselling, away from the hustle and bustle of daily activities. An important feature is the self appraisal and counselling programme. ITC believes that employee are responsible and trustworthy enough to be able to review their own performance in a matured and balanced manner and they have, faith in this. The basic objectives of the Performance Appraisal System in ITC are : Assessment of Performance and Review. Individual Training and Development need identification. Feedback and Follow-up of development. Determine career growth. Influence job rotation. Extension or termination of contract/promotion. Granting incentives and rewards. Appreciation / foreign deputation. The scheme is part of the overall Performance Review System that periodically reviews group/product wise performance and achievement to targets against what is outlined in the Annual Performance Plan.
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SUGGESTIONS
The company should send their employees for workshop and Training programme on role analysis as the ratio is not upto mark. Senior Management = 5% Outsourcin g Company pay role Middle Management = 40% Skilled = 7 % Skilled = 88 . 666 % Lower Management = 6% Unskilled = 6 . 333 % Unskilled = 50 % 2. The fair dealing of boss & supervision have ever since derestricted & hurt the feeling of skilled by 6% and unskilled by% the organisation should check this out (on Company pay role). 3% of skilled & 9% of unskilled (outsource). 3. The 14.666% of skilled workers and 24% of unskilled workers pay role are not satisfied with the present salary 3.75% or skilled & 4.333% of unskilled (out souring are not satisfied hence some this should be done in this respect 4. 16.666% of skilled worker & 24% of unskilled (company pay role), 7% skilled & 9% unskilled (out souring) workers feel that they can improve their technical & managerial abilities if chances are given to them. Thus company should manifesh such type of abilities from time to time. 5. The 6.25% of skilled workers & 7.333% of unskilled workers (out Source) feel that work load is not distributed equally. Hence techniques should be applied for equal distribution of work. 6. 5% of skilled & 6.666% of unskilled workers (for out sourcing) feel that proper equipments and space is not available in the job. 7. 3% of skilled & 4.333% of unskilled worker of out sourcing does not seems to match & patch up with their seniors in solving their day to day problems of the company. Hence improvement is required in this respect. 8. 3% of skilled labour & 6.333% of unskilled worker of outsourcing feels that the better way of training is off the job means no the technical / training programme. 9. 9% of unskilled workers and 3.25% of skilled of out sourcing feel that they do not play a vital role in the group. Their cause disaltractive activities or problems should be assessed time to time. 10. 3% of skilled & 9% of unskilled workers of out souring feel that even if they can give a good idea to the boss he may not give oredit to him. one should think and give importance to them also. 1.
CONCLUSION
The survey indicated that the integrated approach has brought about a radical change in the overall performance of the skilled and unskilled workers. The changes are visible particularly with reference to the following aspects : Clarity of role and responsibility at various levels. The interpersonal relations and job relation have improved significantly. The motivation level and morale have gone up considerably. The programme has helped the participants to introspect and modify their behaviour. Improved communication approach at various levels. It has also been observed that these training programmes and workshop have not only improved the overall climate and culture of the organisation, but have also generated better quality of life and satisfaction amongst the particularly amongst the supervisors and workers in their personal lives. Periodically the management development inputs are being given to staff to ensure that the cohesive team can achieve results. Staff members are also sent on external technical programmes to update their knowledge on the state-of-the art in the field of electronics, telecom and management and are given the opportunity to go on foreign deputation to get an exposure in advance technologies and new areas of interest. Also as part of development input good articles on technical/management areas are circulated to everybody. To sum up, these programmes have become greatly instrumental in generating a swing for the creating of Learning Organisation. In order that these programme may be able to produce the maximum desired results, it is necessary that these programme are taken to a logical conclusion by covering the entire organisation, including the top management. Steps to achieve these objectives have also been started by ITC. There is a very positive response to training in ITC. Even some initially viewed training with skepticism, today see it as useful. In ITC, the contribution of the training function makes related to the processes of self-renewal, personal growth, appraisal and counselling, team building and target setting. In ITC, identifying, nurturing and development appropriate leadership values and styles are critical when building a collective ethos. Strategically, over the next year or two, the training function is poised to play a vital in building value leader within the organisation.
REFERENCES
Chatterjee, N. N. Gupta, C.B. Monappa, Arun Agarwal, R.D. Basu, K.S. Beach, Dale Alexander, K.C. Davis Keith Dayal, Ishwar Dwivedi, R.S. Flippo, B. Edwin Ghosh, S. Giri, V.V. Kapoor, T.N. Management of Personnel in Indian Enterprises (Allied Book Agency, New Delhi). Human Resource Management (Sultan Chand & Sons. New Delhi). Human Resource Planning and Career Planning (MacMillan, Ahmedabad). Dynamics of Personnel Administration in India (Tata McGraw Hill, New Delhi). New Dimensions in Personnel Management (Kogan Page Ltd., London). Personnel Management (Macmillan Publishing Co., New York) Participative Management The Indian Experience (Shri Ram Centre for Industrial Relations, New Delhi). Human Behaviour at Work (Tata McGraw Hill, New Delhi). Management Training in Organisation (Prentice Hall of India, New Delhi). Management of Human Resources (Oxford & IHB, New Delhi). Personnel Management (McGraw Hill, Kongakusha, Tokoyo, Japan). Trade Unionism in Underdeveloped Countries (Bookland, Culcutta). Labour Problems in India Industry (Asia Publishing House, Mumbai). Personnel Management and Industrial Relations in India (N.M. Tripathi & Sons Mumbai)
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BUDGET DISCIPLINE UNDER MILITARY AND CIVILIAN REGIMES: ANY DIFFERENCE IN NIGERIA? EGBIDE BEN-CALEB ASSOCIATE MEMBER INSTITUTE OF CHARTERED ACCOUNTANT OF NIGERIA FACULTY, DEPARTMENT OF ACCOUNTING SCHOOL OF BUSINESS COLLEGE OF DEVELOPMENT STUDIES COVENANT UNIVERSITY CANAAN LAND OTA AGBUDE GODWYNS ADE FACULTY DEPARTMENT OF POLITICAL SCIENCE SCHOOL OF SOCIAL SCIENCES COLLEGE OF DEVELOPMENT STUDIES COVENANT UNIVERSITY CANAAN LAND OTA ABSTRACT
The Nigeria budgetary practices has been characterised with indiscipline and flagrant disregards to budgetary rules and procedures. This culture has been substantially attributed to the long years of military rule. This paper juxtaposes military and civilian regimes in Nigeria with respect to adherence to budgetary estimates. Eight years for each regime were purposively considered (1991 1998 and 1999-2006). Time series data were retrieved from secondary sources and analyzed using simple variances, percentages, descriptive statistics as well as independent T-Test. The paper found that although budget discipline under democratic regime is arithmetically higher that budget discipline under military system, the difference is not statistically significant. It was therefore recommended that since budget is a law (appropriation Act); it should be accorded the same respect like any other act of the National Assembly as a justification for the democratic tenet of the rule of law. To that end budget implementation and control should be judiciously enforced with a view to achieving the lofty objectives that accompanies each years budget, as well as reduce the negative pressure that budget indiscipline engenders.
KEYWORDS
Budget, Civilian, Discipline, Military, Niger
INTRODUCTION
he superior performance of every economy is largely determined by efficient fiscal and monetary policies management. These two macro economic variables are in most countries congregated in the national budget. Besides, being a critical planning and control device, budget gives expression to the macro economic objectives of the government as well as the fiscal strategies for their attainment. However, the extent to which such objectives are achieved depends to a great extent on the discipline exercised by government in the implementation and control of the budget. It is also recognized that the attainment of budget can be thwarted by external economic forces uncontrollable for an organization or nation; many aspects of a budget are controllable by the operators- hence discipline is required. Budget discipline connotes the extent to which an institution or nation stays within the budget or simply, the ratio of budgetary expenditure to actual expenditure, as different from fiscal discipline which is the ratio of budget deficit to the Gross Domestic Product (GDP) (Nazarovetes, 2001). Lack of budget discipline has been identified as one of the main factors accounting for the disappointing budgetary performance of many countries in Africa (Lienert & Sarraf, 2001). Indiscipline in the management of resources is iniquitous to the economic progress of any nation irrespective of the nature of government (Military or Civilian). In Nigeria, the budgetary processes is said to be characterised by lack of discipline and flagrant disregard for budgetary procedures (Obidegwu, 2005; Abe, 2009), leading to the unimpressive performance of Nigerian economy. This reported financial and fiscal rascality of the Nigerian federal government has been substantially attributed to the long years of military rule, which to a great extend associate budget indiscipline to the type of government in power (Orebiyi & Ogochukwu, 2005). It is to this end that this paper attempts to investigate the budgetary practices of Nigeria at different regimes (Military and Democracy). The paper is predicated on the proposition that there is no significant difference between military autocracy and civilian democracy in terms of adherence to budgetary estimate. The study is intended to emphasise the fact that the sustainability of the Nigerian nascent democracy is dependent on the delivery of tangible dividends to a larger majority of the citizens, and one way of doing that is through discipline in the management of scarce recourses. The rest of the paper is organised into the following sub headings; section ii undertakes a theoretical discourse of military and civilian administration as well as an X-ray of budget discipline under military and civilian regimes. In section iii, the methodology of the study was captured, giving way for data presentation, analyses and discussion of result which took their turn in section IV. The paper was concluded in section v after making recommendations as considered necessary.
LITERATURE REVIEW
MILITARY AND CIVILIAN ADMINISTRATIONS: A THEORETICAL DISCOURSE As a way of establishing the foundational thesis of this paper, it is important we engage in a theoretical analysis of both the military and civilian administrations. Though our focus is the Nigerian State, we still consider a general discourse of the basic tenets of both administrations as a necessity without necessarily avoiding the Nigerian historical experiments of the military and civilian administrations. First, the concepts of power and authority are central concepts that distinguish the two administrations. For the military, power is a fundamental factor given that no organized electoral process serves as the basis of the enthronement of military form of government. Carl Frederick (1963) sees power as the capacity to modify the conduct of others in a manner that is desired. Lasswell and Kaplan (1950) conceived power as the process of affecting the policy options of others through the actual or threatened use of sanctions for nonconformity to prescribed behavioural pattern. From the definitions above, power implies the coercive method employed by those not entitled to our obedience.
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Their rules and regulations are complied with not because they are legitimate but because sanctions are provoked to compel compulsory obedience. This is peculiar to the military system of government. Authority, on the other hand, entails willingness to obey given that the one demanding for obedience has the consent of the people. For April Carter (1979) authority implies force exercised or capable of being exercised with the general approval of those concerned. For D.D Raphael (1990) when we speak of power in a social context, we are usually thinking of a specific kind of ability, the ability to make other people do what one wants them to do while to have authority to do something is to have the right to do it. The military system of government generally lacks legitimacy due to the fact that it emerges through coup dtat which is nothing but forcefully seizure of political power without the consent of the people given through elections. It is the general modus operandi of a military system of government to operate without given cognizance to the importance of the peoples opinion. But for a civilian administration, the people are supposed to form the bedrock on which its legitimacy and operations are built. This is because its emergence is supposed to be a product of the peoples collective consensus. Therefore, militocracy and democracy (under which civilian administrators exercise political power) are antithetical. Democracy is certainly not in the same camp as Militocray. Democratic principles rest its supreme power in the people collectively giving them the power to choose their own leaders. In this case the common people are the source of political power and not the other way round. Such elected democrat understand right from the start that they are only representing the people who have reposed so much faith and confidence in them (Mosuro, 1997:11) Military administration is an aberration of the ideal form of governance given that military power is not predicated on the general will and consent of the people. Military government is usually enthroned through coup dtat, which is a political act directed at the unauthorized seizure of power through the direct use of, or the threat of the use of violent forces (Obi, 1999), without recourse to any form of electoral processes or procedural justice (without regards for the constitution). Military regime is characterized by unitary hierarchical structure and intrinsic arbitrariness and authoritarianism (Adamolekun, 1991); while the civilian government operates a shared political power with the tiers of government and the electorates. Another important factor that distinguishes the military from its civilian counterpart is the suspension of the constitution. The military operates by decrees to which obedience is by coercion while the civilian government operates within the purview of the constitution to which obedience is based on right to demand it and there is a legitimate ground for its enforcement. Unfortunately, the Nigerian constitution has been a brain work of the several military regimes. For instance, scholars argue that the 1999 constitution lack moral authority (the legitimacy question) and legal validity because its conception and promulgation lack legitimacy, having been introduced by the previous military government (Ogowewo, 2000) Military is identified as the government of men and not of law because its practitioners (Soldiers) are men not trained in the art of politics and constitutionality but rather in warfare situations where the lives of the opponents are not valued. The first military coup in Nigeria led to the death of several Northerners including the then Prime Minister Sir Abubukar Tafawa Balewa and several other politicians. Since then, the Nigerian state has witnessed several coups leading to the loss of lives. Thus, given the evils with which the military terminates incumbent political processes, scholars in search of the end to military rule in Nigeria discovered the theoretical underpinnings of military incursion into politics. the causes of military coups in the developing world especially Africa are linked to the weakness of the political structures and processes in post-colonial states, the prevalence of economic crises, and the institutional role of the military as the custodian of national defence (Obi, 1999:134) The poor political structure of the first Republic gave birth to the first military incursion, led by Major Nzeogwu, into Nigerian young democracy. Major Nzeogwu gave a justification for his attack on the politicians thus: Our enemies are the political profiteers, the swindlers, the men in high and low places that seek bribes and demand ten per cent ( First, 1976:112) The perceived crises in Nigerian politics seemed to be the basis for military incursion as the different military regimes justified their interventions as patriotic acts based on national interests (Obi, 1999). The different military regimes pledged to put an end to corruption, misrule and indiscipline, but in reality they went on to legitimize what they spoke against. The first military coup, January 15 1966, was the beginning of a journey into a 29-year military rule in Nigeria, with a brief hiatus between 1979 and 1983. From then till 1999, the history of governance in Nigeria was the history of excessive militocratic exercise of naked political power void of legitimacy until the enthronement of democratic governance administered by the civilian administrators who are expected to be the representatives of the people. Obviously, the modus operandi of the two administrations differs. A military administration emerges through a forceful seizure of power while a civilian government is a product of the electoral process where the peoples preference for who should lead them is expressed. The concept of opposition parties is foreign to military government. An opposition party, for the military, is an enemy of the State that must be executed. But for civilian government, opposition parties are part of the game of politics. Even the people can rise and demand for accountability and transparency from their leaders under civilian government while such is treated with disdain under military government. In other words, the people have the power to change their representatives in the next elections under civilian government while military government is not a product of the peoples willing consensus. Every government must submit itself to the judgement of those who feel the consequences of its act. The reason for such submission is the simple historical fact that unconditional power has always proved, at least ultimate, disastrous to those over whom it is exercised (Laski, 1978:56) While the civilian government can readily, whether willing or unwillingly, submit itself to the critical evaluation of those who suffer the effects of its policies, military government resort to naked power in clamming down all oppositions. BUDGET DISCIPLINE UNDER MILITARY AND CIVILIAN ADMINISTRATION Budget still remains the single most important policy document in the hand of government. This is because budget gives expression to the fiscal intentions of the government in managing an economy. According to Olaoye (2010), public sector budget beside assembling the projected revenue and expenditure of government, addresses the allocation of resources to achieve societal goals; serves as an instrument for managing economic crisis and uncertainty, serves as an instrument of policy direction for the economy; it also represents a tool for defining government economic and societal focus as well as an instrument for economic management. However, budget is not an end by itself it is a means to an end, hence, the call for discipline at all stages of the budgetary process to ensure the achievement of budget objectives (Olomola, 2009) Budget discipline connotes the extent to which an institution or nation stays within the budget or better still the ability of a government to confine itself to the limit of expenditure in the approved budget or supplementary budget (Aruwa, 2004). It is measured as the ratio of budgetary expenditure to actual expenditure, as different from fiscal discipline which is the ratio of budget deficit to the Gross Domestic Product (GDP) (Nazarovetes, 2001). They are three principal areas or dimensions of budget discipline according to (Oshisami, 1992 & Omolehinwa, 2001) these include; adherence to stated budgeting policies without wavering; adherence to budget calendar in the development, approval, implementation and monitoring as well as adherence to approved estimates in the appropriation act. These three levels of discipline are crucial for the effective working of the budget, and a breach in any level constitutes indiscipline. Indiscipline in the management of resources is iniquitous to the economic progress of any nation irrespective of the nature of government (Military or Civilian). Observation in most literature is that budget indiscipline is a fundamental characteristic of budget practices of most countries in sub Sahara African including Nigeria (Lienert & Sarraf, 2001; Aruwa, 2004; Obidegwu, 2005; Abe, 2009; Olaoye, 2010). However, Obidegwu attributed this callous fiscal behaviour to the degeneration in governance and the increasing lack of coherence between government policies and the budget. This suggests that fiscal indiscipline will be reduced if policies are integrated into the budget. It could also be deduced that the effectiveness of any budgetary system is dependent on the working of the government and the sincerity of her programmes. In Nigeria, fiscal irresponsibility or budget indiscipline has been observed and identified to be one of the serious problems of budgetary process. According to Aruwa (2004) the principle of strict budget discipline has evaded the implementation of the federal budget. This observation has been corroborated by a number of literatures. For instance, Orebiyi and Ugochukwu (2005) related budget implementation failures in Nigeria to non-adherence to rules and control mechanisms associated with long years of military rule, as they stated thus:
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...in recent times, literature are limited with regards to budgetary control, practices and procedures in Nigeria. This can be partially attributed to the fact that Nigeria was under the military rule for more than 30 years out of the 44 years of her independence. Whenever budgets are formulated, planned, prepared and presented, the control mechanisms where never adhered to thus resulting in budget implementation failures (Orebiyi and Ugochukwu, 2005) The above statement acknowledged the fact that budget failures in Nigeria are engendered by indiscipline, which they partially attributed to long years of military rule. If this is true, with over ten years of democratic government, has this felonious budgetary practices been abated? The answer is not in the affirmative even from literatures. Again, Orebiyi and Ugochukwu (2005) lamented the continuation of this bad practice of non-implementation of budget to the letter in the new democratic Nigeria. It was this worrisome fiscal management that led to the inclusion of budget discipline improvement in the Obasanjos public sector reform agenda (Ahmed, 2007). This was to be done through effort to establish an annual budget framework and guideline to be followed by all tiers of government as embodied in the fiscal responsibility Act 2007. The extent of compliance and its effectiveness is still a moot. Further more, Olomola (2009) studying strategies and consequences of budgetary reforms in Nigeria stated thus; With regard to Nigerian budgets over the years, there is a sharp contrast as expected, between budgeting under military regimes and budgeting under civilian administration. Whereas the former was ad hoc and beclouded with arbitrariness, the latter is often subjected to scrutiny at various stages by the executive and legislative arms of government before the budget is finally approved. Irrespective of whether the government is military or civilian, however, the budget process has always been fraught with monumental abuses (Olomola, 2009) The above observation affirms that the military modus operandi undermines the constitution, uses ad hoc procedures in budgeting and celebrates arbitrary budget estimations, as against the civilian regime where the budget is made to pass through constitutional and legal procedures. However, the theoretical dichotomy between the military and the civilian administration do not seem to be reflected in the overall budgetary performance hence, monumental abuses are always reported in both military and civilian regimes. This situation is further buttressed by Olaoye (2010) who studying budget discipline in government, asserted from whatever angle one looks at the subject of budget discipline, the Nigerian nation still has a long way to go. From the forgoing, it seems conclusive that budget indiscipline is the order of the day whether in the military or civilian administration. However, an empirical analysis would be a better proof of the position, which none of the literatures above has provided. This is in fact the justification and relevance of this study.
METHODOLOGY
This paper adopted both qualitative and quantitative approaches. The secondary data were obtained from Central Bank of Nigeria Annual Reports; (2007, 2008); Central Bank of Nigeria Statistical Bulleting, December 2002, Vol 13 and Annual Audited Accounts of the Auditor General of Nigeria. Simple variance, percentage analyses, descriptive statistics as well as independent T- Test were employed for analyses, using MS Excel and Statistical Package for Social Sciences to aids the analyses Budget Discipline was operationally defined as the ratio of budgetary expenditure to actual expenditure while budget variance in operationally the difference between budget expenditure and actual expenditure. Mathematically; Budget Discipline = Budget Expenditures Actual Expenditure Budget Expenditure Variance = Budget Expenditure-Actual Expenditure
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extra budgetary expenditure in 2003. This is reflected in a higher mean discipline of 0.8698 but with a higher standard deviation of 0.47823 (Table 2). A higher standard deviation during democratic period indicates that the variances were more erratic than the military era as depicted by the variance curve in figure 1.
Source: Charted by the Authors Using Micro Soft Excel Furthermore, the variance analyses reveals a high proclivity to spend off the budget (budget indiscipline) during transition or election years as demonstrated by the 1999 and 2003 colossal off budget expenditures of 165% and 901% respectively. These budgetary behaviours again suggest the problem of poor budget planning or faulty budgetary allocation. Transitions or elections are not accidental programs; one would have expected their cost to have been adequately factored into the years budget either in the appropriation acts or supplementary appropriation acts, thus, reducing the extra budgetary expenditure to the barest minimum if not totally eliminated. A situation where expenditure for the year is overshot by about nine times the target cannot be justified by any economic or financial models except to confirm the non-alignment of economic political objectives with budgetary allocations as observed by Aruwa, (2004). TABLE 2: GROUP STATISTICS Type of Government N Mean Std. Deviation Std. Error Mean Budget Discipline Military Government 8 .6240 .06849 Civilian Democracy 8 .8698 .47823 .02421 .16908
Source: computed by the authors using SPSS Further more, in order to test the hypothesis of this study, an Independent Sample T-test was conducted to compare budget discipline under the two regimes (military and democracy). From the result (table 3), the Levenes test for equality of variance indicates that the data violates the assumption of equal variances since the sig. value of 0.048 does not exceed 0.05. The T-test for equality of mean has a value of -1.439 with a sig value of 0.192. Since the sig value is greater than 0.05 it means that the mean difference between the two independent scores is not significant. By this result, it is unsafe to reject the research hypothesis. We therefore conclude that there is no statistically significant difference between budget discipline under the military regimes and budget discipline under the civilian regime. TABLE 3: INDEPENDENT SAMPLE TEST
Levene's Test for Equality of t-test for Equality of Means Variances 95% Confidence Interval of the Difference F Budget Discipline Equal variances assumed Equal variances not assumed 4.710 Sig. .048 T Df Sig. (2tailed) .172 Mean Difference -.24581 -.24581 Std. Error Difference .17081 .17081 Lower -.61216 -.64650 Upper .12053 .15488
14 1.439
CONCLUSION
The issue of discipline in the management of recourses can not be over emphasised. This is because mismanagement, waste or indiscipline not only frustrate the achievement of budgetary objectives but is also iniquitous to the economy irrespective of whether the government is military or civilian. This paper had applied both theoretical exploration and simple quantitative techniques to compare budget discipline under military autocracy and civilian democracy. The findings are here under summarised; 1. Budget indiscipline is a characteristic feature of the Nigeria budgetary process. 2. There is no statistically significant difference between budget discipline under military regime and budget discipline under civilian democracy in Nigeria. 3. There is high proclivity to over spend during transition years (as evidenced in 1999 and 2003) than it is for other years. From the findings, it is therefore not surprising why the Nigeria budgetary performance had been describe as disappointing as it has contributed to further under developing the nation and adding to the poverty crises. If this culture of fiscal rascality in the Nigerian budgetary process is not fought, it will not only continue to undermine our developmental effort but will also threaten the sustainability of Nigeria nascent democracy given the countrys mono-product status. Worst still, is the fact that with respect to budgetary practices, the dichotomy between military and civilian regimes is only theoretical. Democracy anywhere is associated with the rule of law, probity and accountability among other tenets. It should not only guarantee prudence management of resources but ensure that there are managed for the common good of a greater number of the citizens.
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It is to this end that we candidly recommend that the budget or the appropriation act should be accorded the same respect like any other act of the National Assembly as a justification for the democratic tenet of the rule of law. This will enable all stages of the budgetary process to be managed with a high sense of discipline and accountability, in order to guarantee the achievement of the lofty objectives that accompanies each years budget, as well as reduce the negative pressure that budget indiscipline engenders.
REFERENCES
Adamolekun, Ladipo (1991) Introduction: Federalism in Nigeria. Publius, Vol. 21, No. 4, Federalism in Nigeria: Toward Federal Democracy. pp. 1-11. Retrieved from the internet (http://links.jstor.org/sici) Ahmed, M.Y. (2007). Public Service Perspective on Anti-Corruption Crusade and Promotion of Integrity; Paper Presented at the March 2007 Edition of ICPC Chairmans Guest Forum ICPC Auditorium on Tuesday 13th March 2007 Aruwa, S.A. (2004). Nigerian Budgeting Process and the Magnitude of Budget Variances. The Academy Journal of Defence Studies. NDA Vol 13 Carter, A. (1979). Authority and Democracy. London: Route Collins, M.K.(2009). Managers Self-Reported Budget Performance and Satisfaction with Perceived Organizational Rewards: Proceedings of ASBBS Volume 16 Number 1 First, R.. (1976). Power in Africa in Samuel Decalo, Coups and Army Rule in Africa, Studies in Military Style. London: Yale University Press Frederick, C. (1963). Man and His Government. New York: McGraw Hill Laski, H. (1978). A Grammar of Politics. London: George Allen and Unwin Laski, H. and Kaplan, A. (1950). Power and Society: A Framework for Political Inquiry. Connecticut: Yale University Press Mahmud, Y.A (2007). Public Service Perspective on Anti-Corruption Crusade and Promotion of Integrity. March 2007 edition of the ICPC Chairmans Guest Forum. Retrieved on 18/01/2011 from http://www.hosf.gov.ng/resources/policy_documents/speeches_25 Mosuro, K. (1997). Acts 2, Scene 1 Tempo 26, June Obi, C.I. (1999). Political and Social Change in Anifowose, R and Enemuo, F.C. (ed). Elements of Politics. Lagos: Malthouse Press Ltd Obidegwu C. (2005). The Medium-Term Expenditure Framework: The Challenge of Budget Integration in SSA Countries. Africa Region Working Paper Series No. 82. Ogowewo, Tunde I. (2000) Why the Judicial Annulment of the Constitution of 1999 Is Imperative for the Survival of Nigeria's Democracy. Journal of African Law, Vol. 44, No. 2, pp. 135-166 Olaoye, O.F. (2010). Budget Discipline in Government: A key to Building and Sustaining Buoyant External Reserves. The Social Sciences Medwell Journals 5(5): 386-390) Olomola, A.S. (2009). Strategies and Consequences of Budgetary Reforms in Nigeria; Paper for Presentation at the 65th Annual Congress of the Institute of International Public Finance (IIPF), Cape Town, South Africa Orebiyi, J.S. & Ugochukwu A.I. (2005). Budget and Budgetary Control in Nigeria: procedures, Practices and Policy Issues. Global journal of Agricultural Sciences Vol 4 No 1 69-73 Raphael, D.D. (1990). Problems of Political Philosophy. 2nd Ed. London: Macmillian.
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WORKPLACE WELLNESS LEADS TO EMPLOYEE POTENTIAL & HEALTHY ENVIORNMENT A STUDY IN THE MIDDLE EAST DR. HARINI J. METHUKU LECTURER DEPARTMENT OF BUSINESS & ACCOUNTING MUSCAT UNIVERSITY COLLEGE SULTANATE OF OMAN SIMI SIMON LECTURER DEPARTMENT OF BUSINESS & ACCOUNTING MUSCAT UNIVERSITY COLLEGE SULTANATE OF OMAN LINA FERNANDES LECTURER DEPARTMENT OF BUSINESS & ACCOUNTING MUSCAT UNIVERSITY COLLEGE SULTANATE OF OMAN ABSTRACT
This study reviews the key issues involved in the employee wellness in the industries in the Middle East cities. The study addresses the present work place stress and the problems faced by the employees because of the changes in the global business scenario. Further the write-up discusses the role of management in promoting wellness in the Corporates. The literature review highlights the wellness program as a support to healthier working practices. A wellness program was devised to provide a road map for implementing and sustaining an effective wellness program in the Middle East. The intent is that this tool will serve as a useful guide for a healthier state of well being for all employees. Further suggestions are put forward for the success of the wellness programs and its great influence on the creativity of employees at work.
KEYWORDS
wellness, healthier working environment, wellness program for corporates, employee potential, six dimensional model.
INTRODUCTION
ellness defined by (Hatfield) as; the concious and deliberate process by which people are actively involved in enhancing their well-being: intelectual, physical, social, emotional, occupational and spiritual. Wellness is considered to be the positive component of good health which reflects how one feels as well as ones ability to function effectively. Health and Wellness can be described using 6 dimensions of wellness which relate to Physical fitness and nutrition, Emotional well-being, Intellectual well-being, Social, family, community and environment, Occupational aspects and Spitirual, values and ethics (Hettler). Wellness is therefore a state to be attained before disease starts or even risk factors set in. Wellness also can be promoted and inspired for at any stage of illness so that further progress of disease and deterioration of quality of life is prevented (Azman). World Health Organization (WHO) defined health as more than freedom from illness, disease, and debilitating conditions (WHO, 1947). The suggestion by the World Health Organization that health has a positive component led to use of the term wellness. (Corbin & Pangrazi, 2001). Wellness is first and foremost a choice to assume responsibility for the quality of your life. It begins with a conscious decision to shape a healthy lifestyle. Wellness is a mind set, a predisposition to adopt a series of key principles in varied life areas that lead to high levels of well-being and life satisfaction. (Ardell, 2002). With a wellness lifestyle, a person is of right weight, fit, stress free and intelligent with a mind of his own, emotionally balanced, critical in thinking, open and alert to discoveries, and able to add meaning and purpose to life.
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Body, Endurance, Flexibility, Strength Family, Friends, Relationships Personal and Professional Development, Worthwhile Work Mind, Creativity, Knowledge Values, Purpose, Religion, Intuition Feelings, Self Esteem, Coping with Stress Source: Hettler (1979) Programming may include interventions from more than one component of wellness. A wellness program is not just about having the occasional lunchtime program. Wellness is about valuing the whole employee in all six dimensions. Worksite wellness focuses more specifically on how these six dimensions affect productivity and creativity at work. Wellness is a multidimensional state of describing the existence of positive health in an individual as exemplified by quality of life and a sense of well-being. (Bouchard, Shephard, Stephens, Sutton, & McPherson, 1990). Ardell (2002) discusses three domains of wellness including: mental, physical, and meaning & purpose. The physical domain has exercise and fitness, nutrition, appearance, adaptations/challenges, lifestyle habits. The mental domain includes emotional intelligence, effective decisions, stress management, factual knowledge and mental health. The meaning & purpose domain includes meaning and purpose, relationships, humor, and play. This study adopted a seven dimensional model created by Health Womens Healthy Living Goals (2006). The seven dimensions include physical, emotional, career, social, financial, spiritual, and personal & family. These domains are taken as the main variables for assessing wellness amongst the employees of the Middle East.
LITERATURE REVIEW
Although several research studies were conducted about the role of Wellness this research highlights the importance of health and wellness in work place. Polakoff and ORourke (1990) suggested creating an integrated health database of the entire workforce to assist with designing health programs and policies. Different authors suggested not viewing investments in improving employee health as a cost but as potential savings. A wellness program is an activity undertaken by the company to reduce health care needs. Savings can occur due to reduction in costs of medical treatment and also reductions in lost time from work directly as the result of illness and injury. These programs educate and motivate employees and their families to adopt better health habits. Falconer (1993) recommended three factors to determine if health care should be obtained or not, these include past costs related to the item, potential impact of an item that may occur in the future, and changes in the covered group. Companies were urged to not adopt a wellness plan that was one-size-fits-all. According to Danna and Griffin (1999), well-being is viewed as comprising the various life/non-work satisfactions enjoyed by individuals including satisfaction with social life, family life, recreation, spirituality and co-worker compatibility and general health. Health in turn is seen as a sub-component of well-being and comprises the combination of mental, psychological and physical indicators. Madsen (2003) stated that understanding individual change readiness characteristics can help organization development professionals to prescribe and implement more effective change interventions. Wellness programs continue to increase in the work place every year. Readiness is the first part of the natural cycle of change in a number of models. Goetzel (2006) looked at a wide range of factors, including healthcare costs, age of workforce, and smoking and other lifestyle factors. Goetzel then created an (Return on Investment) ROI calculator that allowed him to figure out the minimum improvement required to break even on an investment, as well as the projected ROI that a specific set of improvement assumptions would yield. Klerk (2005) explored work wellness from a spiritual framework by focusing on the contribution that a persons sense of meaning in life can play in improving work wellness and wellness in general. Bob Brady (2007) suggested that if the construct clarity in workplace spirituality was in place, spirituality can be approximated and operationalized through one of its major elements, which is meaning in life. White (2005) suggested some methods to advocate health care like providing plenty of nutrition options in cafeteria, making workplace smoke free, having fitness centers, offering on-site health educators, screening for high blood pressure and cholesterol, and designing health care program that will reach out to immediate family. OReilly (2006) also suggested that the most likely interventions to improve health were support for healthier working practices, investment in employee assistance programs, and health screening. Watson (2007) stated in a study involving Scottish local authority staff that the leading causes of death in the developed world were ischaemic heart disease, stroke, and cancer. These conditions were caused by poor diet, smoking, and alcohol use. Bob Brady (2007) stated that occupational health professionals can play an important role by offering lifestyle screening, which can identify people likely to benefit from provision of health-related information. Results of the Watson (2007) study suggest that the workforce is amenable to the assessment of lifestyle issues and the receipt of information and advice aimed at promoting health. The job growth of health educators is driven by the rising costs of healthcare, increased awareness of preventable diseases, the need for early detection of diseases, and an increasing recognition of the need for qualified health educators (Teixeira, 2007). Mueller and Kaufmann (2001) aimed to make a clear distinction between wellness and cure, from the health policy angle. Hence, a line should be drawn between wellness, which includes comprehensive service packages consisting of physical fitness, beauty care, healthy nutrition, meditation, mental education, and illness prevention. While wellness guests can claim services which are very similar to those used by normal cure guests, wellness guests ask for those services with the motive of preserving or promoting their health, which contrasts with the cure guests (Mueller & Kaufmann, 2001).
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Wellness needs to be a part of the culture of the organization but not a just program. A survey, titled Working Well: A Global survey of Health Promotion and Workplace wellness strategies pointed out that the organizations spent 35 percent more on the wellness program in 2010 compared to 2009(Buck consultants). It again noticed that the organizations that measure the impact of their wellness programs are seem to be more successful at improving the health of their employees (Barry Hall). But many of the organizations in the Middle East who undertakes the wellness programs dont know how to measure the results, or majority of them dont have the resources to do so. Though, the results are not measured accurately in most of the organizations, reducing the work place stress is considered to be top driver in almost all wellness programs. Employers in the Middle East are reporting with stress as their primary health care concern for their employees according to the recently released study. Lack of job satisfaction and security, changing work styles and patterns and globalization are increasingly hurting the employees at the bottom line. Stress causes excessive absenteeism, loss of productivity, lower worker morale and loss of sense of belongingness toward the organization (Barry Hall). The chronic diseases such as heart disease and diabetes rank first in many of the Middle East employees. It is found that even with high job satisfaction, the employees are forced to work beyond office hours and even evenings and weekends. Lack of balance between work and home and fear of job loss also rates immense impact on the organizations in using its employee potential (Kathy Gurchiek). Mental stress can cause inability to focus and concentrate in the work. According to the Dubai and Health Medical services Cardiovascular diseases were among the top 10 causes of deaths in UAE and Oman in 2009 and it is three times even higher in Dubai.19.5% of the adult population in UAE and Oman has Diabetes, and another 18% is at the risk of developing the same. Heart diseases, strokes and Diabetes alone estimated to reduce the growth Domestic product by 1%-5% in the Middle East. An online poll conducted by a recruitment company from 12,368 respondents from across the Middle East found that nearly three in five respondents have irregular eating habits that are causing loss of concentration, mood and behavioural changes in the work place.
Assemble
Wellness
Implement Plan
Adjust
Program
The establishment of a wellness program has no end point, since the needs of employees and stakeholders are ever-evolving. With the advances in healthrelated research, its important to continually revise and adjust wellness programs for maximum effectiveness.
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EVALUATION
Evaluation is one of the most critical points in the development of a program. If the strategic plan was built correctly, measures to gauge success are included in the implementation plan. An analysis of the results will determine what course corrections are needed. Do not worry if the goal has not yet been achieved. Evaluation is not a time for ego, but rather self-confidence as this is just one step in the journey. It is important not to ignore the information, but rather to use it in making an increasingly strong program.
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CONCLUSION
A piece of advice to remember amidst all of all the findings, strategic plans and operational objectives included in the study is that Worksite Wellness means working with people. If the employer needs quantifiable behavior change and return on investment in the organisation employees are the first priority. One must truly care about the employees health and family in order to make long-lasting change. Mutual trust and honesty about personal struggles is a key to the success of a program and employees will often respond better to a genuine spirit, than a number-cruncher whose focus is to get more productivity out of the workforce. Be clear on the goals, steadfast with the plan, but true to the mission to achieve wellness.
REFERENCES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Ardell, D. (2002). What is wellness? The Institute of Rehabilitation and Research. Retrieved January 14, 2007 from http://www.ilru.org/healthwellness/healthinfo/wellness-definition.html. Bouchard, C., Shephard, R. J., Stephens, T., Sutton, J.R., & McPherson, B. D.(1990). Exercise Fitness and Health: A consensus of current knowledge. Champaign, IL: Human Kinetics. Corbin, C.B., & Pangrazi, R.P. (2001). Towards a uniform definition of wellness: A commentary. Presidents Council on Physical Fitness and Sports Research Digest, 3(15), 1-8. Danna, K., & Griffin, R.W. (1999). Health and well-being in the workplace: A review and synthesis of the literature. Journal of Management, 25(3), 357-384. "Department of Health Affairs, Health Administration, Office of Patient Care Services, National Center for Health Promotion and Disease Prevention"2007. Hotmail's creator is starting up again, and again, and... (2000, September 14). Business Week. Retrieved January 2, 2008 from http://www.businessweek.com/bwdaily/dnflash/sep2000/nf20000914_779.htm. Health Womens Healthy Living Goals. (2006). Health womens goals and principles for optimum health life balance. Retrieved April 27 2008 from http://www.health-womens-healthy-living-goals.com/. Hettler, B. (1979). Defining wellness: The six dimensional model of wellness. The National Wellness Institute. Retrieved January 14, 2007 from http://www.nationalwellness.org/index.php?id=391&id_tier=381. Klerk, J.J. (2005). Spirituality, meaning in life, and work wellness: A research agenda. International Journal of Organizational Analysis, 13(1), 64-68. Mason, J.C. ( 1994) The Cost of Wellness. Management Review, 83(7), 29-34. OReilly, N. (2006). Survey shows investment in organizational health is set to grow. Occupational Health, 58(10), 9. Polakoff, P.L., Rourke, P.F.O. (1990). Healthy worker-healthy workplace: The productivity connection. Benefit Quarterly 6(2), 37-57. Falconer, R. (1993, February). Controlling health care costs with wellness program. The CPA Journal. Retrieved April 28, 2008 from http://www.nysscpa.org/cpajournal/old/13808645.htm. Madsen, S.R. (2003). Wellness in the workplace: Preparing employees for change. Organization Development Journal, 21(1), 46-55. Stress Management Coaching and Work Life Balance Coaching , dubai middle east(2011) http://insideoutcoaching/stressbalancecoaching.html Watson, H. (2007, November 30). Boosting health promotion. Occupational Health. Retrieved December 10, 2007 from http://www.personneltoday.com/articles/2007/11/30/42005/boosting-health-promotion.html. White, M. ( 2005). The cost-benefit of well employees. Harvard Business Review, 83(12), 22. "Department of Health Affairs, Health Administration, Office of Patient Care Services, National Center for Health Promotion and Disease Prevention"2007. Work stress damages Middle East eating habits(2010) http://en.news.maktoob.com/Work_stress_damages_Mideast_eating_habits/Article.html
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THE IMPACT OF PRODUCT PRICE CHANGES ON THE PROFITABILITY OF SMES IN NIGERIA OBIGBEMI IMOLEAYO FOYEKE LECTURER, DEPARTMENT OF ACCOUNTING COVENANT UNIVERSITY OTA, OGUN STATE ABSTRACT
This research work treats the impact of pricing on the profitability of organizations, a study of SMEs in Nigeria. The methodology adopted was the survey and empirical approach, with the administration of questionnaires to some SMEs in Nigeria, the financial report of a major sample company was also evaluated to measure the significant impact of pricing on profitability. The Pearson Correlation Coefficient statistical tool, the student t-test as well as the accounting financial ratios were used to measure the impact of change in price on the profitability of the sample company. The work found that there is a relationship between effective pricing and profitability and that any significant change in the price of a product will have its own effect on the turnover as well as the profit of the organization. Recommendations were made for the close monitoring of SMEs and that SMEs should employ the service of price experts when making pricing decisions.
KEYWORDS
Product, SME, Price, Financial, Profitability.
INTRODUCTION
or any organization that is involved in the production of goods and rendering of services, after answering the question what to produce, and who to produce for, there is need to answer the question how much will our potential customers be willing to pay for the good? This difficulty of price fixture and the effect changes in the price of products has on the profitability, has posed a sense of concern to most business enterprises in Nigeria. Pricing decision is a crucial decision every organization has to make, because this will eventually affect their corporate objectives, either directly or indirectly (Monroe, 2003). For every business entity, irrespective of their line of business and objective, cost minimization and profit maximization is a general factor to be considered and for non-profit making organizations, there will always be the need to reduce cost at all means and to maximize output. A business whether small or big, simple or complex, private or public, is created to provide competitive prices (Ayozie, 2008). According to Hilton (2005), setting the price for an organizations product or service is one of the most crucial decisions a manager faces, and one of the most difficult, due to the number of factors that must be considered. Horngren, et al (1996), buttresses this point by stating that managers are frequently faced with decisions on pricing and profitability of their products. Some of the objectives of business enterprises vary from maximization of profit, minimization of cost, maximization of shareholders fund, becoming a market leader, etc. From the various objectives of business organizations, the primary objective of any business enterprise is to maximize profit and minimize cost, except for charity organizations that are set up primarily not to make profit, but there will be need to minimize cost by all means, therefore the need to set prices, which therefore connotes that pricing decision arises in virtually all types of organizations, irrespective of their level of activities. According to Lovelock & Wirtz (2004), the principal approach to an effective pricing strategy is to manage revenues in ways that support the firms profitability objectives, which leads to the question; how well can we complement the various factors that influence pricing decision, to achieve our overall objective, which is maximization of profit. This study is aimed at evaluating the various factors that influence pricing decision and how well an organization can manage these factors effectively to maximize profit. The study focuses on how product price changes affect the profit of an organization with a close assessment of the profit of a sample company.
LITERATURE REVIEW
Pricing is a major subject matter in the management sciences and has been viewed from different perspectives and dimensions. For this study three major backgrounds to the pricing theory will be considered and this consists of the Economists perspective, the Accountants perspective as well as from the Marketers perspective. The accountants have given a background look at the study at hand giving it a comparison to how well a relationship can be established between total cost, price and profit. The marketers are mainly concerned with how well price can be set to suit the value the customers will be willing to pay (customer satisfaction). The economists have provided much of the theoretical background to pricing. The theory states that firms should seek the price which maximizes profit and will thereby obtain the most efficient use of the economic resources held by the firm. From the Accountants point of view, pricing theory is based on the concept that a relationship can be established between price, quantity demanded, quantity sold and total revenue. Demand sympathizes with price and therefore varies with it, and if an estimate can be made of demand at different price levels it should be possible to derive a profit maximizing price, and a revenue maximizing price. Except if realistic estimates of demand at different price levels can be made, pricing theory is difficult to apply in practice (Asaolu and Nassar, 2007). From the Economists point of view, firms should seek the price which maximizes profit and will thereby obtain the most efficient use of the economic resources held by the firm. This price is at that level of sales where the addition to total revenue from the sale of the last unit (the marginal revenue, MR) is equal to the addition to total costs resulting from the production of that last unit (the marginal cost, MC). The economic theory is more concerned with the behavior of aggregates or markets, particularly how persistent and widespread behavior leads to stable results called equilibrium. One important aspect of the economic perspective is to realize that it views the firm as a price-taker rather than a price-maker. This means that management only determines the quantity of a product to produce, and the market sets price through the forces of supply and demand. In contrast to the economists point of view, the marketing perspective views price as a decision variable, instead of a given variable. In line with the marketers point of view, price is a decision variable influenced by various factors (Lucey, 1996; Monroe, 2003). Pricing is the only element in the marketing mix that creates sales revenue, the other elements are costs. Price is the amount of money we must sacrifice to acquire something we desire. (Monroe, 2003; Oyeniyi, 2004). Prices determine what products and services should be produced and in what amounts. Prices determine how these products and services should be produced, and for whom the products and services should be produced (Lawal et al, 2007). For the purpose of this study, pricing will be looked at from the accountants point of view, which looks at how a relationship can be established between price, quantity demanded, quantity sold and total revenue. Demand sympathizes with price and therefore varies with it, and if an estimate can be made of demand at different price levels, it should be possible to derive:1. A profit maximizing price 2. A revenue maximizing price Except if realistic estimates of demand at different price levels can be made, pricing theory is difficult to apply in practice (Asaolu and Nassar, 2007). Price changes, is the process of either increasing or reducing the selling price of a product or service. It involves the process of responding to the various factors influencing the pricing decision. There are various ways of changing price, with respect to changes in cost of production and changes in other intervening variables, which may at the long run affect the long term objectives of the company, if not changed. Most organizations only pay attention to the amount of money to be received from the customer, without taking a close look at the quantity of goods delivered. One way to change price is to change the quantity of
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money or goods and services to be paid by the buyer. Another way is to change the quantity of goods or services provided by the seller. Hilton (2005) stated that most industries, both market forces and cost considerations heavily influence prices. No organization or industry can price its products below their production costs indefinitely. And no companys management can set prices blindly at cost plus a markup without keeping an eye on the market. Therefore, the need for price changes, which is carried out strategically, through the use of good market survey and strategic pricing. Companies are sometimes price takers, which mean their products prices are determined totally by the market. In most cases, however, firms have some flexibility in setting prices. The demand law, which is what obtains in most cases is the fact that as the price of a commodity increases, there will be a decline in the quantity demanded of that product.
DATA ANALYSIS
Below is a summary of the profit and loss account of a company that changed its price (increase in price) in February, thus two months before the change in price and two months after the change in price. TABLE 1: DATA FROM THE SAMPLE COMPANY (SALES REACTION TO CHANGE IN PRICE) January February May July Price Sales (N) Price Sales(N) Price Sales (N) Price Sales Big Loaf N120 1,880,550 N120 1,795,204 N140 2,336,730 N140 3,083,702.8 Medium Loaf N30 166,785 N30 45,090 N40 70,125 N40 124,197.5 Small Loaf N25 152,640 N25 205,535 N30 134,395 N30 195,310 Mini Loaf N20 524,920 N20 87,160 N25 159,455 N25 164,900 Big Fruit Loaf N140 102,890 N140 141,970 N150 402,580 N150 786,720 Small Fruit Loaf N70 183,370 N70 128,770 N80 272,600 N80 377,630 Source: Data collected by Researcher (2008) From the table above, it can be seen that there was an initial decrease in the sales revenue between the month of January and February, and in May, due to the increase in price there was an increase in sales revenue as well as the month of July, but this change can be said to be non-commensurate to the change in price. There was a change of 17%, 33.3%, 25% & 7.1% increase in the price of the products. The change in revenue from the month of January to July is 27.9%, but quantity demanded as disclosed by the management of the company declined for some weeks, before there was a gradual increase in quantity demanded. The change in sales turnover was not evident, as a result of the inability to determine the quantity demanded. Product
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One-Sample Test Test Value = 0 95% Confidence Interval of the Difference Lower Upper 1.0754 1.1776 1.0370 1.1196
pricingprofit ChangedPrice
t 43.530 51.556
df 165 165
Source: Data collected by Researcher (2008) From the tables above, there is a significant negative correlation between the two variables (Profit and Price Changes) at 0.05 level of significance. It can be decoded that there is a negative significant relationship between change in price and profit, thus, an increase in price will not necessarily result in an increase in profit. TABLE 3: CHANGES IN GROSS PROFIT, NET PROFIT, OPERATING EXPENSES & SALES Month Gross Profit (N) Net Profit (N) Operating Expenses (N) Sales (N) January 3,061,050.91 2,824,408.91 356,343.96 5,738,160 February 2,455,971.20 2,068,965.20 506,707.96 4,771,884 May 2,191,552.20 1,800,630.85 510,623.31 6,141,000 July 3,154,538.32 2,987,176.82 287,063.46 7,336,429.30 Source: Data collected by Researcher (2008) To measure the impact of change in price on the profit of organizations, three profitability ratios will be used. TABLE 4: PROFITABILITY RATIOS Gross Profit Margin Net Profit Margin Operating Expenses Ratio 53.30% 49.20% 6.20% 51.50% 43.40% 10.60% 35.70% 29.30% 8.30% 43% 40.70% 3.90% Source: Data collected by Researcher (2008) From the above calculations, it can be seen that the company had a favourable Gross profit margin of 53.30% in January, which later dropped to 51.50% in February, but in May, due to the change in price of the products, and other concealed factors, there was a drastic reduction in the gross profit margin to 35.70% and in July, the company picked up and moved to 43%, but was unable to reach the 53.30%. The same trend occurred for the Net profit margin and a close look at the Operating expenses ratio, it can be said that the company had the highest operating expenses ratio in the month of February, which is the month preceding the change in price, thus in the month of May, this ratio reduced to 8.30% but was unable to get to 6.20% which is the figure for January, but in July, the Operating expenses ratio reduced drastically. From the analysis above, it can be said that when there is a significant change in the price of a product, it will have an effect on the sales turnover generated, which will in turn affect the profit margin on the product, which may be either positive or negative, depending on the type of change and how this change is effectively executed and managed. Month January February May July
REFERENCES
Asaolu, T.O. & M.L. Nassar (2007). Essentials of Management Accounting & Financial Management, Nigeria: Cedar Productions. Ayozie, D. O. (2008). The Role of Small Scale Industry in National Development in Nigeria. ICAN Students Journal, 12(1) 10-17. Hilton, R.W. (2005). Managerial Accounting: Creating Value in a Dynamic Business Environment, New York: McGraw Hill. Horngren, C.T., Foster, G., & Datar, S.M. (1996). Cost Accounting: A Managerial Emphasis, New Delhi: Prentice Hall. Lawal, A.A. et al (2007). Entrepreneurship Development in Small Scale Business, Lagos: Ade Ola Printing Press. Lovelock, C. & Wirtz, J. (2004). Services Marketing: People, Technology, Strategy, U.S.A: Pearson Prentice Hall. Lucey, T. (1996). Management Accounting, New York: Ashford Colour Press. Monroe, K.B. (2003). Pricing- Making Profitable Decisions, New York: McGraw Hill. Oyeniyi, O. (2004). Introduction to Business A Conceptual Approach, Lagos: Standard Publications.
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ANALYSIS OF VALUES AND UNDERSTANDING THE NATURE OF HUMAN PERSONALITY (GUNAS) IN THE INDIAN PSYCHO-PHILOSOPHICAL PERSPECTIVES DR. M. ANBALAGAN PROFESSOR & HEAD PG AND RESEARCH DEPARTMENT OF COMMERCE VOORHEES COLLEGE VELLORE DR. A. DHANALAKSHMI PROFESSOR & CO-ORDINATOR ACHARYA ACADEMY OF MANAGEMENT STUDIES BENGALURU - 560 091 ABSTRACT
A number of business and industrial enterprises disregard the importance of spiritual, ethical and human values that conditions human behaviour. As a result there are definite signs of deterioration in the ethical and moral standards of the people practically in all walks of life. Indian cultural values are being discredited because they are perceived as incongruous with modern business life. The spiritual tradition of India is rich and profound well of insight and wisdom, one that articulates with precision the whole sweep of human history, potential and purpose. It is a tradition that has successfully survived the millennia unchanged in its core structure and one that stands in stark contrast to the currently dominant mode of western rationalistic thought. The immediate problem that this poses for a full understanding of human functioning is that the inner subjective experiences of consciousness are deemed to lie beyond the realms of illusory and meaningless epi-phenomena. The great tradition of Indian thought that gives solutions to the modern economic malaise. Indian literature occupy the heights of human psychological accomplishment and could usefully call upon the insights of any of these sources to aid in addressing the problematic nature of modern-day businesses and have significant bearing on human behaviour. The Samkhya School contributes to the study of personality. The physical world is the manifestation of Prakrti, which is subtle and devoid of any consciousness. On the other hand, Purusa is the self within, Prakrti which is pure consciousness and sentience. TamasRajas-Sattva Gunas give rise to the framework of Space-Time-Causation when evolution starts in association with Consciousness Principle. This paper highlights values that are found in Indian scriptures that would deepen ones thoughts to construct an Indianised value profile for Indian businessman and to epitomize personality of human beings underpinning Guna concept Viz., Sattva, Rajas and Tamas.
KEY WORDS
Guna Concepts Sattva, rajas and tamas, Indian Psycho-philosophy, Indian Thoughts and Indian Traditional Values.
INTRODUCTION
he quality of work in a business organization is greatly influenced by ethical and moral values prevalent in the organization. However, a number of business and industrial enterprises disregard the importance of such values. As a result there are definite signs of deterioration in the ethical and moral standards of the people practically in all walks of life. Cheating is considered as a necessary condition for winning. Result-orientation is often used as a justification for unethical and amoral practices. A Value is an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence. A value system is an enduring organization of beliefs concerning preferable modes of conduct or end-state of existence along a continuum of relative importance. Some writers on Indian Management have taken a single value to analyze managerial or organizational behaviour. On the one hand, modern business characteristics, such as technology and efficiency, are being discredited because they are said not to correspond with the old Indian Cultural Values. Indian cultural values are being discredited because they are perceived as incongruous with modern business life. Religion has generally been seen as obstructing progress in business because some values are interpreted in narrow sense. The same has been said about paternalism and other typical Indian cultural values. Such analysis misses the inherent strength and adaptability of the cultural values, if properly understood and implemented in the daily business life. It is even dangerous to make such analysis as they are, firstly, often culturally biased, holding Western cultural values as the ultimate yardstick. Secondly, such analysis leads to a notion of cultural supremacy/mediocrity, yielding a low cultural self-confidence for the Indian Values. A low cultural self-confidence in turn reinforces the problems and supports a values corruption, when people start to doubt their own values and uncritically assimilate negative foreign values (Galib 1991). Western thought is characterized by the competition, exploitation, materialism and consumerism of modern society. Again western thought lacks values - such as quality of relationship, ecological and spiritual values and respect and care for the other creatures on the planet. Recent western thinkers like Frijof Capra (1976) and Wilber (1992) tried to build conceptual bridges between the western and eastern models of man. From the list of Indian thoughts given below, one could understand the superiority of the Indian thought on human behaviour linking Indian ethos and culture.
INDIAN THOUGHT
1.Self-realization is the highest need (Moksha) 2.Duty-oriented people 3.Giving Model is practiced each employee will think what he can contribute to the success of their organization. 4.Values are given priority. 5.Loyalty is an ethical values in Indian context. 6.It is based on Transcended ideology. 7.Compassion is given preference. 8.Promotion is purely based on seniority. 9.Harmony and Co-operation. 10.Indian mind is synthetical. 11.Eastern mentality is the believing mind. 12.Renunciation detachment is the important values. 13.Pragmatic approach
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INDIAN PSHYCO-PHILOSOPHY
The spiritual tradition of India is rich and profound well of insight and wisdom, one that articulates with precision the whole sweep of human history, potential and purpose. It is a tradition that has successfully survived the millennia unchanged in its core structure and one that stands in stark contrast to the currently dominant mode of western rationalistic thought. If it is considered as a psychological system this difference comes into stark relief. The term psychology refers to the study of the nature of the psyche or the mind. In the modern western culture, dominated by the rationalistic empiricism of post-enlightenment thought, psychology has come to mean the statistical search for the universal laws that govern observable human behaviour and inferable cognition. As such, psychologists in the west attempt to capture psychological reality in the net of positivist analysis and in the spirit of scientific enquiry as adopting a methodology characterized by objectivism. Westerners attempts to understand the nature of psychological existence revolve around the use of experiments in which the researchers separate herself completely from the phenomenon under study. This means that until very recently, only observable phenomena experienced through the objective observation of others could be accepted as valid evidence. The immediate problem that this poses for a full understanding of human functioning is that the inner subjective experiences of consciousness are deemed to lie beyond the pale of real phenomena and are derogated to the realms of illusory and meaningless epi-phenomena. By holding fast to this method-driven conception, western psychology has, for the mass of its history, refused to entertain the very possibility of spirituality. In essence then, the Enlightenment agenda rendered a truly spiritual psychology impossible. To understand the realms of spirit and consciousness in the west one has to turn away from its formal study to seek answers in the etiolated annals of formal religion. In Indian schema however such limitation has never obtained as the central importance of the spiritual life has never been denied. In India, the schism between rationality and spirituality has never emerged, thus psychology and the understanding of the Vedantic tradition in particular to develop a far more inclusive and holistic understanding of the nature of the psyche, one that integrates the findings of observable empirical reality with the subjective inner realization of conscious potential. In this sense alone Indian spiritual psychology has much to contribute to our understanding of the modern malaise, both with regard to its etiology and with regard to how we might advance from it to a more balanced and truly integrative mode of conscious existence. In the objectivist analysis of the western academy much a value-based schema is impossible The term Indian Psycho-philosophy as Joseph Campbell points out in his epic work The Masks of God, basic human nature is largely the same in every collective and culture. The fundamental motivations, emotions, instincts and aspirations of the species replicate themselves in common form across humanity and as such it would be mistaken to postulate a distinctively Indian condition of mind that is not shared by humanity as a whole. The representation of psyche can and do differ significantly across culture. Thus, the symbols, metaphors, logic and modes of articulating what human existence means and what behaviour is and ought to be do vary in accordance with the particular idioms of human culture. It is on this level that of the particular representative forms that seek to explicates our common psychological inheritance that the notion of a uniquely Indian Spiritual psychology or psycho-philosophy attains meaning. The great tradition of Indian thought that gives solutions to the modern economic malaise, but even here have further distinguish between variety of profound and long-established spiritual systems. Within India we find a variety of highly developed religious frameworks each with its own well-worked out systems of psychological representations. Islam, Jainism, Bhuddism, Sikhism and Hinduism are pre-eminent in this listing and although there is a considerable overlap in the central philosophies of all of these advanced religious forms, but still the Vedantic system of thought that is central to the Hindu tradition. Indian spiritual psychology has a great deal to offer humanity by undoing the selfishness that lies at the heart of the modern malaise. It is Indian psychology truly comes into its own in terms of providing significant insight into the means for our continued advance. Western conceptions of psychology currently languish in the dead end of empiricist closed-mindedness, one that denies its potential to meaningfully contribute to ameliorating the modern malaise. In contrast, Indian psychology derives its whole purpose from formulating the means by which a separative and divisive individualism can be undergone in order that a more considerate and compassionate consciousness may emerge. In this time runaway individualism, it points humanity towards the only ultimately secure means of progressive advance. Sri Aurobindo and others clearly point out, the collective mind is nothing more than the aggregation of its individual members. It is essential to recognize then that although Indian spiritual psychology specifically aims at the emancipation of the individual consciousness, its ultimate aim is the emancipation of humanity as a whole. It is in this context that the unique insights of Indian spiritual psychology and its practical methods for effecting the progressive movement towards the integrative ideals of human peace, harmony and justice. In the great achievements of Indian psychology there are numberless luminaries each of which has developed particular means by which the ignorance and harmfulness of selfishness may be overcome. These are rishis and seers of Indian history, those who rose in their own consciousness to the point where the problems of human limitation were clearly realized and overcome. Such well-known names of Vivekananda, Ramakrishna, Krishnamurti and Sri Aurobindo. In addition to the astonishing profundity and clarity of these modern luminaries, India has also produced a wealth of historical literature of global significance in the struggle to understand the nature of consciousness and the means to conscious realization. Vedas, Upanishads and Epics of Indian literature occupy the heights of human psychological accomplishment and could usefully call upon the insights of any of these sources to aid in addressing the problematic nature of modern-day selfishness.
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Samkhya and Yoga are atheistic, whereas Nyaya and Vaisesika are theistic; however, the former are theistic in their later developments. All these are generally classified as orthodox schools. From another point of view, some scholars combine the orthodox schools in pairs: Yoga-Samkhya, Nyaya-Vaisesika, and Mimamsa-Vedanta. The basis for this coupling is that the first element of each of the three pairs pertains to practice, and the second to theory. Thus Yoga is essentially a practical discipline of physical and mental training for the realization of the truths taught by the theoretical system of Samkhya; similarly Nyaya is primarily methodology, whereas Vaisesika is the metaphysical system upheld by Nyaya. Similar considerations hold with respect to Mimamsa and Vedanta. The following characteristics are common to all systems of Indian philosophy, with the single exception of materialism (Ramakrishna Puligandla (1997)) 1. All schools insist that no account of reality which fails to do justice to reason and experience can be accepted. By reason is meant here the canons of formal reasoning as well as those of inductive inquiry. Similarly, experience is to be understood in its broadest sense, which includes extraordinary commonsensical experience, scientific experience, and extraordinary states of consciousness. 2. All the systems maintain that every acceptable philosophy should aid man in realizing the purusarthas (the chief ends of human life). Briefly, all philosophies of India are philosophies of life. Any philosophy worthy of its title should not be a mere intellectual exercise but should have practical application in enabling man to live an enlightened life. A philosophy which makes no difference to the quality and style of our life is no philosophy, but an empty intellectual construction which may quench the thirst of the curious but is otherwise irrelevant. Indian philosophy has the power to transform mans life from one of ignorance, darkness, and bondage to one of knowledge, wisdom, and freedom. 3. All the systems of philosophy acknowledge mans essential spirituality, regard freedom as his highest and ultimate goal, and demand that philosophy show him the way to attain freedom. 4. All the schools teach that mans state of ignorance and suffering is not due to original sin but due to original ignorance. 5. Accordingly freedom and liberation can only be won by conquering ignorance through knowledge. 6. All the systems hold that there is no limit to the perfectibility of man. The reason for this view is that man contains within himself the secret of all existence, for example, as the Upanishads teach, mans inmost Self (Atman) is Brahman, and as Buddhism teaches, every man is Buddha, only he should know that to be the case. 7. All the schools argue that complete freedom (Moksa, Nirvana) is to be attained here and now in the bodily existence. 8. All the systems accept Yoga in some form or other as the spiritual discipline par excellence for the attainment of freedom. Indian sacred texts are store house of values for human action. Values found in Srimad Bagavad Gita, Upanishads, Thirukural, Naladiyar, Athichudi, Vedantics, Arthassastra and Manusmriti has significant bearing on the human behaviour. These values are highlighted here in order to construct a value profile based on Indian psycho-philosophical perspectives.
27. Firmness (Dhridatwa) 28. Love (Prema / Preethi) 29. 30. 31. 32. 33. 34. 35. Bliss (Santosham) Friendliness (maitri) Joy ( Santhosham) Indifference to wicked (Upeksha) Self-realization (Moksha) Absence of hatred (Nirdwesha) Self-actualisation and (Atmayatharthyia Karana) 36. Modesty/Humility (Vinaya) 37. Cosmic causation (Karma)
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Code of ethics in ones position or station. Primordial Code Sanatana Dharma i.e. code of basic virtues. Preference for affiliative relationship rather than formal or talk-oriented relationship. Also relationship transcending bodily or mere physical relationship. Firm in allegiance. Unagitated condition and freedom from anxiety. Freedom of the mind from hypocrisy, falsehood and fraudulence in ones conduct. Non-violence in thought, word and action. Showing ones pleasure or satisfaction with a pleasant face. EQUIVALENT MEANING Insatiable longing especially for wealth or food. Thirst for possession; coveting others wealth etc. Desire for materials things and very close relationship with people. Pretending or not being original. Meanly, parsimonious, niggardliness, miserliness. Violating faith or betraying trust. Over-enthusiasm as distinct from normal enthusiasm. High opinion of ones own qualities & merits. Feeling resentment or envy of person, his advantages etc. Some people could be erroneously jealous about normal attributes and attainment of others. Unreality or emptiness. Empty pride. Intention of doing things for the purpose of getting reward. (Opposite to Nishkamkarma). Importance is given for monetary benefits. Capacity to dominate other persons. EQUIVALENT MEANING Rank or position in ones social group. Decision of doing evil to others. Extreme displeasure due to this one will lose temper. Misrepresentation in order to deceive others. Inflexible; firmly adhering to ones chosen course of action. Being cruel and merciless while dealing with people. Passionate enjoyment for sensuous appetite regarded as sinful. Lack of knowledge. Painful emotion caused by impending danger or evil. Unwilling to work. Defer action postponing the work. State of mind of one who suspects that all is not well. Creating false impression or symptom of madness. Revengeful. Not taking care for or development (indifference to progress). Sending of goods not ordered, in hope that recipients will not take action to refuse them and must later make payment. Self-assertive as a sign of emotional. Wasting of wealth for unproductive purpose.
VALUES (RAJAS) 1. Greed (Lobha) 2. 3. 4. 5. 6. 7. 8. Attachment (Mohayam) Hypocrisy (Dwantham) Stinginess (Krupanata) Treachery (Droham) Impetuosity (Vypareetya in Utsukata) Pride (Garva) Jealous (Matsayrya)
9. Vanity (Prathishta) 10. Expecting Reward (Phada nireekshinam) 11. Wealth/Income (Sampath/Dhana) 12. Power (Adhikar) III. VALUES (TAMAS) 1. Status (Sthiti) 2. Malevolence (Matsaram) 3. Anger (Krodha) 4. Deceit (Mosam) 5. Obstinacy (Hatam) 6. Arrogance (Ahankara/madam) 7. Lust (Kama) 8. Ignorance (Ajnana) 9. Fear (Bhaya) 10. Laziness (Jadam) 11. Procrastination (Kala-vilambam) 12. Suspicion (Samshayam) 13. Delusion (Maya) 14. Vindictiveness (Matsara) 15. Heedlessness (Ajaagrata) 16. Inertness (Stabdha)
17. Aggressiveness (Akramah) reaction. 18. Lavishness (Vrithaa-vyayam as opposed to Mittravyayam) 19. Caste (Jati) Structurisation of society on the basis of status ascribed by birth. Based on the above values a Personal Value Questionnaire could be framed to know the personal value profile of typical Indian businessmen. The questionnaire will guide the one to understand, what are the terminal values, instrumental values, operating values, and weak values of Indian businessmen. PERSONALITY IN INDIAN THOUGHT GUNA CONCEPT Chakraborty.S.K describes in his book on Values and Ethics for Organizations, Guna Theory - is a theory of psychological energies or forces that determine individual properties and dispositions. These forces are also the constituents of everything in creation, in Prakrti, in Nature. There are three such energies: Sattva, rajas, and tamas. Sattva energy is essentially enlightening and harmonizing, rajas is dynamic but blind and fragmentist, and tamas is indecisive and inert. Yet, as a flame requires a wick, wax, and a lighted matchstick, so also in a human being all these gunas are necessarily present, but in differing proportions. This is the key to differences in tendencies and proclivities, including ethical ones, amongst individuals. The higher the proportion of sattva in an individual, the stronger are his/her ethical propensities. Transcendence, Oneness, understanding of the involved Self, all come naturally and easily when greater sattva prevails. A preponderance of rajas, while imparting strong action-orientation, inevitably carries with it greed, anger, jealousy, vanity, cunning, vindictiveness. These constituent psychological forces of rajas are the prime-movers of unethically. Tamas lacks actionorientation, yet includes many of the negative psychological forces (dis-values) of rajas, breading a sort of passive, unproductive unethically. Against the backdrop, this part of the paper attempts to explain the concept of personality in terms of three Gunas in the Indian psycho-philosophical perspectives viz., Sattva, Rajas and tamas as found in the Hindu scriptures. SAMKHYA SCHOOL Samkhya contributes to the study of personality is worth notable. There are two different accounts of the origin of the name of the school. According to the one, Samkhya derives its name from the word Samkhya, which means number, in that the school concerns itself with providing the right knowledge and understanding of reality by specifying the number and nature of the ultimate constituents of the universe. According to the other account, the term Samkhya means perfect knowledge, and since the philosophy is regarded by its followers as the system of perfect knowledge they gave it the name Samkhya. Samkhya is dualistic realism. It is dualistic because of its doctrine of two ultimate realities: Prakrti, matter, and Purusa, self (spirit). Samkhya is realism in that it holds that both matter and spirit are equally real. With regard to the self, Samkhya is pluralistic because of its teaching that purusa is not one but many. The Samkhya distinction between purusa and prakrti is fundamentally that between the subject and the object. The subject can never be the object, and the object
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can never be the subject. The self (purusa) and the non-self (prakrti) are radically different from each other. The dualistic metaphysics of Samkhya is thus founded on the undeniably bipolar character of our everyday experience as made up of the experiencer and the experienced. Prakrti is the ultimate cause of all objects, (Dale Riepe, 1964) including human body, senses, mind, and intellect. Every object is caused by other objects. Prakrti has a principle; it is the first and ultimate cause of all objects, gross, and subtle. It is both the material and the efficient cause of the physical world. Being the ultimate cause, prakrti itself is uncaused, eternal, and all-pervading; and being the subtlest and finest, prakrti cannot be perceived, but can only be inferred from its effects. The Samkhya inference of the existence of prakrti is as follows: Every object of our experience is dependent upon and caused by other objects. Nothing arises out of nothing. In this manner, the whole physical world is a series of causes and effects can only account for the whole physical world is a series of causes and effects. But, the Samkhya continues, the series of causes and effects can only account for the arising of one object from another and cannot explain the fact of there being any objects at all. The Samkhya infers prakrti as the primal cause of all physical existence. Prakrti is the non-self and is devoid of consciousness [Chandradhar Sharma (1964)] and hence can only manifest itself as the various objects of experience of the purusa, the self. The Samkhya, therefore, propounded the theory of a single indiscrete omnipresent substance called prakrti, the original substance the source of all modifications, with natural elemental properties (Gunas) inherent in it, called Sattva-Rajas-Tamas, capable of manifesting themselves in different states and forms, like the same H20 having the property of appearing as vapour, water, and ice etc., under different conditions. According to the Samkhya, prakrti is constituted of three gunas, namely sattva, rajas, and tamas (Isvarakrsna, 1887) and the whole subtle internal and the gross external universe and its psychophysical organisms evolve in association with the sentient Purushas for serving their purposes. To account for experience and knowledge of beings, they also possed the non-material and non-corporeal Principle of Sentiency and Experience called Purushas. When the dynamic equilibrium of the three gunas is disturbed by the proximity and natural urge of the Purushas for experience, as a result of the permutation and combination of the different characteristics of the three Gunas, viz.: 1) Tamas (Inertia), 2) Rajas (Motion), and 3) Sattva (Stabilizing), with the capacity to manifest different qualities under different conditions and on different planes, respectively, such as : 1) Mass, Veiling, Darkness and Dullness; 2) Attraction and Repulsion, and Energy and Activity; and 3) Serenity, Lightness, Luminosity, and Revealing. These manifest in different ways under different conditions of permutation on the physical, psychical, and spiritual planes (cf. Gita, chs. XIV and XVII). Tamas-Rajas-Sattva give rise to the framework of Space-Time-Causation when evolution starts in association with Consciousness Principle. The term guna ordinarily means quality or nature. But in the context of prakrti, guna is to be understood in the sense of constituent (component). Sattva is the component whose essence is purity, fineness, subtlety, lightness, brightness, and pleasure. It is sattva which is most closely associated with ego, consciousness, mind, and intelligence. It should be emphasized however, that sattva is only a necessary but not a sufficient condition for consciousness, for consciousness is exclusively the purusa. Rajas represents the principle of activity and motion. In material objects rajas is responsible for motion and action of objects. In man rajas is the cause activity, restlessness, and pain. Tamas is the constituent which manifests itself in material objects as heaviness as well as opposition and resistance to motion and activity. In man it is the cause of ignorance, coarseness, stupidity, laziness, lack of sensitivity, and indifference. The gunas constitute prakrti as a dynamic complex and not a static entity; prakrti is thus not mechanical aggregate of the three constituents, but an organic unity in which the three gunas are in a state of dynamic equilibrium. The gunas are ever changing. They cannot remain static even for a moment (Chandradhar Sharma, 1964) that is, the gunas not only oppose but are also dependent upon each other. The gunas are interdependent moments in every real or substantive existence.(B.N.Seal, 1915). On account of the homogeneous, non mechanical, organic unity of prakrti, the gunas cannot be separated. This is another way of saying that prakrti cannot be decomposed into the individual gunas, for otherwise the gunas and not prakrti would be the ultimate cause of all physical existence. The Samkhya maintains that since prakrti is the ultimate cause of all physical existence, the three gunas which constitute prakrti also constitute every object of the physical world. Every object therefore produces in us pleasure, pain or indifference. Prior to its evolution and differentiation into the world of objects, prakrti exists in a state of dynamic equilibrium due to the perfect balance between the three gunas. It is worth emphasizing that even before evolution prakrti is in a state of constant change and transformation the gunas constantly balancing each other. Thus prakrti is never in a static state. Change and activity are its very essence (Hiriyanna, 1956). Consequently, every object in the world, being an effect of prakrti, is also in a state of constant change. Further the Samkhya teaches that the evolution of prakrti is due to the imbalance and disequilibrium brought about by the dominance or predominance of one or the other of the three gunas. The evolution of prakrti results in twenty-three different kinds of objects (Vacaspati Misra, 1921). The first of these is intellect (mahat, buddhi, the great one), arising out of the preponderance of sattva (Anirudhhas Vrtti). Mahat is the basis of all intellectual modes. It is thus the faculty by which one could discriminate, deliberate, judge, and make decisions. It is by mahat that one could distinguish between the subject and object, self and nonself, experiencer and experienced. The second, namely, ego (ahamkara), arises out of mahat. Ahamkara is the source of the sense of I and mine. It is what causes men to appropriate objects, set goals for ourselves, and initiates actions to realize them. From ahamkara emanate two sets of objects, The first consists of the Five sense-organs, the five motor organs, and mind (manas); the second is comprised of the five elements which, according to the Samkhya, may exist in two forms, subtle and gross (Isvarakrsna, 1887). It is the first group pertain to mens conscious life and consequently arise out of the sattvic components of ahamkara. On the other hand, the objects of the second group, of which the objective world is constituted, emanate from the tamas component of ahamkara. The rajas aspect of ahamkara does not produce any objects of its own but supplies the energy for the other two gunas to produce their respective objects. The Samkhya account of the purusa. Samkhya is dualistic in that it recognizes two ultimate realities: Prakrti, the physical world, and purusa, the self. The physical world is the manifestation of prakrti, which is subtle and devoid of any consciousness. On the other hand, purusa is the self within, Prakrti which is pure consciousness and sentience. The distinction between purusa and is absolute and indissoluble. Purusa is radically different from the body, the senses, the manas, the ego, and even the intellect, all of which are physical. The self is not to be thought of as an object whose attribute is consciousness. Quite the contrary, the self is pure consciousness itself. The self cannot be an object, because if it were it would in principle be possible to experience it as one among many objects. It is the subject and hence can never be the object (Dale Riepe, 1964). The sattvikabhavas are the spontaneous organic manifestations of emotions, which spring from sattva only. Sattva is an innate virtue of the mind which manifests emotions abiding in the self. (1) Vikarah sattva-sambhutah sattvikah parikirtitah, they are different from the other organic expressions because they spring from sattva only. (2) Sattvamatrodbhavatvat te bhina apyanubhavatah. Visvanatha gives this definition of sattvikabhavas, Singa Bhupala defines sattva as that quality of the mind, which includes the mind towards joys and grief of others, and evoke similar emotions in it, which are characterized by pleasure and pain. He defines sattvikabhavas as those states which arise from the sattva of the mind excited by emotions. Saradatanaya also holds this view. Bharatamuni regards sattva as a virtue of the mind, which enables it to concentrate itself on an object, and which is manifested in horripilation, shedding tears, change of colour, etc. Sattvikabhavas are eight in number: 1) inactivity (stambha), 2) perspiration (sveda), 3) bristling of hairs of the body (romanca), 4) change of voice (svarabheda), 5) trembling (vepathu), 6) change of colour (vaivarnya), 7) shedding tears (assru), and 8) insensibility (pralaya). GUNAS IN VARNA DHARMA Varna means occupational classes and Dharma means a system here. The Bhagavad Gita (Verses 41 to 44 in Chapter 18) and the Manu Smriti (an ancient book on social ethics and jurisprudence) describe the occupational system of social classes as found in ancient India. The occupational division was not necessarily hereditary. The occupational caste system was not rigid and there was a freedom to move from one caste to another. The social classes (varna) were (i) the Brahmins; (ii) the Kshatriyas; (iii) the Vaisyas; (iv) the Sundras and their duties were as follows. The Brahmin studied and taught, conducted sacrifices (yagnas) and acted as priests. The Gita (18.42) says Serenity, self restraint, austerity, purity, forgiveness, and also uprightness, knowledge, realization, belief in a hereafter these are the duties of the Brahmins, born of their nature.
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The Kshatriya protected the life and property of the people and ruled over them (e.g. the king, warriors and officers). The Gita (18.43) says Heroism, vigour, firmness, resourcefulness, not flying from battle, geneerossity and lordliness are the duties of the Kshatriyas born of their owned nature. Those who are engaged in agriculture, cattle-rearing, banking, trade and industry are Vaisyas. And those who serve others are the Sudras (e.g. clerks, assistants and other labourers). Swami Chinmayananda (1983) feels that sattva will be dominant among the priestly and teaching class of Brahmins who may also have a little rajas with minimum tamas; the Kshatriyas will have mostly rajas, with some sattva and a slash of tamas; the Vaisyas will have more rajas, less sattva and some tamas; and the Sundras will have more tamas, less rajas and much less sattva. He even ventures to give average percentage of the guna mix in the different classes. BHAGAVATAM Shrimad Bhagavatam also describes the three gunas. Bhagavatam describes particularly of devotion to Lord Narayana and specially his incarnation as Sri Krishna. It offers a comparative picture of sattva, rajas, and tamas (ch.12.3) as follows: When sattva which is pure and tranquil and which has the power to illumine overcomes the other two gunas, then a man becomes endowed with happiness, virtue and knowledge. When rajas, which leads man to action, which rouses attachment, and causes the vision of multiplicity, overcomes tamas and sattva, then a man becomes active, finds wealth and fame, and suffers misery. When tamas, which is characterized by inertia, and which casts a veil of ignorance over ones mind and makes one lose the power of discrimination, overcomes rajas ands sattva, then man becomes stricken with grief and delusion; he lives in a dream of hope; he becomes cruel; he falls asleep spiritually. The emphasis in the above literature is that sattva is superior to rajas and rajas to tamas, and the aim of every man to develop more of the superior guna and have less of the inferior, and ultimately raise oneself above all the three gunas and realize God who is also guna-less (nirguna Brahman). THE GUNA SCHEMATA OF THE GITA The Gita classifies the psychological characteristics of an individual into three gunas the sattva, the good; the rajas, the passionate; and the tamas, the dull. Of the eighteen chapters in the Gita, chapters 14, 17 and 18 deal with the Guna Concept. Every individual will have a combination of these three gunas sattva, rajas, and tamas. The predominance of one or the other of these determines the personality of the individual. Swami Chinmayananda (1983) compares this to different cups of coffee taken by different consumers, the coffee being a mixture of milk, decoction and sugar in different proportions (p.70). RELEVANT RESEARCH FINDINGS ON THE CONCEPT OF GUNA Chakraborty.S.K (1988) compares the two theories Transactional Analysis and Guna Dynamics and sketches the similarities and differences between them. He finds that Guna theory is more comprehensive in its scope than Transactional Analysis, and is, therefore, able to explain better, both the industrys impact on environment, and the aggravated negative tendencies in Indian society. He proposes a synthesis of the two theories for more effective handling of human relationships. Chakraborty is author of several books on the relevance of Indian psycho-philosophical theories to managers. Vinod Garg and Bharat Vakharia (1999), explained through their work on Empowering Organisations Through the Geetha, the basic Themes of the Geetha namely, Modes of Nature ( Gunas Sattva, Rajas, and Tamas), Transcendentalism, Act For Krishna and Love, Devotion & Surrender to Krishna. Gunas had been compared with Human Motivation in the above work. Correlations between Ethical Decision-Making and Different Personality Variables namely Sattva Guna, Rajasa Guna, and Tamas Guna, Locus of Control and Machiavellianism have been carried out by using five vignettes in the works of Roy and Dhawan (1984). In addition to the above research work, Parvinder Kaur and Arvind Sinha (1992) have used Indian based Personality type in their work on Dimensions of Guna in Organisational Setting by analyzing data collected from 310 executives of 13 organisations, Kaur and Sinha identified four factors Tamas Guna, Rajas Positive Guna, Sattva Guna, and Rajas Negative Guna and discussed the relationship of these variables with some organizationally relevant variables. Elankumaran, S. (1994) had used vignettes in his research work to classify the personality, namely Sattvic, Rajasic, and Tamasic based on Indian Psychophilosophy and compared with Oganizational Climate and Job Satisfaction.
CONCLUSION
Values are universal in nature and formation of values are natural process and purposeful. Intellect and reason are in fact, directed by deeper values which essentially dwell in emotions and feelings. Human values are noble emotions, disvalues are ignoble. It is this set of emotions which is true master of oneself. If the direction comes more and more from human values, the quality of life will ethically uplifted. If the thirst springs mainly from disvalues ethicality will be deteriorated. Values are the basic principles, forces and guiding factors which formulates the personality structure. Personality is a diverse psychological concept and it is incorporates all the psychological process. It is possible that one may have a belief system or set of values deeply ingrained in his personality but when it comes to practical situations he may face dilemmas or conflicts of values. This conflict or dilemma is indeed, again a question of judging the true personality. Personality would influence perception of the environment. Theoretically, a sattvic person is knowledgeable and has a more correct picture of the business environment. He will view business as his service to the society. So, he will take rationale decision which will benefit his customers. Rajasic person will be emotional and goal oriented and would like to be successful in his business and he may use any strategy to earn profit. Where as the Tamasic person is dull and full of ignorance. He is unlikely to have a correct picture of the business. He either feel happy about others advancement or take initiatives to improve his business. He will never bother about the consequences of his business.
REFERENCES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Aurobindo, Sri.1981. Life Divine. Pondicherry, Aurobindo Ashram. Chakraborthy, S.K.1988. Guna Dynamics can enrich Transactional Analysis. Vikalpa, 13(3), pp 39-50. ----- (1991) management by Values Towards Cultural Congruence Oxford University Press, New Delhi. Chandradhar Sharma. 1964,. A Critical Survey of Indian Philosophy. Delhi: Motilal Banarsidass, pp.153. Chinmyananda. Swami.1983. The Bhagwada Gita. Chapter XVIII, Bombay: Central Chinmaya Mission Trust. Dale Riepe. 1964, Samyutta-Nikaya XXII.90 (Translations, pp. 165-66, XII.35), The Naturalistic Tradition in Indian Thought (Delhi: Motilal Banarsidass, pp.193.) 1927. Elankumaran. S. 1994. Personality, Organization Climate and Job Involvement. Unpublished Ph. D Thesis submitted to Pondicherry University, Pondicherry. Frijof Capra, 1975The Tao of Physics Wildwood House, London. Hiriyanna, M. 1956. Essentials of Indian Philosophy. London George Allen and Unwin. Isvarakrsna and vacaspati Misra. 1991. The Samkhya Karika and The Samkhya-tattva-kaumudi. Banaras. Pp. 67-68 Vrtti 3.78 84. Isvarakrsna. The Samkhya Karika, (cited as SK) tr. By T.H. Colebrooke (Bombay: Tookraram Tatya, 1887), 36-37; and Samkhya-pravacana-sutra (SPS) with Anirudhas Vrtti. Ed. Kalivara Vedantavagisa (Calcutta), pp. 2.40-43. Joseph Campbell, The Masks of God.. Viking Press: Volume 2, Oriental Mythology (1962) Parvinder Kaur and Arwind Sinha. 1992. Dimensions of Guna in Organisational Settings. Vikalpa, Vol.17, July-Sept. Radhakrishnan, S. 1966. Indian Philosophy Volume I. London: George Allen and Unwin Ltd. R
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15. Adhakrishnan, S. 1976. The Bhagavad Gita. Calcutta: Blackie and Son. 16. Rajagopalachari, C. 1962. The Tiru -Kural, in The Cultural Heritage of India. (ed.) by S.K. De, vol.2, Calcutta, The Ramakrishna Mission Institute of Culture, pp.531. 17. Ramakrishna Puligandla. 1997. Fundamentals of Indian Philosophy. D.K. Printworld (p) Ltd. New Delhi. Pp.10-12. 18. Raman, B.V. 1983. Hindu Preductive Astrology. Bangalore: Raman Publication. 19. Roy, S. and Dhawan, S.K. 1984. Indian managers and their values. Indian Journal of Industrial Relations, 19(30, pp. 367-378. 20. Seal, B.N. 1915. The Positive Science of the Ancient Hindus. London: Longmans, Green & Co. pp.2. 21. Shamasastry, R. 1961. Kautilyas Arthasastra. Mysore Printing House, Mysore, pp. 343. Shanbhala. 22. Vacaspati Misra, 1921. Samkhya-tattva-kaumudi. (Cited as STK), ed. By B. Ramasastri, Chowkhamba Sanskrit Series (Banaras, 1921), 211-41; SPB, pp. 1.64-74; 2.10-32. 23. Vinod Garg and Bharat Vakharia (1999) Empowering Organizations Through The Geeta (Hardcover) Publisher: Bpi (india) Pvt Ltd (2003-01) 24. Warrier, S.K. 1983. Value Profile of Indian Managers, Indian Management, 22(7), pp. 23-38. 25. Wilber Ken, et al. 1992. Transformations of Consciousness. Massachusetts. SCRIPTURAL SOURCES Arthasastra: a treatise on state-craft which covers public administration, taxation, ethics and economic administration. It is popularly attributed to Kautilya and the 4th century BC. But its authorship could be diverse spread over a few centuries. The resemblance of the later-day Italian Machiavelli to the Arthasastra is striking. Both preach realistic ethics. Bagavad Gita: Part of the Indian epic, Mahabharata, in Sanskrit attributed to Vyasa. Innumerable commentaries have been written on this by Indian philosophers down the centuries. It provides the quintessence of the ethics of the Upanishads and is certainly anti-ritualistic. Its advocacy of yoga is based on the Sankhya school of Indian philosophy. Bhagavatam: A collection of ancient stories in Sanskrit. Bijak Kabirdas: The poems of Kabirdas, a weaver by profession of the 15th century. Gurbani: The sacred work of Guru Nanak in Punjabi. It is the synthesis of Islam and Hinduism. Jatakas: Popular tales in Pali (Peoples variant of Sanskrit) suffused with Buddhist ethics. Kural: An ethical text from South India in Tamil authored by Thiruvalluvar, possibly of the 1st century BC. It has very little of religion and god in it and its ethics are strongly secular and cover among other things the daily tasks of businessman, agriculturists, doctors and ordinary householders. Mahabharata: A Sanskrit epic attributed to Vyasa. Manusmriti: An ethical text attributed to the 5th century BC attributed to Manu. It explicitly sanctions caste distinction and discriminatory treatment against women. Nitishataka: A well-known ethical text authored by Raja Bharthrihari of the 6th century AD. Ramaana: An epic in Sanskrit attributed to Valmiki. Sevaral regional versions have been brought out of the basic story. The most widely read of these is by Tulsidas in Awadhi (a variant of Hindi). Vedas: The most ancient of scriptures in Sanskrit. A large part of it is lyrical poetry is addressed to nature. Some of the Vedas are ritualistic mantras which were believed to have marginal power. Upanishads: A later development in Sanskrit of Indian thinking and are philosophically reflective. Their tenor and thinking is vastly different from the simpler Vedas. The Upanishads are, therefore, described as Vedanta.
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MALNUTRITION AMONG INFANTS: KEY TRENDS AND STATUS ASHALATHA SUVARNA ASSOCIATE PROFESSOR DEPARTMENT OF COMMERCE SHREE GOKARNANATHESHWARA COLLEGE MANGALORE 575 003 DR P. S. YADAPADITHAYA PROFESSOR, CHAIRMAN AND DEAN FACULTY OF COMMERCE MANGALORE UNIVERSITY MANGALAGANGOTRI - 574 199 ABSTRACT
The health status of infants is the powerful indicator of a nations health, for; they are the precious human resource of tomorrow. Early childhood constitutes the most crucial period in life when the foundations are laid for the physical and sensual development. India has the largest child population with 157.8 million below the age of six years (2001 census), but is performing very poorly by most indices of child well-being worse than even sub-Saharan African countries. Forty six per cent of our children are nutritionally deprived. The central purpose of this paper is to examine and report on the trends and status of malnutrition in India. An attempt is made to identify and discuss malnutrition and child feeding practices, malnutrition and infant mortality, mothers health and malnutrition, reasons for the dismal performance of the programmes based on secondary data and information and to focus on the target specific programmes to combat the situation.
KEYWORDS
Malnutrition, Infant, Integrated Child Development Service, Health
INTRODUCTION
he health status of infants in any country is the reflection of the socio-economic development of that country. It is determined by various factors such as the level of income, standard of living, housing, sanitation, education, health consciousness, personal hygiene, availability, accessibility and use of public health distribution. The poor health status is the product of inadequate nutrition during the early period of a childs growth. A child during the earliest period of its life is referred as infant in the Oxford Dictionary. From the time of delivery to 3 years of age is infant stage. During this stage the child begins to walk, talk and becomes able to consume solid food. Physical and sensual development begins (Muthuswamy, 2000). Proper nutrition care and development during this period will lead to a healthy and productive life. Therefore, growth monitoring, health check up, identification of risk cases, treatment of minor diseases, deworming, prophylactic measures and referral of serious cases etc., should become the major concern of everybody. Deaths in infancy are indicative of a poor state of maternal and child health services (Bose, 2006). However, child malnutrition is the central health problem in India and the largest human development gap that the nation faces (Shivakumar, 2006).India is performing poorly by most indices of well-being of children. The results of the recent National Health Family Survey (NFHS), show that not only is the nutrition and health status of children in the country poor, but also they are showing very slow signs of improvement. For instance, 46 percent of children under three are under weight which is an improvement of only one per cent age point compared to National Family Health Survey 2 which was carried out 8 years back. The corresponding level of child malnutrition is much lower in most other countries- 28 per cent in Sub Sahara Africa, and 8 per cent in China (Shivakumar, 2006). Ranked on an index that adjusts child malnutrition level to GDP, India had the second highest level of malnutrition - worse than all of Africa, second only to Bangladesh, and closely followed by Nepal and Pakistan. A high proportion of children are nutritionally challenged even prior to birth, with as many as 25 per cent of all babies born with low birth weight. This high proportion of under nourished children cannot be a matter of pride in a food-surplus economy, where government is regularly mooting public health programmes to combat the situation. Despite, its vibrant programmes like Integrated Child Development Services (ICDS), Reproductive Child Health (RCH), National Rural Health Mission (NRHM) the malnutrition among infants continues unabated. A peep into the trends and status of malnutrition as reported in the National Family Health Surveys (NFHS) will give an insight into the graveness of the problem. In this paper an attempt is made to analyse the reasons for the dismal performance of these programmes and to focus on the target specific programmes for infants hailing from different socio-economic backgrounds in the country. We find that there is obvious imbalance between the targets set and goal achieved. The article is set out as follows. Section II reviews the relevant literature and section III discusses the trends and status of infant health in the country. Section IV deals with the government sponsored health programmes, while section V attempts to highlight the deficiencies of these public health programmes. The final section summarises study.
REVIEW OF LITERATURE
Studies show that malnourished children are at greater risk of dying than healthy children.Malnutrition has been identified as the biggest single contributor to child mortality in developing countries.A new analytical framework for the study of determinants of child survival in developing countries is proposed by Mosley, Chen (1984). The approach incorporates both social and biological variables and integrates research methods employed by social and medical scientists. The framework is based on the premise that all social and economic determinants of child mortality necessarily operate through a common set of biological mechanisms, or proximate determinants, to exert an impact on mortality. The Cebu Study Team (1992) estimated child health production functions for diarrhea and febrile respiratory infection, and weight with data from Cebu in Philippines for children up to 2 years old and examined the infants with exclusive breast feeding, breast feeding supplemented with nonnutritive liquids, and breast feeding with nutritive supplements and found that children in any of the breast-fed categories weighed more than those not breast-fed. The results of the study from the National Health and Nutrition Survey (1989) conducted in Brazil strengthen the compelling case for breastfeeding by documenting its significant beneficial effects on reducing illness and improving growth among infants and young children. The clear benefits of breast feeding beyond a childs first six months are perhaps the most important finding of this study (Senaur et al.2000). Infants born at low birth weight conventionally defined as a birth weight less than 2500 grams experience severe health and developmental difficulties that can impose substantial health costs on society (Almond, 2005). The onset of the malnutrition is usually between the childs six month and second birthday. In India the high prevalence of low birth weight (almost a third of the babies born in India weigh less than 2.5 kg at birth) is due to the young age, poor nutrition of the mother, which is compounded by the stress of repeated pregnancies. Mortality among these low birth weight babies is higher than in normal weight babies. The
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main reasons are lack of awareness of the young childs food requirements, poor living conditions, unsafe water, and poor sanitation, resulting in repeated infections (Ghosh, 2006). Studies from different parts of the country have reported a widespread prevalence of protein calorie malnutrition caused by inadequate food intake and deficiencies in the consumption of micro nutrients, vitamins and minerals.Child malnutrition is intimately related to inappropriate infant and young child feeding practices, and its beginnings set in during the first two years of an infants life. As more than 90 per cent of the brain actually develops during the first two years of an infants life, it is at this age the nutritional status of Indian children deteriorates in an irreversible way. If we are serious about malnutrition we have to focus on this age group says Shanti Ghosh (2006). This requires interventions such as home visits and nutritional counseling.The Tenth Five Year Plan (GOI 2002:337) document quoting NFHS-2 notes As a result of these faulty infant feeding habits, there is steep increase in the prevalence of under nutrition from 16 per cent at less than six months, to 63 per cent in the 12-23 months age. And this per cent age does not change much after two years. The Infant and Young Child Feeding programme (IYCF) is in need of an immediate reappraisal. To ensure the IYCFs optimal efficacy, it needs to be integrated into health, welfare and outreach programmes presently underway in urban as well as in remote and far-flung remote areas. Arun Gupta (2006) presents specific prescription on IYCF, exclusive breastfeeding for the first six months (starting within one hour of birth) and continued breast feeding for two years or beyond, along with adequate and appropriate complementary feeding after six months and calls it Optimal IYCF, reflects a unique global consensus on issues related to IYCF. According to Jeane Dreze (2006), India has some of the worst indicators of child well-being. About half of all Indian children are undernourished more than half suffer from anemia, and a similar proportion escape full immunization. There is therefore, an urgent need to re-examine what India is doing for the survival, well-being and rights of children under the age of six years. Ashokan (2006), in his study deal with issues related to health care system and its utilization specifically focusing on the implications for maternal and child health in rural areas. He points out to the wide gaps and inefficiency in health care services in rural areas and suggests for inter-sectoral co-ordination within the rural health network by integrating activities and the primary health centres, non-government organizations and the integrated child development services to meet the health needs of women and children. Shivakumar (2007), that the onset of malnutrition in the womb itself and reflects an inter-generational transfer of malnutrition from the mother to the child, and he further says one of the reasons for the same is the limited reach of public health services and messages. The cycle of malnutrition begins with undernourished mothers giving birth to low- weight infants. These infants grow into stunted and under weight children. With their physical and mental potential unachievable they tend to reach adulthood as men and women with poor physique and little prowess, either in the mental or physical sphere ,doomed to earn a pittance, live a life of deprivation and give birth to yet another under nourished generation. While both men and women go through the life cycle together, it is only the women who the capacity to affect changes at every stage. Not only through her reproductive role, but equally so, through her caring function, does a women affect the nutritional status of her family. As such, policies to effect nutritional improvements must focus on women (Ramachandran Nira, 2005). A similar study conducted by Gangadharan (2006), found that children in the low socio-economic profiles both in urban and slum avoided certain dose of immunization. The problem of underweight children is acute in slum where 33.3 per cent are underweight. The problem of underweight is mainly the result of low calorie intake of the mothers during pregnancy period and low intake of food due to poverty resulting from low per capita income of the family. The malnourished mother gives birth to a low weight baby. Malnourishment after birth lowers the childs resistance to disease. A malnourished child may suffer mental impairment and thus, benefit less from any education that is provided for (Rout, 2007) Mere reduction in Infant Mortality Rate (IMR) does not necessarily imply an improvement in the health of children who survive. It reflects only survival status of the child in the first year of life. Kerala has low IMR of 13 per1000 for both rural and urban. The morbidity problem among the children in Kerala is high compared to other Indian states (Registrar General 1998). Though Kerala is considered with the advanced countries of the world in respect of several socioeconomic indicators, the health status of mother and children are poor due to inadequate utilization of antenatal and postnatal health services, inadequate services provided by the Government. Health Centres and due to the condition of these hospitals (Gangadharan, 2006). India is the home of the largest child population in the world. The development of children is the first priority on the countrys development agenda, not because they are the most vulnerable, but because they are our supreme assets and also the future human resources of the country. In these words the Tenth Five Year Plan underlines the fact that the future of India lies in the future of Indian children-across income groups, geographical locations, gender and communities.However, only about one per cent of the total union budget is spent on children under 6 years of age. In a democracy, every child must be regarded as indispensable and the government must be accountable for the deaths of children and mothers. Unfortunately, the issue of childrens health seldom finds space in contemporary political discourse in India (Sinha, 2006). There is, therefore, an urgent need to prioritize policies towards children Henry Mosley and Lincoln Chen in the Bulletin of the World Health Organisation 2003, presents an analytical framework for the study of child survival in developing countries. The purpose of an analytical framework in the study of child survival is to clarify our understanding of the many factors involved in the familys production of healthy children in order to provide a foundation for formulating health policies and strategies. There are numerous situations in which a multi-disciplinary approach to the study of child survival could provide guidance for health policymakers in the developing world. For example, in many developing countries, large differences in infant and child mortality have been observed between various regions, or between mothers with different educational or social characteristics within a given area. In-depth investigation to connect these ecological or socio-economic factors to specific proximate determinants can give policymakers insight into health-related development strategies that could reduce these differentials.
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TABLE 2: NUTRITIONAL STATUS OF INDIAN CHILDREN RESIDENCE WISENFHS3 (2005-06) Children under 3 years who are Urban (%) Rural (%) All India (%) Stunted 31 41 38 Wasted 17 20 19 Underweight 36 49 46 Source: NFHS3 Fact Sheet According to NFHS2 47 per cent of Indian children under the age of 3 are under weight. In other words, of the estimated 75 million survivors below the age of 3, about 36 million are under weight. This has profound negative consequences on the physical and mental health and development of children, and thus on the Indian society (Gupta, 2006). TABLE3: NUTRIENT INTAKES OF CHILDREN UNDER SIX Age(years) Intake(calorie) RDA(calories) 1-3 791 1240 3-6 1020 1690 RDA-Recommended Daily Allowance. Source: National Nutrition Bureau, 2006 Looking at the results of a recent survey by the National Nutrition Monitoring Bureau it is seen that today there is a deficit of over 500 calories in the intake of children 1-3 years and 700 calorie among those 3-6 years old. Therefore, there is clearly gap in access to food (quality and quantity)and health services for children(Dipa Sinha) There are bound to be additional multiple vitamin deficiencies when there is a forty per cent deficit in calories. The latest UNDP Human Development Report 2005, states India has the highest proportion of under-nourished children in the world, along with Bangladesh, Ethiopia and Nepal. STATE OF IMMUNISATION Childhood is an important stage where the child is prone to certain illness and faces a group of communicable diseases like polio, diphtheria whooping cough etc. proper immunization can prevent these among children. TABLE 4: VACCINATION COVERAGE OF CHILDREN 12-23 MONTHS -2005-06 Vaccine Urban Rural Total BCG 87 75 78 3 Doses of Polio 83 77 78 3 DPT Injections 69 50 55 Measles 72 54 59 BCG+3polio+3 DPT+ Measles 58 39 44 Received vitamin A dosage in last 6 months 23 20 21 Source: NFHS3 Fact Sheet MALNUTRITION AND CHILD FEEDING PRACTICES The link between malnutrition and infant feeding has been well established (Chowdhry, 2006). Recent scientific evidence reveals that malnutrition directly or indirectly contributes to about 50 per cent to 55 per cent of all deaths among children under 5 years annually, and two-third of these deaths are often associated with inappropriate feeding practices occurring during first year of life. Mothers milk is the perfectly balanced food for the infants. It is natures way of ensuring a sound, healthy start to life and it meets all the nutritional needs of the child safely and adequately. A longer duration of breast feeding is practiced in rural areas than in urban areas. TABLE 5: MALNUTRITION AND CHILD FEEDING PRACTICE (PER CENT AGE) - 2005-06. Particulars Urban (%) Rural (%) Total(%) Children under 3 years of age Breast fed within 1 hour of birth 29 22 23 Children aged 0-5months exclusively breast fed 40 48 46 Children aged 6-9 months received solid, semi solid food and breast milk 62 54 56 Source: NFHS3 Fact Sheet It is observed that only 23 per cent of children under three years of age were breast-fed within one hour of birth and about 46 per cent were exclusively breastfed of 0-5 months. 56 per cent of children aged 6-9 months who received solid, semi solid and breast milk. Inadequate complementary feeding, late introduction of complementary food, inadequate frequency quality (including micronutrient content) energy density and quantity-also contribute to young child malnutrition. Under nutrition increases nearly five folds between 0-6 months and 12-23 months of age mainly because of poor Infant and Young Child Feeding practices. TABLE 6: TREATMENT OF CHILDREN DISEASES UNDER THREE YEARS OF AGE-NFHS3 Urban (%) Rural (%) Total (%) Children with diarrohea in the last two weeks who received ORS 33 24 2 Children with diarrohea in the last weeks taken to a health centre 55 56 58 Children with acute respiratory infection or fever in the last two weeks taken to health centre 72 90 64 Source:NFHS3 MALNUTRITION AND INFANT MORTALITY Another indicator of health status among infants is the Infant Mortality Rate, which gives the number of deaths of children of age less than one year per one thousand live births in a year. The IMR is widely used as a measure of the health situation of the nation as a whole, and is included among the basic indicators of the state of development of a country. Globally, whopping 10.9 million children under the age of 5 die annually. Four million of them in the first month and 2.42 million (roughly one quarter) of these deaths are in India alone. Worse yet, the survivors are not able to develop to their full potential.The IMR has declined from 129 in 1970 to 114 in 1980, 80 in 1990, 68 in 2000 and 58 in 2004. Though there is decline in IMR over the period of time the IMR among rural children is much higher compared to urban counterparts. According to NFHS the incidence of IMR is found to fall with a rise in the level of education of the mother and with a rise in the standard of living index.The IMR was found to increase when the birth interval is less than 24 months. Children born to younger mothers of age less than 20 years and older mothers aged 40- 49 were found to have a higher IMR than mothers in middle age groups. The IMR was also found to rise when the birth order was more than six. Absence of medical care also led to a higher rate of IMR (Bose, 2006)
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TABLE 7: MALNUTRITION AND INFANT MORTALITY Infant Mortality Rate (per 000 live births) 1980 1990 2000 2001 2002 2003 2004 Rural 124 86 74 72 69 66 64 Urban 65 50 44 42 40 38 40 Combined 114 80 68 66 64 60 58 Source: Office of the Registrar General of India CHILD MALNUTRITION AND MOTHERS HEALTH The linkages of child malnutrition with womens health and well being are very strong. The dietary inadequacy during pregnancy coupled with malnutrition, poor environment, sanitation and inadequate medical service make the child more vulnerable to fall into the vicious cycle of poverty-malnutrition-disease- poverty-ill health (Gupta et al.1998). According to NFHS3 ,close to one third of Indian women suffer from chronic energy deficiency and have a Body Mass Index of less than 18.5 kg/m2 (Shivakumar, 2006) It is widely argued that the economic condition is the most important criterion of the nutritional status. The poor health and nutrition status of mothers is reflected in the large incidence of low birth weight babies. Many women remain in ill health and are ill-fed, they are prone give birth to low weight babies and tend not to be aware of how best to feed them (Somini, 2009). LOW BIRTH WEIGHT (LBW) Infants born at LBW conventionally defined as a birth weight less than 2500 grams-experience severe health and developmental difficulties that can impose substantial costs on society (Almond, 2005) Studies have also established correlation between LBW and high blood pressure, cerebral palsy, deafness, blindness, asthama and lung diseases, among children as well as with IQ, test scores, behavioral problems, cognitive development. Birth weight is the primary measure of a babys health and welfare in economic research. Estimates for India reveal that 20-30 per cent babies weigh less than 2500 grams at birth. This suggests that the onset of malnutrition in the womb itself and reflects an intergenerational transfer of malnutrition from the mother to the child. In the United States , reducing the incidence of LBW has been a stated agenda of several social programmes targeting infant health, including Medicaid, and publicly funded nutrition programmes such as the Women, Infant and Children (WIC) programme. The causes of malnutrition are micro-nutrient deficiency, iodine deficiency, zinc deficiency, vitamin A deficiency.
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inefficient functioning of the health delivery system or due to the ignorance, illiteracy and poverty of the people or both. Lack of coordination between ANMs and AWWs and ASHA in the implementation of the programme has resulted in poor performance. Supplementary Nutrition Programme of ICDS does not reach Children under three adequately. The SNP consists of poor, cereal based items that have little nutritional value.. The Primary health care network in most areas is in a sad state. There are big shortages in funds, manpower, equipment, medicines, and in training (Bose,2006). The states have done little to reform the system. The poor suffer the most as they have to go to private practitioners, often quacks, or suffer from untreated ailments. In the pilot study undertaken on ICDS Devendra Gupta (1998) observes the need for upgradation of physical infrastructural facilities and also focuses on the region specific programmes.The failure of the public health programmes is not only a result of poor implementation, corruption, and low motivation of health workers, but also systematic issues of low budgets, design flaws, low priority and poor focus, inadequate reach, lack of coordination. The key reasons for the dismal state are political, administrative and managerial. But there are a few examples where the initiatives taken up by the Government and NGOs at the regional level have given fruits in the achievement of targets which are listed below: Mitannin- the health activists mobilized by Adivasi Adhikar Samiti to improve child malnutrition among tribals in Chattisgarh; MV Foundation of Andhrapradesh in mobilizing public on child health issue; Bal Sanjivini Abhiyan launched in Madhyapradesh to address IMR and malnutrition; Kano Parbo Na (why cant we do it?) the positive deviance approach in early childhood care in selected districts of West Bengal; Aame be Paribo(we can also do it) an innovative regional specific programme to tackle malnutrition for tribal children in two districts of Orissa; enlightened women in Tamilnadu; Malnutrtion Mission in Maharastra through community participation to address malnutrition among infants have evoked good response.
CONCLUSION
Malnutrition continues to be a big challenge for India. It is a problem wider than poverty and it should be remembered that malnutrition is not the result of single cause but of multi-faceted problems acting singly or in combination with other complex factors like poverty, purchasing power, health care, ignorance on health education and nutrition. There has been constant effort on the part of the government, to curb malnutrition, through public health programmes. In spite of having health facility practically in every village, programmes have not been marketed successfully. There is an obvious imbalance between the targets set and the goal achieved. Enough research has not taken place to throw light on the existing gap. Our study emphasizes the need for a more detailed investigation into the gap through the successful implementation of social marketing policies and practices. A suitable social marketing approach can bring about significant change in the behaviour of the service users and can bring about significant improvements in the effectiveness and efficiency of the programmes. To improve the prevailing situation, the problem of infant health is to be addressed both at macro level (national and state) and micro (district and village) levels. A paradigm shift in the approach from health for people to health by people has to be adopted for the effective implementation of the various programmes taken up by the government.
REFERENCES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Almond Douglas, Kenneth Y Chay and David S Lee (2005),The Costs of Low Birth Weight, Quarterly Journal of Economics, pp.1031-1083 Ashokan A. (2006), Health Care System and its Utilization in India: Implications for Maternal and Child, Manpower Journal, Vol XXXXI, No. 1,(jan mar), pp.1-18 Bose A.B. (2006), Child Development Report, India Social Development Report, Council for Social Development, Oxford University Press, pp.151-178. Cebu Study Team (1992), A Child Health Production Function estimated from Longitudinal Data, Journal of Development Economics, Vol 38, pp.323-351. Chowdhury Renuka (2006), ICDS: Indias Response to Early Child Development, Yojana, Vol.50, November, pp.5-9. Dreze Jeane (2006), Universalisation with Quality ICDS in a Rights Perspective, Economic and Political Weekly, August 26, pp.3706-3714. Gangadharan K. (2006), Health Status of Mothers and Children, The Asian Economic Review, Vol.48, No.2, August, pp.256-262. Ghosh Shanti (2006), Food Dole or Health, Nutrition and Development Programme, Economic and Political Weekly, August26, pp.3664-3666. Gupta Arun (2006), Infant and Young Child Feeding An Optimal Approach, Economic and Political Weekly, August 26, pp.3667-3670. Gupta Devendra B, Anil Gumber and Anuradha Banerjee (1998), Strengthening Integrated Child Development Services Programme: Key Findings from a Pilot Study, Margin, ,Vol.30, No.2 , Jan-Mar, pp.77-105. Gupta Kamal, Sulabha Parsuraman, Arokiasamy P, Singh S.K, and Lhungdim H (2006), Key Population and Health Indicators of NFHS-3,2005-06,Demography India, Vol.35,No.2, pp.193-217. International Institute for Population Sciences (2007)NFHS-3 Fact Sheet, India and 29 States,accessible at http://www.nfnsindia.org/factsheet.html Kumar B L N and Sandhya Vani B V (2008), An Integrative Approach for Rural Health Care : NRHM, Kurukshetra,Vol. 56, No.12, October, pp.15-20. Mosley W.Henry. and Lincoln C. Chen (1984), An Analytical Framework for the Survival of Child in Developing Countries, Population and Development Review, Supplement:25-45 Bulletin WHO 2003,81(2). Muthuswamy S (2000), Rights of the Children, Social Welfare, January, pp.15-17. National Nutrition Monitoring Bureau (2006),Diet and Nutrition Status of Populations and Prevalence of Hyper tension among Adults in Rural Areas, National Institute of Nutrition, ICHR,Hyderabad Office of Registrar General of India(2006),Sample Registration System Bulletin October, accessible at http://www.censusindia.net/vs/srs/ bulletins/index.html Ramachandran Nira (2005), Why Women must be a Central Concern in Food and Nutrition Policy, Indian Social Science Review, Vol.7, No.2,July-Dec.pp. Rout Himanshu Sekhar (2007), Income, Education and Household Health Expenditure: A RuralUrban Analysis, Asian Economic Review, Vol.49 No.3, Dec, pp.544-555. Sasidharan P.K (2008), Our Health Care Needs Restructuring, The Hindu, Sunday August 10. Sekher T.V(2006), Changing Database for Population and Health Research in India An Overview, The Indian Journal of Social Work, Vol.67, Issues 1and 2, Jan-mar, pp.92-103. Senauer Benjamin and Ana L Kassouf.(2000), The Effects of Breast Feeding on Health and the Demand for Medical Assistance among Children in Brazil, Economic and Cultural Change, Vol.48, July, pp.719-735. Sengupta Somini (2009), An Indian paradox: 42.5 pc Kids Malnourished , Deccan Herald, Friday,March 13. Shiva Kumar A K (2007), Why are Levels of Child Malnutrition high?, The Hindu, Friday, June 22. Shiva Kumar A.K (2007), Why are Levels of Children Not improving? Economic and Political Weekly, April 14, pp.1337-1345 Sinha Dipa (2006), Rethinking ICDS: A Rights Based Perspective, Economic and Political Weekly, August 26, pp.3689-3694. Sinha Dipa(2008), Child Malnutrtion and ICDS, Yojana, Vol.52, July, pp.54-57. Sinha Shanta (2006), Infant Survival: A Political Challenge, Economic and Political Weekly, August26, pp.3657-3660. Srinivasan.S and Durgaprasad P.(2000), RCH Programme and Womens Health : Problems and Prospects, Social Welfare, April, pp.3-7. Working Group on Children under Six (2007), Strategies for children under Six, Economic and Political Weekly, Vol 42(52), December, pp.87-101.
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SATISFACTION AND EFFECTIVENESS OF TRAINING AMONG THE EMPLOYEES OF TWAD BOARD A CASE STUDY F. MOHAMED SABURA RESEARCH SCHOLAR MANONMANIAM SUNDARANAR UNIVERSITY TIRUNELVELI DR. T. VIJAYAKUMAR PROFESSOR & HEAD PET SCHOOL OF MANAGEMENT STUDIES PET ENGINEERING COLLEGE VALLIOOR ABSTRACT
The liberalization of the Indian economy and the many changes has put an unprecedented pressure on most organization to improve performance. Many organizations in the private corporate sector are working on creating sustainable competitive advantage and on progressive globalization. The public sector is being called upon to improve its services or face privatization. People and their development are quite central to meeting these needs with more people and organization recognizing this fact now. The stress today is on wholeness development, which is awakening of the spiritual, moral and cultured economic and political dimensions. There has been a gradual shift in emphasis from machine to man. In other words organizations have to build up competitiveness on strength of not only in physical resources but also on its human resources and on its respective fields. Training attempts to improve staff performance on the current job or prepare them for an intended job. The service sector organizations play a very important social role. By extending benefits to the people of all social and economic segments, provides opportunities for development and for reduction of socio-economic disparities. The range of services in India has increased in both breadth and depth. Services create value by providing a bridge between producer of goods and the beneficiaries or between the production and consumption segments of the society. TWAD Board is a service industry and hence the type of service rendered by is directly affected by the skill and attitude of the TWAD Board employees. Adequate training programmes only improve and enhance the quality of the services. The management is required to understand the various factors which can influence the effectiveness of training among the employees and can give satisfaction to them. This study is conducted to ascertain the views of the employees regarding training.
KEYWORDS
Service Sector, Training, Development, Employee.
INTRODUCTION
s a result of globalization, business is exerting pressure world wide. All the firms need to reduce production cost and improve operational efficiency. Hence, it is important for all organizations to maintain an efficient workforce for attaining these aims. The firms can develop their employees as talented and knowledgeable workers by means of identifying their insufficiency and lack of knowledge in the required areas, and thereby providing sufficient training and development programmes to fill the gap. The organizational training effectiveness and its evaluation play a crucial role in an organization to decide whether the proposed business upshots are attained or not. An effective training programme is emerging as one of the most vibrant and exhilarating aspect for the firms to solve their managerial and human resource issues, and thereby winning advantage in the competitive market. Training aims to change behavior at workplace in order to change stimulate efficiency and higher performance standards. It is concerned with work based learning. Evaluation of training effectiveness should not be treated only as a corrective measure for the existing training programmes offered by the organization, but also as a pro-active measure for making future training programmes effective. Today, only those firms are flourishing which became accustomed to the changes in the right time with the right course of action. Only an effective training facilitates in improving the human resource of the organization making them adaptable to changes that take place in their business environment. As the work turn out to be more complicated, the significance of the employee development also raises. However, it is also a process that a firm must place resources to, if it is to uphold workable and talented employees. Concerning the choice of training methods for specified skills and tasks, our results suggest that the effectiveness of organizational training appears to vary as a function of the specified training delivery method, the skill or task being trained, and the criterion used to operationalize effectiveness However, they have more latitude in the choice and design of the training delivery method and the match between the skill or task and the training method. For a specific task or training content domain, a given training method may be more effective than others. Because all training methods are capable of, and indeed are intended to, communicate specific skill, knowledge, attitudinal, or task information to trainees, different training methods can be selected to deliver different content (i.e., skill, knowledge, attitudinal, or task) information. Thus, the effect of skill or task type on the effectiveness of training is a function of the match between the training delivery method and the skill or task to be trained. Training function is the corner stone of the sound management. Training involves the development of skills that are usually necessary to perform a specific job. Its purpose is to achieve a change in the behavior and to enable the workers to do their job better. EDWIN B. FLIPPO defines training is the art of increasing the knowledge and skill of an employee for doing a particular job.
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Virtually every employee from bottom to top gets some on the job training (OJT). Here the trainees earn as they learn under the watchful eye of a trainer. Trainee is practiced in the actual work environment and with the some people they will work with after training immediate feedback is also available. On the job training is mostly given for unskilled and semiskilled jobs. The following are the training with in the industry. COACHING: This technique involves direct personnel instructions and guidelines usually with extensive demonstration and continuous critical evaluation and correction. The employee is trained usually by his immediate superior. The advantage is increased motivation for the trainers and the disadvantages are possible to coaching by a superior. UNDERSTUDY: The method makes the trainee an assistant to the current job holder. The trainee learns by experience, observation and limitation the advantage of this method is that training conducted a practical and realistic situations. JOB INSTRUCTION TRAINING: This method requires skilled trainers, extensive job instruction training schedules and prior assessment of trainers job knowledge. It involves listing of all necessary steps job in a sequence. Then the instructor describes what is to be done how it is to be done and why. This method is also known as training through step by step learning. POSITION ROTATION / JOB ROTATION TRAINING: The major objective of job rotation training is boarding of the background of trainee in the organization. The trainee is related periodically from one job to another job. The main advantages are training takes place in actual situation, competition can be stimulation among the rotating trainers and it stimulates a more co-operative attitude by exposing a man to either follow problems of view points. DEMONSTRATION & EXAMPLES (LEARNING BY SEEING): In this method the trainer describes and displays while he actually perform the activity. There will be a step by step explanation about why and what be is doing. Demonstration is often used in combination with Lectures, pictures, discussion etc. SPECIAL PROJECT: This training may be asked to perform special assignment through he will be learning the work procedure. It is ordinarily done after identifying the individual weakness. Sometimes a number of trainees (task force) are given such a kind of training. VESTIBULE TRAINING: In this training on attempt is made to duplicate as nearly as possible the actual material equipment and condition found in the work place. The working condition will be secondary to the actual work ship conditions. The workers are trained on these specific schools run by the organization. II. OFF THE JOB TRAINING METHOD This method is not a part of the every day job activity. The actual location may be companys class room or places which are found by the company or universities or associations which have no connection with company. SPECIAL COURSE AND LECTURES: It is regarded as the simplest way of importing knowledge to the trainees. The ability such as fake, concept, principles, theories etc are taught under this method. It is given by a training specialist of formal superior or regular instructors assigned for training members. They are put to a face to face situation and is asked to communications. The group has no agenda, no established rules or established norms of performance. This creates a tension and anxiety in the mind of group members. To get relief they actively participate in communication, attempt to provide the missing structural: elements leadership set goals and set up or agenda. TRAINING GROUP TRAINING: Members of a professional association receive training on new techniques and ideas by this method. Here training is provided by regular supply of professional internal; social contacts or gathering and members are kept informed about the latest development in their particular fields.
INDUSTRY PROFILE
Two statutory Boards, namely, (a) Tamilnadu Water Supply and Drainage Board and (b) Chennai Metropolitan Water Supply and Sewerage Board are the major Governmental agencies through which the Government implements schemes to provide drinking water and sanitation facilities to the rural and urban areas of the State. Subsequently as the importance of the provision of protected drinking water to the residents of rural and urban areas gained significance, it was considered that a separate Board should be constituted to coordinate effectively all the works relating to water supply and drainage schemes. Hence in G.O.Ms.no.1800 R.D & L.A dated 23.9.1969, the TWAD Board was formed. Members of the Board were selected. Subsequently Tamil Nadu Water Supply and Drainage Board was formed on 14.4.1971 by an Act called the Tamil Nadu Water Supply and Drainage Board Act 1970 (Act No. 4 of 1971). TWAD investigates, formulates and executes water supply and sewerage schemes, water supply schemes are implemented in rural as well as urban areas and sewerage schemes in urban areas. TWAD also maintains a large number of combined water supply schemes. The Board was formed with a view to be set us as an autonomous body on a statutory footing so as to conduce speedier planning, investigation and execution of schemes and also enable it to raise substantial resources from financing institutions and in the open market to provide drinking water and drainage facilities to urban and rural areas in the State of Tamilnadu within the shortest possible time. A perspective plan for standardized training should in an integral part of water resource development. It should cover training in information systems, sectoral planning, project planning and formulation, project management operation of projects and their physical structures and systems and the management of the water distribution systems. The training should extent to all the categories of personnel involved in these activities as also the farmers. The Research Development and Training Activities are in the preview of the Human Research Development Cell, TWAD BOARD. The Research Development and Training Centre housed in the fourth floor of TWAD House, Chennai is vested with the responsibilities of Planning, Organising and Conducting training courses on
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the Water Supply and Sanitation sector for TWAD Board staff besides Refresher courses sponsored by Government of India for Engineers drawn from various states at National level and courses for sister Government Organisations based on their request. TWAD Boards training center is conducting various training programmes and refresher courses for the employees of TWAD Board and other State public health engineers by obtaining financial assistance from Central Public Health & Environmental Engineering Organization. The Main Training centre is at Chennai. Subtraining centres are at Madurai, Trichy and Coimbatore
REVIEW OF LITERATURE
This section discloses the review of literatures on training effectiveness and the satisfaction of training and highlights the significant works on the same. In a study conducted by the Foundation for Organisational Research and Education (FORE) which covered 50 undertakings in the Central Public Sector. The respondents were asked to express the extent of gaps existing in knowledge, skills and attitudinal aspects of the existing training programmes across top, senior, middle and junior management levels. The ranks, in the areas perceived to have gaps in the order of importance, as given below in the table. TABLE: 1.1 Gaps in Existing Training Programmes in the order of priority Gap Areas Levels of Management Top Senior Middle Junior Knowledge in the functional area 6 6 1 4.5 Leadership and human relations 4 2 3 2 Managerial skills 2 1 2 3 Job-related attitudes 5 5 5 1 Attitudes-general 1 3 6 6 Teamwork 3 4 4 4.5 (1-Largest Gap, 6-Least Gap) Source: Foundation for Organisational Research and Education (FORE) In a study conducted by Earley, 1987; Harrison, 1992, found a match between high consideration and high structure and employee satisfaction with supervision. But, while high consideration was the preferred leadership behavior within each of the tested categories, this was not the case for structure. Low structure was the preferred leadership style by non-professional employees. In his study Caroll, evaluate the effectiveness of training programmes. The training directors were asked to evaluate nine training techniques on their effectiveness in achieving knowledge acquisition, changing attitudes, providing problem-solving skills, developing interpersonal skills, gaining participant acceptance and achieving knowledge retention. For this purpose, a questionnaire was issued to 200 training directors with the request to rank the training methods(Case study, Conference, Lecture, Business games, Movie films, Role playing, sensitivity training and Programmed instruction) from highly effective (5) to not effective (1). The directors judged the Programmed instruction as the most useful technique where Knowledge acquisition and knowledge retention were important. Sensitivity training ranked highest on changing attitudes and developing interpersonal skills. The case study method led in the problemsolving skill category and the conference method was said to be the most effective in gaining participant acceptance. According to Van Dyk et al (1997), evaluation has the following three purposes: it is performed to make decisions about individual learners (their needs, the instructional plan and sequence, their grouping and feedback); course improvement (deciding on the most appropriate methods and material, and where and how to revise the material); and how effective the system is. The social-learning model and learning principles tells that the training should provide the trainee with a given model to follow, specify goals to achieve, an opportunity to perfect the skills, feedback on how well the trainee is progressing and praise for transferring the acquired skills to the job. The value of these recommendations was shown in a training experiment at an international company in the northwestern United States. Forty employees, all supervisors, were identified for the experiment twenty assigned to the training group and twenty to the control group. The training was done in nine two hour sessions, one session taking place each week. The results confirmed the value of training based on social-learning theory. The trained performed better than the control group. The supervisors who had the training received significantly higher performance appraisals than did those in the control groups. A revival of Job Instruction Training achieved impressive results. In a journal James H. says that when twenty supervisors who had received training for twenty five hours over ten weeks in turn retrained their subordinates, all but three supervisors were able to show tangible results of job training in their areas. Productivity was significantly improved and reject sure cut by approximately two-thirds. In a material from Saratoga Institute says that the evaluation of the training program can be done by its effectiveness. To conduct these analysis three measures has to be generated: costs, change and impact. The costs are those monetary outlays for providing the training. The change factor looks at the difference between what one knew after the training as compared with before the training. The last factor, impact, tries to show what change was solely attributed to the training program. It measures after training results to before training status. This will determine the training effectiveness. If quantifiable differences are measured and recorded, and the ratios positive, then the program is effective and a justifiable expenditure.
OBJECTIVES OF STUDY
1. To find out and study the necessity of training programme in the organization. 2. To evaluate the effectiveness of training and the satisfaction of training among the employees in the organization. 3. To give suggestions to improve the existing training programme.
METHODOLOGY
This study is based on data from primary and secondary sources. Primary data is collected from the employees of TWAD Board of various cadres through a structured questionnaire. Secondary data were collected from the earlier research studies on training from different authors, books, training journals, internet and departmental circulars. Samples of 100 employees were selected from various branches of TWAD Board. A structural questionnaire was used to elicit information pertaining to the study from 100 respondents. For analysis a Master chart was prepared to cater the responses of each respondent and small cross tables were made from the master chart to obtain the total score of the sample respondents, Likert scaling technique was adopted. Chi-square was used to study the relationship between satisfaction of employees regarding training and the type of training given in the institution and also the effectiveness of training.
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S.No. 1. 2. 3.
Fair 7 8 4 19
total 52 34 14 100
From the above table, it is clear that 52% of the respondents prefer On Job Training, 34% prefer off the job training and the remaining 14% of the respondents prefer both the training programmes. Therefore, it is inferred that most of the respondents prefers On the Job type of training.
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A further problem with training is that workers are sometimes isolated on training courses, left to work and learn on their own, because the team can only afford one person out of the office on training at any one time. This means that on returning, the worker is the only one to have learnt a specific skill, and this new and effective method cannot be put into effect in a team where the vast majority use an older, more familiar method. A way of solving this is by finding the time to send entire teams off together on training courses, so that they all return with the same skills, and can each encourage one another to implement newly learnt methods. The trainers themselves also need clearly defined objectives for the course, so that they do not waste employees' time. The Board that sends employees on training courses is often at fault by putting too many time constraints on the training course. This means that trainers can skip over valuable points, making the course much less worthwhile. The development of new training programmes and training methods should be based on a clear understanding of the needs within TWAD Board and should take into account the possibilities and limitations for training. Remove the barriers of participation in training progrmmes by the employees of TWAD Board. Enhance the incentives for training programmes. 1. In consultation with private management consultants and TWAD Board Senior Engineers, the existing TWAD policy in training programme may be suitably redesigned in future. 2. The apex management may allot more funds to its HRD wing and to do HRD activities without any barriers in future. 3. The employees may be given refresher courses frequently to extract better performance in future. 4. On the job training to the employees are strongly recommended. 5. The employees may be invariably given chances to work in all disciplines in the TWAD Board by providing them suitable training in future. 6. The training programmes may be monitored and reviewed periodically by the apex management so as to rectify the bottlenecks. 7. Updated/ advanced programmes in relevant categories may be introduced in association with technical institutions/ universities. 8. Suitable training courses may be conducted for apex management personnel such as General Manager, Directors, Chief Engineers, Superintending Engineers and Accounts/Administrative officers in order to focus their attention in future development of the organization. The service sector organizations play a very important social role. By extending benefits to the people of all social and economic segments, provides opportunities for development and for reduction of socio-economic disparities. The range of services in India has increased in both breadth and depth. Services create value by providing a bridge between producer of goods and the beneficiaries or between the production and consumption segments of the society. TWAD Board is a service industry and hence the type of service rendered by is directly affected by the skill and attitude of the TWAD Board employees. Adequate training programmes only improve and enhance the quality of the services. Most of the present training programmes are conducted by the external agencies. It will be appreciated if the field expertise of the department and veterans of the retired personnel added to the team; the outcome of the training performance will be good, more beneficial and purpose serving nature. The evaluation and the impact of assessment of the training programme may be monitored and reviewed periodically by the apex management so as to rectify the bottlenecks if any. Regarding training programme 40% of the staff is given training according to their option. The training should be compulsory given to all employees so as to avoid a same person repeatedly attending all the programmes which will serve no benefit to the department. This study has a few shortcomings or discussible issues, which may be taken into account when conducting similar studies in the future. Some points can be taken care which could guide in future research in this area. The present study is partly restricted through the small sample size. Larger samples will help to investigate more on training programmes. The evaluation of training programme has to be done in the future research which will help to know more about the effectiveness of the training programmes. Finally depending on how training is done, it can be very productive and useful or a complete waste of time and money, it can bring teams together or split them apart. A systematic process is used to determine job performance requirements, specify training programme content, prepare supporting training materials, and maintain the training programme. As a global economy becomes reality, workplace training, continuing professional education and full-degree programs may be needed in distributive formats that can reach learners worldwide. The feasibility of long-distance training will depend on the availability of advanced cognitive learning formats that can transmit quality instruction without exhausting the resources of workplace safety programs and university degree programs. Studies will be needed to assure the quality and effectiveness of these nontraditional learning resources. It is clear that to identify the value added by training, requires either statistical separation of the actual performance data or institute work controls to try to isolate the training effects alone. The efficiency and performance of an employee is often hampered by his personal characteristics and socio-economic background conditions. As these are out of the periphery of formal organizational jurisdiction and could hardly be changed, it is always better to concentrate on the employee morale and to increase the productivity. So the Management should aim to provide training based on their needs and personal characteristics which will result in an effective training. It seems that through training the organization can develop internal leadership, reinforce worker morale and motivation, and encourage a strong sense of team work. Management has to get through from unrealistic expectations for false results, lack of management commitment and support, resistance by middle level management, resentment by non participants and failure to get solutions implemented. The Company has to give more effective training programme based on the needs of employee to increase the employee performance. The Company should increase the training facilities to get a maximum out of the employees. More coaching should be provided to the employees to make the performance effective. Better communication channel should be adopted to make the employee performance better for the upcoming years.
REFERENCES
Al-Khayyat, R. & Elgamal, M.A. (1997), A macro model of training and development, Journal of European Industrial Training, 21 (3), pp. 87-101. Aronoff. J., and Litwin, Achievement, Motivation, Training and Executive advancement, Journal of Applied Behavioural Science, 7(1), pp 215-229. Aswathappa K., Human Resource and Personnel Management Text and Cases 4th edition, Tata Mcgraw Hill. Barnicle, B., Garavan,T.N. & OSuilleabahain, F. (1999), Management development: contemporary trends, issues and strategies, Journal of European Industrial Training, 23 (4/5), pp. 193-201. Bryans, P. & Smith, R. (2000), Beyond training, reconceptualising learning at work, Journal of Workplace Learning: Employee Counselling Today, 12 (6). Retrieved March 6, 2003, from http://www.emerald-librabry.com/fulltext.html Campbell J.P., Personnel Training & Development, Annual review of psychology, vol 22. No. 1, 1971. Caroll, Stephen J. Paine, Frank T., and John J.., Ivancevich, Effectiveness of Training Methods, Personnel Psychology, Vol. 25, No. 3, 1972, p. 498. David A. Decenzo, Stephen P.Robbins, Personnel/ Human Resource Management, Third edition, Prentice Hall of India, New Delhi. Donovan, P., Hannigan, K. & Crowe, D. (2001), The learning transfer system approach to estimating the benefits of training: empirical evidence, Journal of European Industrial Training, 25 (2), pp. 221-228. Garavan, T.N. (1997),Training, development, education and learning: different or the same? Journal of European Industrial Training, 21 (2), pp. 3-13. Gary P.Latham and Lise M.Saari, Application of Social-Learning Theory to Training Supervisors through behavioural Modeling, Journal Applied Psychology, June 1979, pp. 239-46. Greenfield, H. & Ulrich, D. (1995),The transformation of training and development to development and learning,American Journal of Management Development, 1 (2). Retrieved May 2, 2003, from http://www.emerald-librabry.com/fulltext.html
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Horwitz, F.M., Bowmaker-Falconer, A. & Searll, P. (1996),Human resource development and managing diversity in South Africa International Journal of Manpower, 17 (4/5), pp. 134-151. James H. McCormick, An Old standby that still works, Training and Development Journal, October 1971, pp. 3-7. N.K.Singh, Study in Training and Development in Public Sector, FORE Norman D. Glick, The Relationship between Cross Cultural Experience and Training, and Leader Effectiveness in the US Foreign Service, CCM International Journal of Cross Cultural Management 2002 Vol 2(3), pp. 339356, Nova Southeastern University, USA Pareek, Udai and Lynton, Rolf P., Training for Development, D.B. Taraporevala, Bombay 1970. Peterson, E., and E.G. Plawaman, Business Training and Management, Richard.D.Irwin, Homewood, 1948. Ramaswamy E.A., From IR to HRD, Business India, April 21 May 4, 1986. Randall S. Schuler, et al., Effective Personnel Management, Third Edition, West Publishing, New York, 1989, p. 385. Rohinton D. Aga, Changing the Mindset Reflections of a Chief Executive, Tata McGraw-Hill, New Delhi, 1994, pp. 293 294. This material was adapted from the Saratoga Institute, Quantifying Personnels Return on Investment, American Society for Personnel Administration (Washington D.C., 1979), Sec.T. Terry L.Leap and Michael D.Crino, Personnel/ Human Resource Management, Macmillan, New York, 1990, p. 277. Thomas H.Stone, Understanding Personnel Management, The Dryden press, Chicago, 1982, p. 248. Van Dyk, PS; Nel, PS; Van Z Loedolff, P; Haasbroek, GD. 1998. Training management: a multidisciplinary approach to human resource development in Southern Africa. International Thomson Publishing (Southern Africa)(Pty)(Ltd) Halfway House
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RETAIL INVESTORS PERCEPTION TOWARDS CORPORATE GOVERNANCE A STUDY OF SELECTED CITIES GADE SURENDAR RESEARCH SCHOLAR DEPARTMENT OF COMMERCE & BUSINESS MANAGEMENT KAKATIYA UNIVERSITY WARANGAL 506 009 DR. S. KAMALESHWAR RAO PROFESSOR DEPARTMENT OF COMMERCE AND BUSINESS MANAGEMENT KAKATIYA UNIVESITY WARANGAL ABSTRACT
Corporate governance is the framework for creating long-term trust between companies and the external providers of capital. Corporate governance involves a set of relationships amongst the companys management, its board of directors, its shareholders, its auditors and other stakeholders. This study is an attempt to find out the perception of the retail investors towards the corporate governance reports, it impact on them and the role of it in decision making process of investment. This study mainly used the primary data which is collected in the form questionnaire. Simple average and standard deviation are used to analyze the data. It is mainly focused whether the retail investors are aware of corporate governance and are they using them in their decision making process. Findings are very interesting majority of the respondents are aware of corporate governance and getting the reports. These reports have been using by them in their decision making.
KEYWORDS
Corporate Governance, Decision Making, Retail Investors.
INODUCTION
ndia has the largest number of listed companies in the world, and the efficiency and well being of the financial markets is critical for the economy in particular and the society as a whole. It is imperative to design and implement a dynamic mechanism of corporate governance, which protects the interests of relevant stakeholders without hindering the growth of enterprises. Directors and manager need to be aware of the interests of stakeholders in governance, however their responsibility towards them is judged. Stakeholders are any entity (person, group or possibly non-human entity) that can affect or can be affected by the actions or policies of an organization. It is a bidirectional relationship. Each stakeholder group has different expectations about what it wants and different claims upon the organization. Modern corporations have seen as so powerful, socially, economically and politically, that unrestrained use of their power will inevitably damage other people's rights. For example they may blight an entire community by closing a major factory, thus enforcing long term unemployment on a large proportion of major workforce. But the newly unleashed forces of deregulation, disintermediation, institutionalization, and globalization and tax reforms are making the stakeholders more powerful and are forcing the companies to adopt healthier governance practices. These trends are expected to become even stronger in future. The key to better corporate governance in India today lies in a more efficient and vibrant capital markets. This study the is an attempt to find out the perception of the retail investors towards the corporate governance reports, it impact on them and the role of it in decision making process of investment
MEANING
Corporate governance is the framework for creating long-term trust between companies and the external providers of capital. Corporate governance involves a set of relationships amongst the companys management, its board of directors, shareholders, auditors and other stakeholders. These relationships, which involve various rules and incentives, provide the structure through which the objectives of the company are set, and the means of attaining these objectives as well as monitoring performance are determined. Thus, the key aspects of good corporate governance include transparency of corporate structures and operations; the accountability of managers and the boards to shareholders; and corporate responsibility towards stakeholders.
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METHODOLOGY
PRIMARY DATA This study is based entirely on primary data collected through a well designed structured questionnaire. The data was collected from investors spread over four selected major cities in the country viz., Mumbai, Bangalore, Chennai and Hyderabad. Warangal is one of the fastly growing city and my native place; hence I have selected Warangal as one of the city to study. Admittedly, the sample does not represent the countrys entire population but only the universe of potential investors. The depository participants, brokers and investor associations were also entrusted with the job of collecting back the issued questionnaires. SECONDARY DATA The secondary data was collected from the various sources available like websites mainly SEBI, RBI, BSE and NSE, magazines, journals etc. wherever necessary. SAMPLE SIZE I have selected 500 literary retail investors as sample size of our study from five cities namely Mumbai, Bangalore, Chennai and Hyderabad and Warangal. From each city 100 literary retail investors have selected. TECHNIQUES FOR ANALYSIS The opinion of the investors is taken on likert type statements. The level of agreement expressed by investors for various reasons was analyzed. For analysis purposes, while entering the data strongly agree option was assigned a weight of five and strongly disagree option was assigned a weight of one. In between these two extremes other levels such as agree, neither agree nor disagree and disagree were assigned weights of four, three and two respectively. Further standard deviation was used to judge the homogeneity of the mean
REVIEW OF LITERATURE
Joseph P.H. Fan and T.J. Wong (2001): Do external auditors perform a corporate governance role in the emerging markets?-Evidence from East Asia. This study examined whether external independent auditors could be employed as monitors and as bonding mechanisms to alleviate the agency conflict. They have suggested that Big five auditors in emerging markets do have corporate governance role. Michael S. Gibson (2002): In his article Is Corporate Governance Ineffective in Emerging Markets? tested whether corporate governance is ineffective in emerging markets. He did find two main results. First, CEOs of emerging market firms are more likely to lose their jobs when their firms performance is poor, suggesting that corporate governance is not ineffective in emerging markets. The magnitude of the relationship is surprisingly similar to what Kaplan (1994a) found for the United States. Second, for the subset of firms with a large domestic shareholder, there is no link between CEO turnover and firm performance. For this subset of emerging market firms, corporate governance appears to be ineffective. Kevin C.W. Chen and Zhihong Chena and K.C. John Wei (2003): In their study titled Disclosure, Corporate Governance, and the Cost of Equity Capital: Evidence from Asias Emerging Markets found that both disclosure and non-disclosure corporate governance mechanisms have a significantly negative effect on the cost of equity capital. In addition, the effect of non-disclosure governance mechanisms is more profound than that of disclosure on the cost of equity capital Jayanth Rama Varma: The problem in the Indian corporate sector is that of disciplining the dominant shareholder and protecting the minority shareholders. Clearly, the problem of corporate governance abuses by the dominant shareholder can be solved only by forces outside the company itself. The paper discusses the role of two such forces - the regulator and the capital market. Regulators face a difficult dilemma in that correction of governance abuses perpetrated by a dominant shareholder would often imply a micro-management of routine business decisions which lie beyond the regulators mandate or competence. The capital market on the other hand lacks the coercive power of the regulator, but it has the ability to make business judgments. C.V. Baxi (2005): He said Public policy on various aspects of the functioning of the corporate sector is evolving in terms of legal and regulatory support in the more recent past. The post-Cadbury debate the world over focuses on the central dimensions of corporate governance such as accountability and transparency. In countries like USA, special legislation has been introduced to promote a greater measure of transparency and accountability. Several countries have also adopted country codes and best practices. India needs to learn a great deal from the experiences of UK, USA, Canada and Europe in evolving an appropriate framework for enforcing higher standards of corporate governance. Dr Y V Reddy (2005): Increasing regulatory comfort in regard to standards of governance in banks gives greater confidence to shift from external regulation to internal systems of controls and risk-management. Each of the directors of the banks has a role in continually enhancing the standards of governance in banks through a combination of appropriate knowledge and values. Rajeev Sinha (2006): This article examined the utility of shareholder value analysis for corporate governance. In value-based management, shareholder value maximization is set as the objective of the firm. The adoption of this objective as the goal of the firm can promote effective corporate governance in three ways. First, it provides the necessary pre-commitment between shareholders and managers regarding the goal of the firm. Second, it necessitates a greater flow of firm-specific information and the disaggregation of financial information. Finally, the goal of shareholder wealth maximization ensures a closer interdependence between strategy formation and the setting of operational objectives for managerial decisions. Elena F Prez Carrillo (2007): In their paper Corporate Governance: Shareholders interests and Other Stakeholders interests In this paper, argued that Shareholders and Stakeholders interests are compatible and both contribute to corporate long term efficiency and progress. It is further argued that it is essential to achieve a wide consensus on how to control Management actions in support of Stakeholders interests. Nandini Rajagopalana and Yan Zhangb (2008): Examined the evolution of corporate governance reforms in the emerging economies of China and India. First described the two major driving forces behind governance reforms in these countries, privatization and globalization. After summarizing the evolution of governance reforms in each context, identified four major obstacles that impede their implementation in both countries, namely: (1) lack of incentives, (2) power of the dominant shareholder, (3) underdeveloped external monitoring systems, and (4) shortage of qualified independent directors. India Knowledge@Wharton (2009): This study is discussed about how the Satyam misled the investors, employees, creditors, customers and other interested parties of the company. If such type of incidents few more definitely damage the brand India and investors also will go away from the investment in corporate sector.
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TABLE 2: SEX WISE DISTRIBUTION OF INVESTORS: Sex male No. of Investors % of Investors 402 80.4 19.6 100.0
Male investors constitute a large majority 80.4 percent as compared to 19.6 percent of the female investors. In other words, male investors were more than 4 times in numbers compared to female investors. INCOME WISE DISTRIBUTION OF INVESTORS The distribution of investors according to their income level is presented in Table TABLE 3: INCOME WISE DISTRIBUTION OF INVESTORS Monthly Income No. of Investors % of Investors Upto20000 20001-30000 30001-40000 40000 above Total 75 124 191 110 500 15.0 24.8 38.2 22.0 100.0
The modal income class is above Rs.30001 to 40000 per month. This group constitutes nearly two fifth of the sample and the Rs.20001-30000 income group accounts for another 24.8% while the rest two groups (up to Rs.20,000 and Rs.40,000 above per month) accounting the balance 37%. EDUCATION (QUALIFICATION) WISE CLASSIFICATION OF INVESTORS Education is an important parameter of analysis. It makes the investors more prudent and analytical, for one can learn more about the intricacies of the investment with increasing levels of education. The distribution of investors according to the levels of education is given in Table 4 TABLE 4: EDUCATION (QUALIFICATION) WISE CLASSIFICATION OF INVESTORS Qualification Graduation No. of Investors % of Investors 190 38.0 45.8 16.2 100.0
The Table and reveals that half of the investors are post graduates, around 40% are graduates and others about 16%. Thus it can be said that 8 out of 10 investors are educated enough to understand the ongoing trends in the capital market and they can acclimatize themselves with the changing capital market environment. OCCUPATIN WISE CLASSIFCATION OF INVESTOSRS The distribution of investors according to their occupations is given in Table 5 TABLE 5: OCCUPATIN WISE CLASSIFCATION OF INVESTOSRS Occupation Government services No. of Investors % of Investors 116 23.2 31.6 24.2 8.8 5.4 6.8 100.0
Non Government services 158 Own business Professional Practices Retired Others Total 121 44 27 34 500
A cursory view of the Table 5 reveals that little more than one fourth (26.8%) of the investors comprises of non-government service investors and a little less than one fourth (24.2%) of the investors comprises of retired investors. Nearly 12% of the investors were practicing professionals, one fifth was in Government service and 14% of the investors had their own business.
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In the backdrop of this information the investors were enquired whether they get corporate governance reports (given annual reports) in right time, for this question nearly 75 percent of the investors have said yes and one fourth of the investors have said no TABLE 6: CORPORATE GOVERNANCE REPORTS Do you get corporate governance Reports? No. of investors Percent Yes No Total 374 126 500 74.8 25.2 100.0
It is further enquired whether they have gone through Corporate Governance Reports or not given in annual reports. Their response is given in Table TABLE 7: INVESTORS KNOWLEDGE OF CORPORATE GOVERNANCE REPORTS Have you Gone through Corporate Governance Reports? No. of Investors % of investors yes no Total 248 126 354 70.05 29.95 100.00
The above Table reveals that more than 70 percent of the investors have gone through corporate governance reports included in the annual reports. It is heartening to know that a large number of investors have gone through them. It is further enquired if the investors have not gone through corporate governance reports, what is the reason for that; the answer to this question is mentioned in the following table. TABLE 8: REASONS FOR NOT GONE THROUGH CG RPORTS If, No indicate the reason from the following No. of Investors Percent No time to go through the reports 26 20.63 42.86 11.11 25.40 100.00
Report don not represent true and fair picture 54 Reports do not reach in time Others Total 14 32 126
The above table says more than two fifth of the investors who have not gone through the reports Report don not represent true and fair picture more than twenty percent of the investors said that no time to go through the reports, more than one fourth of the investors have said the other reasons and only 11 percent of the investors said reports do not reach in time. However, does that report serve any purpose? Have they made use of any information given in those reports in their investment decisions? These questions are answered in the following table TABLE 9: CORPORATE GOVERNANCE REPORTS USEFULNESS TO INVESTORS Is Corporate Governance Reports Useful in Investment Decision Making? Number of Investors % to Total Yes 181 72.98 No 20 8.06 Cant Say 47 18.96 Total 248 100.00 The above table finds that nearly 73 percent of the investors who have gone through the corporate governance reports have found them useful in making investment decisions. Nearly 19 percent of the investors were unable to express their opinion and only very little amount of investors i.e., 8 percent have said no. In this context, it is interesting to know which of the information given in the corporate governance reports were used by them. The investors were asked to pick from four information titles, which are usually included in corporate governance reports were used by them. The investors were asked to pick from four information titles, which are usually included in corporate governance reports. The investors pick are given the following Table TABLE 10: CORPRATE GOVERNANCE INFORMATION USED BY INVESTORS Information Title Number of Investors Used Board of Directors particulars 153 Disclosures 92 Shareholder information 67 Investors Grievance committee 54 From the above table it can be understood that the shareholder information provided in the corporate governance reports is widely used by the investors in making their investment decisions. The shareholder information as provided by the report incorporates wide range of details from the date of annual general meetings to listing details, stock price data to distribution of shareholding and categories of shareholding, investor grievance received to investor correspondence details. The investors also use information on disclosures, investors grievance committee and Board of Directors details. Further the investors were asked to give their opinion on corporate governance related statements on a five point scale ranging from strongly agree to strongly disagree. The mean values and standard deviation of values from mean values of these statements are given in the following table. It reveals that the investors opinions regarding various issues relating to corporate governance are not the same. The investors could neither agree nor disagree with the statements companies are more responsive to investor grievances and the system of independent directors can secure good corporate governance in Indian listed companies. It seems they would like to adopt a wait and see approach before giving their opinion on these two statements. Of course, it can be said that their opinions right now are slightly inclined towards agreeing for the statement companies are more responsive to investor grievances and slightly inclined towards disagreeing for the statement independent directors can secure good corporate governance in Indian listed companies. However, their opinions on other
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statements indicate that they accept companies conduct annual general meetings regularly, they receive their dividends on time and corporate governance is slowly practiced in Indian companies. Their level of agreement is more in case of former two statements than the last one. The standard deviations of values from the mean values for all the statements are low indicating the high level of uniformity among the investors in agreeing to these. TABLE 11: MEAN AND STANDARD DEVIATION OF INVESTORS OPINION ON CORPORATE GOVERNANCE Statement N Mean Companies conduct AGM regularly. 500 3.9614 I receive dividend warrants in time. 500 3.9919 Companies are more responsive to investor grievances. 500 3.0866 Corporate governance is slowly practiced in Indian companies. 500 3.6111 The system of Independent directors can secure good corporate governance in Indian listed companies. 500 2.9827
CONCLUSION
Corporate governance ensures good relationship amongst a companys different stakeholders. Various steps have been taken by the companies to reach the individual investor, one of the important stake holders in any company. This study analyzed the reach of some of these measures. More than 70 percent of the sample investors have gone through corporate governance reports have found them useful in taking investment decisions. The sample investors opinions regarding various issues relating to corporate governance are not the same. They accept that, companies conduct annual general meetings regularly, they receive their dividends on time and corporate governance is slowly practiced in Indian companies. These opinions of the investors no doubt would go to long way in attracting more and more individual investors in to equity fold.
REFERENCES:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Jayanth Rama Varma, Corporate Governance in India: Disciplining the Dominant Shareholder, IIMB Management Review,(www.iimb.ernet.in/review) Scandal at Satyam: Truth, Lies and Corporate Governance, January 09, 2009 in India Knowledge@Wharton http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4344 C.V. Baxi, The Current Context of Corporate Governance in India, Global Business Review, August 2005 vol. 6 no. 2, pp. 303-314 Joseph P. H. Fan and T. J. Wong, Do External Auditors Perform a Corporate Governance Role in Emerging Markets? Evidence from East Asia, William Davidson Working Paper Number 400, October 2001 http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp400.pdf Michael S. Gibson, Is Corporate Governance Ineffective in Emerging Markets?,Federal Reserve Board FEDS Working Paper No. 99-63; Tuck-JQFA Contemporary Corporate Governance Issues II Conference, June 2002 Kevin C.W. Chen and Zhihong Chena and K.C. John Wei (2003), Disclosure, Corporate Governance, and the Cost of Equity Capital, Working Paper Series, June 2003, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=422000 Rajeeva Sinha, Corporate Governance and Shareholder Value Analysis, Global Business Review, February 2006; vol. 7, 1: pp. 1-16. Y V Reddy, Corporate governance in banks in India, Seminar on Corporate Governance for Bank Directors organised by the IIM, Bangalore, 16 December 2005. Nandini Rajagopalana,and Yan Zhangb, Business Horizons, Corporate governance reforms in China and India: Challenges and opportunities, Volume 51, Issue 1, January-February 2008, Pages 55-64 Elena F Prez Carrillo (2007): Corporate Governance: Shareholders interests and Other Stakeholders interests published in Corporate Ownership & Control / Volume 4, Issue 4, Summer 2007 www.sebi.gov.in
) ) ) )
4. 5. 6.
) ) ) ) ) )
7.
8. 9.
( ( ( ( Yes / No Yes / No (
) ) ) )
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Yes / No / Cant Say If Yes, Which of the following information is used for your decision making? a) Board of Directors ( ) b) Disclosures ( ) c) Shareholders information ( ) d) Investors Grievance committee ( ) 11. What is your opinion about the following statements regarding Corporate Governance, Please indicate your opinion in respect of the following statements by ticking 1 Strongly Agree, 2Agree, 3Neither Agree nor Disagree, 4 Disagree, and 5 Strongly Disagree a) Companies conduct AGM regularly 1 2 3 4 5 b) I receive dividend warrants in time 1 2 3 4 5 c) Companies are more responsive to investor grievances 1 2 3 4 5 d) Corporate governance is slowly practiced in Indian companies. 1 2 3 4 5 e) The system of Independent directors can secure good corporate governance in Indian listed companies 1 2 3 4 5
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PROFESSIONAL MANAGEMENT OF SCHOOLS: AN ANALYSIS OF PLANNING FUNCTION. DR. N.P.PRABHAKAR ASST. PROFESSOR & ACADEMIC COORDINATOR ITM BUSINESS SCHOOL WARANGAL 506 001 DR. K. V. RAO PROFESSOR, DEPARTMENT OF COMMERCE AND BUSINESS ADMINISTRATION MEMBER OF ACADEMIC SENATE & EXECUTIVE COUNCIL ACHARYA NAGARJUNA UNIVERSITY GUNTUR 522 510 ABSTRACT
There is an increasing awareness around the world for incorporating professional management into traditional public services hitherto dominated by the governments to achieve resulted pro rata to the investments. Similar trend has been encompassing the school education sector. Many countries have been initiating reforms to facilitate school based management. It would be appropriate to analyze the prevailing practices of school management in the context of similar reforms being initiated in India. This paper is an integral part of the doctoral dissertation A study of Management Practices of Secondary Schools. The main objective of this paper is to explore the prevailing planning practices in school management in terms of the three major components of planning academic, infrastructure and financial planning. A sample of 188 secondary schools about 34% of the population in Krishna district of Andhra Pradesh in India, was selected through stratified sampling technique. The primary data was collected through self designed questionnaire and interview schedules. Chi-Square Test and simple percentages were used to analyze the data with the help of SPSS-17. The findings reveal that the planning function is centralized at the higher levels of administrators. Even though liberty prevails in some areas such as instruction planning, the public school managements are not utilizing the provision while some private school managements are excelling in that area. The study suggests the policy makers to facilitate planning at school level to ignite the reforms on a faster pace to turn around the sector for efficiency and accountability.
KEYWORDS
School Basaed Management, Professional Management, Planning Function, Academic Planning, Financial Planning.
INTRODUCTION
f-late, professional management has been extended to more traditional areas of service management to achieve better results. School Based Management (SBM) is one such experiment in the area of education sector. Many countries developed as well as developing, have been benefitting from such management oriented reforms in education sector ensuring fast development. India also has witnessed a phenomenal educational development since Independence. The public expenditure on education has gradually been increasing from a slightly less than 0.8% of the GDP during 1951-52 to about 4.02% during 2001-02 and 3.57% of the GDP in 2006 -07, aiming at meeting the targeted expenditure of 6.0% of the GDP (GOI,2004) as early as possible, as recommended by the Kothari Commission in 1966. However, as Kingdon (2007) observes, the story of India's educational achievements is one of mixed success. On the down side, India has 33% of the world's illiterates and is home to a high proportion of the worlds out of school children and youth. On the positive side, it has made encouraging progress in raising schooling participation and emerged as an important player in the worldwide information technology revolution and thus emerged as a knowledge hub. School management reforms, being practiced in many countries, are challenging the conventional education governance structures aiming at increasing school autonomy and empowering localized decision making. It aims to strengthen incentives for schools to deliver services that are responsive to the needs of the communities they serve. Advocates of this innovative system of school management point-out a wide range of potential benefits. They argue that the devolution of decision-making authority to schools can facilitate and enhance participation a core strategy in the Dakar Framework for Action (2000). A stronger parental voice and more participation in school management will lead to greater incentives for education providers to offer more efficient services. Moving decisions away from remote planners and closer to those working at the schools who know much about the learners and their educational needs, as well as about local values and realities, is seen as a route to a more responsive system. The origins of school management reforms can be traced to the United States in 1980s and Australia, Canada and the United Kingdom in 1990s. Similar programs have also been adopted in some developing countries viz. Latin America and South Asia, though sub-Saharan Africa also figures with increasing prominence. In India also, many committees on education and specifically, school education, have referred to the aspect of school management reforms. Indian government has been making efforts to implement these recommendations through some reforms. By strengthening the management aspects through reforms, at both the organizational as well as institutional level, the school education sector can be improved on par with the developed economies. Raju (2006) recommends autonomy not just for the private institutions and the self financed institutions, but also for the institutions which are under the government either fully or partly financed by the government. The type of autonomy should ensure that the stakeholders are protected, particularly the students, against dilution in quality. Concerning autonomy, the law must delegate the necessary decision making power to the institution for changes in curricula and teaching methods, for internal self-governance, for interaction with other organizations nationally and internationally and for economic transactions. It is also very important that accountability must follow autonomy.
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(1995) suggests that if schools are to take full advantage of the opportunities offered by the ongoing reforms, a thorough review may be needed by the governments of their existing laissez faire attitudes towards planning. In India, the Education Commission, 1964-66 emphasized that the effectiveness of any educational system is affected to a great extent by proper planning, particularly at institutional level. The components of planning in school management can be interpreted, in broader terms, as academic planning, infrastructure planning, and financial planning. During the last few decades, the importance of micro level and district level planning has been accepted by the Indian educational administrators. The present paper attempts to analyse the three aspects of planning function in school management at secondary level being practiced by the school heads. This article is an integral part of the research study A Study of Management Practices of Secondary Schools.
HYPOTHESIS
That the selected schools are able to develop systematic plans, both academic and non academic, for their development.
METHODLOGY
Stratified sampling has been utilized to draw the sample from the finite universe of 557 secondary schools operating under four major types of management in Krishna District of Andhra Pradesh in India. The sample has been made largely representative by selecting 188 secondary schools accounting for around 34% of the population and representing 49 out of a total of 50 mandal administrative units. The primary data is collected through self designed questionnaire and interview schedules from the Headmasters / Principals of the select secondary schools. The data is analyzed through Chi-Square Test with the help of SPSS version 17, to establish the consistency of the responses.
1.
ACADEMIC PLANNING
The core of educational service is the attainment of academic goals. Educational planning without considering the academic aspects is a mere skeleton without life. Hence academic planning is of high priority in school management, since it constitutes the very purpose of a schools existence. In view of the diverse nature of the Indian society, academic planning needs a great attention. The principal subcomponents of academic planning are: curriculum, instruction and evaluation. It would be appropriate to explore these three subcomponents to find out the nature of academic planning in school management. a. CURRICULUM The term curriculum is one of the most ambiguous terms in the present-day educational discourse in India. The curriculum is the plan for the implementation of educational aims. The success of any school system lies in careful planning of curriculum in the school year and in the evaluation of student performance. The curriculum should give balanced importance to all aspects and integrate them with each other in a planned manner. Curriculum planning enables a school to monitor the coverage, continuity and development of desired knowledge, skills, understanding and values across the stages of schooling. Curriculum planning not only focuses on what topics to be taught, but also on the skills that students require within specific subjects. A brief survey of the present-day class rooms would be enough to convince a keen observer that the most marked features of most of our educational practices in schools are a dull routine, bored teachers and students, and rote learning. Despite several policy documents, curricular frameworks, and pragmatic approaches mentioning the need for further decentralization of curricular material development, at least up to the district level, there has rarely been any effort to facilitate this. The Education Commission (1964-66) highlighted the poor quality of the text books owing to the lack of research related to their preparation and production. The limited view of the curriculum was manifested in the 1988 document National Curriculum for Elementary and secondary Education: A Framework. The reluctance of the system to allow for true plurality and flexibility in the curriculum was most clearly evident in Professor Yash Pal lead National Advisory Committees report Learning without Burden presented in 1993 to the Government of India. Even though the notions of curriculum and syllabi existing in the three National Curriculum Frameworks (1975, 1988, and 2000) are more or less similar, they failed to emphasize a clear connection between the concerns, aims, and curricular content. Mehdi (1988) investigated the instructional, developmental and social aspects of curriculum at secondary stage in Delhi schools and
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found that the curricula in various subjects and the evaluation techniques were not conductive for the attainment of intellectual, social and developmental objectives. Sinha and Tripathy (2005) found that: many concepts included in the syllabus and textbooks are repetitive; many unwanted materials have been included; children are not given a chance for learning to learn; there is no scope for giving new information in the curriculum; and the whole curriculum of science for Classes IX and X has become mechanical, a process of passing information from teacher to students through textbooks. The findings of the study regarding the curriculum aspect are discussed hereunder. DISCUSSION All the schools are following the curriculum designed by the respective governments through the apex bodies like NCERT at the national and SCERTs at the State levels. Even though, the SCERTs are designated a constructive role in designing and updating State specific curriculum, the APSCERT is not that much active. The school heads hardly have any role in designing and revising the curriculum. The syllabus is not updated regularly and there is unanimous demand from all schools regarding the necessity to update the curriculum from time to time. The schools do not have freedom to deviate from or modify the prescribed syllabus in view of the students socio cultural environment. All the schools demand for a category-wise representative mechanism in development and modification of syllabus. Regarding the appropriateness of the present curriculum, the data pertaining to the perceptions of the school heads is tested by Chi- Square Test to establish consistency (Table-1). TABLE-1: HEADMASTERS PERCEPTIONS REGARDING THE PRESENT SYLLABUS (CROSS TABULATION) The perceptions of the school heads regarding the appropriateness of the present curriculum Very much InapproprNeither appropriate nor Appropr- Very much inappropriate iate inappropriate iate appropriate Count 1 1 1 1 0 % within 25.0% 25.0% 25.0% 25.0% .0% category % within 2.4% 1.6% 4.3% 2.5% .0% column % of Total .5% .5% .5% .5% .0% Count 18 36 12 28 19 % within 15.9% 31.9% 10.6% 24.8% 16.8% category % within 43.9% 56.3% 52.2% 70.0% 95.0% column % of Total 9.6% 19.1% 6.4% 14.9% 10.1% Count 4 12 6 3 1 % within 15.4% 46.2% 23.1% 11.5% 3.8% category % within 9.8% 18.8% 26.1% 7.5% 5.0% column % of Total 2.1% 6.4% 3.2% 1.6% .5% Count 18 15 4 8 0 % within 40.0% 33.3% 8.9% 17.8% .0% category % within 43.9% 23.4% 17.4% 20.0% .0% column % of Total 9.6% 8.0% 2.1% 4.3% .0% Count 41 64 23 40 20 % within row 21.8% 34.0% 12.2% 21.3% 10.6% % within 100.0% 100.0% 100.0% 100.0% 100.0% column % of Total 21.8% 34.0% 12.2% 21.3% 10.6% Source: Survey responses. TABLE-2: CHI-SQUARE TEST RESULTS Value df Asymp. Sig. (2-sided) Pearson Chi-Square 26.682** 12 .009
Category
Total
Government
4 100.0% 2.1% 2.1% 113 100.0% 60.1% 60.1% 26 100.0% 13.8% 13.8% 45 100.0% 23.9% 23.9% 188 100.0% 100.0% 100.0%
Local Body
Private Aided
Private Unaided
Total
N of Valid Cases 188 * 0.05 - Significant; ** 0.01 - Highly Significant; *** 0.001- Very Highly Significant. As the responses of the Government schools are equally distributed; the majority of Local Body schools (32%) felt inappropriate, followed by around 25% who said appropriate where as about 11% rated it as neither appropriate nor inappropriate. Among the Private Aided category, the majority (46%) rated the curriculum as inappropriate where as the major part (40%) of the Private Unaided schools felt very much inappropriate, closely followed by around 33% as inappropriate. Thus, the majority of the Local Body and the Aided schools coincide with the total samples majority opinion saying that the present syllabus is inappropriate. The dominant opinion of the Private Unaided schools stood alone saying very much inappropriate. The Chi Square value (26.682), as observed from Table-2, is highly significant at 0.01 level. b. INSTRUCTION The Education Commission (1966) remarked that the primary purpose of education is to provide with the widest opportunity to develop learners potentialities to the full. Successful schools are organized around student learning. NCERT has always been recommending child centered and activity based learning in conformity with the international trends and rich empirical evidences. Given the curricular outlines of the central and state level apex bodies, the schools should be able to plan and spell out the curriculum in detail through different instructional methods, suitable to the local conditions. The planning exercise must eventually focus on the overall development of the students. What type of students do the school wants to produce should be forecasted so that specific instructional plans are generated to achieve this goal. In the area of instructional planning, the research work of Gangopadhyay (1991) on class IX students in the subject of history proved that the method of lecture, explanation, questioning and using the feedback was most effective. Narain (1992) compared various methods of teaching such as large-group lecturedemonstration and small-group laboratory methods and found that neither of the methods is superior in teaching all aspects of science exclusively. Mujumdar
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(1989) applied the principle of cybernetics in teaching-learning process. Jana (1989) studied the pupil growth and personality development under the nurturing effect strategy and found it to be effective over the traditional strategy. Ashrafs case study (1988) of some schools in Delhi revealed that about 28.57% of the schools in the sample had innovative practices in classroom. Sharma (1991) compared the effect of various modes of classroom teaching involving video-based instruction, teacher discussion, demonstration and self-experimentation on the achievement in science of the secondary level learners and concluded that video-based instruction was most favored while self-experimentation under the guidance of the teacher was found to be least effective of all the models. Singh(1990) surveyed the availability and use of teaching aids in middle and secondary schools of Jammu and Kashmir, Kerala, Orissa and Uttar Pradesh and concluded that Kerala is making maximum use of the teaching aids with teachers adequately trained on those aids. Singh, Ahluwalia and Verma (1991) found that students who were exposed to Computer Assisted Instruction (CAI) in mathematics scored higher than those taught through the conventional method. Kalimuthu (1991) compared the students performance receiving through video-viewing and through traditional teaching and proved that the group instructed through video gained more and learnt more concepts than the control group. Joshi (1987) found that the secondary school TV programmes in science were of poor quality; run of the mill; and have not changed over the years. The study is aimed at finding out the nature and practice of instructional methods being followed at the sample schools. DISCUSSION The instruction planning in all types of schools is scheduled basing on the Academic Calendar supplied by the concerned district educational administration. The Private Unaided schools are clearly showing the difference as 87% of them are preparing the instructional plans well in advance of the commencement of the academic year and regularly ensuring its implementation as per the schedule for each subject. However, all the schools have freedom in designing suitable teaching methodologies. However, only 25% of Government and 40% of Local Body and Private Aided schools are experimenting with new methodologies while all the Private Unaided schools are doing the same. Regarding the nature of teaching aids utilized in the instruction activity at schools, Figure-1 represents the situation.
Fig-1: Type of teaching aids utilised in 100% schools.
89% 64% 36% 11%
Source: Survey responses. The schools under the Government and Local Body managements are mostly depending on traditional teaching aids such as maps, charts, specimens, science labs and around 36% of Private Aided schools are utilizing the sophisticated aids like audio-visual, overhead projector, interactive blackboards, in addition to the traditional ones whereas 78% of the unaided schools are employing the sophisticated as well as digital aids such as educational CDs, animated programs, large LCDs and conducting some experiential exercises and other innovative aids prepared by the senior subject teachers. There is a consensus among the respondents that the instruction planning at schools must aim at overall development of the students. But, unfortunately, many of the public sector schools were not able to design specific programs aimed at this objective, as evident from Figure 2.
No
Source: Survey responses. Around 50% of Local Body and 80% of the aided schools are able to implement some programs for overall development of the students. A sort of ingenuity prevailed only in case of private unaided schools in this respect. Those who disagreed, say that aiming overall development of students is not possible in the prevailing set-up of centralized academic planning. c. EVALUATION In view of generating a meaningful report on quality and level of individual learners progress, it is necessary to assess each childs learning. A systematic collection of the ways the learning has improved and grown, the material produced, and ideas articulated should be incorporated into the students evaluation report along with the marks obtained, if that is felt necessary. Thus, the purpose of examination must be an evaluation of well-defined and sensible achievement levels at all stages, and not the test of meaningless transient memory (Eklavya, 1985). As long as it stresses on simple recall and the exact repetition of the contents as stated in the textbook, all innovations will be of no use. As Socrates noted, Education is not the filling of a vessel but the kindling of a flame. But the examination system forcing students to memorize a plethora of facts, from an unattractive dry-as-dust textbook is unlikely to keep them attending. The Indian school board exams, though fairly reliable on tests of narrow textbook content, are rarely valid tests of desired competencies and broader curricular objectives (NCERT, 2006). The main purpose of examination as envisaged by the Education Commission (1964-66) and reiterated in the National Policy on Education 1986, is to help determine and gradually raise standards of
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attainment: as such it should be constructed as a powerful instrument for improving the quality of education in general and that of improving teaching-learning in particular. While the basic philosophy behind examination is laudable, its alternative effects on students cognition remain a concern. Humphry (1988) describes examination distress as being nearly universal, due in part to societys examination consciousness. While, under some circumstances, examination pressure promotes excellence by increasing attention and motivation (Bernard, 1990) in many academic situations, it detrimentally affects student well-being and performance (Ghose, 2001). At this moment, the National Focus Group on Examination Reforms (NCERT, 2006) proposes that a school based continuous and comprehensive evaluation system be established in order to: reduce stress on children; make evaluation comprehensive and regular; provide space for the teacher for creative teaching; provide a tool for diagnosis and for producing learners with greater skills. Moreover, it is recommended that each school should be given freedom in evolving a simple and suitable scheme of evaluation for its students, involving its teachers and owned by the teachers. Dave (2005) opines that there was an urgent need to strengthen school-based evaluation system giving adequate emphasis on the cognitive, non-scholastic and value content of education. DISCUSSION The public examination system is common to all categories of schools as prescribed by the government. Under the present system, the focus is more on Grade X compared to other classes. The students of other classes, especially in public sector and aided schools, are promoted based only on attendance. There are significant differences in the success rates of students as could be seen from the data given here for the past three consecutive years. The average student success rates from 2005 to 2008 for the four categories of schools are presented in Figure-3. Around 90% of the unaided schools are achieving an average student success rate of more than 90% where as only 9% of Local Body schools could manage to that level; while the majority among other categories are able to achieve the student success rates between 50 to 70%. Many of the schools have incentive mechanism for both students and teachers.
100 80 60 40 20 0 0-50% 51-60% 61-70% 71-80% 81-90% 91-100% 25 25 18 8 5 4 8 29 33 17 25 Fig-3: Average student scores of Grade-X during 2005 to 2008. Government Local Body 33 25 27 17 9 Pvt.Aided Pvt.Unaided 92
2.
INFRASTRUCTURE PLANNING
It is widely recognized that student performance is strongly affected by the design and suitability of those facilities in which it takes place. Both teachers and students feel motivated and satisfied with adequate infrastructural facilities and create positive environment for learning (Yadav, 2008). A number of studies have documented the link between the physical environment and academic achievement. Some economic researchers report that every dollar spent on such projects can generate almost another dollar in local spending. In India, Punjab has emerged a leading state in the country in providing best infrastructure and facilities to primary and upper primary schools (Yadav, 2008). Availability of land is a prerequisite to all other physical resources. Only when the land is available, other physical expansions are possible. Next to land, the physical structures occupy a prominent role in infrastructure planning. The following discussion facilitates the status of infrastructure planning among the select secondary schools. DISCUSSION Availability of land is a boon to many Government run schools. The schools run by Local Body managements were successful in attracting donors of land for the establishment of schools to the extent of almost 60%. The land for 28% of private aided schools was leased by different governmental agencies while a majority72%, are run with the land purchased by the managements concerned. Despite the availability of sufficient land resources, there are some schools which suffer from insufficiency of pucca buildings. The major need is in the Local Body category as 44% of the schools were suffering from insufficient accommodation. Providing sufficient accommodation is not an issue in the Private Unaided schools. In the Private Aided category, 11% schools were not having sufficient building infrastructure. However, the ratios of plinth area to student showed much variation as evident from Table 3. TABLE-3: RATIO OF PLINTH AREA IN SQ. FEET PER STUDENT (CROSS TABULATION) Ratio of plinth area of school buildings in square feet per student. Less than 5 sq. ft. per student 5 to 10 sq. ft. per student More than 10 sq. ft. per student Count 0 3 1 % within category .0% 75.0% 25.0% % within column .0% 2.7% 8.3% % of Total .0% 1.6% .5% Count 51 59 3 % within category 45.1% 52.2% 2.7% % within column 79.7% 52.7% 25.0% % of Total 27.1% 31.4% 1.6% Count 3 20 3 % within category 11.5% 76.9% 11.5% % within column 4.7% 17.9% 25.0% % of Total 1.6% 10.6% 1.6% Count 10 30 5 % within category 22.2% 66.7% 11.1% % within column 15.6% 26.8% 41.7% % of Total 5.3% 16.0% 2.7% Count % within row % within column % of Total 64 34.0% 100.0% 34.0% 112 59.6% 100.0% 59.6% Source: Survey responses. 12 6.4% 100.0% 6.4%
Total 4 100.0% 2.1% 2.1% 113 100.0% 60.1% 60.1% 26 100.0% 13.8% 13.8% 45 100.0% 23.9% 23.9% 188 100.0% 100.0% 100.0%
Local Body
Private Aided
Private Unaided
Total
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* 0.05- Significant; ** 0.01 - Highly Significant; *** 0.001- Very Highly Significant. Among the Government schools, 75% were operating with ratios between 5 to 10 square feet to student and the remaining 25% have a ratio of more than 10 sq.ft. The Local Body schools which could provide around 5 to 10 sq.ft per student were 52% and another 45% percent of them have less than 5 sq.ft. Among the Private Aided schools, around 77% could provide between 5 to 10 sq.ft, per student while the unaided category also could show the same result as 67% of them were able to operate around 5 to 10 sq.ft per student and another 22% show an inferior ratio of less than 5 sq.ft. Very less number of schools, among all categories, has more than 10 sq.ft. per student. In this aspect, the Private Unaided schools are not an exception. Of the total sample schools among the four categories, only 6% could operate with spacious premises where as the majority at 60% were operating with ratios between 5 to 10 sq,ft. per student. The Chi Square value - 21.332 (Table-4) is highly significant at 0.01 level.
3.
FINANCIAL PLANNING
In education, more than 75% of the expenditures are by and large on maintenance (non-plan) activities. In the present framework of federal financial arrangements, the plan funds for the union, state, and decentralized units have to be sanctioned by the Planning Commission of India and non-plan funds by the Finance Commission. Even though much ground work is done through the Planning Commission and many other working groups for determination of the financial requirements of education sector, much of it, however, remains only on paper. All the plans and proposals prepared by various commissions and working groups are tailored to fit the budget and many-a-time end up with no new scheme philosophy. This is a clear indication of centralization of Indian educational planning which can otherwise be called reductionist planning (Mukhopadhyay & Tyagi, 2008). The scenario in the states is also similar, if not the same. The financial requirements and the views of the basic unit of educational service the school, are never taken into consideration during the centralized process of financial planning. The schools do not have any say in the resource allocation. As a result, they are not able to design various programs and plans for efficient achievement of goals. While there is a great shortage in funds allocation for the basic and minimum requirements at the institutional level, many educational analysts observed that there is huge wastage of financial resources. A study by Loh (1995) estimated the contribution of education, through production function approach, by using macro data at the all India level over a period of time, i.e. 1961 1991, found that the effect of education on economic growth was insignificant during 1961-71, while it was substantial during 1971-91. Tilak and Qamar (1994) discussed the utilization of financial resources to school education in Guntur district of Andhra Pradesh. Most of the schools were found to be below optimal level for which the total cost turned out to be much higher than desired. Within the current trend to decentralize management to schools, budget authority is usually the most common responsibility delegated to the school management followed by personnel and curriculum responsibilities. Raywid (1990) argues that devolution of budgeting to individual schools will encourage innovation and change. Many advocates of school based budgeting have argued that it will enhance organizational effectiveness and productivity by placing decisions closest to students (Levin, 1987) and by directing accountability toward individual schools instead of the central office and board of education (Ornstein, 1974). The budget should evolve primarily from the schools' current needs. Hence, provision must be created for financial autonomy where schools can prepare their budgets and can re-appropriate funds for school improvement. Thus, financial planning must originate from the micro plans developed at the institutional level. Acharya Ramamurthy Committee in 1992 reviewed the National Policy on Education, 1986, and strongly recommended transfer of centrally sponsored schemes to states through decentralization. The following discussion provides insights into the financial planning aspect of school management among the select schools. DISCUSSION In some schools under the Local Body and Private Aided managements, salary payment is not as prompt as in other schools. Interestingly, the 13% of the local body schools experiencing delay in salary payment totally belong to the schools run by municipal bodies. Similarly, about 38% of the schools under private aided managements facing delay in salary payment attributed the delay to non transfer of grants by the government within time. Even though there is provision for maintenance grants for education department in the State budget, the public sector schools do not receive funds for school maintenance regularly. The Government and Local Body schools dont have the practice of preparing annual budget for their schools. The management bodies of Private Aided schools take care of preparing and submitting budgets to get grants from the education department and the school heads and staff are involved to some extent in this process. Majority of the school heads from all categories responded positively for involving in long term / perspective planning for their schools, if given the opportunity. The private sector schools are more inclined towards perspective planning than the public sector managements as evident from Table 5. TABLE-5: OPINION REGARDING PERSPECTIVE PLANNING (CROSS TABULATION) Opinion of school heads regarding perspective planning Strongly agree Agree NR Disagree Strongly disagree Count 14 42 4 45 12 % within category 12.0% 35.9% 3.4% 38.5% 10.3% % within column 29.8% 63.6% 66.7% 81.8% 85.7% % of Total 7.4% 22.3% 2.1% 23.9% 6.4% Count 7 10 1 6 2 % within category 26.9% 38.5% 3.8% 23.1% 7.7% % within column 14.9% 15.2% 16.7% 10.9% 14.3% % of Total 3.7% 5.3% .5% 3.2% 1.1% Count 26 14 1 4 0 % within category 57.8% 31.1% 2.2% 8.9% .0% % within column 55.3% 21.2% 16.7% 7.3% .0% % of Total 13.8% 7.4% .5% 2.1% .0% Count 47 66 6 55 14 % within row 25.0% 35.1% 3.2% 29.3% 7.4% % within column 100.0% 100.0% 100.0% 100.0% 100.0% % of Total 25.0% 35.1% 3.2% Source: Survey responses 29.3% 7.4%
Total 117 100.0% 62.2% 62.2% 26 100.0% 13.8% 13.8% 45 100.0% 23.9% 23.9% 188 100.0% 100.0% 100.0%
Private Aided
Private Unaided
Total
TABLE-6: CHI-SQUARE TEST RESULTS. Value df Asymp. Sig. (2-sided) Pearson Chi-Square 42.526*** 8 .000 N of Valid Cases 188 * 0.05 - Significant; ** 0.01 - Highly Significant; *** 0.001 - Very Highly Significant.
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Among the public sector schools, about 36% agreed for involving in perspective planning and another 39% disagreed. Of the Private Aided schools, 39% agreed whereas 58% of the Private Unaided schools strongly agreed and another 31% agreed for practicing perspective planning at schools. Thus, the unaided school heads were showing much interest in perspective planning while a majority of their counterparts in public sector and aided schools also agreed for the same. Thus, all the school heads showed similarity with the majority trend of the total sample; whereas the private unaided school heads were more proactive. The Chi Square value (42.526) as derived by the SPSS analysis in Table-6 is very highly significant at 0.001 level.
CONCLUSION
The planning practices regarding the components of academic planning are centralized to a major extent making professional management difficult. However, in some areas like instruction planning, the school managements, specifically under the public sector, are not showing interest for larger involvement. Similarly, infrastructure and financial aspects of planning also are considerably centralized which hinders accountability of the school management. The main contention of the school based management reforms is decentralization to enhance accountability of the school managements. Professional management of schools is possible only when the resource allocation and decision making are decentralized to the level of individual schools. The governments initiating reforms at the secondary level of school education through schemes like Rastriya Madhyamic Siksha Abhiyan (RMSA) should consider these aspects first to facilitate professional management of each school which ultimately can ensure efficiency of the sector.
REFERENCES
Abu Duhuo Ibtisam (1999). School Based Management: Fundamentals of Educational Planning. series number 62. Sponsored by Swedish International Development Authority. UNESCO. Ashraf Mohamed (1988). A Case Study of Selected Delhi Schools With Special Reference to Innovative Classroom Practices. Jamia Millia Islamia, New Delhi, India. Bernard ME (1990). Taking Stress Out of Teaching. Collins-Dove; Melbourne. Australia. Christopher Winch ( ). Key Concepts in Philosophy of Education. Routledge, London,UK. Dakar Framework for Action (2000). Education For All. Proceedings of World Education Forum 2000, Dakar, Senegal. 26-28 April. Dave RH (2005). The Keynote Address. Proceedings of the annual conference of the Council of Boards of School Examinations (COBSE), 29 January, Thiruvananthapuram, India. Drze Jean and Gazdar H (1997). Uttar Pradesh: The Burden of Inertia. In Indian Development: Selected Regional Perspectives. Jean Drze and Amarthya Sen (ed.s), Clarendon Press, Oxford, pp76-77. Education Commission (1966). Education and national development. The Report of Education Commission 1964-66, Government of India, New Delhi. Eklavya (1985). Teaching of Science- Report and Recommendations of the National Seminar on Science Teaching. held at Bhopal,India, 15-17 November. G O I (2004). The Indian Education System at the beginning of the 21st Century: An Overview. National Report on the Development of Education presented at the 47th session of the International Conference on Education, Geneva, 8-11 September. Gangopadhyay Tapan Kanti (1991). An Experimental Study of the Effectiveness of Classroom Teaching Techniques in Relation to Student Achievement. University of Calcutta. Kolkata, India. Ghose J (2001). Examinations Without Tears. The Times of India: Education Times; 29 january. New Delhi. Giles Corrie (1995). School Based Planning: Are UK Schools Grasping the Strategic Initiative. International Journal of Educational Management, Vol. 9, No.4, pp 4-7. Humphry JH (1988). Teaching Children to Relax. Thomas Books, Springfield, IL, USA. Jana B (1989). Pupil Growth Under Nurturant Effect Strategy and Traditional Strategy Through Exploratory Data Analysis Techniques. Indian Educational Review, Vol. 24, No. 3, pp.33-48. Joshi V (1987). A Study of the Effectiveness of School Television Programmes in Science at the Secondary School Level. The Maharaja Sayajirao University of Baroda, India. Kalimuthu T (1991). Developing a Video Programme on Environmental Pollution in Biology for Higher Secondary Students. Madurai Kamaraj University, India. Karpade MS, Ashok K, Srivastava, and Meghanathan R (2004). An Eextensive Study of Successful School Management in India: Case Studies of Navodaya Vidyalayas. National Council of Education Research and Training, New Delhi. Kingdon Geeta Gandhi (2007). The Progress of School Education in India. Economic and Social Research Council-Global Poverty Research Group Working Paper 071. Oxford University Press, London. Pp 1- 6. Levin HM (1987). Finance and Governance Implications of School-Based Decisions. Proceedings of the meeting of the National Advisory Committee of the Work in America Institute. June. New York. Loh Jackie (1995). Education and Economic Growth in India: An Aggregate Production Function Approach. NCERT, New Delhi. Mehdi Baqer (1988). Instructional Development and Social Objectives of Education at the Secondary Stage. Independent study. NCERT, New Delhi. Mujumdar Braja Gopal. (1989) On Developing of Cybernetic Model of Teaching. Indian Educational Review, Vol.24, No. 4, pp.14-24. Mukhopadhyay Marmar and Tyagi RS (2008). Governance of School Education in India. NUEPA: New Delhi. Narain Archana (1992). Chemistry Achievement and Science Attitude of Indian Students, Stemming From Lecture Demonstration and Small Group Laboratory Teaching Methods. University of Luknow, Lucknow, India. National Knowledge Commission (2009). Report to the Nation: 2006-09. Govt of India. New Delhi, pp.14. NCERT (2006). Position Paper 2.5 - National Focus Groupon Examination Reforms. NCERT, New Delhi. Ornstein AC (1974). Race and Politics in School/Community Organizations. Pacific Palisades, CA, USA. Raju, K D (2006). Indian Education Sector-Growth and Opportunities. PHDCCI working paper N0. III, Jawaharlal Nehru University, New Delhi. Raywid MA (1990). Restructuring Schools: The Next Generation of Educational Reform. Jossey-Bass, San Francisco. PP.152-200. Sharma RC (1991). Effect of Four Classroom Presentation Models on the Achievements of Secondary Students in Science. Maharshi Dayanand University, India. Singh Abhijeet (2006). Public Sector Education in India: Challenges Ahead. University of Delhi, New Delhi. Singh RD, Ahluwalia SB, and Verma SK (1991). Teaching Mathematics: Effectiveness of Computer Assisted Instruction and Conventional Method of Instruction. Indian educational review, Vol. 26, No.4, pp.15-34. Singh Satvir (1990). An Intensive Study of Teaching Aids at Middle and Secondary Stages of School. Independent study. NCERT,New Delhi. Sinha MP and Tripathy HH (2005). A Study of Correlation of the Curriculum Load in Science for Classes IX and X. Indian Educational Review , Vol. 41, No. 1, pp. 59-64. Tilak JBG and Qamar Furqan (1994). Utilisation of Resources in Education-A study of Mandals in Guntur District in Andhra Pradesh. NUEPA, New Delhi. Yadav SK (2008). Quality Appraisal of SMART-PT Programme. Indian Educational Review, Vol.3, No.1.
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SERVICE QUALITY IN HOSPITALITY INDUSTRY EXPECTATIONS FROM THE PERSPECTIVES OF MANAGERS AND GUESTS DR. R. RENGANATHAN PROFESSOR SCHOOL OF MANAGEMENT SASTRA UNIVERSITY THANJAVUR ABSTRACT
Service sector is going at a much faster rate than manufacturing and agriculture in India. Service quality is very important for the revenues and profits of any service organizations. Companies can adopt service quality as a method to gain competitive advantage over other players. Customer perception of service quality is very important, since service is intangible. In order to sustain, thrive and excel in the competitive scenario, understanding customer requirement is very important. The aim of this study is to analyze the guests expectations of service and managers perceptions of guests expectations. The SERVQUAL model is used. Much of the contemporary theory considers service quality from the viewpoints of both provider and customer, and Parasuraman et al. (1985) propose a model, which enables perceptual gaps to be identified. In 1991, these authors developed this framework into the SERVQUAL scale. The results show that there is a gap between Managers perceptions of guests expectation and actual guests needs and desires. The key area to be concentrated by the managers of hospitality industry is to develop proper strategy, which will meet guests expectations of service quality. The findings of the study suggest that guests stayed in the hotels view reliability as the most important satisfactory attribute. Managers of these hotels have to keep up their promises (as spelt out in the communicationpromotion) in order to satisfy the guests and maintain their credibility. In order to reduce the gap, managers have to conduct survey at least two to three times in a year. Hotel managers may adopt different ways to assess the gap and take suitable corrective action to reduce the gap.
KEYWORDS
Customer expectations, Hospitality business, Quality, Service Delivery, Thanjavur, Trichy.
INTRODUCTION
he hospitality industry is one of the fastest growing industries today with more and more people traveling for business as well as for pleasure. The hospitality sector, impelled by the tourism and business travel boom, is growing very fast. According to World Tourism Organization (WTO) about 300,000 rooms would be required by 2020 to cater the rising number of tourists to India. Competition is very stringent in hospitality industry. It is very important for service industries, to retain loyal consumers. Loyal consumer may act as an unpaid brand ambassador. It is hard to maintain a repeat customer profile. In order to thrive and excel in the competitive environment hospitality organizations have to maintain quality as per the expectations of consumers. Hospitality managers have to become much more aware of the quality and value of services being provided by them as desired by potential consumers (guests). The positive consequences of companies achieving high levels of customer satisfaction and service quality are well documented (Buzzell & Gale, 1987; Rust & Zahorik, 1993; Zeithaml, Berry and Parasuraman, 1996). Indeed, service quality and customer satisfaction issues are important as companies attempt to differentiate their services and compete effectively in the marketplace (Parasuraman, Zeithaml & Berry [PZB], 1988; Brown & Schwartz, 1989). Most research in the area of service quality has been based upon the model developed by Parasuraman, Zeithaml and Berry (1985, 1988), which incorporates a comparison of customer expectations and perceptions of service performance. Hospitality customers base their purchase decisions on factors such as price, value, and satisfaction. Nightingale (1985) contends that customer satisfaction leads to loyalty and a flourishing business. Hadyn Ingram (1999) contends that satisfying the guest leads to repeat customer, personal recommendations and a favorable image, and this is hard won but easily lost. The travel and tourism demand in India has increased at a compound annual growth rate (CAGR) of 16.4 per cent between 2004 and 2009, to reach US$ 91.7 billion (INR 4,412.7 billion). (Travel and tourism economic impact: India, 2009, Statistics, Ministry of tourism, Government of India). Consumers have become more eager than ever to complain and transfer their allegiances to perceived providers of quality service (Palmer, 1988). Consumer satisfaction and loyalty, secured through high quality products and services providing value for money, for the consumer, are essential for long-term survival, let alone long-term success (Zeithaml et al., 1990; Robeldo, 2001). The Indian hospitality industry is highly fragmented and unorganised. The Indian hotel industry is required to comply with a number of regulations related to the preparation and sale of food and beverages, and various laws and regulations governing employee relationships. Hotel owners and operators need to obtain multiple licences, permits and authorisations, including local land-use permits, building and zoning permits, environmental, health and safety permits and liquor licences. Hotels in India are broadly classified into two categories approved and unapproved. The Department of Tourism (DoT) grants approval and classifies hotels into seven categories heritage hotels, 5-star deluxe, 5-star, 4-star, 3-star, 2-star and 1-star. The DoT reclassifies hotels every three years and provides reclassification to 5-star deluxe, 5-star and 4-star hotels. The state governments reclassify the 1-star, 2-star and 3-star hotels. (Ministry of Tourism (Government of India))
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The word quality means different things to people according to the context. David Garvin (1988) identifies five perspectives on quality. 1. The transcendent view of quality is synonymous with innate excellence: a mark of uncompromising standards and high achievement. 2. The product-based approach sees quality as precise and measurable variable. Differences in quality, it argues, reflect differences in the amount of ingredient or attribute possessed by the product. 3. User-based definitions start with the premise that quality lies in the eyes of the beholder. 4. The manufacturing-based approach is supply based and is concerned primarily with engineering and manufacturing practices. 5. Value based definitions define quality in terms of value and price. By considering the tradeoff between performance (or conformance) and price, quality comes to be defined as affordable excellence. David Garvin (1988) It is commonly said that what is not measured is not managed. Without measurement, managers cant be sure whether service quality gaps exist. And, of course, measurement is needed to determine whether goals for improvement are being met after changes have been implemented. (Christopher Lovelock et al. 2006). Even though service quality is difficult to measure and quantify but has to be measured, in order to assess whether service industry provides necessary service as per the expectation of consumers. THE SERVQUAL (SERVICE QUALITY) MODEL Much of the contemporary theories consider service quality from the viewpoints of both provider and customer, and Parasuraman et al. (1985) propose a model, which enables perceptual gaps to be identified. In 1991, these authors developed this framework into the SERVQUAL scale, which enables actual service delivery to be measured. Zeithaml et al. (1990) suggest that the criteria used by customers in molding their expectations and perceptions fit in five dimensions of service quality: Tangibles: physical evidence, appearance of physical facilities, personnel, and communication materials. Reliability: ability to perform the promised service dependably and accurately. Responsiveness: willingness to help customers and provide prompt service. Assurance: knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy: provision of individualized caring attention to customers. The SERVQUAL model of service quality claims that the consumer evaluates the quality of a service experience as the outcome of the difference (gap) between expected and perceived service (Zeithaml et al. 1990). The model also highlights the main requirements for delivering high service quality and is a useful framework to assess the quality of hotels. The SERVQUAL model of service quality identifies five gaps that cause unsuccessful delivery. These five quality gaps are the result of inconsistencies in the quality management process: Gap 1.The management perception gap: Managers perceptions of customers expectations may be different from actual customers needs and desires, suggesting that management perceives the quality expectations inaccurately.
(Sources: A.Parasuraman, Valarie A.Zeithaml, and Leonard L.Berry, A Conceptual model of service quality an its implications for future research, Journal of Marketing (Fall 1985).44) Gap 2.The quality specification gap: Divergences in service quality specifications might signify that, even if customer needs are known, they may not be translated into appropriate service specifications. Gap 3.The service delivery gap: This is referred to as the service performance gap and denotes that quality specifications are not met by the performance in the service production and delivery process. Gap 4.The market communication gap: This gap indicates that promises given by market communication activities are not consistent with the service delivered. Gap 5.The perceived service quality gap: This gap results when the perceived service falls short of the expectations of customers. Brogowicz et al. (1990) contend that this gap is the most important, because it compares actual to perceived service delivery. Zeithaml and Bitner (2003) stated that in order to manage service quality, it was important to manage the gaps between expectations and perceptions on the part of the management, employers and customers. Service quality scores (Q) can be measured by subtracting the customers perception score (P) from the customers expectations score (E). This can be denoted by the equation: Q= P-E (Zeithaml et al.1990 ) The SERVQUAL model has come in for criticism from, for example, Carman (1990) and Cronin and Taylor (1992). Johns (1996) argues that it may be too cumbersome for general use, but provides a useful service tool, which can: point the way forward for more rigorous quality monitoring. Despite criticism, SERVQUAL has been used to measure service quality in a variety of contexts, including hospitals (Desombre and Eccles, 1998), Universities (Galloway, 1998),
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Police Services (Webb, 1998), Banks (Kangis and Passa, 1997) and Travel Agencies (Luk, 1997).Other researchers refuted the criticism when they proposed that practitioners require a generic model to ensure reliability, which allows both cross-industry and cross-functional comparisons to be made (Pitt et al., 1997; Williams, 1998) USE OF SERVQUAL INSTRUMENT IN THE HOSPITALITY INDUSTRY The SERVQUAL model consists of 22 statements for assessing consumer (guest) perceptions and expectations regarding the quality of a service. Respondents (Guests) are asked to rate their level of agreement or disagreement with given statements on a five point Likert scale. Consumers (Guests) perceptions are based on the actual service they receive, while consumers (guests) expectations are based on past experiences and information received. Several researchers used SERVQUAL instrument to examine consumers expectations of hospitality organizations. Researchers arrived at the most important dimensions of the service, that is, assurance, reliability and tangibles although they did rank them in different orders (Saleh and and Ryan, 1991; Fick and Richie, 1991; Fick and Richie, 1991; Bojanic and Rosen, 1994; Wuest et al., 1996). Saleh and Ryan (1991) examined the hotel managers perception of consumer expectations and found that most important dimensions of reliability, tangibles and assurance correlated with order, but not the degree of consumer expectations. In their research in the hotel sector, Gabbie and ONeill (1997) reported that the higher expectations of consumer related to the dimensions of reliability and assurance while the dimensions of tangibility and empathy were lowest in their rankings.
METHODOLOGY
Questionnaires were designed according to the SERVQUAL model of measuring the gaps between managers and guests expectations and perceptions. In particular, the questionnaire design enabled two major gaps suggested by Parasuraman et al. (1985) to be explored: Gap 1. The management perception gap Gap 5. The perceived service quality gap
STUDY SAMPLE
A survey questionnaire was completed by two distinct groups of respondents-managers, and guests. 250 questionnaires were administered, only 228 samples responded. The samples include 200 guests and 8 managers .18 guests and 2 managers were used for pilot study. The study sample could be said to be wholly representative of the target population because questionnaires to managers and guests were completed in all the 8 hotels of Thanjavur and Tiruchirappalli area. The guests who stayed at the hotels were requested to complete the survey questionnaire. The survey questionnaire is regarding the guests expectations, before actually experiencing the service and their perception after stay. No consideration in this survey was taken with respect to ratings of hotels, the type of guest i.e. local or tourists, or the frequency of their visits.
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TABLE II: GAP 5 GUEST EXPECTATIONS AND ACTUAL PERCEPTIONS Mean of guests expectations Mean of guests actual perceptions Difference 4.08 4.26 +0.18 4.89 4.40 -0.49 4.59 4.32 -0.27 4.52 4.58 +0.06 4.30 4.16 -0.14 (Source: Primary data) It is clear from Table II that, hotel guests are satisfied in terms of tangibles and assurance. In terms of reliability, responsiveness, and empathy guests perceptions of service quality does not exceed their expectations, which is an indicator of dissatisfaction. The difference in mean is large for reliability (-0.49) and for responsiveness (-0.27). The difference in mean is relatively low in the case of empathy (-0.14). Managers have to understand those guests needs and expectations can vary extensively. Any differences between guests expectations and the organizations perception of guests expectations of quality are important to identify and determine the level and quality of service provided. (Lesley Douglas, Robert Connor, 2003). The results of this study show that there is a gap between managers perception of guests expectations and guests expectations (Gap 1). This is in contrast to the work of Salah and Ryan (1991) who found that for all of the dimensions; managers overestimated consumers expectations, placing the dimensions in a similar order. The current study found that managers underestimated guests expectations for three of the five dimensions, and also placed them in a different order of importance (Table 1). Guests rated tangibles as the least important attribute in their expectations of service quality. Because guest might have felt that tangible should be naturally present in the hotel. Absence of the tangible element or below the expected level may dissatisfy the guest. This would be in line with Maslows theory that people satisfy their basic physiological needs before moving on to the higher order needs (Mullins, 1998). Managers perceptions of guests expectations of service quality placed tangibles as being most important. Managers have to understand that guest assess their experience on individual components, therefore managers have to give importance to all the attributes. The results indicate the significant differences between the managers and guests rating of the dimensions of reliability and responsiveness. Guests rate these dimensions higher because the reputation of the hotel and the temperament of staff in rendering good quality service. Managers need to be kind and compassionate enough to understand the guests expectations and comfort stay in their hotels. So by referring to the gap model a hotel manager must lessen customer gap (Gap 5). Feature Tangibles Reliability Responsiveness Assurance Empathy
CONCLUSION
The findings of the study suggest that guests stayed in the hotels view reliability as the most important satisfactory attribute. In order to ensure the reliability, managers of these hotels have to keep up their promises (as spelt out in the communication- promotion). This will even the guests and enhance their credibility. In order to reduce the gap to satisfy the guests, managers have to conduct survey at least two to three times in a year. The main aspect of providing quality service is to meet the consumers (guests) expectations and thereby making the consumer (guest) feel that they can influence the service. In general satisfied guests may disseminate positive word of mouth and thereby act as an unpaid brand ambassador. Hotel managers may adopt different ways (for example mystery shopping) to monitor and understand the needs of their guests.
REFERENCES
Berry, L.L and Parasuraman, A. (1991), Marketing services; Competing Through Quality, The Free press, Newyork, NY. Christopher Lovelock, Jochen Wirtz, Jayanta Chatterjee.(2006), Marketing of services, People, Technology, Strategy,Pearson education,P393. David A. Garvin, Managing Quality, The free press, New York, 1988. Hadyn Ingram, George Daskalakis (1999), Measuring quality gaps in hotels: the case of Crete, International journal of Contemporary Hospitality Management, Volume 11 No.1, pp.24-30. Lesley Douglas, Robert Connor (2003), Attitude to service quality the expectation gap, Nutrition and Food Science, Vol 33 No. 4, pp.165-172. Maslow, A. (1954), Motivation and personality, Harper, New York, NY, Mullins, L.J. (1998), Managing People in the Hospitality Industry, Longman, Harlow Nightingale, M. (1985), The hospitality industry: defining quality for a quality assurance program- a study of perceptions, The Service Industries Journal, Vol.5 No.1,pp.9-22. Olive Gabbie and Martin A. ONeill, SERVQUAL and the Northern Ireland hotel sector: a comparative analysis part 2 Managing Service Quality Volume 7 Number 1 1997 pp. 4349 MCB University Press ISSN 0960-4529 Pitt, L.F., Watson R.T and Kavan C.B. (1997), Measuring Information systems service quality: concerns for a complete canvas, MIS quarterly, Vol.21, No.2. pp.209- 21 Saleh, F.and Ryan C. (1991), Analyzing service quality in the hospitality industry using the SERVQUAL model, The Service Industries Journal, Vol.11 No.3,pp.32443 Zeithaml, V.A., Parasuraman, A. and Berry. L.L. (1990), Delivering Quality Service: Balancing Consumer Perceptions and Expectations, The Free Press, New York, NY. WEBSITE http://en.wikipedia.org/wiki/Thanjavur http://en.wikipedia.org/wiki/Tiruchirappalli
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GOVERNANCE OF MUTUAL FUNDS: THE ANALYSIS OF MANAGEMENT PRACTICES IN INDIA E. UMA REDDY ASST. PROFESSOR (MANAGEMENT STUDIES) CVR COLLEGE OF ENGINEERING VASTUNAGAR, MANAGALPALLY (V) RR DIST C M REDDY PROFESSOR EMERITUS AND CHAIRMAN (MANAGEMENT STUDIES) DEPT OF BUSINESS MANAGEMENT OSMANIA UNIVERSITY HYDERABAD ABSTRACT
Governance in mutual fund operations aims at establishment of appropriate checks and balance, full disclosure and reporting for mutual funds offering, fair valuation methods and uniform performance measurement while fulfilling the investors expectations. Mutual fund industry in India is demonstrating the philosophy of innovative nature in every aspect of the fund management. As a result it is observed that all asset management companies are implementing the best management practices to facilitate their customers with various provisions of utmost advantage. This study of governance of mutual fund includes identifying the mandatory regulations for management practices and also evaluates effectiveness of such practices. The Grievance management information of all Indian Asset Management Companies reveals that there is a need for review of existing management practices.
KEYWORDS
Governance of mutual funds, management practices, grievance management.
INTRODUCTION
he size and Growth of Mutual Fund industry in India has changed enormously over the last decade. Industry is growing with annual growth rate of 27.25 % in terms of net sales. However Retail investor participation is only 26% of total Assets Under Management (AUM) which is indicating untapped potential for the growth of industry. Building investors trust and increased customer awareness will be the critical factors towards sustainable growth. In this regard Mutual funds need to exhibit good governance practices and transparency in all their areas of operations, in particular, roles and responsibilities of the board of directors and the committees of the board, code of ethics and best practices for the employees, trading procedures and practices, portfolio management, management fee and other expenses and performance measurement of the fund. FIG 1: CATEGORY WISE INVESTORS IN PERCENTAGE OF ASSETS UNDER MANAGEMENT
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All offer documents (ODs) including Statement of Additional Information (SAI) and Scheme information Document (SID) Mutual Fund schemes shall be filed with SEBI in terms of the regulations. Undertaking from Trustees for new Scheme with regard to compliance of AMC with Regulations related to new product offer, Selection of appropriate Benchmarks for performance measurement, Consolidation of Schemes, Implementation of the Risk Management System, Half Yearly disclosure of Portfolios and Disclosure of derivatives in Half Yearly Portfolios, Abridged Scheme wise Annual Report, Annual report of the AMC, Submission of bio data of key personnel, Disclosure of investor complaints with respect to Mutual Funds, Formation of Audit and Valuation Committees by the Trustees and/or AMC, Investment and/or for / Trading in Securities by the employees of the AMC(s) and Trustee(s), Compliance to the Insider Trading Regulations, Scheme Performance Review with benchmark indices and reporting, Audit by an independent CISA/CISM qualified or equivalent auditor, role of mutual funds in corporate governance of public listed companies, Disclosure of Net Asset Value, Valuation of Securities, Limits on fees and expenses charged to schemes, dividend distribution procedure, Investment Restrictions and Overseas Investment, Norms for investment and disclosure by Mutual Funds in Derivatives, Advertisement Code and Forms of Advertisement, Specify the Code of Conduct for distributors, agents, brokers and Obligating the investors for Know your client (KYC) certificate. FIG 3: CATEGORY WISE TOTAL COMPLAINTS OF ALL ASSET MANAGEMENT COMPANIES AND PERCENTAGE OF TOTAL FOLIOS
Source: AMFI Investor complaints as on 31st march2010. All Asset management companies are effectively handling the investor complaints since most of the complaints have been resolved within a month. Indian Mutual funds are maintaining the total folios of 4,73,15,958 as on 31st march 2010. Most of the complaints related to non receipt of dividend and redemption proceeds when IV category complaints are excluded. In total, the reported 36 fund houses received over 3.89 lakh complaints in 2009-10, of which approximately 3.79 lakh (97%) were resolved by them within 30 days of receiving the complaints. Important aspect in the analysis is other complaint category. It accounts for 48.18% of total complaints. Other complaints include changes in policies and procedures, changes in key personnel, changes in key information memorandum and scheme information document, Book closure, Asset allocation and Portfolio matters. This category accounts for majority of complaints therefore serious attention is needed. These complaints not only question the credibility of governance practices but also leave the investors with apprehension. This precursor states the need for the urgent review of management practices by the Asset management companies.
CONCLUSION
The Indian mutual fund industry needs enhanced governance for the greater participation of all stakeholders to maintain the sustainable growth. The efforts of all the stake holders are needed to embrace best governance practices in the fund management. The improvements in the service, better definition in the rules, more education of industry participants, development of industry best practices and continued regulatory and industry dialogue and feedback are to be taken into perspective.
BIBLIOGRAPHY
1. CII-KPMG Report J U N E 2009 Indian Mutual Fund IndustryThe Future in a Dynamic Environment Outlook for2015 2. Global corporate governance issues for Mutual funds Survey by Investment company institute (ICI), Washington Dc, year 2000 website: www.ici.org 3.Governance of Canadian Mutual Funds: Reality, Regulation and Reforms Outline by Rebecca Cowdery The American Enterprise Institute for Public Policy Research Washington, D.C May 18, 2006 website: www.blgcanada.com 4. Lee Gremillion (2005): Mutual fund industry handbook A comprehensive guide for investment professionals, John Wiley &Sons, Inc., New jersey 5. Robert F. Radin* and William B. Stevenson: Comparing Mutual Fund Governance and Corporate Governance, CORPORATE GOVERNANCE Volume 14 Number 5 September 2006 6. SECURITIES & EXCHANGE BOARD OF INDIA (SEBI) .The Master Circular January 07, 2011 and january01, 2010 http://www.sebi.gov.in/circulars/2010/ MasterCircular-mf.pdf 7. Stephen Tate: The Role of Independent Directors In Mutual Fund Governance http://cyber.law.harvard.edu/rfi/papers/Role.PDF 8. The 2008 Mutual Fund Governance Survey by PricewaterhouseCoopers www.pwc.com/lu.
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A STUDY OF ROLE STRESS AMONG TWO INDIAN GOVERNMENT ORGANIZATIONS BUSHARA BANO RESEARCH SCHOLAR, DEPT OF BUSINESS ADMINISTRATION ALIGARH MUSLIM UNIVERSITY ALIGARH DR. PARVAIZ TALIB PROFESSOR DEPT OF BUSINESS ADMINISTRATION ALIGARH MUSLIM UNIVERSITY ALIGARH ABSTRACT
Total stress at workplace may account for 1-10% GDP of the country. India has a mixed economy. Although, country is liberalizing to some extent, but key regulating powers are still in the government hand. Therefore, government authorities are exposed to play a critical role in development of the country. Government employees are called upon to take important decisions regarding policies, plans, procedures etc. As they shoulder critical responsibilities, they are required to have a sound physical and mental health. This research study empirically assesses the occupational stress among the employees of two important government organizations namely archaeological survey of India (ASI), Agra and District Treasury office of Agra. The analysis has been done using ORS scale. This scale comprises of ten role stressors; Inter-role distance, Role Stagnation, Role Erosion Conflict, Role Erosion, Role Overload, Role Isolation, Personal Inadequacy, Self-role distance, Role Ambiguity, Resource Inadequacy indicate key findings as well. The finding reveals that the government employees are facing moderate level of stress. The research established that Resource inadequacy is the most potent stressor. It also identifies that Role Erosion and Role Expectation Conflict has a significant impact on the stress level of employees in different government organizations.
KEYWORDS
Occupational Stress, government, ORS scale etc.
INTRODUCTION
ndian society is undergoing rapid changes due to many contemporary trends in the form of industrialization, liberalization, modernization, automation etc. These changes have impacted the health profile of employees. Workload has been increased in many folds. Employees are called upon to spent additional time in their workplace. They are given deadline to finish tasks. That creates stress among them. Stress is the adverse reaction which people experience due to excessive pressure or other types of demands placed on them (Water & Ussery, 2007). In simple words, stress occurs when external demands exceeds from the internal capabilities of a person. Stress is generally associated with negative outcomes. But it may not true always. Every stress is not harmful and dysfunctional in nature. Research in this field indicates that moderate amount of stress combined with appropriate responses can actually benefit both the individual and the organization (Chusmir & Franks, 1988). Occupational stress can be defined as the harmful physical and emotional responses which occur when the demands of the job do not match the capabilities, resources or needs of the workers (Sauter & Murphy, 1999). Stress is the inevitable part of human life. It cant be totally removed from anybodys life. We can attempt to reduce stress. Stress can be minimized when one is helped to understand how stress occurs, what the consequences of stress are and how it can be coped (Gibbons & Gibbons, 2007). This organizational stress directly impacts the health profile of the employees. Government employees are also vulnerable to stress. Stress impacts those professions where employees are called upon to deal with the general public directly. Government functioning directly affects the common people. Government employees shoulder greater responsibilities in comparison to private sector employees as they are the regulating entities and they have to formulate the governing policies. It is therefore imperative that they must have a sound mental and physical health. A person encounters many stressors during course of his work. Stressors can be grouped in two categories: job related stressors and individual related stressors. Researchers have classified occupational stress in different ways. Physical environment, role stressors, organizational structure, job characteristics, relationship with others, career development and work-family conflict can be the stressors among employees (Burke, 1993). They may also be categorised as factors intrinsic to the job, management role, relationship with others, career and achievement, organizational structure and climate, home/work interface may be the stressors among people at workplace (Cooper, C.L. & Marshall J. 1976). The model is given in the Figure 1. The factors intrinsic to the may be too much or too little work, poor working conditions, time pressure etc. The factors related to role in organization may be role ambiguity, no participation in decision making etc. The stressors under the head of career development may be under or over promotion, job insecurity etc. Company vs. Family demands, company vs. Own interests may be stressors under home/work interface. Organizational Structure may contain stressors like restriction on behaviour, office politics etc. Poor relationship with boss, peers and subordinates may also create work stress. Finally stress can also be varied due to personality, coping capabilities and behavioural pattern of the individual manager. 1.1 FIGURE 1: OCCUPATIONAL STRESS MODEL
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Stress can be measured using varied instruments. In this paper, our focus is on role stress. ORS, developed by Pareek (1983), is a popular instrument of measuring role stress. This scale measures respondents quantum of stress in terms of total ORS scores. It also measures the intensity of ten role stressors contributing to total ORS score. The ten role stressors areInter Role Distance (IRD): conflict between the organizational and non-organizational roles Role Stagnation (RS): feeling of being suck in the same role Role Expectation Conflict (REC): conflicting expectations and demands by the different role senders Role Erosion (RE): feeling that functions which should belong to incumbents role are being transformed/performed or shared by other roles Role Overload (RO): feeling that too much is expected from the role than what the occupant can cope with Role Isolation (RI): lack of linkages of ones role with other roles in the organization Personal Inadequacy (PI): lack of knowledge, skills or adequate preparation to be effective in a particular role Self-Role Distance (SRD): conflict of ones values and self-concepts with the requirements of the organizational role Role Ambiguity (RA): lack of clarity about expectations of others from the role, or lack of feedback on how performance is regarded by others Resource Inadequacy (RIn): non-availability of resources needed for effective role performance
REVIEW OF LITERATURE
In India, there have been a number of studies which attempt to understand phenomenon of occupational stress among government employees. Some ORS scale (Pareek, 1983c) based studies done are as followsSharma (1987) targeted managers and supervisors of public and private Pharmaceutical organization for his study. His aim was to ascertain the role of motivated climate on four psychological variables- Job satisfaction, participation, alienation and role stress. The respondents were 150 in number (75 managers and 75 supervisors). The findings of the research study indicates that the employees of public sector organizations scored lower and significantly differed from the employees of private sector organizations. However, the public sector employees scored significantly higher on role stagnation. Choudhary (1990) conducted a study on 100 bank officers using ORS scale and Employers Satisfaction Dissatisfaction Inventory (Pestonjee, 1973b) to probe the relationship between role stress and job satisfaction. Results showed that role erosion and resource inadequacy were experienced as dominant whereas role ambiguity and role expectation conflict as remote contributors of role stress among bank officers. The overall indices of role stress and job satisfaction were found to be negatively correlated in higher as well as lower age groups. Srivastava (1991) conducted a study on 300 employees of supervisory cadre of Life Insurance Corporation (LIC) of India. The study reported significant positive correlation of various dimensions of role stress with the symptoms of mental ill health. Stress arising from role ambiguity and role stagnation were most intensively correlated with anxiety. Singhvi and Mathur (1997) carried out a study on officers of Central Reserve Police Force (CRPF). The sample consisted of 19 gazetted officers and 32 nongazetted officers. The study found that role erosion and inter role distance to be the most dominant whereas role ambiguity and role overload to be the least dominant contributors of role stress. Pattnayak and Mishra (1997) carried out a comparative assessment between old and new public sector organizations in respect to ORS and quality of work life (QWL). The study covered 800 respondents including executives and non-executives both. Significant differences were observed between old and new public sector firms an all the ten dimensions of organizational role stress and total role stress. Similarly significant differences were found between executives and nonexecutives on all ORS dimensions and total role stress. Talib (1999) carried on study on role stress among police personnel. The sample comprised 178 police personnel belonging to two groups viz, civil police and provincial arms constabulary (PAC) from Uttar Pradesh region. The study found that the inter role distance, resource inadequacy and role erosion were the dominant stressors for the police personnel. It was observed that more than 42% respondents were experiencing either medium high or high stress. The study found that role overload score was higher in civil police personnel. Overall PAC emerged as a far more stressed group. Inter role distance was found as a most potent stressor among both police and PAC. Aziz (2003) conducted a research study on IT sector professionals. 257 employees from eight IT firms were administrated to assess occupational role stress. The study established that the information technology professionals were experiencing a fair amount of role stress. It was also found that resource inadequacy, role stagnation and inter role distance were those stressors, which were emerged as top three contributors to overall organizational role stress among IT sector professionals. Rishi et al (2004) studied 34 forest officers from Bhopal to identify different coping strategies used by them while facing multifarious role stressors. Projective Role PICS technique (Pareek, 1983b) was used to get the response. The results suggested that there was a positive and significant relationship between stress, avoidance strategies and type A personality. Forest officers having type A personality experienced more role stress and used more avoidance-based strategies to cope with it. Overall, 23.5% of the sample was found to be experiencing a high stress and ineffective coping styles. Kaila (2004) conducted a study on 100 women managers to assess the stress and health aspects of women managers using in depth interviews in and out of Mumbai from diverse organizations. The study revealed that the factors like clashes with superiors, competition, dual responsibilities, meeting deadlines, lack of support from others, handling different type of clients, long working hours. Nagar (2009) undertook a survey of sixty police personnel belonging to three hierarchical level of police organization (CSP, Inspector and Constables) during a soft skill training session to explore the occupational stress and health of the police personnel. Results revealed that 40% constables, 20% inspectors and 10% CSPs are facing high level of occupational stress. The common health complains reported by police personnel were high blood pressure, diabetes, Sciatica, arthritis, migraine, asthma and Gastric problems. After analyzing the literature review, it is quite evident that stress research is a popular field of enquiry among management researchers. All aforementioned studies have highlighted different dimensions of the stress across varied occupational groups, sectors and national settings. The studies have also proposed various coping strategies. This also hints at the need of further exploration. It is found by most of the studied done on public sector employees that the government employees encounter lower stress. In this paper, we aim to study the stressors on the basis of the organization.
HYPOTHESIS
H0 1: H0 2: H0 3: H0 4: H0 5: H0 6: There has been no significant variation of mean score on IRD as a dimension of ORS with select govt organizations There has been no significant variation of mean score on RS as a dimension of ORS with select govt organizations There has been no significant variation of mean score on REC as a dimension of ORS with select govt organizations There has been no significant variation of mean score on RE as a dimension of ORS with select govt organizations There has been no significant variation of mean score on RO as a dimension of ORS with select govt organizations There has been no significant variation of mean score on RI as a dimension of ORS with select govt organizations
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RESEARCH METHODOLOGY
TOOL USED FOR DATA COLLECTION Occupational Role Stress scale (ORS) has been used to generate data for the study. This scale measures quantum of stress in terms of total ORS scores. It also measures intensity of ten role stressors mentioned earlier. The respondents are required to indicate their responses on a 5-point Likert scale ranging from zero to four. TEST- RETEST RELIABILITY OF THE ORS SCALE: The overall reliability of ORS scale is 0.73. This shows that ORS scale is highly reliable. On the other hand, the reliability of the three stressors are given in Table 1: TABLE 1: RELIABILITY OF THE SCALE Variables Coefficient Level of Significance Inter Role Distance 0.58 .001 Self-Role Distance 0.45 .001 Role Erosion (RE) 0.37 .003 Role Stagnation (RS) 0.63 .001 Role Ambiguity 0.65 .001 Role Overload 0.53 .001 Role Inadequacy 0.58 .001 Total Role Stress (ORS) 0.73 .001 Source: Pareek, 1983c
S. No. 1. 2. 3. 4. 5. 6. 7. 8.
This shows that scale is reliable in all aspects. SAMPLE The sample of the study is drawn from the Department of Archaeological Survey of India (ASI), Agra and District Treasury Board (DTB), Agra. The study includes 35 employees, in which, 24 belong to ASI and 11 are from DTB. STATISTICAL ANALYSIS The data has been subject to analysis in the form of variables like ORS scores for public sector employees in which low, medium and high stress, comparison of stress of ASI and DTB employees, qualification, length of service, marital status and age has been considered. The grouping was done to ascertain the differences between the groups (Table 2). SPSS 16.0 was used to analyse the results. Findings were tabulated separately. TABLE 2: DEMOGRAPHICAL PROFILE OF THE RESPONDENTS Variables Details of Variables Number of Respondents Education Group A (Up to 12 standard) 10 Group B (Graduate & P.G.) 21 Group C (Doctorate) 4 Age Group A ( Up to 35 years) 9 Group B (36-50 years) 20 Group C (Above 50 years) 6 Length of Service Group A (1-10 years) 8 Group B (11-20 years) 14 Group C (21-30 years) 11 Group D (31-36 years) 2 Organization Group A (District Treasury Board) 11 Group B (ASI) 24
S. No. 1.
2.
3.
4.
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the problem of RO more than rest of the employees. Finally, we can say that RIn, RE and IRD are the top three contributors to the total stress level among government employees. TABLE 4: ANOVA VALUES OF DIFFERENT STRESSORS Hypothesis Stressor f value Remarks H 01 IRD 0.694 Not Rejected H 02 RS 0.832 Not Rejected H 03 REC 0.013* Rejected H 04 RE 0.001** Rejected H 05 RO 0.293 Not Rejected H 06 RI 0.067 Not Rejected H 07 PI 0.592 Not Rejected H 08 SRD 0.129 Not Rejected H 09 RA 0.081 Not Rejected H 010 RIn 0.796 Not Rejected ORS 0.100 Not Rejected *value is significant at 95% level of significance **value is significant at 99% level of significance Table 4 is showing that on the basis of organization, the calculated value of Role Expectation Conflict (REC) and Role Erosion (RE) is significant. Data interprets that only two hypotheses are rejected and most of hypotheses are not rejected. There is a significant difference in REC (Role Expectation Conflict) between organizations and there is a strong significant difference in RE (Role Erosion) between organizations.
CONCLUSION
The study has been conducted in two different government organizations to assess the most potent stressors among government employees. It has been concluded from the study that government employees are experiencing the moderate level of stress. It is further explored from the study that Resource Inadequacy is the most potent stressor followed by Role Erosion and Inter Role Distance. The study also assessed that Role Erosion and Role Expectation Conflict have significant impact on total stress level of employees.
MANAGERIAL IMPLICATIONS
The study explores that government authorities should design their strategies in such a manner that resource inadequacy and role erosion may be reduced in order to have sound physical and mental health of government employees which results in the enhancement of the overall productivity of the government organizations.
REFERENCES
Aziz, M. (2003): Organizational role stress among Indian Information Technology Professionals. Asia- Pacific Newsletter on Occupational Health and Safety.10 (2): 31-32. Burke, R. J. (1993): Towards an understanding of psychological burnout among police officers. Journal of Social Behavior and Personality, 5(3), 425-438. Chaudhary, A. (1990): A study of relationship between job satisfaction and role stress of bank officers. Unpublished M.A. Dissertation, Department of Psychology, University of Rajasthan, Jaipur. Chusmir, L. H., Franks, V. (1988), Stress and the Woman Manager, Training & Development Journal, 42(10): 66-70 Cooper, C.L. & Marshall J. (1976): Occupational sources of stress: A review of the literature relating to Coronary Heart Disease and Mental Ill-Health, Journal of Occupational Psychology, 49(1): 11-28. Gibbons, R.M. & Gibbons B. (2007): Occupational Stress in the chief Professional. Int. J. Contemporary Hospitality Management, 19:32-42. Kaila, H.L. (2004): Indian Women Managers: Their Stresses, health and coping behaviour- A survey in Mumbai. Journal of Health Management.6 (2):147-161. Murphy, L.R. (1989): Workplace interventions for stress reduction and consequences of stress at work, New York: John Wiley Nagar, D. (2009): A study of Occupational Stress and Health in Police Personnel. The Indian Police Journal.LVI (4):47-54. Pareek, U. (1983c): Role Stress scales ORS scales Booklet, Answer sheet and Manual, Naveen Publications, Ahmedabad. Pattnayak, B. & Mishra, P.K. (1997): Life in Organizations. New Delhi/Allahabad: A.H. Wheeler & Co. Pestonjee, D.M., (1999): Stress and Coping in Indian Experience. New Delhi: Sage Publication. Rishi, P., Upadhyay, B.K. & Solanki, A. (2004): Stress and coping profiles of IFS officers: An empirical analysis. Journal of Health Management.6 (2): 177-186. Sehgal, P. (1997): Role Stress. Coping and job involvement. In D.M. Pestonjee and U.Pareek (eds.), Studies in Organizational Role Stress and Coping, Jaipur/New Delhi: Rawat Publication. Sharma, T. (1987): Different effects of organizational climates on job satisfaction, sense of participation, alienation and role stress. Unpublished Ph.D.dissertation. Gujrat University, Ahmedabad. Singhvi, M.K. & Mathur, C.N. (1997): Role stress in central police officers. In D.M. Pestonjee & Udai Pareek (Eds.), Studies in Role Stress and Coping, Jaipur: Rawat Publications. Srivastava, A.K. (1991): A study of role stress-mental health relationship as a moderator by adopting coping strategies. Psychological Studies.3: 192-97. Talib, P. (1999): Role Stress among Police Personnel: Managerial Implications for Public Administration, Unpublished Ph.D. dissertation, Aligarh Muslim University, Aligarh. Waters J.A. & Ussery W. (2007): Police stress: history, contributing factors, symptoms, and interventions, Policing: An International Journal of Police Strategies & Management. 30 (2):169-188
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EXECUTIVE ROLE CONFLICT AND ITS CONSEQUENCES SELVARANI SHANKER PROFESSOR DEPARTMENT OF BUSINESS MA NAGEMENT OSMANIA UNIVERSITY HYDERABAD ABSTRACT
Organization being a structure of inter-related roles which to certain extent also tend to be overlapping, role conflict role conflict and role ambiguity inevitably occur. Though conflict and ambiguity when they arise to a moderate degree tends to be motivational, however, above the optimum level they have a detrimental influence for the employee and for the organization. The incidences of role conflict and role ambiguity have their basis in the structural aspects of the organization, employee and also how he relates to the organization. Some of the structural aspects are span of control, professional growth in the organization etc,. The consequences of conflict can be both for the organization and the employee.The present study aims to investigate the relationship between role conflict and role ambiguity and certain antecedent and consequent variables. While antecedents are causes that lead to and result in the arousal of role conflict and role ambiguity, consequences refer to the effect of role conflict and role ambiguity. The antecedents examined in the study include age, job tenure, span of control and professional growth in the organization. The consequences studied are job, satisfaction job performance.
KEYWORDS
Conflict, Executive, Organisation, Roles.
INTRODUCTION
mong the antecedent variables studied it is years of experience and professional growth that are found to be related to role conflict consistently. As people acquire more experience they tend to experience less of role conflict in their job. This is explained in the following para. Familiarity and experience with situations tends to be more for experienced people, hence conflict may not be that stressful to them. Having resolved similar conflicts in the past they are used to these stressful situations. Moreover in terms of experience their experience they might be well tuned to the expectations of their role set members. And interpersonal relations built overtime may induce the role set members to time their expectations inconsonance with focal persons own expectations.
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measured in terms of the number of subordinates under the focal persons immediate control. The response alternative included: (1) 1-5, (2) 6-10, (3) 11-15, (4) More than 15, (5) none. SAMPLE A sample survey of 160 Executives of the middle and lower management levels were selected randomly from three different organizations. Two of them were in Public Sector and the third one was from a private sector. The Public Sector organizations are referred to as X and Y and the Private sector as Z. The investigator approached each of the subjects in the present sample by a prior appointment. The purpose of the study and the questionnaire was explained to each of the respondent. The respondents were allowed to complete the questionnaire at their leisure. For this purpose 10 days time was given and the questionnaires were collected back from the respondents. The nature of the sample and its characteristics are presented in Table-2.
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performance was supported only at the higher management levels. Because, at lower, tasks are well defined and structured and employees can more easily obtain information to reduce ambiguity than they can change rules, procedures and resources in order to reduce role conflict. The negative influence of the role stress variables on job performance was not significant for the executives of the private sector. In a private organization the emphasis is more on performance. Job security depends upon achieving optimum performance consistently. Hence, employees are expected to achieve the desired level of performance in spite of the conflict or ambiguity being present in their job situations. Negative attitudes generated because of role stress may not be reflected on the job performance for executives of private industries while it is not so for executives of public sector.
REFERENCES
1. 2. 3. 4. 5. Porter, Lawler, Hackman Behavior in Organizations, Mc Graw Hill Kogakusha Ltd. Richard Jack Pelit, Role Conflict and Role Ambiguity Multiple Relationship roles, Dissertation Abstracts 1973. Organ, Dennis, and Greene, Charles, Role Ambiguity, Journal of Applied Psychology. Rosenheim Validation of the theory of Role Conflict resolution among Industrial Foremen. International Dissertation Abstracts. Schuler, Randal S.- Role Perceptions, Satisfaction Performance: A partial Reconciliation, Journal of Applied Psychology.
TABLES
TABLE 1: INTERNAL CONSISTENCY RELIABILITIES FOR ROLE CONFLICT & ROLE AMBIGUITY Organization Internal Consistency Job Satisfaction RIC RP RC RAT RAF RA X (N = 30) .84 .25 .54 .10 .58 .44 .85 Y (N = 90) .67 .42 .73 .39 .59 .62 .98 Z (N = 40) .61 .32 .65 .30 .70 .73 .75 X+Y(N=120) .68 .45 .70 .35 .61 .62 .97 .90 X+Y+Z(N=160) .66 .41 .68 .33 .65 .68 TABLE: 2 Job Level Age OE 30 60 STO 25 50 AO 25 - 50
Name of the Industry X Y Z Note : X&Y represent public sector industries Z represents private sector industry OE represents Officer-Executive STO represents Senior Technical Officer AO represents Accounts Officer.
Number 30 90 40
TABLE: 3 CORRELATIONS BETWEEN ROLE CONFLICT AND THE ANTECEDENT VARIABLE Age Years of Experience Experience in the present position Span of Control Number of positions -.290** -.216* .151 -.036 -.118 -.009 -.193* -.249 -.280** -.045 -.077 -.178 -.098 -.367* -.196*
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WORK ETHICS AND PROFESSIONAL VALUES A TOOL FOR ORGANIZATIONAL EFFECTIVENESS DR. S. B. AKASH ASSOCIATE PROFESSOR & CO-ORDINATOR (M. COM. DISTANCE) KUVEMPU UNIVERSITY SHANKARGHATTA 577 451 ABSTRACT
Under changing business environment business is too complex and highly competitive; this environment generally encourages organization to develop strong work ethics among employees because work ethics enhances employee productivity, encourages employees to accept responsibilities, improve the capability of employees, facilitates to act with in the purview of rules and regulations ,increases the commitment of employees , team work, understanding among different positions of organization properly, attain the basic objectives of organization, fair behavior come out from each employees of organization at work place, sense of good feeling about organization activities and organization, effective utilization of organizational and societal resources etc , However, it attempted to analyze the level of work ethics and professional values among employees of SSI.
KEYWORDS
Work ethics, Professional values and organizational effectiveness
INTRODUCTION
mployee work ethics and professional values played key roles in any business success and survival, because, employees are the key elements in any business, if employees has work ethics organization able to perform organizational function according to their expectations. However, professional ethics have different role in business like increases the attendance of employees; encourage the employees to accept responsibilities, increases the productivity of employees, encourage employees to work with in the working norms and rules, protect the interest of employees and organization, ensures to get competitive advantages over competitors etc. However , work ethics deals with adoption of right method and means towards right end about their duties and responsibilities and it includes not only how employee feels about their work, career or vocation, but also how one does their job or responsibilities. This involves attitude, behavior, respect, communication, and interaction; how one gets along with others. Work ethics demonstrate many things about employees. It also refers aspects like honesty and accountability, beliefs, standards, norms etc. . Essentially, work ethics break down to what one does or would do in a particular situation. Work ethics, such as not lying, cheating, and stealing, doing a job well, valuing what one does, having a sense of purpose and feeling being a part of a greater vision or plan is vital. Philosophically, if one does not have sound work ethics, a person not bothered about the work and his duties. People who have sound work ethics they always try to do good things for organization and they are not go beyond the existing rules and regulations. Work ethics are important organization for variety of reasons such discharging responsibilities, co-operation with their subordinates, acceptance of responsibilities, work always in favour of organization etc.
STUDY AREA
Uttara Kannada District is one of the biggest districts in Karnataka State with abundant natural resources. The district has varied geographical features with thick forest, perennial rivers and abundant flora and fauna and a long coastal line of about 140 KM in length.It is surrounded by Belgaum District and State of Goa in the North, by Dharwar District in the East, by Shimoga and Udupi Districts in the South. Arabian Sea forms the West border.In its 10.25 lakh hectares of total land, of which 8.28 hectares is Forest land. Andonly about 1.2 lakh hectares of land (roughly about 10%) is under agriculture / horticulture.
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HYPOTHESES
There is no adherence and agreement of sample employees towards work ethics and professional values.
SAMPLE DESIGN
The size of registered small-scale industry is very large and size of employees also very high in Uttar Kannada district. Since detail study of opinions of all employees of small scale industry towards agreement and adherence of work ethics of all employees is very difficult and times consuming, therefore, the study were adopted cluster sampling method and selected 125 employees from different category of employment from different small- scale units in Uttar Kannada district.
20 30 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree
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Table 3 provides information about agreement and adherence of employees towards subordinates related ethics. Among different subordinates related ethics the employees were just agree as relating to protection of subordinates interest (3.4), as regards to proper guidance to subordinates employees were not agree(2.7), in respect of confidence in subordinates employees is concern were moderate agree(3.2) and as relating to other subordinates related ethics is concern employees were not agree. Thus it is clear that there is no strong agreement and adherence of employees towards subordinates related ethics. TABLE 4: AGREEMENT AND ADHERENCE OF EMPLOYEES TOWARDS PEER RELATED ETHICS Peer related ethics Level of agreement of employees Total Score SA-5 Agree- 4 MA-3 DA-2 SDA-1 Generosity among peers Sense of cooperation among Peers Competitive sprit among peers Positive response towards peers feelings 05 10 20 25 15 35 45 35 30 38 40 35 07 35 305 368 280
10 45 34 36 279 2.2 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree Table 4 provides information about agreement and adherence of employees towards peer related ethics. Peer related ethics played a very important role in order to build up a strong team work among employees, however, here an attempt is made to study the agreement and adherence of employees towards peer related ethics, generosity among peers is one of the important peer related ethics and which constitute a total score amounting 305 (2.4), it means the sample employees were not agree with generosity among peers. As relating to sense of co-operation among peers sample employees were agree because, it constitute a total score amounting 368, in respect of competitive sprit among peers total score were 280 ,it means the sample employees were not agree with competitive spirit among peers. And in respect of positive response towards peers feeling the total sore were 279, it means sample employees were disagree. Thus it is clear that sample employees were not agree with peer related ethics because they only agreed about sense of co-operation among peers. TABLE 5: AGREEMENT AND ADHERENCE OF EMPLOYEES TOWARDS TRADE UNION AND COMMUNITY RELATED ETHICS Trade union and community related ethics Level of agreement of employees Total Score Average SA-5 Agree- 4 MA-3 DA-2 SDA-1 Active participation in trade union 08 19 37 32 32 323 2.6 Binding oneself to trade union decisions 14 26 40 28 28 378 3.1 Social involvement 17 20 33 35 35 356 2.9 12 41 31 31 264 2.1 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree Table 5 provides information about employees agreement and adherence towards trade union and community related ethics. The total score were 323 about active participation in trade unions which constitute weighted average 2.6 , it means sample respondents not agree about to take active part in trade union activities. As regards to binding oneself trade union decisions the total score amounting 378 and weighted average constituting 3.1. It is clear that from the data, sample respondents were agreed about binding oneself to trade union decisions. Regarding social involvement sample respondents were agreed because the total score were amounting 356 and in respect of other trade union and community related ethics sample respondents were not agreed. Thus it is evident that the agreement and adherence level of sample employees in respect of trade union and community related ethics were not acceptable and it is also not good to create good working environment as well as to protect them-selves whenever exploited from employer. TABLE 6: AGREEMENT AND ADHERENCE OF EMPLOYEES TOWARDS ORGANIZATIONAL RELATED ETHICS Organization Related Ethics Level of agreement of employees Total Score Average SA-5 Agree- 4 MA-3 DA-2 SDA-1 Commitment to organization 15 25 36 30 24 367 2.9 Fostering institutional image 12 28 30 33 22 350 2.8 Conflict resolution through negotiation 23 21 30 31 20 371 3.0 23 47 17 10 412 3.4 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree Table 6 reveals information about agreement and adherence of employees towards personal ethics. Among different organizational related ethics the highest score come towards conflict resolutions through negotiation (371) which constitute weighted score amounting 3, which means the respondents were moderate agree. Regarding work for organization good sample respondents were agree, because the total score were (412) and weighted score constitute 3.4. And other organization related ethics like fostering institutional image and commitment to organization sample respondents were moderate agree. Thus it is clear that from the above analysis sample respondents not strongly agreed about organizational related ethics. TABLE 7: AGREEMENT AND ADHERENCE OF EMPLOYEES TOWARDS PERSONAL ETHICS Personal Policy level Ethics Level of agreement of employees Total Score SA-5 Agree- 4 MA-3 DA-2 SDA-1 Not misuse others for personal end 21 27 29 35 13 383 Not spoil promotion chance of others 15 33 40 30 07 394 Not indulge in political to gain power 5 10 35 45 30 290 Respect for persons and property 25 Work for organizational good 29 other -
20 35 34 11 389 3.11 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree Table 7 gives information about agreement and adherence of employees towards personal policy level ethics. Personal policy level ethics played a significant role in order to attain the requirement of employees and it also helps organization to utilize organization assets for development of organization. Among different personal policy level ethics the total score amounting 394 come towards in respect of not spoil promotion chance of others, it means sample respondents were agree. Regarding not misuse others for personal end sample respondents were moderate agree, in respect of not indulge in political to gain power (290) sample respondents were agreed in respect of person and property because the total score amounting (389). Thus it is clear that most of the sample respondents were moderate agree.
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TABLE 8: AGREEMENTS AND ADHERENCE OF EMPLOYEES TOWARDS PROFESSIONAL VALUES Professional Values Level of agreement of employees Total Score Average SA-5 Agree-4 MA-3 DA-2 SDA-1 Honest and trust worthy 29 27 40 17 12 449 4.0 Work selflessly 15 20 45 23 23 382 3.0 Proper utilization of organization resources 28 45 46 6 470 4.0 Fair and correct accounting Practices 18 37 48 22 426 3.0 Fair return on investment 23 33 68 1 452 3.0 Fair Business Practices 13 35 43 27 7 401 3.2 Sources: Field survey Note 1 SA- strongly agree, MA moderate agree, DA- disagree and SDA- strongly disagree Professional ethics is the behavior that a professional adheres to in its daily dealings with their obligations and authorities. Table 8 reveals the agreements and adherence of employees towards professional values. Here an attempt is made in order to know the level of agreement and adherence of employees towards professional values. For this purpose taken some selected professional values like honesty and trust worthy, work selfishly, proper utilization of organizational resources, fair and correct accounting practices, fair return on investment and fair business practices. However, among different professional values sample respondents agree towards honesty and trust worthy and proper utilization of organizational resources total score amounting 449 and 470 respectively. Thus it is clear that sample respondents not have adequate professional ethics, because, respondents moderate agree in case of work selfishly, fair and correct accounting practices, fair return on investment and fair business practices. MODELS FOR IMPROVE THE WORK ETHICS AND PROFESSIONAL VALUE LEGISLATIVE MEASURES Proper legislation for working norms Acceptable Code of Ethics for work Proper rules for promotion, recognition and compensation Proper action for unacceptable action of employees
EMPLOYEE RELATED ASPECTS Adequate training to employees Reward and Recognition Responding positively towards employee problems Adequate Salary for work Fair treatment of all employees Protection of employee interest Create sense of security among employees about their existence in organization Adequate safety and protection
WORK ETHICS
CORPORATE CULTURE RELATED ASPECTS Ensure sense of discipline among employees Inculcate hardworking ability among employees Proper work management relations Ensuring proper work environment Making work more interesting and encourage able Equitable wage structure for equal work Proper ways for control and legislations Ensures sense of commitment and
OTHER ASPECTS Fair administrative practices Participative Management Encouraging employees to form trade union Encourage employee to develop their personality Respect the employee opinions Sources: Author developed
CONCLUSIONS
Business is complex and highly competitive, this environment generally encourages organization to develop strong work ethics among employees, because, it facilitates organization to increases the commitment of employees , team work, understanding among different positions properly, attain the basic objectives of organization, fair behavior come out from the employees at work place, sense of good feeling about organization activities and organization, effective utilization of organizational and societal resources , increases the performance of organization , increases the competitive ability of organization, and ensures survival and success of organization., hence , every organization needed sound system or model for develop the work ethics among employees. In view of this the study has recommended the model for improve the work ethics among employees; if organization consider this model for improve the work ethics to their employees surely the organization able to improve the work ethics and professional values among employee without fail.
REFERENCES
1. 2. 3. 4. Daniel T. Rogers (1978) The Work Ethic in Industrial America,(1850-1920), Univ. of Chicago Press, Chicago. Cetina, K. K. and A. Preda, (2005). The sociology of financial markets. Oxford, Oxford University Press. Lekan, T. (2003). Making Morality, Pragmatist Reconstruction in Ethical Theory. Nashville, Vanderbilt University Press S.B. Akash (2009) Business Ethics and corporate governance, paper presented in National Seminar , Shimoga
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MOBILE TEXT MESSAGING BEHAVIOR AMONG YOUTH IN INDIA: AN EMPIRICAL STUDY BASED ON THEORY OF REASONED ACTION G. N. SATISH KUMAR ASSOCIATE PROFESSOR AND HEAD OF M.B.A DEPARTMENT AURORAS PG COLLEGE MOOSARAMBAGH 500 036 H. VANI ASSOCIATE PROFESSOR AURORAS PG COLLEGE MOOSARAMBAGH 50 0036 S. VANDANA ASSOCIATE PROFESSOR, AURORAS PG COLLEGE MOOSARAMBAGH 50 0036 ABSTRACT
This empirical study has investigated the Mobile Text Messaging Behavior among youth in India based on Theory of Reasoned Action (TRA) model. The article discussed the impact of mobile text messaging Attitude, Subjective norms towards mobile text messaging and mobile text messaging Intention on mobile Text Messaging Behavior. The study was conducted on 329 young Mobile phone users for a period of 3 months. The data analysis was conducted in a three-stage process. First, reliability tests were performed. Upon satisfactory results, the factor analysis of the collected data was conducted followed by Confirmatory Factor Analysis (CFA) was performed to confirm the findings. SPSS Statistics 17.0 is used to conduct factor analysis and the validity of the model. Once the model was validated, SPSS Amos 18.0 is used to test the overall fitness of the Structure Equation Model (SEM). The results of the study confirmed that the TRA Model is viable in predicting the mobile text messaging Behavior. The findings have revealed that Attitude towards mobile text messaging is having significant positive effect on Behavior and Intention towards Mobile Text Messaging among youth. Subjective norms have negative effect on Intention and no effect on Behavior towards mobile text messaging. Intention towards Mobile Text Messaging has positive effect on Behavior. This study has important implication for researchers to further explore text messaging Behavior based on TRA.
KEYWORDS
Mobile Text Messaging, Attitude, Subjective Norms, Intention, Behavior, Theory of Reasoned Action (TRA), Structure Equation Model (SEM).
INTRODUCTION
ext Messaging refers to the exchange of brief written alpha-numeric message between fixed-line phones or mobile phones over a network. Mobile Text Messaging is exclusively sending text message between mobile phones. Mobile Text Messaging is also referred as SMS in India, Australia, Philippines, United Kingdom and most parts of Europe. Text Message was first used by Neil Papworth to send a Text Message Merry Christmas via the Vodafone network to Richard Jarvis phone in December 1992. Today mobile text messaging is the most widely used mobile data service, with 74% of all mobile phone users worldwide are active users of mobile text messaging. According to a research 2.3 trillion text messages are send in 2010. On average 27 text messages are send per day in Philippines which is the largest average Mobile text messaging in the world. According to Telecom Regulatory Authority of India (TRAI) an average Indian sends 29 Text Messages per month but receives 4 to 6 Text messages which are both personal and promotional oriented messages. Text messaging is a substitute for voice calls in situations where voice communications is undesirable. Text message has many advents over voice calls as in Text messaging the Textee (receiver of the message) is not restricted to sent a reply immediately to the Texter (sender of the message) but can send a message later at his/her convenient time and place. Text messaging does not require real time attention and Conversations/Messages can be stored and looked up later. Text messaging is significantly cheaper than voice call; various mobile service providers in India are offering 1000 to 2000 Short Message Services (SMS) for a minimum cost of Rs. 10 to Rs. 30 on different occasions. Short messages are particularly very popular among youth urbanities In India. Indians use SMS for many purposes like receiving News alerts, Sports updates, Astrology, Jokes, Stock/Finance/Business, Health tips, Jobs, Spiritual, Love tips/Quotes and Vastu. Popular Text services used by young in India are Jokes (53%), Astrology (47%), News alerts (44%) and Jobs (43%). Males are generally more active users of SMS than Females; Males are more interested in getting sports updates were as Females are more interested in spiritual and astrology quotes. Dr Scott Frank (2010) in his study found that teens of age between 13 to 18 years who are constantly text messaging more than 120 messages per day (called as hyper texters) are more likely to engage in risky Behavior. According to his findings presented to American public Health Association in Denver USA, Hyper texters are 40 per cent more likely to have smoked cigarettes, 43 per cent more likely to be binge drinkers; 41 per cent more likely to have used illegal drugs; 55 per cent more likely to have been in a physical fight and 90 per cent more likely to have had four or more sexual partners.
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perform a behavior is a combination of attitude toward performing the behavior and subjective norm. The individual's attitude toward the behavior includes; Behavioral belief, evaluations of behavioral outcome, subjective norm, normative beliefs, and the motivation to comply. If a person perceives that the outcome from performing a behavior is positive, she/he will have a positive attitude forward performing that behavior. The opposite can also be stated if the behavior is thought to be negative. If relevant others see performing the behavior as positive and the individual is motivated to meet the exceptions of relevant others, then a positive subjective norm is expected. If relevant others see the behavior as negative and the individual wants to meet the expectations of these "others", then the experience is likely to be a negative subjective norm for the individual. Attitudes and subjective norm are measured on scales (as an example the Likert Scale) using phrases or terms such as like/unlike, good/bad, and agree/disagree. The intent to perform a behavior depends upon the product of the measures of attitude and subjective norm. A positive product indicates behavioral intent Glanz et al (1997). TRA works most successfully when applied to behaviors that are under a person's volitional control. If behaviors are not fully under volitional control, even though a person may be highly motivated by her own attitudes and subjective norm, she may not actually perform the behavior due to intervening environmental conditions.
OBJECTIVES
The main objectives of this empirical research is to study 1. The young mobile users attitude towards mobile text messaging and its impact on text messaging intention and mobile text messaging behaviour. 2. The young mobile users subjective norms to use mobile text messaging and its impact on mobile text messaging intention and mobile text messaging behaviour. 3. To understand the correlation between young mobile users attitude and young mobile users subjective norms towards mobile text messaging behaviour. The following hypothesis are formulated to study the Text Messaging Behavior among youth based on TRA Model FIGURE 1: MOBILE TEXT MESSAGING HYPOTHESIS BASED ON THEORY OF REASONED ACTION
HYOITHESIS
Hypothesis1 (H1): Young mobile users Attitude towards mobile text messaging will have a significant effect on mobile text messaging Intention. Hypothesis (H2): Subjective norms towards mobile text messaging will have a significant effect on mobile text messaging intention. Hypothesis (H3): Young mobile users Attitude towards mobile text messaging will have a significant effect on mobile text messaging Behavior. Hypothesis (H4): Subjective norms towards mobile text messaging will have a significant effect on mobile text messaging Behavior. Hypothesis (H5): Young mobile users mobile Text Messaging Intention will have a significant effect on mobile text messaging Behavior. Hypothesis (H6): Young mobile users Attitude towards mobile text messaging will have a significant correlation with Subjective norms towards mobile text messaging.
RESEARCH METHODOLOGY
Structural Equation Modeling is used as the main statistical technique and data was collected through questionnaire survey. The questions in the survey are self created. 5 point likert scale was used (1 strongly disagree, 2 disagree, 3 nether agree or disagree, 4 agree and 5 strongly agree) to measure affects of consumer Attitude, Subjective Norm, Intention and Consumer Behavior towards Mobile Text Messaging. The research questions consisted of 18 questions. The first 2 questions are related to demographic variables age and gender. The remaining 16 questions are related to investigate mobile users attitude, subjective norm, Intention and Behavior towards Mobile Text Messaging. The questionnaire was pretested on 35 respondents to test its consistence and reliability of questions to its research objective.
DATA ANALYSIS
The data analysis was conducted in a three-stage process. First, reliability tests were performed. Upon satisfactory results, confirmatory factor analysis (CFA) with SPSS Statistics 17.0 was used to analysis the convergent, concurrent and discriminant validity of the model. Once the model was validated, SPSS Amos 18.0 was used to test the overall fit of the structural equation model and to estimate the relationships between the independent variables and the dependent variable so as to accept or reject the hypothesis. RELIABILITY TESTS The reliability of 16 items in the questionnaire is tested with Cronbachs alpha (Cronbach, 1951). Cronbach alpha reliability coefficient is 0.896 which is exceeding the suggested level of 0.70. It suggests that the questionnaire is having reliability and can be used for further analysis. CONFIRMATORY FACTOR ANALYSIS The Kaiser-Meyer-Oklin (KMO) and Bartletts Test is used to test suitability of data for factor analysis. KMO value was 0.871 exceeding the recommended value of 0.60 while Bartletts Test of sphericity reached statistical significance (Approx. chi-square 1145.048, df 120 and Sig 0.00) which signifies the data is good for conducting factor analysis.
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The 16 items were subjected to principal component analysis (PCA) with varimax rotation to test the suitability of data for factor analysis. The PCA revealed the presence of 4 components with Eigen values the exceeding 1, explaining 32.038, 22.160, 19.684 and 7.737 total percentage of variance is 81.619. These components correspond to four constructs in the TRA structural model - Attitude, Subjective Norm, Intention and Behavior towards Mobile Text Messaging. All factors loading of each item are above 0.50. The results of the principal component analysis can be viewed in table 1. TABLE 1: DESCRIPTIVE STATISTICS FOR THE QUESTIONS IN THE SURVEY AND FACTORS ANALYSIS Mean S.D Factor Eigen % Loads Value variance Attitude towards Mobile Text Messaging A1 I like Mobile Text Messaging 3.81 0.998 0.765 5.126 32.038 A2 Generally, I find Text Messaging is good 3.88 0.862 0.669 A3 Using Mobile Text Messaging is enjoyable 3.50 1.155 0.771 A4 Overall, Mobile Text Messaging is very Important 3.41 1.115 0.612 Subjective Norms towards Mobile Text Messaging S1 If I use Mobile Text Messaging most of the people will consider me to be modern 2.78 1.153 0.714 1.946 22.160 S2 Most of my friends think I should use Mobile Text Messaging for quick communication 3.65 1.118 0.672 S3 If I use Mobile Text Messaging most of the people will consider as educated person 2.96 1.129 0.754 S4 If I use Mobile Text Messaging most of the people who are important to me will 3.58 0.982 0.661 regard it as useful. Mobile Text Messaging Intention I1 My general intention to use Mobile Text Messaging is good 3.99 0.979 0.763 1.549 19.684 I2 I intend, the task of sending Mobile Text Messaging is very simple and easy 3.95 0.970 0.900 I3 I intend to use Mobile Text Messaging in my personal life 3.64 0.970 0.564 I4 Overall, I intend Mobile Text Messaging is important in my daily life 3.76 1.083 0.816 Mobile Text Messaging Behavior B1 I will think about using Mobile Text Messaging 3.21 1.103 0.803 1.238 7.737 B2 I will use Mobile Text Messaging in the future 3.66 1.064 0.743 B3 I will recommend others to use Mobile Text Messaging 3.54 1.041 0.615 B4 I will use Mobile Text Messaging because they are more convenient for 3.87 1.100 0.687 communication Total % of variance 81.619 STRUCTURE EQUATION MODEL SPSS Amos 18 software is used to perform confirmatory factor analysis using Structural Equation Model (SEM). Total number of variables in the model is 38, number of observed variables 16, number of unobserved variables 22. The data has no missing values. The model is over-identified, a preferable situation for SEM. According to the univariate and multivariate normality tests the data is not normally distributed. After the data was normalized, the Maximum likelihood (ML) estimation method is used. ML attempts to maximize the likelihood that obtained values of the criterion variable will be correctly predicted. MODEL FIT Based on Structure Equation Model using SPSS Amos 18 it is found that Chi-square(CMIN) = 97.228, Degree of freedom(DF) = 82 and probability level is about 0.120 which is evidence against the null hypothesis is not significant at the 0.05 level. CMIN/DF is called as the minimum discrepancy which is 1.186 Wheaton et al (1977) suggested that if the minimum discrepancy is less than 5 the model is reasonable fit. Item No Component FIGURE 2: MOBILE TEXT MESSAGING BASED ON THEORY OF REASONED ACTION MODEL
BASELINE COMPARISONS The following value are found in our study for each parameter to test model fit TABLE 2: PARAMETER VALUE FOR MODEL FIT IN AMOS Name of the Parameter Goodness of Fit Index (GFI) Adjusted Goodness of Fit Index (AGFI) Normed Fit Index (NFI) Comparative Fit Index (CFI) Tucker-Lewis Index(TLI) Incremental Fit Index(IFI) Relative Fit Index(RFI) Root Mean Square Error of Approximation (RMSEA)
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Based on various studies conducted by Bentler and Bonett (1980), Jreskog, and Srbom (1984), Bollens(1989) and Bentler (1990) it was suggested that if the Index value is greater than 0.9 and if RMSEA valus is less than 0.05 it indicates model is fit and accepted.
FINDINGS
SPSS Amos Graphics has specified path-diagram in figure2 specifies the relationship between the observered variables and unobservered variable. The portion of the model that specifies how the unobserved variables are related to each other is called structural model. In this present Structural Equation Model Behavior are the dependent variable and the three variables Attitude, Subjective Norm and Intention towards Mobile text Messaging are independent variable. The Regression weights estimates provides the relative importance. The estimates with the largest value represent the most important dimension in terms of its influence on overall mobile text messaging behaviour. The findings of the regression weights estimates are summarized following table with all the paths are significant at p< 0.05. TABLE 3: REGRESSIONS STANDARDIZED ESTIMATIONS Hypothesis Factor Direction Factor Estimate Standard Error Critical Ratio P. value 1 Intention Attitude 0.735 0.076 9.671 0.000 2 Intention Subjective norm - 0.292 0.078 -3.743 0.000 3 Behavior Attitude 0.366 0.066 5.545 0.001 4 Behavior Subjective norm 0.014 0.056 0.25 0.061 5 Behavior Intention 0.267 0.058 4.603 0.000 Hypothesis1 (H1): Young mobile users Attitude towards mobile text messaging has a significant positive effect on mobile text messaging Intention it is 0.735, Hypothesis one is accepted. Hypothesis2 (H2): Subjective norms towards mobile text messaging is significant but negative effect on text messaging intention which is -0.292 and Hypothesis two is accepted. Hypothesis 3 (H3): Young mobile users Attitude towards text messaging has a significant positive effect on text messaging Behavior which is 0.366, Hypothesis three is accepted. Hypothesis 4 (H4): Subjective norms towards mobile text messaging are not significant and have a very week positive effect on text messaging Behavior which is 0.014, Hypothesis four is not accepted Hypothesis 5 (H5): Mobile Text Messaging Intention has a significant positive effect on mobile text messaging Behavior which is 0.267, Hypothesis five is accepted. Hypothesis 6 (H6): Attitude towards text messaging has a significant positive correlation with Subjective norms towards text messaging it is 0.41, Hypothesis six is accepted.
DISCUSSION
The young mobile users attitude towards mobile text messaging has a positive and very strong impact on mobile text messaging intention with regression estimation 0.735 and less positive impact on mobile text messaging behaviour with regression estimation 0.366. As youth generally has a tendency to chat and keep in touch with friends they frequently do text messaging about jokes, cricket score etc. In India many service providers are now providing SMS at a very less cost compared to talk time cost. Since text messaging has lot of advantage than voice calls youth frequently hang up with text messaging than voice calls. Youth mobile users are spending most of their time with mobile phones and they find it is very important device in daily life. Apart from talking they have perceived many other benefits from mobile phones which is making mobile text messaging attitude strong positive impact on mobile text messaging intention and behaviour. Subjective norms towards mobile text messaging is having negative effect on mobile text messaging intention with regression estimation -0.292 and very less impact on mobile text messaging behaviour. In the society many people are of the opinion that due to mobile phone youth are spoiling the time and money with unnecessary chat and text messaging. Dr Scott Frank (2010) research has revealed that hyper text messaging may lead to hyper activities like drugs, smoking, sex, drinking etc. Subjective norms towards mobile test messaging has a negative impact on mobile text messaging intention and subjective norms towards mobile text messaging has very less impact on mobile text messaging behaviour on youth because young mobile users may not worried much about the society due to which subjective norms may not have an impact on young mobile users text messaging behaviour. Young mobile users text messaging intention has a positive impact on mobile text messaging behaviour with regression estimation 0.267. According to Fishbein and Ajzen (1975) intention is influenced by attitude and subjective norms which determines the impact of intention on behaviour. The correlation between young mobile users attitude towards mobile text messaging and subjective norms towards mobile text messaging is 0.41 which shows that these two factors are not much correlated towards young mobile users mobile text messaging behaviour.
CONCLUSION
This study used the Theory of Reasoned Action model to predict young mobile phone users Text Messaging Behavior in India. Despite of huge growth in mobile subscribers and mobile service providers in India, little research has investigated Text Messaging Behavior in India. The findings of this study contribute to a better understanding of the relationship between Attitude, Subjective Norms, Intention and the Text Messaging Behavior in India among youth. In particular, the finding in this research can help practitioners understand that Attitude has more positive impact on mobile text messaging Intention than Subjective norm towards mobile text messaging. Subjective norms have negative effect on mobile text messaging Intention and it has no impact on mobile text messaging Behavior. The result of this study suggests that practitioners and academics should focus their efforts on this relationship in TRA model for better understanding the mobile text messaging Behavior of youth in India.
SUGGESTIONS
The results of this research showed a comprehensively integrated framework of Theory of Reasoned Action on mobile text messaging behaviour among youth in India to understand the relationships among several dimensions of attitude, subjective norms impact on intention and Behaviour. However, this research still predict that further research efforts are required with larger sample size and include additional variable like behavioural control of young mobile users on mobile text messaging is studied with current research variable before generalization can be made.
REFERENCES
Ajzen,I.& Fishbein, M. (1997). Attitude-behavior relations: a theoretical analysis and review of empirical research. Psychological Bulletin, 84, 888-918. Ajzen, I.& Fishbein, M. (1980). Understanding Attitudes and Predicting Social Behavior. Englewood Cliffs: Prentice-Hall, Inc. Baren, S., Patterson, A., & Harris, K. (2006): Beyond technology acceptance: understanding Consumer practice. International Journal of Service Industry Management. Vol. 17 No.2, 2006. Pp.111-135. Emerald Group Publishing Limited. Browne, M. W., and R. Cudeck. (1989). Single sample cross-validation indices for covariance Structures. Multivariate Behavioral Research, 24: 445455.
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Bentler, P. M., and D. G. Bonett. (1980). Significance tests and goodness of fit in the analysis of Covariance structures. Psychological Bulletin, 88: 588606. Bollen, K. A. (1986).Sample size and Bentler and Bonetts non-normed fit index. Psychometrika, 51: 375377. Bang, H. K., Ellinger, A., Hadjimarcou, J., & Traichal, P. (2000). Consumer concern, Knowledge, belief, and attitude toward renewable energy: An application of the Reasoned action theory. Psychology & Marketing, 17, 449-468. Browne, M., & Cudeck, R. (1993). Testing structural equation models. Newbury Park: Sage Publications. Cronbach L.J. (1951). Coefficient Alpha and the Internal Structure of tests. Psychometrika 16: 297 334. Davis, F.D. (1989): Perceived Usefulness, Perceived Ease of Use and User Acceptance of Information Technology. MIS Quarterly; Sep 1989; 13, 3; ABI/INFORM Global pg. 319 Davis, F.D., Bagozzi, R.P., and Warshaw, P.R. (1989): User Acceptance of Computer Technology: A Comparison of Two Theoretical Models. Management of Science; Aug 1989; 35, 8; ABI/INFORM Global pg.984 Davis, R. & Yung, D. (2005): Understanding the Interactivity between Television and Mobile Commerce. Communications of ACM July 2005/Vol.48, No. 7 Fitzmaurice, J. (2005). Incorporating consumers' motivations into the theory of reasoned Action. Psychology & Marketing, 22(11), 911-929. Fishbein, M.& Ajzen,I.(1975). Belief, attitude, intention and behviour: An Introduction to theory and research. Reading, MA: Addison-Wesley. Glanz, K., Lewis, M., & Rimer, B. K. (Eds.) (1997). Health behavior and health education: Theory, research, and practice. San Francisco: Jossey-Bass. Gupta, S., & Kim, H. W. (2007). Developing the commitment to virtual community: the Balanced effects of cognition and affect. Information Resources Management Journal, 20(1), 28-45. Health Jackal. (2010). Text messaging for teens can lead to risky behavior. Available fromh ttp://www.healthjackal.com/health/2010/11/10/text -messaging-for-teens-can-lead-to-risky-behavior. Accessed on 02 Dec 2010. Ilie, V., Van Slyke, C., Green, G., & Lou, H. (2005). Gender difference in perception and Use of communication technologies: A diffusion of innovation approach.Information Resources Management Journal, 18(3), 13-31. Jreskog, K. G., and D. Srbom. (1984). LISREL-VI users guide. 3rd ed. Mooresville, IN: Scientific Software. Kwok, S. H., & Gao, S. (2005/2006). Attitude towards knowledge sharing behavior. The Journal of Computer Information Systems, 46(2), 45-51. Nysveen, H., Pedersen, P.E., & Thorbjornsen, H. (2005): Intentions to Use Mobile Services: Antecendents and Cross-Service Comparisons. Academy of Marketing Science. Journal; Summer 2005; 33, 3;ABI/INFORM Global. Njite, D., & Parsa, H. (2005). Structural equation modeling of factors that influence Consumer internet purchase intentions of services. Journal of Services Research, 24(6), 43-59. Pak, H. S. (2000). Relationships among attitudes and subjective norms: testing the Theory of reasoned action across cultures. Communication Studies, 51(2), 162175. Scott Muska (2011). New Research: Texting, Social Networking can lead to risky behavior by teens. Available on http://www.altoonamirror.com/page/blogs.detail/display/4932/New-research--texting--social-networking-can-lead-to-risky-behavior-by-teens.html. Accessed on Jan 2011. Sinha, (2009). Mobile Market Report SMS Usage in Urban India . Available from Http://www.pluggd.in/india-mobile-market-report-sms-as-a-vas-service-297/, Accessed on 02 Dec 2010. Song, J., & Kim, Y. J. (2006). Social influence process in the acceptance of a virtual Community service. Information Systems Front, 8, 241-152. Traci Pedersen (2010). Hyper-Texting Associated with Health risk for teens. Available on http://psychcentral.com/news/2010/11/09/hyper-texting-associatedwith-health-risks-for-teens/20729.html. Accessed on Dec 2010. Tarkiainen, A., & Sundqvist, S. (2005). Subjective norms, attitudes and intentions of Finnish consumers in buying organic food. British Food Journal , 107(11), 808822. Venkatesh, V., & Morris, M. (2000). Why don't we ever stop to ask directions? Gender, Social influence, and their role in technology, acceptance model. MIS Quarterly , 24(1), 115-139. Wang, C.-C., Hsu, Y., & Fang, W. (2005). Acceptance of technology with network Externalities: an empirical study. Journal of Information Technology Theory and Application, 6(4), 15-28. Wheaton, B. (1987). Assessment of fit in over identified models with latent variables. Sociological Methods and Research, 16: 118154. Wu, J., & Liu, D. (2007). The effects of trust and enjoyment on intention to play online Games. Journal of Electronic Commerce Research, 8(2), 128-140. Wikipedia, (2008), free encyclopedia: Text messaging . Available from Http://en.wikipedia.org/wiki/Text_messaging, Accessed on 02 Dec 2010. Xu, Y., & Paulins, V. A. (2005). College students' attitudes toward shopping online for Apparel products: Exploring a rural versus urban campus. Journal of Fashion Marking and Management, 9(4), 420-433. Yan, X., Gong, M., & Thong, J.Y.L. (2006): Two tales of one service: user acceptance of Short message service (SMS) in Hong Kong and China. Vol.8, NO. 1 2006, pp. 16-28, Emerald Group Publishing Limited.
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EDUCATIONAL LOANS: A STUDY OF STUDENTS, EDUCATIONAL INSTITUTIONS AND BANKERS PERSPECTIVE DR. BABLI DHIMAN ASST. PROFESSOR LOVELY HONORS SCHOOL OF BUSINESS LOVELY PROFESSIONAL UNIVERSITY PHAGWARA DR. ASHOK KHURANA ASSOCIATE PROFESSOR DEPARTMENT OF COMMERCE GURU NANAK KHALSA COLLEGE YAMUNANAGAR ABSTRACT
Higher education is one of the growing horizons in todays scenario. This paper has been designed with the objective that whether these education loans are beneficial for students, educational institutions or for banks. This paper is divided into three parts. Part one represents introduction, review of literature, research methodology and objectives of the study. Part two includes analysis and interpretation. The analysis in this paper is qualitative as well as quantitative. This paper is based on information obtained from primary sources which includes 200 students who have taken education loan from the selected banks in the paper. Secondary data is collected from relevant websites and reports. The null hypothesis has been rejected that there is no significant effect of education on education sector. Final and third part includes findings and conclusion that education loan scheme is beneficial for all whether these are students, educational organizational or banks.
KEYWORDS
Banks, Beneficial, Educational organizations, Education loan, Students.
INTRODUCTION
he higher education in India has witnessed many fold increase in its institutional capacity since independence. The studies observed that notwithstanding this many fold increase in the enrolment; it is still relatively low by international comparison. Besides the studies bring to light the problem of regional imbalance as well as inter-social groups imbalances in enrolment rate, in term of male female, inter-caste, inter-religion, inter occupation and poor non poor disparities in the attainment in enrolment. The studies also highlighted the issue of quality. Above all, the studies analyze the problem of under financing of higher education since the mid eighties. Till some years back higher education and quality education was not affordable to some illustrious students because of the financial constraints. There was not any alternative but to jump in the job market prematurely. And this led to untimely end of budding talents and their forceful transformation into to the mediocrity. Scholarships were there, but those were so less in numbers that only luckier few could avail them. But now the scene has changed drastically. The boom in the banking sector has led to release of large amount of funds for education loans. Now, education loans are easily available from various banks in India and this change is encouraging more and more students to take up higher education despite their financial shortcomings. Many nationalized banks have come up with various educational loan schemes that students can benefit from, even private banks are not lagging far behind. The wave of change could be well gauged from the amusing situation that immediately after the results announcements of CAT or PMT/ IIT JEE, the representatives of the banks queue up for giving education loans to the successful candidate even with very flexible conditions. This scenario is certainly helping the illustrious students to pursue higher education and realize their dreams.
REVIEW OF LITERATURE
Ziderman (2009) studied the influence of student loans on the accessibility of disadvantaged groups to higher education. Three key conditions are necessary for success, but are often neglected. These are: that effective eligibility and screening criteria are in place and that pro-active targeting measures are employed to reach out to the most deserving sections of the target population defined in terms of those most in need of help; that the scheme is sufficiently sizeable to achieve an impact nationally; and individual loans are sufficiently large to cover the needs of the students at whom the scheme is directed. The varied experience of loans schemes in Asia, aimed directly at enhancing the access of students from low-income backgrounds, is examined. These schemes are often to be faulted because they lack a number of necessary prior conditions for success. Chapman et al. (2009) explored that in recent times there has been considerable change and instability with respect to Thailand student loans policy. The contribution of what follows is to compare and contrast the consequences of disparate possible approaches to the payment of tuition in two main respects: the effect on internal rates of return for higher education investments; and the implications of different approaches for the time stream, and thus the present value, of tuition payments to the government. The authors find that, in general, income contingent loans are preferred to the current scheme, although this would not be the case if such a policy reform is poorly designed. Shamsuddoha (2008) stated that after the liberty, Bangladeshi Economy has moved towards industrialized based. Bangladesh had also adopted open economy by the grace of heavy tide of globalization. Consequently, competition of the domestic and foreign industrialized market, organizations need skilled management which highlight on the development of management education and the need for suitable managerial, leadership, administrative and decision making skills. This could support TQM as both a valuable tool and a fad. By getting a MBA degree from an institution, an executive can handle the total wants of an organization. There are lots of MBA program giving through private and public institutions. This study is fully focused on the various MBA programs, which can keep a vital contribution to build a skilled executive after that who can handle the things properly in the organization. Chapman (2006) explored that higher education rates are increasing throughout the Western world, yet at the same time, government budgets face increasing constraints. This has ensured that the importance of student support is recognized in many countries. In recent years there has been a world-wide movement towards the use of income contingent loans (ICL) for higher education. ICLs are now used in six countries following the Australian innovation of 1989, with the governments of many more countries looking very seriously at the model. This impressive new book by Bruce Chapman analyses ICLs (particularly their use in supporting students), exploring the experiences of a number of other countries adopting them. Chapman presents analysis of a number of disparate case studies to illustrate how ICLs can aid risk management policy reforming in both progressive and administratively feasible ways. Georgescu (2005) stated that in today's world, a new level of commitment is required in order to educate the young generation and e-learning perhaps emerges as an important tool of imparting knowledge and information. The challenge, however, is to provide a suitable means to disseminate disparate information in a dynamic, open and distributed e-learning environment. While there still exists some uncertainty about its role in education and professional training, there is a growing concern about the issues and strategies of e-learning that may be faced by both providers and learners of e-learning in future. E-learning is here to stay as the fast changing pace of technology, the shortening product development
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cycles, lack of skilled personnel, competitive global economy, the shift from the industrial to the knowledge era. E-Learning seeks to mobilize the educational and cultural communities, as well as the economic and social players in Europe, in order to speed up changes in the education and training systems for Europe's move to a knowledge-based society. Hanushek et al. (2004) explored that the current level and form of subsidization of college education is often rationalized by appeal to capital constraints on individuals. Because borrowing against human capital is difficult, capital constraints can lead to non optimal outcomes unless government intervenes. He develop a simple dynamic general equilibrium model of the economy that permits to explore the impact of alternative ways of subsidizing higher education. The key features of this model include endogenously determined bequests from parents that can be used to finance schooling, uncertainty in college completion related to differences in ability, and wage determination based upon the amount of schooling in the economy. Because policies toward college lead to large changes in schooling, it is very important to consider the general equilibrium effects on wages. Vossensteyn (2002) explored that students now have to contribute more to the costs of higher education than in the past. The Netherlands provides an interesting example of the global trend towards 'cost sharing'. Tuition fees are going up; general subsidies to students have gone down and/or have been replaced by means-tested grants and loans. All in all, there is reason to expect that enrolment in higher education and student choice will come under pressure.
OBJECTIVES
To know the benefit of education loans on education sector prior and post availability of banking services (education loans schemes). To know the benefits of education loan schemes to the students. To compare the education loans schemes provided by selected banks (PNB and SBI). To know the income generated by concerned banks from education loans.
METHODOLOGY
SOURCES OF DATA The data has been collected by personally interviewing the bank officials in order to know the role of education loans in developing the banking sector. For this purpose we choose SBI & PNB as a sample for representing the whole banking sector. The secondary data was collected from various sources like Annual reports, internet, newspapers, journals, and articles. HYPOTHESIS Ho: There is no significant effect on education sector prior and post availability of banking services (education loan). Ha: There is significant difference in the banking services (education loans) provided by various banks (education loan).
Year 1950-1951 1955-56 1960-61 1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 1991-92 1992-93 1993-94 1994-95
Change nil 110 1149 506 989 3685 29 -1347 206 272 326 447 561
% Change nil 15.38 61.64 21.35 29.44 52.31 0.41 -23.52 3.47 4.38 4.99 6.4 7.44
Table 1 represents the percentage change in the number of educational institutes before the availability of education loan facility. The table shows that the education sector was poorly developed before the loan service availability. In the year 1985-86 this rate became negative 1347 educational institutes were closed due to non-availability of the students. Therefore, students were not able to take quality education because of their poor financial position which causes reduction in number of educational institutions. 2. EDUCATION SECTOR POST AVAILABILITY OF EDUCATION LOANS Student loans in India (popularly known as Education loans) have become a popular method of funding higher education in India with the cost of educational degrees going higher. The spread of self-financing institutions for higher education in fields of engineering, medical and management which has higher fees than their government aided counterparts have encouraged the trend in India.
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Year 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Total 8149 8757 9503 9844 10150 10406 11418 12080 12482 13942
Change 611 608 746 341 306 256 1012 662 402 1460
% Change 7.5 6.94 7.85 3.45 3.01 2.46 8.86 5.48 3.22 10.47
The table 2 shows the education sector after availability of education loans. It clearly depicts that the education sector started growing consistently after loans schemes were provided to the students. Moreover during this era many private players entered into education sector and number of institutes providing professional education rose to great extent. The no. of education institutes increased from 8149 in the year 1995-96 to 13942 in the year 2004-05. This shows that after availability of education loans profession education actually increased and started developing. FIGURE 1: COMPARISON BETWEEN SITUATION -PRIOR AND POST AVAILABILITY OF EDUCATION LOANS
Education loan is becoming popular day by day because of the rising fee structure of higher education. It came into existence in 1995 started first by SBI and after that many banks started offering study loan. The table no.1 and 2 above show the scenario of the education sector before and after the availability of education loans. Before the availability of banking services there was a decrease in educational institutes but since the educational loans have started in 1995 there is a year on year increase in the development of educational sector. Therefore, the null hypothesis is rejected. There is a significant effect of education loans in development of Indian education sector because educational institutes started increasing after education loans were introduced. EDUCATION LOAN SCHEME BENEFITS FOR THE STUDENTS Helpful in getting higher education. Helpful for better future due to easy availability of higher education. Improvement in existing living standards. Contribution to the society. Improvement in the financial position. Fulfillment of family responsibilities. Contribution to the economy. COMPARISON BETWEEN EDUCATION LOAN FROM SBI AND PNB AMOUNT OF LOAN This is co-related to expenses involved in taking up the course and the expected earnings after qualifying, subject to a maximum of: TABLE 3: MAXIMUM AMOUNT OF LOAN BY PNB & SBI Punjab National Bank State Bank of India For studies in India Rs. 7.50 lacs Maximum Rs.7.50 lacs For studies abroad Rs.15.00 lacs Maximum Rs.15 lacs In case of part time computer courses, the extent of loan should not exceed Rs. 50,000/- per annum or fee fixed by the particular institution whichever is less. RATE OF INTEREST TABLE 4: RATE OF INTEREST ON LOAN BY PNB Loan up to Rs. 4 lacs 12.25% p.a Loan over Rs. 2 lacs up to Rs. 15 lacs 13.25% p.a Loan over Rs. 15 lacs 15.25% p.a. TABLE 5: INTEREST RATES FOR LOAN BY SBI Loan Amount Interest Rate Loans up to Rs. 4 lacs presently 13.25% Loans over Rs. 4 lacs 1% above SBMTLR presently 14.25% Rate of interest is subject to change from time to time. The Interest shall be charged at simple rate from the date of disbursement till the commencement of repayment of loan and thereafter, compound Interest will be charged on reducing balance basis. 1/2% interest concession may be provided for the borrowers if the interest is serviced during the study period. MARGIN
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Repayment Holiday - Course period + 1 year or 6 months after getting job, whichever is earlier. The loan is to be repaid in 5-7 years after commencement of repayment BENEFITS OF EDUCATION LOANS FOR THE BANKS-INCOME GENERATED BY SBI AND PNB FROM EDUCATION LOANS State Bank of India and Punjab National Bank has also generated income through education loans. Both these banks provide education loans according to their policies. Here it has been find out that how much the banks have earned the income from these loans. TABLE 8: INCOME FROM EDUCATION LOANS TO SBI AND PNB (Rs. Crores) PNB
Total Income % income from education loan Education Loan Income Total Income % income from education loan
Year
SBI
Education Loan Income
FIGURE 2: INCOMES FROM EDUCATION LOANS TO SBI AND PNB (RS. CRORES)
Table 8 clearly show the incomes of both the banks generated from education loans. This also depicts that SBI & PNB both have education loans income at increasing rate which is the significant part of the total income. Therefore, the banks should have to encourage more the education loans for the growth of the banks as well as for the education developments. SBI being market leader in education loans generates much higher income than PNB as shown in figure 2. FIGURE 3: COMPARISON OF TOTAL INCOME & INCOME FROM EDUCATION LOANS TO SBI (RS. CRORES)
Figure 3 shows the income that State Bank of India has earned from education loans in past years. The income from education loans is derived on the interest rate percentage. Interest amount is taken on average of 12%. Income to the bank from education loans is the 12 percent of total education loans every year. So this is the approximate income that State Bank of India generates from education loans. The figure and table 8 clearly depict that each year education loans form an important part in total income. The amount being less but still is very significant in improving operational efficiency of the bank. The income earned has increased every year but only in the year 2005 these loans did not contribute much into the total income of the bank. FIGURE 4: COMPARISON OF TOTAL INCOME & INCOME FROM EDUCATION LOANS TO PNB (RS. CRORES)
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Figure 4 shows the income earned by Punjab National Bank in past years and contribution of education loan income to the total income of the bank. Similar is the case with this bank is too. The income from education loans is less but still is very essential portion of income generation and overall development of banks. The income from education loans for this bank has shown a consistent increase in every year. So it can be said that in some way or the other education loans are a part of income generation for banks. Banks derive good amount of income from lending of education loans.
CONCLUSION
Education is the backbone of a cultured society, but it has become more commercial or money-making and in order to ensure the best possible education, it is an expensive affair. Therefore, the education loans are biggest support for the needy persons. The current study attempts to focus on professional education through banking services (loans) which includes the role of various banks in providing education loan service and its effect on the education system of Indian economy. The comparative part of the banking services (education loans) provided by the various banks shows the significant effect on education sector prior and post availability of banking services. The findings of the study reveal that the null hypothesis is rejected. Therefore there is a significant effect of education loans in development of Indian education sector because educational institutes started increasing after education loans were introduced. So that students are also benefited from education loan schemes. It also inferred that SBI & PNB both have education loans income at increasing rate which is the significant part of the total income. Therefore, the banks should have to encourage more the education loans for the growth of the banks as well as for the education developments.
REFERENCES
Chapman, B. (2006), Income Contingent Loans for Higher Education: International Reforms, Handbook of the Economics of Education, Elsevier, pp 79-103, DOI: 10.1007/1-4020-4660-X_4 Chapman, Bruce and Kiatanantha, L. (2009), The Effects of Different Loan Schemes for Higher Education Tuition: An Analysis of Rates of Return and Tuition Revenue in Thailand, Higher Education in Europe, Volume 34:2, pp 211-226. Georgescu, M. (2005), The Future of E-Learning: Designing Tomorrow's Education, Collaborative Support Systems In Business Education, Babes Bolyai University of Cluj Napoca, Available at SSRN: http://ssrn.com/abstract=904201 Hanushek, E. A., Charles K. Y. L. and Kuzey Y. (2004), Borrowing Constraints, College Aid, and Intergenerational Mobility, National Bureau Of Economic Research, Working Paper 10711, Assessed from http://www.nber.org/papers/w10711 Shamsuddoha, M. (2008), Developing Skilled Executives through Various MBA Program: A Study on Private Universities in Bangladesh, available at SSRN: http://ssrn.com/abstract=1302310 Vossensteyn, H. (2002), Shared Interests, Shared Costs: Student contributions in Dutch higher education, Journal of Higher Education Policy and Management, Volume 24, Issue 2, pp 145 154 Ziderman, A. (2009), Promoting Access of Disadvantaged Groups through Student Loans: Pre-requisites for Success, Higher Education in Europe, Volume 34, Issue 2, pp 227 242
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HR PRACTICES THAT ENHANCE HUMAN CAPITAL DEVELOPMENT AND ORGANIZATIONAL PERFORMANCE IN INDIAN SOFTWARE COMPANIES R. INDRADEVI ASST. PROFESSOR (SR.) VITBUSINESS SCHOOL VIT UNIVERSITY VELLORE 632 014 ABSTRACT
Rapid globalization of the software industry in recent years had focused a great deal of attention on India, whose software industry is a growing part of the international division of labour in software (Arora et al., 2001). The role played by the software industry in the contemporary world aroused the need for analysis of the HR practices that lead to Human Capital Development of the industry. Understanding Indias success in the software industry with the use of Human Capital may assist other developing countries to create a competitive advantage in their software industry. Data for the research was collected using a self administered questionnaire. The questionnaire consists of forty eight items on HR practices for Human Capital Development on a five-point scale ranging from strongly disagree (1) to strongly agree (5) and seven items on organizational performance on a five point scaling ranging from excellent (5) to worst (1). Data was collected from a sample of 200 respondents from 4 software companies in Bangalore, the Silicon Valley of India. Being satisfied with the reliability of the instrument, the researcher carried out factor analysis to identify the HR practices that enhanced Human Capital Development practices and multiple regression to analyze the relationship between HR practices and organizational performance.
KEYWORDS
Human Capital, Human Capital Development practices, organizational performance, Indian Software Industry.
INTRODUCTION
he Indian software industry, which was almost non-existent till late 1980s, grew at tremendous pace after early 1990s. The Indian software industry's export was about US$128 millions in 1990-91 and grew to US$485 millions in 1994-95 (Arora et al., 2001). By 2003-04 the software exports had increased to US$ 12.2 billions. The bulk of Indian software industry is concentrated in a few clusters; indeed Bangalore has often been branded as the Silicon Valley of India in press accounts. The importance of availability of skilled manpower in the success of Indian software industry has been recognized by several research studies (e.g., Lakha, 1994). A noteworthy feature of Indian software industry is predominant share of engineers amongst software professionals in India. It is widely believed that the key to the success of the Indian software exports is the supply of trained, low cost software professionals. HRD is critical in software companies with 95% having formal training divisions and learning needs analysis. The minimum training hours per employee is 40 hours in a software company (Bhatnagar, S, 1997). Right from the manager to the worker, our people must be empowered with the knowledge, the tools, the skills and the mindset to build world-class teams that can then deliver world-class performance. This is a monumental task. Human Capital is asserted to be the most important element of success in todays business. Developing human capital requires creating and cultivating environments in which human beings can rapidly learn and apply new ideas, competencies, skills, behaviors and attitudes. Corporations are recognizing the importance of investing in their employees now more than ever before. Organizations that appreciate the financial impact of their employees often refer to them as human capital. Placing such an importance on Human Capital, the researcher therefore investigated the perception of employees in Software Industry to understand the HR practices for Human Capital Development and its impact on organizational performance.
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Paul, A.K and Anantharaman, R.N (2004), developed and tested a causal model that related Human Resource Management (HRM) with Organizational performance. The study found that each and every HRM practices under the study had an indirect influence on Organizational performance. In this study, organizational performance was measured subjectively in two dimensions: operational performance and financial performance. Operational performance was measured by items like employee retention, employee productivity, product quality, speed of delivery and operating cost. Financial performance was measured in terms of growth in sales, net profit and return on investment from year 1997 to 2000. Each Organization was asked to rate their performance on each parameter in comparison with other software companies for a period of three years (19972000). Bassi, L and McMurrer, D (2005) focused on Human Capital as a source of competitive advantage. The study identified five human capital indices like leadership effectiveness, workforce optimization, learning capacity, knowledge optimization and talent retention as leading indicators of business results. Pickett,L (2005), identified core measures used by senior management to increase the effectiveness of Human Capital and to organizational performance. An internationally researched framework for human capital capability was used as the basis of this research, complemented by an international benchmarking. Pickett identified five key practices namely leadership practices, employee engagement, knowledge accessibility, workforce optimization and learning capacity which enhanced the performance of human capital. Hooi Lai Wan (2007), analyzed the implication of Human Capital Development (HCD) policies like perceptual responses pertaining to provision of training and development, training and development opportunities, and managements supervision and guidance on employees satisfaction (ES) with four leading chemical and petrochemical MNCs located in the same industrial area in Malaysia. The study identified that Foreign-owned MNCs being more globalised and technologically advanced are likely to have better HCD policies and hence employees satisfaction is higher on HCD policies of these companies. Marimuthu et al., (2009), commented Human Capital as an instrument to sustain competitive advantage in the Organization. The authors developed a model to show the relationship between human capital and firm performance. Human capital investment is related to training, education and other professional initiatives in order to increase the knowledge, skills, abilities, values, and social assets of an employee which will lead to the employees satisfaction and performance. The present study seeks to answer the following questions: What are the HR practices that enhance Human Capital Development in Indian Software companies? What is the agreement level of the employees on the perceived HR practices? What is the relationship between perceived HR practices and Organizational performance? Do demographic variables have an impact on organizational performance? Do perceived HR practices enhance organizational performance?
METHODOLOGY
Primary data with reference to the perception of the employees on HR practices for Human Capital Development and organizational performance was collected from the respondents by using a well designed questionnaire with 55 items. A sample of 200 respondents from 4 Software companies in Bangalore, constituted as the sampling unit for the study. Convenient sampling technique was adopted to collect the data. Survey was conducted with special reference to Bangalore, India. Reliability test was conducted on the tool to test the reliability of the instrument. The cronbachs alpha value for the scale was .09374 (Table 1). This value is higher than the acceptable lower limit of 0.6 according to Nunnally, J.C (1978). Being satisfied with the reliability of the instrument, the researcher preceded further and conducted factor analysis to identify the HR practices for Human Capital Development (HCD) in Indian Software companies. After identifying the HR practices for HCD a multiple regression was run to find out how much of organizational performance is predicted by these HR practices. TABLE: 1 CRONBACHS ALPHA COEFFICIENT FOR SCALES Reliability Coefficients N of Cases = 200.00 Alpha = 0.9374 N of Items = 55
Source: the researchers survey To measure the dependent variable perceived organizational performance, the researcher used perceptual measures. Though there are certain limitations in using perceptual data, research had found measures of perceived organizational performance correlate positively with the objective measures of firm performance (Dollinger, M and Golden, P 1992, Powell, T.C 1992). Further, there is precedent for using such measures in similar research of Delaney, J.T and Huselid, M.A (1996), and Youndt et al. (1996). Seven items that measured organizational performance used in a study made by Delaney J, T and Huselid, M.A (1996) were adopted for the present study. The questions enquired the respondents on how they would compare their own organizations performance on certain specific parameters, with that of similar organizations over the preceding three years on a five point likert scale ranging from Excellent (5) to worst (1).
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Variables
Factor 1 Recruitment Looks into potential of new hires Invests in recruiting top talents Hire more qualified people My company uses extensive procedures Capable of attracting adaptable workforce Attracts better applicants than competitors Factor 2 Training
Training enhances employees performance Guidance increases organization performance Tutoring develops employees skills Education makes employees meets the standard of work Teaching fosters learning Learning develops employee capability Training is designed with managers inputs Preparation improves employee value Instruction helps to cope up with the changes Training leads to competitive advantage Factor 3 Counselling and Mentoring Support by peers fosters good working relationship Counselling and mentoring addresses employees Problems Advising reduces absenteeism Therapy provides opportunity for appreciation Work orientation prevents work related Accidents Suggestions corrects unsatisfactory behaviour Personal guidance improves performance Peer support develops positive working environment Factor 4 Empowerment Autonomy sets inspirational goals Confidence building holds higher Expectations Matching of authority with responsibility creates self-determination Empowerment expresses confidence Permission to express strengthens the activities of employees Acclaim strengthens the commitment of employees Provides autonomy to the employees Factor 5 Performance Appraisal Measurement of achievement increases productivity setting up performance targets makes the system transparent Performance Appraisal sets development plan for the employees Appraisal brings unity of purpose Merit rating enhances competition Transactional analysis improves interpersonal skills Feedback meetings retains the best talents Work Quality reviews improves employees performance Progress reporting enhances post recruitment decision Kaiser-Meyer-Olkin Measure of Sample Adequacy Bartletts Test of Sphericity Significance Source: the researchers survey
TABLE: 3. FACTOR MEAN AND ALPHA Factor Mean Score Eigen Value Cronbach Alpha Recruitment 4.1 4.54 .70 Training 4.0 4.23 .77 Counselling and Mentoring 4.1 3.76 .73 Empowerment 4.1 2.54 .70 Performance Appraisal 4.0 1.58 .72 Source: the researchers survey Six items like great amount of money in recruiting top talents, extensive procedures used in selection, including a variety of tests and interviews, attracting the best person for a given important position, emphasizing the potential of new hires, attracting better applicants than competitors and managers hiring even more qualified people than they themselves are loaded under factor one with factor loadings ranging from .81 to .44. The Alpha Value for the first factor is .65 and the factor mean score is 4.1 (Table 3) which indicated a strong level of agreement among the respondents for Factor one. The six items loaded under factor one emphasize the importance recruitment of employees. Hence Factor One was named as Recruitment. This was approved by the study of Black, S.E and Lynch, L.M (1996) who identified education, training and recruitment as the practices that develop Human Capital and enhance the productivity of the Organization. Ten items like enhancing individual performance, guiding towards organizational performance, improving values, meeting the standard of work, coping up with changes, developing employee skills, developing individual and organizational capability, leading towards competitive advantage, fostering learning and training No. 1 2 3 4 5
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designed with inputs from managers were loaded under Factor two with loading ranging from .75 to .43. The Alpha Value for the second factor is .77 and the factor mean score is 4.0 (Table 3) which indicated a strong level of agreement among the respondents for Factor two. The items loaded under Factor two defined the importance of Training for Human Capital Development. Hence Factor two is named as Training. This result is supported to a large extent by the earlier study made by Antonio Aragon-Sanchez et al., (2003), Nishimura et al., (2004) and Ardichvili, A and Dirani, K.M (2005). Eight items such as fostering good working relationship, addressing problems, reducing absenteeism and turnover, increasing commitment, improving performance and enhancing communication were loaded under Factor Three with loading ranging from .68 to .47. The Alpha Value for the third factor is .73 and the factor mean score is 4.1 (Table 3) which indicated a strong level of agreement among the respondents for Factor three. The eight items loaded under factor three insists counselling and mentoring as one of the factor for Human Capital Development. Hence Factor Three was named as Counselling and Mentoring. This result is supported by the earlier studies made by Hunt, M and Michael, C (1983); Kram, K.E (1985); Ragins, B (1989) Mobley et al., (1994), Kent, S (2001),Watt, L (2004). Seven items like setting inspirational goals, holding higher expectations, creating self-determination, expressing confidence, strengthening the activities of employees, strengthening the commitment of employees, providing autonomy and improving performance was loaded under Factor Four with factor loadings ranging from .60 to .47. The alpha value for the fourth factor is .70 and the factor mean score is 4.1 (Table 3) which indicated a strong level of agreement among the respondents for Factor Four. The seven items loaded under factor four emphasize the importance of empowering employees for their development. Hence Factor Four was named as Empowerment. This is supported by the studies of Cole, N.D (1995), Ford, R.C and Fottler, M.D (1995), and Weerakoon, T.S and KeeHung Lai (1997) and Robert et al., (2000). Nine items like identifying goal, developing employees, correcting behaviour, decision on lay-off, training needs and career planning, increasing job performance, enhancing healthy competition and changing work behaviour were loaded under Factor five with loading ranging from .68 to .41. The Alpha Value for the fifth factor is .72 and the factor mean score is 4.0 (Table 3) which indicated a strong level of agreement among the respondents for Factor five. The nine items loaded under factor five recommended performance Appraisal as one of the factor for Human Capital Development. Hence Factor Five was named as Performance Appraisal. The studies made by Smith, A.D and Rupp, W.T (2003), DeNisi, A.S and Pritchard, R.D (2006), Kuvaas, B (2006) and Ridley, S.E (2007) supported this factor. CORRELATION BETWEEN PERCEIVED HR PRACTICES FOR HUMAN CAPITAL DEVELOPMENT [HCD] AND ORGANIZATIONAL PERFORMANCE Likewise Pearson Correlation is conducted to find out the relationship between HR Practices for Human Capital Development and Organizational performance. The following hypothesis is tested here H1 There is no significant relationship between HR Practices for Human Capital Development and Organizational performance TABLE: 4 CORRELATION BETWEEN HR PRACTICES FOR HUMAN CAPITAL DEVELOPMENT AND PERCEIVED ORGANIZATIONAL PERFORMANCE Dependent variable Recruitment Training Counselling Empowerment Performance Appraisal Organizational performance Pearson Correlation 0.615(**) 0.675(**) 0.528(**) 0.723(**) 0.643(**) Sig.(2-tailed) 0.001 0.001 0.001 0.001 0.001 N 424 424 424 424 424 Source: the researchers survey It is inferred from the correlation test that there is a significant and high degree of positive relationship between HR Practices for Human Capital Development and Organizational performance. The hypothesis H1 is rejected and shows a high level of relationship with employee empowerment (Table 4) (r=0.723; p=0.0001) followed by training (r= 0.675; p=0.0001), performance appraisal (r=.643 and p=0.0001), recruitment (r=.615, p=0.0001) and counselling and mentoring (r= 0.528; p=0.0001). The present study results was also supported by other study conducted by Delaney, J.T and Huselid, M.A (1996), who found a strong association between Human Capital Development practices and Organizational performance. RELATIONSHIP BETWEEN DEMOGRAPHIC VARIABLES AND ORGANIZATIONAL PERFORMANCE Pearson et al., (2003) had stated that age and gender had influenced the computer efficacy of people. Their study had identified that older and female employees were not confident about their abilities in learning new techniques. This in turn affects the performance of the organization. Mehay, S.L and Rowmanf, W.R (2005) examined the relationship between marital status and performance ratings of employees and identified that married men got higher performance ratings compared to single men. Like wise Russell, J.E.A and Rush, M.C (1987), indicated that married females received the most favorable performance evaluations compared to single female. Hence it is proposed that H2 Organizational performance is not dependent on the demographic variables like age, gender, sex and marital status TABLE: 5 RELATIONSHIP BETWEEN DEMOGRAPHIC VARIABLES AND ORGANIZATIONAL PERFORMANCE ANOVA Sum of Squares Df Mean Square F Sig. Gender Between Groups 2.358 16 0.147 0.603 0.882 Within Groups 99.416 407 0.244 Total 101.774 423 Age Between Groups 54.244 16 3.390 2.539 0.001 Within Groups 543.470 407 1.335 Total 597.715 423 Experience Between Groups 49.231 16 3.077 1.924 0.017 Within Groups 651.033 407 1.600 Total 700.264 423 Marital status Between Groups 11.717 16 0.732 3.225 0.000 Within Groups 92.434 407 0.227 Total 104.151 423 Source: the researchers survey It is inferred from the table above (Table 5), the significance value is less than .05 for age (p= 0.001) and experience (p=0.017) and marital status (p=.000) of the employees. Hence the hypothesis H2 is rejected and alternate hypothesis is accepted which states that age, experience and marital status of the employees has an impact on organizational performance. This means that in the development of organizational performance the age, experience and marital status of the employees plays a vital role. In the case of gender (p=0.882) of employees, the significance value is greater than .05. Hence in this case the H2 is accepted which means, gender of employees do not influence the development of the performance of the organization. ORGANIZATIONAL PERFORMANCE PREDICTED BY HR PRACTICES FOR HUMAN CAPITAL DEVELOPMENT Hitt et al., (2001), Noe et al., (2003); Youndt et al., (2004), Ardichvili, A and Dirani, K.M (2005) had identified in their study that firm performance was positively impacted by the presence of Human Capital Development practices. The preceding evidence suggests that the factors influencing organizational performance is expected to have positive magnitude and the theoretical expectation is portrayed in the model with positive contribution by the various factors. Hence the following hypothesis is proposed H3 Organizational performance is not predicted by HR Practices for HCD
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The proposed regression model is given below: Organizational performance Y1b = b1b + b1b1 x1 + b1b2 x2 + b1b3x3 + b1b4 x4 + b1b5 x5 Where, x1 - Recruitment x2 Training x3 Counselling and mentoring x4 Empowerment x5 Performance appraisal b1b1, b1b2, b1b3, b1b4, b1b5 - Regression Coefficients b1b Regression constant MODEL SUMMARY The coefficient of determination R2 was compared to determine percentage variation in the dependent variable. F value was to compute the significance of R2 with F-distribution at 5% level of significance. The model is found fit on significance (.000) of independent variable and proving perceived organizational performance depends on HR Practices for Human Capital Development like recruitment, training, counselling and mentoring and mentoring, empowerment, and performance appraisal and hence the hypothesis H3 is rejected. The prediction ability of the model is expressed by R square which was .609 whereby 61% (Table 6.1), of the variance in perceived organizational performance was explained by HR practices for Human Capital Development like recruitment, training, counselling and mentoring and mentoring, empowerment and performance appraisal with F-value 130.374 (Table 6.2) at .000 level of significance. TABLE: 6.1. REGRESSION MODEL SUMMARY FOR ORGANIZATIONAL PERFORMANCE AS CRITERION VARIABLE AND HR PRACTICES FOR HUMAN CAPITAL DEVELOPMENT AS PREDICTORS Model Summary Model 1 R 0.781 R Square Adjusted R Square Std. Error of the Estimate 0.609 0.605 0.31153 Source: the researchers survey a. Predictors: (Constant), performance appraisal, recruitment, training, counselling and mentoring and mentoring, empowerment TABLE 6.2. - ANOVA (B) Sum of Squares Df Mean Square F Sig. Regression 63.266 5 12.653 130.374 .000(a) Residual 40.568 418 0.097 Total 103.834 423 Source: the researchers survey Predictors: (Constant), performance appraisal, recruitment, training, counselling and mentoring and mentoring, empowerment b Dependent Variable: Organizational performance TABLE: 6.3. ASSOCIATION BETWEEN HR PRACTICES FRO HUMAN CAPITAL DEVELOPMENT AND ORGANIZATIONAL PERFORMANCE Variables Unstandardized Coefficients t- value Sig. Beta SE (Constant) 0.447 0.152 2.938 0.003 Recruitment 0.227 0.046 4.968 0.001 Training 0.282 0.054 5.369 0.001 Counselling and mentoring 0.224 0.052 4.281 0.004 Empowerment 0.420 0.055 7.609 0.001 Performance appraisal 0.189 0.055 3.431 0.001 Source: the researchers survey a Dependent Variable: Organizational Performance In predicting the performance of the organization in software companies (Table 6.3) it is found that empowerment of employees is found to be the most important variable (=0.420, t= 7.609) followed by training (=0.282, t= 5.369), recruitment (=0.227, t= 4.968), counselling and mentoring (=0.224, t= 4.281) and finally performance appraisal (=0.189, t= 3.431). REGRESSION EQUATION Organizational performance = .447 + .227 (recruitment) +.282 (training) +.224 (counselling and mentoring) + .420 (empowerment) +.189 (performance appraisal) Empowerment plays an important role in improving the performance of the Organization (Conger, J.A and Kanungo, R.N, 1988), since empowerment strengthens the commitment of employees, improves self-esteem and creates self confidence. Empowered employees enjoy autonomy at work and autonomy enables them to be innovative at work and set inspirational goals for achievement. All this qualities of empowered employees contribute towards organizational performance. Organization is also influenced by another Human Capital Development practice namely training since training develops the skills and enhances the capability and performance of individuals and thereby the performance of the Organization (Aragon Sanchez et al., 2003). Training helps the employees to meet the standard of work and to cope up with the changes in the Organization. With these characteristics of training a trained employee become more valuable for an Organization and also he contributes more towards the performance of the Organization, (Kumpikaite, V and Ciarniene, R, 2008). Another important factor that influences the performance of an organization is recruitment made by the organization. Leidinger (2009) argued that recruiting employees with high potential leads to further personal growth and thereby for the growth of the organization. Organization uses extensive procedure in recruitment and selection and emphasizes on recruiting the most talented and qualified people. Since large amount of money is invested by the Organization in recruitment, they try to take the best candidates than their competitors. Since the best talents are recruited they give their best towards organizational performance. The next factor that contributes to the performance of an Organization is counselling of employees. Hutcheson, P.G (2006), had conveyed that the ancient practice of mentoring had totally transformed into a business tool in talent development and management. Mentoring enhanced the professional development of employees, expanded organizational breadth and broadened the personal network. Mentoring built the skills of employees, increased their productivity, fostered the relationships across the organization, increased organizational performance and retained the talent workers. The last variable that predicts the performance of an Organization is performance appraisal. According to Smith, A.D and Rupp, W.T (2003), performance appraisals is a critical part of a companys success since they allow the company to retain and reward high performers and offer guidance and improvement to poor performers
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REFERENCES
Aragon-Sanchez, Antonio, Isabel Barba-Aragon and Raquel Sanz-Valle. (2003), Effects of training on business results, International Journal of Human Resource Management, Vol.14, No.6, pp. 956-980. Ardichvili, A and Dirani, K. M. (2005). Human Capital Practices of Russian Enterprises, Human Resource Development International, Vol.8, No.4, pp.403-418 Arora, A., Arunachalam, V.S., Asundi, J.M., and Fernandes, R (2001), The Indian Software Services Industry, Research Policy, Vol.30 pp 1267-1287. Jose M Barrutia, Jon Charterina and Ainhize Gilsanz (2009). Salesperson empowerment in Spanish banks: A performance-driven view, Journal of Financial Services Marketing, Vol.14, pp.40-55 Bassi, L and McMurrer, D (2005). What to do when people are your most important asset, Handbook of Business Strategy, Vol.6, No.1, pp.219 224 Bhatnagar, S (1997). The Indian software industry: moving towards maturity, Journal of information technology, Vol.12, No.4. pp. 277-288 Black, S. E and Lynch, L. M, (1996). Human-Capital Investments and Productivity, American Economic Review, American Economic Association, Vol.86, No.2, pp. 263-67 Chao, G.T, Walz, P.M, and Gardner, P.D., (1992). Formal and informal mentoriships: A comparison on mentoring functions and contrast with non-mentored counterparts, Personnel Psychology, Vol.45, pp.619 636 Cole N.D. (1995).Research Translation: How employee empowerment will improve manufacturing performance, Academy of Management Executive, Vol.9, No.1, pp.80. DeNisi, A.S and Pritchard, R.D. (2006). Improving individual performance: A motivational framework, Management and Organization Review, Vol.2, pp.253277. Farreell, D and Rusbult, C.E (1981). Exchange variables as predictors of job satisfaction, job commitment, and turnover: The impact of rewards, costs, alternatives, and investments, Organizational behavior and human performance, Vol.28, pp. 78 - 95. Ford, R. C. and Fottler, M. D. (1995). Empowerment: a matter of degree, Academy of Management Executive, Vol. 9, No.3 pp. 21-29. Hooi Lai Wan, (2007). Human capital development policies: enhancing employees' satisfaction, Journal of European Industrial Training, Vol.31, No.4, pp.297 322 Gerald Z.D. Huang, Matthew H. Roy, Zafar U. Ahmed, Judy S.T. Heng, Joyce H.M. Lim, (2002). Benchmarking the human capital strategies of MNCs in Singapore, Benchmarking, Vol.9, No.4, 357. Hunt, M and Michael, C (1983). Mentorship: A. Career. Training and. Development Tool, Academy of Management Review, Vol.8, No.3, pp.475-485. Hsu, I-Chieh, Lin, Carol Yeh-Yun, Lawler, John and Wu, Se-Hwa (2007). Toward a Model of Organizational Human Capital Development: Preliminary Evidence from Taiwan, Asia Pacific Business Review, Vol.13, No.2, pp. 251 275 Indradevi, R (2010). Training for the most capable workforce, Advances in Management, Vol.3, No.12, 49-54 Kaiser, H.F. (1974). An index of factorial simplicity, Pschometrika, Vol.39, pp.31-36. Kent, S. (2001). Mentoring: An age old idea whose time has come, The Canadian Manager, Vol.26, No.4, 24. Khandekar, A. and Sharma, A. (2005b). Organizational learning in Indian organizations: A strategic HRM perspective, Journal of Small Business and Enterprise Development, Vol.12, No.2, 211-226. Kram, K. E. (1983). Phases of the mentoring relationship, Academy of Management Journal, Vol.26, No.4, pp.608-625. Kumpikaite, V. and R. Ciarniene (2008). New training technologies and their use in training and development activities: Survey evidence from Lithuania, Journal of Business Economics and Management, Vol.9, No.2, pp. 155-159. Kuvaas, B (2006), Performance appraisal satisfaction and employee outcomes: mediating and moderating roles of work motivation, The International Journal of Human Resource management, 17(3), pp. 504 - 522 Lakha, Salim (1994), The New International Division of Labor and the Indian Computer Software Industry, Modern Asian Studies, Vol. 28 pp 381-408. Marimuthu, M., Arokiasamy, L., and Maimunah, I (2009). Human Capital development and its impact on Firm Performance: Evidence form Developmental Economics, The Journal of International Social Research, Vol.2, No.8, pp.265-272. Mayo, A (2000). The role of employee development in the growth of intellectual capital, Personnel Review, Vol.29, No.4, pp. 521-533. Mobley, G. M., Jaret, C., and Yong Lim, Y. (1994). Mentoring, job satisfaction, gender, and the legal profession, Sex Roles, Vol.31, No.1, pp.79-98. Nishimura, K. and Yano, M., (1994). Social capital as a public good and an oscillatory behaviour, Research Economics, Vol.48, No.3, pp. 185-193 Nunnally, J.C., (1978). Psychometric Theory (2nd ed.), New York, McGraw-Hill. Ragins, B. (1989). Barriers to Mentoring: The Female Manager's Dilemma, Human Relations Vol.42, No.1, pp.1-22. Ridley, S.E (2007). 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BRAND LOYALTY NEERAJ KUMAR SADDY ASST. PROFESSOR S. N. COLLEGE BANGA 144 505 ABSTRACT
Brand loyalty is an important component of enterprise marketing strategy. The development of a brand name entails a complex structure which must be understood in order to build a string brand. The study revealed that in terms of first objective the responses of respondents have demonstrated a brand consciousness, price consciousness and prevailing trends in the market. While for the second objective the things suggested for the marketers are to use a blend of marketing mix i.e. competition based pricing, mark up pricing, prevailing pricing. In the third objective customer wants more variety and colors, style and sizes, so new variety and styles should be introduced more frequently. In the fourth objective, the respondents are of the opinion that the activities in each field adjust continually to each other and to changes in their external environments. The fifth object describes that the consumers are found to be rational in their behaviour when they prefer to buy jeans considering price. Even the quality has been kept as the second parameter. While in the sixth and seventh object the respondent are of the opinion that they want more variety and colors, style and sizes. However, the constructs of innovation, service and marketing have a strong impact on brand loyalty development.
KEYWORDS
brand quality, brand consciousness, price consciousness, brand new variety and styles and prevailing trends.
INTRODUCTION
n important aspect of buying behavior of consumer is making successive purchase of certain product brand, which is chosen at the consecutive purchase occasions. Generally, more than one brand is offered of the same products within a given product field, and a buyer has to choose one of these brands at the moment of purchase. It may be expected that this is not a random choice from the alternative available, because the various brands of the same product will differ more or less from each other in the eyes of the consumer. The concept of the brand loyalty is of the interest for academicians, marketers as well as for the manufacturers. The main interest lies in the fact that what are the important factors which are responsible for building brand loyalty among the consumer for a particular brand of the product and customer's preference to use this particular brand over time and thereafter what factor may contribute for switching over to another brand which the consumer were previously using. The buying behaviour of individual is influenced by the structure of the society to which the consumer belongs. Individual tends to adopt, their behaviour patterns to much those with whom they regularly interact, individual who are similar in social status and have similar goals and views on life. In addition, individual rue influenced to some extent degree by goal and behaviour pattern of the groups social organisation to which they belong. Some evidence indicates that brand preferences are form during the childhood and adolescence. If such preferences turn into loyalty among the consumer segment it would suggest that manager should being targeting their customer early in their life cycle. DEFINITION OF BRAND LOYALTY The easiest to understand and most complete definition of this approach to brand loyalty was formulated by Jacoboy. Brand loyalty is:(I) the biased (i.e. non-random), (2) behavioural response (i.e. purchase), (3) expressed over time, (4) by some decision making units, (5) with respect to one or more alternative brand out of a set of such brands, and (6) is a function of psychological (decision making) processes". The definition of brand loyalty has a number of implication for marketers. First, brand loyalty is not a random event, whether or not a consumer becomes loyal to a particular brand can be controlled to some extent by action of a marketer. Second, mere verbal reports that someone is loyal to a product are insufficient to show brand loyalty. Third, to reveal brand loyalty, the repeat purchase behaviour must be found over some lengthy period of time. Fourth, brand loyalty can be exhibited by decision making units in addition to individual consumer the decision may be made jointly by husbands and wives and that then in combination reveal brand loyalty. Fifth, consumer may be loyal to more than one brand at a time. Finally, brand loyalty results from some type of evaluative process that follows from the outcome of previous purchase of the product. So, when a consumer has brand loyalty, he or she actively prefers the brand, is committed to the brand to some extent, and probably has developed positive feeling towards the brands. Brand loyalty is important to marketers because it leads to increased market share, and ultimately to greater profit. If consumer have been satisfied with the promoted brand their satisfaction is reinforcing and leads to increase in the probability of choosing the brand is again after the promotion is withdrawn, particularly for previous non users of brand. Because of the importance of the brand loyalty, many marketers develop a simple, descriptive promotional line, and through heavy repetition, engrave it in the consumers memories. They are concerned with the actual consumer purchasing pattern, with consumer beliefs and opinion concerning their brands and with knowing how important the product is to consumer known. Discovering how consumer knows about brands and become attach to certain brands assists marketers in achieving their goals. So manager should recognize the importance of creating and maintaining the brand loyalty, because satisfied consumer are more likely than dissatisfied consumer, reveal brand loyalty. When a consumer has a brand loyalty, he or see actively prefers the brand, is committed the brand to some extent and probably has developed positive feeling towards brand. Brand loyalty is important to the managerial areas of developing the marketing mix and marketing research. Marketers attempted to develop the marketing mix in order to create brand loyalty among the user of the product. Brand loyalty however, is a suitable basis for market target definition. A firm aware of its customers is highly brand loyal may elect to confine its marketing efforts to that group of people. Reaching highly loyal customers may be a relatively simple matter depending on the length of repurchases cycle. If the cycle is short a message can be effectively distributed by putting it in a package with the product or even attaching it to the product itself. So a marketer who wants to be successful should recognize that consumer is the king. He can justify his existence only when he is able to understand commitment and satisfy them.
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MEASUREMENT OF BRAND LOYALTY Brand loyalty is conceptual in nature. As a conceptual variables, it has been used both as an output variable the results of the consumer decision; and as input variable-the cause of consumer decisions. In either case the concept of brand loyalty to be used in consumer research must be operationally defined. The operational definitions described below include: Brand choice sequences Preference over time~ proportion of purchase and other measures, including an extended definition of brand loyalty based both on preferences and purchases. BRAND CHOICE SEQUENCES This concept of brand loyalty based on the sequences of purchasing a specific brand. This operational definition of loyalty was important in the development of the concept and in the studies such as those of Tucker and Stafford who defined brand loyalty as three successive choices of the same brand in their empirical studies. Thus if A,B,C,D,E,F.. are various brands in a particular product, then household could be classified as having following types of loyalty: 1 Undivided loyalty is sequence AAAAAAA 2. Divided loyalty is sequence ABABABAB 3. Unstable loyalty is sequence AAABBB 4. No loyalty is sequence ABCDEF PREFERENCES OVER TIME Some time loyalty has been defined as preference statement overtime rather than actual purchase. This loyalty was most manifest when factors such as unavailability, price consideration and respondent not being the buyer did not play a major part in brand selection. PROPORTION OF PURCHASE The most frequently used definition of brand loyalty, at least in empirical research, is the proportion of total purchases within a given product category developed to the most frequently purchased brand (or set of brands). This is used both on a conceptual definition of brand loyalty in these studies as well as on operational measures. Other measures of loyalty Several researchers have employed a combination of two or more of the above criteria in defining brand loyalty. The factor analytic approach employed by Sheath uses a definition of brand loyalty based on both the frequency of purchase of a brand and the pattern of these purchases. Another entirely different approach based on the price increase in most preferred brand relative to the prices of other brand necessary to induce brand switching. WHY JEANS FOR THE STUDY Jean was chosen as the product for the study because it was kept in mind that this product has been and is among the fastest growing industry on national and international standards/markets. The product is rather already very popular. It is a routine shopping product. Every company feels that the market for jeans will keep going, and at a growing pace. The product is popular everywhere and anywhere in India. The main customers are the youths. Most of the young persons or the ones who are studying or newly employed generally have a crush over jeans. It is this segment which generally feels like 'rebelling' and 'independent'. Most of the marketers try to strike this segment only, when they term their jeans as 'for cowboys', rugged', 'tough', etc. As such the educated youth is the most aware about different brands of jeans available in the market. Also most almost all the jeans available in the nation could be had from outlets in almost every city. So, there is uniformity
MAIN OBJECTIVES
1. 2. 3. 4. 5. 6. 7. To study the number of persons wearing branded jeans. To study the change in brand loyalty in response to change in price. To study the effect of freebies scheme on brand loyalty. To study the effect of non-availability of favourite brand on the brand loyalty. To determine the product attributes which consumers considered as important while making purchase decision. To evaluate the reasons for brand switching by the consumers. To study which are the most powerful source of information?
RESEARCH METHODOLOGY
It is quite an attempt to examine brand loyalty of consumers towards various brands of Jeans. This research is called as "Expostfacto" research because this is descriptive -cum-analytical in nature. Most "Ex-post-facto" research projects are used for descriptive studies in which researcher seek to measure such items e.g. frequency of shopping, preferences of people or similar data. In this type of study researcher has no control over variables. He can only report what has happened or what is happening. UNIVERSE OF THE STUDY The universe of study has been confined to Ludhiyana and Jalandhar (economically significant cities) due to the limitation of time, finance. The "Ludhiyana and Jalandhar" has been chosen due to the reason that it has maximum number of colleges and university from where the respondents were interviewed. RESEARCH DESIGN Human beings by nature differ in behaviour preferences, liking and disliking. A consumer has different feelings he views products in his own way of thinking and ranks the brand with his own level of satisfaction. It was in this background of the consumer behaviour that questionnaire was divided into two different parts. In one part information regarding age, occupation and educational qualifications were framed. In the second part of questionnaire covers the different aspects ranging from the liking of the consumers to different brands media, range of price of product source of motivation, effects of different factors on his decision etc. were taken. DATA-COLLECTION METHOD This study is entirely based on primary data. For the collection of primary data, the questionnaire method were used for questionnaire was of structured and non-disguised type which contained open and close ended, multiple choice and dichotomous questions. Some of the questions required rating or ranking of alternative i.e. the liker scale method. SAMPEL AND SAMPLING DESIGN The sample under study comprised of 112 respondents which were personally interviewed. The sample has been chosen with the help of "random sampling technique" and the sample was divided into three categories i.e. undergraduates, graduates and post graduates. RESEARCH METHODOLOGY The data is analysed on the basis of response by respondents in the questionnaire. Age, education and family income has been taken as the main variables in the analysis.
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ANALYSIS TOOLS PERCENTAGES: Demographic features and other response obtained from survey are express in terms of percentages, figures in tables within parenthesis represents percentage while those without parentheses are simple frequencies. WEIGHTED AVERAGE: Respondents were asked to rate the benefits of branded apparels, according to their importance from rank 1 to 5. Weighted score assigned viz. 5, 4, 3, 2,1 to rank 1, 2, 3, 4,5 respectively. On the basis of frequency rating of each factor, weighted average scores for each factor were computed. LIMITATIONS OF THE STUDY Although utmost care has been taken to get the accurate results, yet because of the risk of ambiguities and interpretations on the part of the respondents, some elements of inaccuracy could have crept in. also the selection of the respondents was based on convenience. Because of the small size the sample is not truly representative of the universe. o Due to the memory difficulties on the part of the respondents, there may be problems of under-reporting. Also there may be problems of over-reporting in the case of prestige brands. o Some of the respondents do not use branded jeans, so its brand loyalty may not be calculated accurately with respect to total percentage of its class.
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However, with a low price strategy, parity perceptions should be fostered in an attempt to discourage brand loyalty. Thus, a starting point for many advertising campaigns should be a clear understanding of both the parity perceptions in the marketplace and the need to either develop or fight brand loyalty.
ANALYSIS
RESPONDENT DESCRIPTION In order to grasp the nature and characteristics of the various respondents included in the study. We analysis the information according to their socio-economic background which includes the characteristics of the respondents age, qualification, family income (yearly). TABLE 4.1: AGE WISE SAMPLE DISTRIBUTION Age-Group Number/Percentages of Respondents 15-19 32 20-24 60 24-28 20
Table 4.1 indicates that the major part of the respondents fall in the age group (20-24 years) which is followed by (15-19) which mostly include under graduates. TABLE 4.2: EDUCATION WISE SAMPLE DISTRIBUTION Educational Qualifications Number/Percentages of Respondents Undergraduates 30 Graduates 32 Post Graduates 50
Table 4.2 signifies the educational level of the respondents. It is quit obvious from the table that post-graduates constitutes the largest groups (50 percent) among all the types of respondents which is then followed by graduates (32 percent), undergraduates (30 percent). TABLE 4.3: FAMILY INCOME WISE SAMPLE DISTRIBUTION Family Income (Yearly) Number/Percentages of Respondents 80000-120000 19 120000-160000 18 160000-200000 43 200000 & above 32
Table 4.3 signifies the family income of the students. It is clear from the table that most of the students (43 percent), belongs to the higher middle income group. Whereas the 32%, percent) high income class. Whereas 19 percent belongs to middle income, level. Whereas (18 percent) belong to lower middle income, group. TABLE 4.4: PERSONS WEARING BRANDED JEANS Respondents Number/Percentages of Respondents Yes 100 No 12 Table 4.4 signifies the major number of students wear brand jeans where as only (12 percent) either doesnt wear jeans or branded jeans. This signifies that there is increase in the living standard of the people and respondents are more in favour of fashion.
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TABLE 4.5: BRAND OF JEANS MOST FAVOURED Brand Name Number/Percentages of Respondents Levis 21 Lee 17 Live In 7 Lee Cooper 16 Newport 6 Pepe 7 Flying Machine 3 Killer 12 Ruff and Tuff 11 Table 4.5 shows that Levis (21 percent) is the most favored brand followed by Lee Cooper (16 percent) where Ruff and Tuff and others constitutes (11 percent) of the students and the others are preferred by the students with the given percentages. TABLE 4.6: PLACE OF BUYING BRANDED JEANS Place Number/Percentages of Respondents Exclusive Showroom 33 Ordinary Retail shop 22 Both (a) & (b) 45
Table 4.6 shows that the people buy their favourate brands mainly from both Exclusive showrooms and ordinary retail shops. This shows that where as second proportion of people buy their brand from the exclusive showroom. Whereas students dont go so, much to the ordinary retail, shops. TABLE 4.7: NON AVAILABILITY OF BRAND AT SHOP Statements Number/Percentages of Respondents Waif for the brand to be available 33 Go for other brand 18 Try to another shop 46 Dont know 3
Table 4.7 shows that if people dont get the brand from the particular showroom they will try for another shop (46 percent) where as 33 percent to will wait for the brand to be available at their exclusive showroom. Whereas 18% despondence were will switch over to another brand. Whereas 3 % despondence, were not able to take any decision regarding this statement. TABLE 4.8: BRAND USAGE OVER THE YEARS Usage over the years Number/Percentages of Respondents 6 months 17 1 year 24 2 year 36 3 year or more 23
Table 4.8 shows that the people are wearing their favourate brand for 2 years where as still good amount of percentage of people are wearing their for more than 3 year. This shows that these people this percentage of people is very brand loyal. Whereas there are respondent 24 percent wearing particular brand for a period of 1 year and 17 percent of respondent constitute period of 6 months.
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TABLE 4.9: CHANGE IN FACTORS THAT WILL LEAD TO SWITCH OVER TO ANOTHER BRAND 2 1 0 -1 -2 Definitely will Probably will Might or Might not Probably will not Definitely will not Weighted Average Price 24 18 24 25 9 .23 Quality 39 29 19 11 2 .92 Stitching 31 21 29 17 2 .52 Fashion 30 28 26 11 5 .67 Durability 36 27 24 9 4 .82 Advertisement 4 11 39 29 17 -.44 The above table signifies that people are not ready to make compromise with the quality of the product. Change in quality will lead to the change in brand worn by the respondents. Large people still very fashion conscious they will change their brand if it is not providing jeans according to the recent trend. Stitching along with durability of cloths also matters the respondents. Whereas the respondents show, their negative impact towards advertisement. Change in advertisement wont matter to the brand loyalty of the respondents. Scale TABLE 4.10: RANKING OF VARIOUS BENEFITS OF BRANDED APPARELS Score 5 4 3 2 1 Ranks Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Average Convenience 19 17 20 26 18 2.93 Status Symbol 27 23 19 18 13 3.33 Better Quality 32 28 18 8 14 3.56 Ready Availability 13 18 23 25 21 2.77 Cost effectiveness 9 14 20 23 34 2.41 Above table takes into consideration the advantages of wearing jeans of the brand use the respondents. The main reason for wearing the particular brand was of better quality where as people also considered wearing branded jeans as a status symbol. Convenience ready availability and cost effectiveness was given the same weight age by the respondents. This shows that the respondents are very particular regarding the quality of branded jeans worn by them. TABLE 4.11: BRAND WORN BY RESPONDENT BEFORE SWITCHING OVER TO PRESENT BRAND Brand Name Number/Percentages of Respondents Ruff & Tuff 41 New Port 21 Flying Machine 12 Other brands 18
Eight percent of respondents were loyal to their old brand (means they did not change their brand). As we know Ruff and Tuff was famous for providing jeans with the low cost. But due to increase in standard of living, people switch over to other brand. Similar is a case of new port and flying machine (21 percent) respondents include who switch over from other brands like Peep, Killer and other brands. TABLE 4.12: REASONS FOR SWITCHING OVER TO NEW BRAND Reasons Number/Percentages of Respondents Friends Experience with new brand 36 Impress by the advertisement of new brand 30 Price increase in old brand 12 None availability of old brand 14 Eight percent of respondents were loyal to their old brand (means they did not change their brand so eight percent of the people were not considered). The main reason for changing to new brand was the effect of reference groups this shows that people has lot of influence of the people living around them. Whereas people were also impress by the promotional scheme (Advertisement) effort taken by the brand producers. Whereas increase in price and non availability of old brand does not affect them much.
CONCLUSION
The study was made with the objective to study the change in brand loyalty in response to change in price , to study the effect of freebies scheme on brand loyalty, to study the effect of non-availability of favorite brand on the brand loyalty, to determine the product attributes which consumers considered as important while making purchase decision ,to evaluate the reasons for brand switching by the consumers , to study which are the most powerful source of information. To achieve these objectives a survey was conducted with sample size of 112 respondents in Ludhiyana and Jalandhar. The important things which came out in this survey are that customers are loyal to brand. Fast changing attitude of people toward different branded apparel and purchase factor, as brought out by this study, necessitate that marketer should remain in touch with the preferences, motivations, expectations, attitudes, perceptions and opinion of customers. Research in consumer behavior should thus be carried out on continues basis by the marketers to keep them in the forefront, thereby improving the productivity of their market efforts. As a whole, brand consciousness and price consciousness are the key areas of concern for consumers. It is clear massage for marketers to work on these and penetrate the market successfully.
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REFERANCES
BOOKS AND JOURNALS Akerlof, George A. (1970). The market for lemons: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics. Byrnes, N. (2000) Brands in a bind. Business Week. Czinkota, M.R. & Ronkainen, I.A. (1993) International Marketing (3rd edn). Fort Worth: The Dryden Press. Chris Janiszewski(1993), .Preattentive Mere Exposure Effects,. Journal of Consumer Cox, Jason & Dittmar, Helga. (1995). The functions of clothes and clothing (dis)satisfaction: A gender analysis among British students. Journal of Consumer Policy. Dibbel, Julian. (2006). Play money: Or how I quit my day job and struck it rich in virtual loot farming. NewYork, NY: Basic Books. Dress to Kill, Advertisement and Marketing,(2002), p. 49. Dress as a Statement, Business World, (2004). Erdem, Tulin & Swait, Joffre. (1998). Brand equity as a signaling phenomenon. Journal of ConsumerPsychology, 7[2]: 131-157. Erdem, Tulin, Swait, Joffre & Louviere, Jordan. (2002). The impact of brand credibility on consumer price sensitivity. International Journal of Research in Marketing. Georgeton, O Gamoran, J. (2007), Virtual Brand Equity: When brand signals disappear, will consumers pay a premium for brand image?, Thesis Submitted to Washington University. Hofstede, G. (1991) Cultures and Organizations, Software of the Mind. London: McGraw Hill. Joel Rubinson and Markus Pfeiffer(2005), Journal of Advertising Research. Johon C Mowen, Consumer Behaviour 2nd edition. Kamakura, Wagner A. & Russell, Gary J. (1989). A probabilistic choice model for market segmentation and elasticity structure. Journal of Marketing Research. Keller, Kevin L. (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing. Kirmani, Amna & Rao, Akshay R. (2000). No pain, no gain: A critical review of the literature on signaling unobservable product quality. Journal of Marketing. Kotler, Philip(2001), Marketing Management Analysis, Planning and Control, Prentice Hall of India, Pvt. New Delhi (2001) Leeflang, P.S.H. & Van Raaij, F. (1995) The changing consumer in the European Union: a meta-analysis. International Journal of Research in Marketing. McCracken, G. (1989) Culture and consumer behaviour: an anthropological perspective. Journal of the Market Research Society. Marianne Paskowski(2006), .Brand Me Entertained, Maybe,. Television Week. Michael Lewis,(2004) Market Research Abstract from: Journal of Marketing Research, Vol XLI, No 3. Nelson, Phillip. (1970). Information and consumer behavior. Journal of Political Economy. Netemeyer et al. (2004). Developing and validating measures of facets of customer-based brand equity. Journal of Business Research. Rajesh Iyer and James A. Muncy(2005), Journal of Advertising Research, Vol. 45, No. 2. Sethuraman, Raj & Cole, Catherine. (1999). Factors influencing the price premiums that consumers pay for national brands over store brands. Journal of Product and Brand Management. Simon, Carol J. & Sullivan, Mary W. (1993). The measurement and determinants of brand equity: A financial approach. Marketing Science. Smith, Michael D. & Brynjolfsson, Erik. (2001). Consumer decision-making at an internet shopbot: Brand still matters. Journal of Industrial Economics. Vanita Kohli(1996,1997), Brand New Ambition, Advertisement and Marketing, 30th November, 1996, pp. 40-42.Advertisement and Marketing . WEBSITES Anderson, Chris. (2006). The long tail. Wired Magazine. <http://www.wired.com.>. Apotheus,(2006). SL Exchange Business Forum <http://www.slexchange.com.>. Book, Betsy. (2005). Virtual world business brands: Entrepreneurship and identity in massively multiplayer online gaming environments. <http://papers.ssrn.com.>. Book, Betsy. (2004). Branding in social virtual worlds. <http://papers.ssrn.com.>. BusinessWeek Online,( 2006), <http://www.businessweek.com> Craig, Kathleen. (2006) Second Lifes must-have stuff. WiredNews<http://www.wired.com>. Craig, Kathleen. (2006, October 19). Second Lifes must-have stuff. Wired .News.<http://www.wired.com>. Fournies,s.(2007):Consumers and Their Brands:accessed from www.jstos.org. Jana, Reena. (2006). American Apparels virtual clothes. Business Week Online.<http://www.businessweek.com>. Margolis, Daniel. (2007). Virtual worlds could be taxed. Certification Magazine.<http://www.certmag.com.> McCann-Erickson, (2007) 750 Third Avenue, New York. Internet www.McCann.com Newitz, Annalee. (2006). Your Second Life is ready. Popular Science.<http://www.popsci.com>.
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FDI IN THE INDIAN RETAIL SECTOR- PROBLEMS AND PROSPECTS BULBUL SINGH ASST. PROFESSOR SRI AUROBINDO COLLEGE OF COMMERCE AND MANAGEMENT LUDHIANA SUVIDHA KAMRA ASST. PROFESSOR SRI AUROBINDO COLLEGE OF COMMERCE AND MANAGEMENT LUDHIANA ABSTRACT
The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, identified India as one of the most attractive retail destinations globally from among thirty emergent markets in 2010. The government has allowed FDI in the single brand segment upto 51% and has also allowed 100% FDI in the wholesale segment. However, as of now, FDI in the multi brand segment wherein foreign giant retailers like Wal-Mart operate are not allowed to enter India. This is because the government wanted to ensure that the entry of global retail giants does not displace the existing population of millions of people employed in the local retail business. The retail sector in India is largely dominated by the unorganized players (mom and pop stores/ kirana or neighbourhood stores with 100- 500 square feet floor area). Organised sector forms just 5% of the market. The retail sector in India is under- invested and according to a study by McKinsey, almost Rs 50,000 crores worth of food is wasted because of poor supply chain management. These drawbacks can be removed if the modern foreign retailers are allowed to enter the Indian markets as they shall bring their technical know how and help in cutting prices by removing intermediaries from the supply chain. The paper discusses the problems and benefits of allowing FDI in the Indian retail sector and recommends how it may be gradually introduced when inevitably it must.
KEYWORDS
FDI, Retail, Organised Retail, Wal-Mart
INTRODUCTION
etailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producers goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Retailing is the largest private sector industry in the world economy with the global industry size exceeding $6.6 trillion and a latest survey has projected India as one of the top destination for retail investors. The government had opened up 51% FDI in the single brand retail outlets which led to an upsurge in retailing business in India. The government is cautiously exploring the avenues for opening FDI in multi-brand segment. The Government is seeking these options keeping in view the existing social framework of India and wants to ensure that the entry of global retail giants do not displace the existing employment in the retail business. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, identified India as the third most attractive retail destination globally from among thirty emergent markets in 2010. India has consistently featured in the top three positions of the Global Retail Development Index conducted by AT Kearney for the last five years. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes. With the market worth $410 billion, the retail industry is definitely one of the pillars of the Indian economy.
METHODOLOGY
The study involved extensive collating, summarizing and synthesizing of secondary data available online by AT Kearney (Global Management Consultants), reports prepared by the Indian Council for Research on International Economic Relations (ICRIER), reports prepared by Centre for Policy Alternatives. All of these reports formed informative studies on some of the key issues with FDI in Retail. To obtain up to date information and opinions on the research topic it was necessary to refer to domestic and international news articles and gather a variety of industry reports and papers, for example reports by Price Waterhouse & Coopers, McKinsey, India Knowledge at Wharton, articles published in the International Retail Digest and several newspaper reports. All of these helped to provide a wide and balanced understanding of the key issues of this research.
RETAILING IN INDIA
Trade or retailing is the single largest component of the services sector in terms of contribution to GDP. Its massive share of 10-11% is double the figure of the next largest broad economic activity in the services sector. Retailing is the largest private sector in India and second to agriculture in employment. After farming, retailing is Indias major occupation (8% of total population). It employs 40 million people. The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Modern format retailers which include Supermarkets like Foodworld, Hypermarkets like Big Bazaar, HyperCity; Departmental Stores like,
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Shoppers Stop, Lifestyle, Pantaloons, Piramyds, Westside and Trent, Specialty chains like Ikea the retail furnishing house and entertainment chains like Fun Republic, Fame Adlabs, Inox and PVR. Some of the biggest Indian corporate houses like the Future Group, Raheja Group, Reliance, TATAs, Aditya Birla Group, Bharti etc. have made massive investments in Indias organized retail business. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Unorganized retailing is by far the prevalent form of trade in India constituting 95% of total trade, while organized trade accounts only for the remaining 5%. Organized retail trade employs roughly 0.5 million people and unorganized 39.5 million. The Indian retail industry is highly fragmented. According to AC Nielsen and KSA Technopak, India has the highest shop density in the world. In 2001, it was estimated that there were 11 outlets for every 1000 people. India today has approximately 15 million retail outlets. The entire retail trade contributes about 10-11% to Indias GDP and is valued at an estimated Rs. 9,30,000 crores. Out of this, organized retailing industry is around Rs. 35,000 crores. Organized retailing is primarily urban centric, its share as represented in urban scenario is projected to be 12 to 20%. Growing at more than 30%, the organized sector is driving the retail growth in India and contributes significantly to the growth of the economy. This economic growth comes primarily from increased consumer spending. Evolution of Indian retail Historic/Rural Reach Traditional/Pervasive Reach Government
Supported Modern Formats/ International
Exclusive Brand Outlets Hyper/Super Markets Department Stores PDS Outlets Khadi Stores Convenience Stores Mom and Pop/Kiranas
Source of
Entertainment
Neighborhood Stores/Convenience
Shopping Experience/Efficiency
THE CHANGING INDIAN CONSUMER There has been an increase in the disposable income of the middle class households in India. Between 1993 and 2003 there was a 20.9% growth in the real disposable income of the Indians. Besides, that, there has been a 10% growth in the middle and high income populations in the last decade. Add to that, the falling interest rates, easier consumer credit and a greater variety and quality of goods available at all price points has increased the momentum of consumerism in India. Consumers in particular, the urban consumers are getting exposed to international lifestyles. They are inclined to own more assets and thus there is an increased tendency to spend. Therefore, contrary to the olden times, shopping is no longer need based. The greater education levels have increased the awareness levels of consumers and they are becoming more demanding and discerning. The age segments of 17- 21 year olds, (which number more than a 100 million in India) tend to spend freely and are highly influenced by international lifestyles. As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. This has also contributed to large scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. The trends that are driving the growth of the retail sector in India are Low share of organized retailing Competitive real estate prices Increase in disposable income and customer aspirations Increase in expenditure for luxury items Another credible factor in the prospects of the retail sector in India is the increase in the young working population. Hefty pay-packets, nuclear families in urban areas, along with increasing working-women population have also contributed to the growth of retailing in India. These key factors have been the growth drivers of the organized retail sector in India which now boast of retailing almost all the preferences of life - Apparel and Accessories, Appliances, Electronics, Cosmetics and Toiletries, Home and Office Products, Travel and Leisure and many more. With this the retail sector in India is witnessing a rejuvenation as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. The retailing configuration in India is fast developing as shopping malls are increasingly becoming familiar in large cities. When it comes to development of retail space specially the malls, the Tier II cities are no longer behind in the race. If development plans till 2007 are studied it shows the projection of 220 shopping malls, with 139 malls in metros and the remaining 81 in the Tier II cities. ANTICIPATED GROWTH RATES As foreign investors exploring their potentials in the retail sector, are keen on developing malls in India, the size of organized retailing is expected to touch $30 billion by 2010 or approximately 10 per cent of the total GDP. This has initiated market-entry announcement from some retailers and has signaled to international retailers about Indias seriousness in promoting the sector. While international retailers like Wal-Mart have entered the wholesale cash-and-carry business in an equal (50: 50) joint venture with Sunil Bharti- promoted Bharti Enterprises for; Reliance, the largest Indian conglomerate has invested $3.4 billion to become Indias largest contemporary retailer. There are also reports of investments for Hypercity Retail by K.Raheja Group to establish 55 hypermarkets by
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2015. Bharti Enterprises is likely to spend $.5 billion by 2015 in their retailing business; they are expected to occupy 10 million sq. ft. of retailing space and employ about 60,000 people in their retailing venture. All these factors will contribute in taking Indian retail business to unexpected growth based on the consumer preference for shopping in congenial environs and also availability of quality real estate. INDIA AS AN EMERGING DESTINATION FOR FDI India today represents the most compelling investment opportunity for mass merchants and food retailers looking to expand overseas. According to AT Kearneys Annual Global Retail Development Index for 2010 an annual study of retail investment attractiveness among 30 emerging markets India is placed at third rank ahead of countries like Saudi Arabia, Brazil, Chile and Russia and just behind China and Kuwait (see table 1and Figure 1). TABLE 1: TOP 10 RETAIL INVESTMENT COUNTRIES Market Attractiveness (25%) Country Risk (25%) Market Saturation (25%) 50.6 75.4 35.4 65.3 73.5 71.8 79.1 67.7 43.4 63.5
85.8 32.9 86.6 64.0 94.3 56.2 24.5 62.6 51.3 62.2 97.8 61.7 86.5 50.7 31.0 58.4 74.3 46.6 36.9 57.8 92.3 27.5 38.3 57.5 100 18.8 32.0 57.5 74.3 58.6 23.1 55.9 54.6 72.2 49.2 54.9 55.1 32.0 61.8 53.1 Source: 2010 Global Retail Development Index 2010, AT Kearney Analysis The Indian retail market is worth $410 billion but only 5% sales are through organized retail, meaning opportunity in India remains immense. Retail should continue to grow rapidly upto $535 billion in 2013, with 10% coming from organized retail, reflecting a fast growing middle class demanding higher quality shopping environments and strong brands. Store growths and consumer insights have been the focus for the past few years. The market is maturing as most retailers are now focusing on profitable growth (see figure 2). Several domestic retailers filed for bankruptcy or exited the market during downturn, like Subhiksha and Magnet, while others optimized their operations, including store labour, rent renegotiations and strategic cost management. Expansion plans did not slow however: Bharti Retail strengthened its position by 59 stores, Bharti- Walmart is expected to open 10 to 15 wholesale locations in the next three years, and Marks & Spenser is considering plans to open additional outlets in the next few years. FIGURE 1: RETAIL INVESTMENT COUNTRY ATTRACTIVENESS
2010 Rank 1 2 3 4 5 6 7 8 9 10
Country China Kuwait India Saudi Arabia Brazil Chile UAE Uruguay Peru Russia
GRDI Score
Source: 2010 GRDI, A T Kearney Analysis Established retailers are tapping into the growing retail market by introducing innovative store formats, such as community shopping, village malls and destination shopping stores for example, Future Group set up a first of its kind Community Family Shopping Centre in Bangalore. Another innovative concept, wedding malls devoted to nearly every aspect of weddings, are making a splash in the Indian market. While rising commodity prices hit Indian consumers in all segments (including cereals, grains, fruit and vegetables), retailers launched a wide range of private labels. More profitable for retailers, these brands are gaining customer acceptance in categories beyond staples. Future Group plans to add 10 to 15 new private label categories every year; this year, it expanded its Tasty Treat label to the breakfast cereal, noodle and soup categories. Beyond private labels, Wal-Mart is working to change the agricultural supply chain model in India to improve productivity and the quality of goods by launching a direct farm produce sourcing system.
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Foreign players continue to demonstrate strong interest in India- most major hypermarket retailers either have a presence or are studying the market for entry. In apparel, Zara (owned by Spains Inditex Group) opened its first store in 2010, while Polo Ralph Lauren and Diesel are expanding. Desirable real estate is a lingering challenge or retailers. Mall rental rates are lower because of an oversupply of space, but there is still a lack of quality street locations. Given these challenges, many retailers see tier 2 cities as the next frontier. Customers in these locations are proving similar to those in tier 1 cities, meaning that retail models translate well- even increasing profitability because of lower operating costs. Spencers Retail, More (owned by Aditya Birla Group) and Shoppers Stop (owned by K Raheja Group) already plan to expand. Regulations pose another challenge to retail growth in India, particularly the foreign investment restrictions for multi brand retail, which will probably not change anytime soon. As a result, cash-and carry formats will thrive, as foreign companies are allowed full ownership. Wal-Mart and Metro have already successfully entered through this route, and Carrefour and Tesco plan to follow. FIGURE 2: THE RETAIL INVESTMENT OPPORTUNITY ANALYSIS
FDI IN INDAIN RETAILING FDI rules in India do not permit foreigners to set up retail stores directly as this threatens small store owners. 100% FDI is however, permitted in the cash and carry (wholesale or B2B format) business. Cash and carry is a form of trade that allows sale to offices, hotels and retailers who become its members. The government has opened up 51% FDI in single brand segment but does not allow foreign entry in the multi- brand segment. There are certain other exceptions also, where foreign players are allowed. These are: 1. Private labels 2. High- Tech items/ items requiring specialized after sales service 3. Medical and Diagnostic Items 4. Items sourced from the Indian small sector and manufactured with technology provided by the foreign collaborator. STRATEGIES ADOPTED BY INTERNATIONAL PLAYERS TO ENTER INDIAN MARKETS CURRENTLY: Franchise: here an international company gives name and technology to local partner and in return gets a royalty. Examples of international retailers operating through franchises in India are- Nike, Pizza Hut, Tommy Hilfiger, Marks & Spencer and Mango. Manufacturing- Here a foreign company sets up an Indian arm for production and also has permission to set up retail outlets for sale. For example, Bata India. Distribution- in such cases an international company sets up local distribution offices and supply products to Indian Retailers for sale. These international companies can also set up franchise for exclusive brand outlet. For example, Swarovski and Hugo Boss. Wholesale trading-these are cash and carry outlets and at present 100% FDI is permitted in wholesale trading. Metro of Germany is an example of such a company. WHAT INDIA MEANS TO THE WORLDS TOP 10 RETAILERS INTEREST IN INDIA
COMPANY. COUNTRY OF ORIGIN Wal-Mart, USA Carrefour, France Home Depot, USA Metro, Germany Kroger, USA Tesco, UK Target, USA Ahold, Netherlands Costco, USA Aldi Einkauf, Germany
RETAIL SALES 2003 ($ BILLION) 256.33 79.80 64.82 60.50 53.75 51.54 46.78 44.58 41.69 40.06
Very Keen to enter India; has already entered in B2B format a 50-50 JV with Bharti Enterprises A prominent global retailer in the world; among the first to enter China; has entered even small countries like Oman. Should be interested in India Has not ventured beyond the American continents yet; may not find immediate traction here Cash and Carry format is already present in India; likely to roll out other formats if FDI is allowed Present only in USA; India may not be on its radar Quite keen in India; is in touch with the Govt. Present only in USA; India may not be on its radar Has some experience in Thailand; India may not be top priority Is in touch with the Govt.; very keen to enter No Asian presence so far; India may not be Priority
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PROBLEMS OF ALLOWING FDI IN RETAIL IN INDIA IN THE MULTI BRAND SEGMENT (1) ADVERSE IMPACT ON THE EMPLOYMENT In the absence of any substantial improvement in the employment generating capacity of the manufacturing industries in our country, entry of foreign capital in the retail sector is likely to play havoc with the livelihood of millions. Let alone the average Indian retailer in the unorganized sector, no Indian retailer in the organized sector will be able to meet the onslaught from a firm such as Wal-Mart when it comes in full swing. With its incredibly deep pockets Wal-Mart will be able to sustain losses for many years till its immediate competition is wiped out. This is a normal predatory strategy used by large players to drive out small and dispersed competition. This entails job losses by the millions. A back-of-the-envelope calculation can substantiate the point. If we take the case of India, it has 35 towns each with a population over 1 million. If Wal-Mart were to open an average Wal-Mart store in each of these cities and they reached the average Wal-Mart performance per store-we are looking at a turnover of over Rs 80330mn with only 10195 employees. Extrapolating this with average trend in India, it would mean displacing about 432000 persons and if we suppose that the large FDI driven retailers take up 20% of the retail trade in India, it would mean a turnover of Rs 800 billion and displacement of eight million persons employed in the unorganized retail sector. (2) THREAT ON ORGANIZED RETAIL PLAYERS Entry of global players would increase internal rivalry among the players than promoting business of overall industry. Their economies of scale will allow them to reduce their margin to provide value for money products in the beginning to grab the market share which is not possible for domestic players to reduce in comparison to global players because of huge investment. Majority of the Indian players have not attained even break even point as organized retail is still at the nascent stage in India. (3) HUGE SPREAD OF RETAIL CHAIN STORES Financially strong giants will spread their function at multiple location to cater to maximum markets with full fledge infrastructure which is not possible for domestic player to cater. (4) PREDATORY PRACTICES OF THE MULTINATIONAL RETAIL CHAINS FDI in retail is often supported on the basis of the need to develop modern supply chains in India, in terms of the development of storage and warehousing, transportation, logistic and support services, especially in order to meet the requirements of agriculture and food processing industries. While the infrastructure and technology needs are undeniable, the belief that the entry of multinational food retailers is the only way to build such infrastructure is unfounded. Moreover, the pitfalls of relying upon an agrarian development strategy driven by food retail chains and giant agribusinesses have already become clear through the experience of several developing countries like Malaysia, Thailand and Vietnam. Farmers experience many problems in supplying their produce to the food retailers and many get eliminated under the preferred supplier system. Farmers also face problems related to depressed prices due to cutthroat competition among the food retailers, delayed payments and lack of credit and insurance The emergence of such problems in India, especially in the context of the deep crisis that has engulfed the agrarian economy is totally avoidable. It is often argued that the Indian farmers and manufacturers are going to enjoy access to international markets by supplying commodities to these multinational retailers. However, the experience of the producers, especially those producing primary commodities in the developing world, is not encouraging in this regard. According to a source, while a cocoa farmer in Ghana gets only about 3.9% of the price of a typical milk chocolate bar, the retail margin would be around 34.1%. Similarly, 54% of the final price of a pair of jeans goes to the retailers while the manufacturing worker gets around 12%. The International market access available to the global retailers do not benefit the producers from the developing countries since they are unable to secure a fair price for their produce in the face of enormous monopsony power wielded by these multinational giants. (5) MONOPOLY IN THE CUSTOMER MARKET AND CREATION OF CARTELS BY THE GLOBAL PLAYERS Foreign players may create monopoly by providing products at discounted rates in the beginning to grab the market share by displacing domestic giants and after getting good market or monopoly in the market may create a cartel of global giants to exploit the customers by inducing price hike and customers would not get any option than to purchase at the available prices. (6) SETBACK TO THE TRADE BALANCE FDI in retailing can upset the import balance, as large international retailers may prefer to source majority of their products globally rather than investing in the local markets. (7) TOWERING EFFECT ON REAL ESTATE PRICES The entry of global players may have towering impact on the real estate prices. With intensified fight for space in cities, the race may result in steep rise in real estate prices which could be counter productive for the domestic players. (8) DISTORTION OF URBAN DEVELOPMENT AND CULTURE The promotion of large retail stores with huge retail space also fosters a different kind of urban development than what we have followed in India till date. Large shopping malls with all known retail chains with their showrooms as a part of urban development is familiar in the US where the consumers live in suburbs, drives long distances for his/her shopping and lives in a community that hardly knows each other. The problem with this model is that it neglects the simple Indian reality where most households do not have cars and need local markets. The myth of a huge and fast growing affluent middle class is counter to the reality that this section is still too small to support the remodeling of the urban landscape as is being planned with malls, large retail chains and branded products. BENEFITS OF ALLOWING FDI IN RETAIL IN INDIA IN THE MULTI BRAND SEGMENT (1) IT WILL IMPROVE COMPETITION AND BRING PRICES DOWN Retail trade in India is fragmented, unorganized, un-networked, inefficient and individually small. An all too visible manifestation of the inefficiencies is the huge disparity between the price which he producer gets and the price which the consumer pays sometimes as high as 10-20 times! Clearly, what is needed is an efficient supply chain backed by improved infrastructure, cold storages, packing and transportation. The traditional system of distribution, ending with the mom and pop or the street-side vegetable seller, is just not capable of creating it. (2) INVESTING IN TECHNOLOGY AND BETTER SUPPLY CHAIN MANAGEMENT The cold storage chains set up by international retailers will solve the perennial problem of wastages. As much as 40 % of Indias fruits and vegetables rot due to lack of processing facilities. The foreign retail giant houses like Wal-Mart and Carrefour can bring better managerial practices and IT- friendly techniques to cut wastages and set up integrated supply chains to gradually replace the present disorganized and fragmented retail market. According to McKinsey, India wastes nearly Rs. 50,000 crore in the food chain itself. With IT application, the modern retail store can cut transaction costs such as due to inventory, delivery and handling. That is precisely how the US based Wal-Mart grew to be a giant because it reduced its distribution costs to 3% of sales compared to 4.5% of others. These international retail outlets can help develop the food processing industry which requires $28 billion of modern technology and infrastructure. Also a more advanced and efficient production and distribution cycle shall evolve. An improved distribution system and better supply chain management shall make an improvement in the product basket from India for exports. (3) CONTROLLING INFLATION Industry trends for retail sector indicate that organized retailing has major impact in controlling inflation because large organized retailers are able to buy directly from producers at most competitive prices. (4) INCREASE IN EXPORTS There are likely to be greater levels of exports due to increased sourcing by major players. Sourcing by Wal-Mart from China improved multifold after FDI was permitted in China. HOW MUCH FOREIGN RETAILERS EXPORTED OUT OF CHINA
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Wal-Mart: $15 billion -$18 billion Metro: $2.4 billion Carrefour: Over $2 billion Total sourcing of global retailers from China: approx $60 billion Wal-Mart sourced products worth $600 million from India in 2006, its fifth year of sourcing operations. In 2010, Wal- Mart sourced goods worth $125 million from Punjab alone comprising mainly of cotton. Wal-Mart officials are hoping that if worlds top 10 retailers start buying from India, exports could go up by tens of millions of dollars. Foreign players can generate positive inflow of cash through export of trade items or cutting down expenses of trade can increase the margin of profit. After 1994, there was a sudden influx of foreign investment in China which helped the country to attain a surplus in its balance of trade. Similarly, India can also benefit from foreign investment. (5) MANPOWER AND SKILL DEVELOPMENT By allowing market-savvy, market-intelligent and best management practices of corporations such as Wal-Mart, Carrefour, Ahold, JC Penny, etc to enter India the know-how and professionalism of Indian employees shall increase. Also there shall be a greater managerial talent inflow from other countries which add to transfer of knowledge and technical know-how. (6) BETTER ENFORCEMENT OF TAX LAWS While there will be increased tax revenue on the one hand, on the other hand there will be better enforcement of tax laws on the organized sector and international players. Tax evasion by players of the organized sector will not be possible like those of the unorganized sector. Thus, the exchequer of the Govt. shall increase. (7) INCREASE IN EMPLOYEMT LEVELS Employment shall be generated at various levels and across the entire value chain. Retailing industry doesnt need very high level skill sets. Graduates and school pass outs shall be suitable for the jobs and this is a major unemployed demographic group. It is projected that job generation will be similar to that of the ITES industry. More employment generation shall lead to an increase in the tax paying population. (8) BETTER LIFESTYLE Greater levels of wages are paid by most international players. The increasing purchasing capacity of consumers shall lead to better lifestyle. International retailers shall offer a better product variety with many new product categories emerging. Also the quality of products shall improve. The newer supermarkets in urban/metropolitan India offer a produce which is cleaner, fresher, well-packed and often cheaper than the vegetable seller on the street. Modern retailing is designed not only to provide consumers with a wide variety of products under one roof, but also of assured home delivery and information feedback between consumers and producers. A modern retail outlet will also make it easy to buy on credit and provide for servicing and repair of products sold. (9) TOURISM DEVELOPMENT The Singapore and Dubai shopping festivals were examples of the possibilities for improving tourism thanks to the retail industry. (10) OVERALL GROWTH AND EXPANSION FDI would result in market growth and expansion. A greater consumer spending shall lead to greater GDP growth. A CASE STUDY OF WAL-MARTS EXPERIENCE IN FOUR OTHER COUNTRIES HOW CHINA BEAT THE FEARS Since China allowed foreign investment in retail in 1992, it has progressively increased the FDI cap from 26% in 1991-92 to 49% in 2002 It allowed 100% foreign equity only in 2004 Initially, China had allowed entry in only a few selected cities It actively encouraged domestic retailers to merge and become large enough to balance the global retailers. Percentage of Workforce employed in Retail: 6% No. of workers employed by top 100 retailers: 8,10,000
US$ bn
300
75
7 8
8 0
8 5
9 0
9 1
9 2
9 3
9 4
9 5
9 6
9 7
9 8
9 9
0 0
0 1
0 2
Years
Retail sales grew @ 19.6% CAGR for the next 4 years after the introduction of FDI in 1992 ---- Projected Trade _____ Actual Trade RESULTS IN CHINA FOREIGN RETAILERS PRESENT IN CHINA
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Modern formats have grown after FDI But so have traditional players WAL-MART IN JAPAN Wal-Mart had acquired a majority stake in Japanese retail chain Seiyu and by early 2005 opened several big size outlets in busy streets of Japan. The global stores offered a wide variety of Japanese products. However, the initial poor decisions made by Wal-Mart put them in bad taste among Japanese consumers. The global retailer fired 25 percent of the staff, which included 1500 employees and managers of Seiyu. As mass firings are not common occurrences in Japan, the country as a whole felt offended. As a result, Wal-Mart received negative press publicity causing the retailer to lose customers. The unique proposition of Wal-Mart is to sell products at everyday low price. This strategy helped Wal-Mart to achieve success in under-related markets such as Mexico and China. However, Japanese consumers equate low prices with inferior goods. They are willing to pay high prices for quality goods. Hence, failure to understand consumer behavior severely impacted sales. Industry observers in Japan believe that social harmony and a distaste of foreign control are heavily ingrained in the social and business environment of the country. Hence, American companies would always be far from ever achieving success in Japan. WAL-MART IN SOUTH KOREA Wal-Mart ventured in South Korea in August 1998. Wal-Mart had relied on its proven business model and its strategy in offering low prices for products. However, everyday low prices alone were insufficient to make Wal-Mart successful in South Korea. Similar to the United States, most Wal-Mart outlets in South Korea were placed outside city limits. South Koreans are used to easily accessible shopping facilities without the need to travel much. Some individuals felt that Wal-Mart should have been located in the central location of the cities where consumers felt more comfortable to shop. South Koreans are visually oriented customers, appreciating aesthetically pleasing displays and shopping environment. South Korean ladies did not like the warehouse like atmosphere of Wal-Mart, which the American consumers seem not to mind since the products are still cheap. They prefer the department store-like, neat, clean, and sophisticated atmosphere. Wal-Mart struck to Western marketing strategies that concentrated on dry goods, from electronics to clothing , while their local rivals focused on food and beverages, the segment that attract South Koreans to hypermarkets. As a result, on May 22, 2006, Wal-Mart, added its name to a list of multinationals like Nokia, Nestle, and Google that had failed to adjust to the taste of South Korean Customers. WAL-MART IN GERMANY In 1997, Wal-Mart acquired Wertkauf, a leading German retail chain. Later it acquired another leading retail major, Interspar in 1998. Wal-Mart stores are designed for customers who are willing to spend lots of time in shopping. But in Germany, the shopping hours are limited: Shops close by 5 pm on weekdays and no shopping on Sundays. This implies that German customers are not in the habit of spending lots of time in a store- wandering around for the things that they need. The German customers do not like to be assisted by Wal-Marts friendly store assistants for shopping. They prefer to do their own search for bargains. Wal-Mart got its merchandise placement wrong: Germans like to see the advertised discount products upfront- without having to ask the store assistant. This implies that the discount products must placed at the eye level. However, Wal-Mart followed its US style merchandise display strategy- where premium priced products are kept at eye level and the discount products are kept at higher shelf or in the bottom racks. This irritated the German shoppers. Wal-Mart also got its store inventory wrong. Products like clothes, hardware, electronics and other non- food products were given much bigger floor space than food products. Germans shop in big outlets mainly for food products. Hence, other German retailers like Metro stock more of food products which constitute more than 75% of their revenue. As a result of constituent mistakes, Wal-Mart suffered consistent losses to the tune of $ 1 billion and exit Germany in 2006 by selling its 85 stores to Metro.
RECOMENDATIONS
India is poised to grow as a Retail hub. It is estimated that the market would grow to $635 billion by 2015. It is imperative to sustain the modernization of the retail sector and cater to the growing taste of the Indian consumer and dispel the myth that the game is big vs. small or traditional vs. modern or organized vs. unorganized or local vs. foreign. What is needed is to promote consumption- which will ultimately lead to economic growth of the country. For the Indian consumer, the gradual and step wise entry of foreign companies in retail involves three pivotal changes- modern technology, better transparency in dealings and sharing best practices. To date, through the franchising route, foreign retailers have already entered India. Pizza Hut, Lacoste, Mango, Chanel, Louis Vuitton, Nike and Marks & Spenser have all entered via franchise agreements. The big multi-brand retailers have expressed keen desire to enter India and are looking forward the governments green signal. Metro of Germany, Shoprite Checkers of South Africa and Wal-Mart of US have already started to operate in the wholesale segment. Today, as far as multi-brand retailing is concerned, the question is not of whether Should India be open to FDI but when to open and how to open as under the WTO regime it is inevitable. (1) WHEN AND TO WHAT EXTENT SHOULD FDI BE ALLOWED The capital formation needed to develop retail trade in India will take at least 2 to 3 years time. FDI should be opened up in a gradual phased manner, allowing a lead time for the Indian retailers to create a level playing field for all. FDI should be allowed in three stages which are as follows: First Stage of 2-3 years wherein only 26% FDI is allowed Second Stage of another 2 years wherein 49% FDI is allowed and The Third stage, when markets are completely ready and developed 100% FDI may be allowed. The government may additionally consider opening FDI first in relatively less sensitive sectors- like garments, lifestyle products, house ware, entertainment etc. (2) CITY RESTRICTIONS
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Another objective of FDI is to enhance infrastructure. While there is no dearth of potential investors in metro cities, the Tier-2 and lesser cities are getting sidelined. FDI should be initially allowed in Tier-2 and lower cities to facilitate infrastructure building. The more such investment, the more incentives may be granted to operate in Metro cities. Models similar to airline operators need to be explored. With this the focus would be on incremental business and create a level playing field for all and not on cut throat competition. (3) ZONING LAWS AND AREA RESERVATION FOR FOOD PRODUCTS The government is already considering a host of conditions for bringing in FDI. One of them is to impose a minimum limit of 10,000 sq ft on the floor space of foreign retail chains and limit the number of stores to one per million once FDI in retail is allowed. These huge retail stores should be located outside the city area and thus be subjected to certain zoning restrictions. Giant shopping centers must not add to our existing urban snarl. This also serves to create level playing fields for all players. Also, inclusion of a clause for reserving at least 500-600 sq ft (out of 10,000 sq ft) of retail space for foods and processed foods alone will further help to protect the interests of certain sectors like agriculture and integrate them with the organized retail supply chain. These measures may be applicable for a short while only, and the Department of Industrial Policy (DIPP) may consider easing some of these restrictions with time. (4) CONDITIONS ON SOURCING India should take lessons from the Thailand story. In Thailand and Malaysia, global retailers spelt doom for the traditional mom and pop stores. In fact, the Thai government had to step in to save local retailers from annihilation. It set up Allied Retail Trade, a network of franchised stores, which brought small stores together to fight the big chains. One solution to this problem is to put a restriction on sourcing of products locally. Thus foreign companies must be encouraged to form linkages with local producers and packages. For example, tie ups with Companies such as Amul, Vita, Verka for dairy may be made. (5) SET UP AN AGRICULTURAL PERISHABLE PRODUCE COMMISSION (APPC) The government should set up Agricultural Perishable Produce Commission to ensure that procurement prices for perishable commodities are fair to farmers and that they are not distorted with relation to market prices. (6) FORMATS Stores like Wal-Mart which is one the worlds most successful retail organizations operates through many business formats- large departmental stores, allunder-one-roof super centers and members-only cash and carry stores that cater to small business and bulk consumers. Being an efficient retailer, it offers quality merchandise across all product categories at low prices. Its logistics, IT and sourcing efficiency are one of the best in the world. And the chains efficient business operations depend on it. The government may initially allow only supermarkets to be set up so that retailers cannot immediately indulge in predatory pricing. (7) IMPROVE MANUFACTURING SECTOR In order to address the dislocation issue, it becomes imperative to develop and improve the manufacturing sector in India. There has been a substantial fall in employment by the manufacturing sector, to the extent of 4.06 lakhs over the period 1998 to 2001, while its contribution to the GDP has grown at an average rate of only 3.7%. If this sector is given due attention and allowed to take wings, then it could be a source of great compensation to the displaced workforce from the retail industry
CONCLUSION
Given the WTO regime India is a party to, the entry of FDI in the retail sector is inevitable. Bit with the instruments of public policy in its hands, the government can create conditions that slow down their entry. Japan has done this quite effectively. In this fashion, the Government can try to ensure that the domestic and foreign players are approximately on an equal footing and that the domestic traders are not at an especial disadvantage. While it is true that some dislocation of traditional retailers will be felt, the government must ensure that retail does not remain concentrated in a few foreign hands.
REFERENCES
JOURNALS Chopra Komal (2011), Wal-Mart Can it succeed in India?, Indian Journal of Marketing, Vol: 41, No. 1, pp 56- 61 Sengupta Debashish, Titus Ray (2011), A Comparative Study on Foreign Direct Investment (FDI) in Retail: A Boon or a Bane?, Indian Journal of Marketing, Vol: 41, No. 4, pp 15- 20 ARTICLES Does India need FDI, The Business Standard, October 20, 2005 FDI in retail: More benefits than costs, The Hindu Business Line, (2005/11/09) FDI or not, Wal-Mart will enter India, The Times of India, October 11, 2005 FDI in Multi-Brand Retail: The Next Big Thing in Reforms, but Roadblocks Persist, Indiaknowledge@wharton, March24, 2011. Friend or Foe, Business World, Cover Story, October 24, 2005 ICRIER makes a case for opening up of retail sector, The Hindu Business Line, (2005/07/15) India among top nations to offer strong retail potential: PwC study, The Hindu Business Line, (2005/10/14) Mixed reactions to FDI in Indian Retail Trade, The Indian Express, September 16, 2005 NO to FDI in retail, No to Wal-Mart, Swadesh Dev Roye, Peoples Democracy, Weekly organ of CPI(M), June 12, 2005 Pushing for retail FDI, The Hindu Business Line, (2005/08/04) Wal-Mart to enter India in Bharti retail venture, Unni Krishnan and Shailendra Bhatnagar, Reuters, November 27, 2006 Wal-Mart, Bharti ink JV, to open wholesale stores by 2008-end, The Times of India, August 7, 2007 WEBSITES AT Kearney (2010): Expanding Opportunities for Global Retailers-2010 Global Retail Development Index Viewed on March 31, 2011 http://www.atkearney.com/index.php/Publications/global-retail-development-index.html Balyan R.K., Shah P., Shah C.: FDI in Indian Retail-Beneficial or Detrimental Viewed on March 20, 2011 http://www.scribd.com/doc/15958632/FDI-in-Indian-Retail-Beneficial-or-DetrimentalGuruswamy M., Sharma K., Mohanty J.: FDI in Indias Reatil Sector- More Bad than Good? Viewed on March 25, 2011 http://www.indiafdiwatch.org/fileadmin/India_site/10-FDI-Retail-more-bad.pdf Guruswamy M., Sharma K.(2006): FDI in Retail II- Inviting more Trouble? Viewed on March 26, 2011 http://www.indiafdiwatch.org/fileadmin/India_site/CPAS_report_2.pdf Left Parties Note (2005): On FDI in Retail Viewed on March 28, 2011 www.cpim.org/upa/10272005_fdi_retail%20trade.pdf Singh Mandeep (2009): Foreign Direct Investment in Retailing In India- Its Emergence &Prospects Viewed on April 15, 2011 http://www.articlesbase.com/investing-articles/foreign-direct-investment-in-retailing-in-india-its-emergence-prospects-1354932.html
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RATIO BASED CREDIT EVALUATION MODEL DR. AMITAVA BASU ASST. PROFESSOR IN COMMERCE B. B. COLLEGE ASANSOL ABSTRACT
Only application of sound credit management practices by experienced risk managers will ensure success in todays competitive environment. There are several reasons for using the new approaches to analysis and new approaches reflects the thought that credit analysis is actually risk analysis. One of the most important reasons of interest in and concern with risk management is escalating is that, in recent years the business world has become more and more competitive and the scenario is changing rapidly. Staying ahead in the competition, protecting market share and to secure economise business has witnessed increasing numbers of mergers, buy ones and acquisitions that converted small businesses into divisions of large corporations. This consists of many diversified entities that deal in a variety of products and services. This is reflected in the increasing demand for objective information to help make profitable decision. As organisation grows or is acquired by larger companies, the decision making process becomes more centralised and the traditional methods of credit analysis used by the credit managers are no longer feasible as well as cost efficient. This motivation has helped to stimulate intense credit management focus.
KEYWORDS
Credit Analysis, Credit Worthiness, Credit Information, Credit Decision
INTRODUCATION
he high standard of living enjoyed in this country today would not have been possible without the liberal extension of credit. Credit has become almost an indispensable convenience or a necessity in our scheme of living. It would be wrong to imagine that the use of credit in a complex and sophisticated form is only a recent phenomenon. Reference of credit can be found as early as 1300 B.C. in the civilization of Babylon, Assyria, Egypt. Credit management has come a long way over the years. Many individuals as well as firms have wrong conception or negative idea about uses and applications of credit. A number of years this kind negative of thinking led to a lacuna in fresh creative ideas, constructive imagination and positive leadership. The concept of Buy now-pay later or promise to pay in future in return for immediate goods must always have existed in the earlier agricultural societies, as the incidence of a mans need would seldom coincide with his ability to pay. Thus, credit helps in those transactions which would not have been otherwise possible. In modern society credit is widely used in every sphere of our activity. Only application of sound credit management practices by experienced risk managers will ensure success in todays competitive environment. There are several reasons for using the new approaches to analysis and new approaches reflect the thought that credit analysis is actually risk analysis. One of the most important reasons of escalating interest in and concern with risk management is that in recent years the business world has become more and more competitive and the scenario is changing rapidly. Staying ahead in the competition, protecting market share and securing economise business has witnessed increasing numbers of mergers, buy ones and acquisitions that convert small businesses into divisions of large corporations. This is reflected in the increasing demand for objective information to help make profitable decision. As organisation grows or is acquired by larger companies, the decision making process becomes more centralised and the traditional methods of credit analysis used by the credit managers are no longer feasible as well as cost efficient. This motivation has helped to stimulate intense credit management focus. It is seen that, in most of the cases pertinent information regarding credit decision making is not available from the credit applicant and the companies take their credit decision exclusively on the merits of past experience with, and the general impression that they have about a customer. Thus, in such cases credit granting decision is based on past experience and general impression about a customer. Proper evaluation of risk involved in a credit granting decision becomes of fundamental importance before sales commence because once the credit is accepted by the creditor firm of its credit applicant, servicing and loss mitigation technique can control the future losses only to a limited extent. If the decision at the initial stage is taken after weighing pros and cons of the situation then transition to subsequent stages take places smoothly. Whatever may be the procedure, credit analysts always consider the nature and type of the business as well as the applicant and their personal judgement. Now, we consider which basis of evaluation the creditor firm should follow to assess the credit worthiness of their credit applicants. A survey conducted in this respect shows that most of the credit granting firms even the big one also, do not follows sophisticated basis of credit evaluation. A major portion of the firm concentrates on the past experience with and general impression about the customers. The next most popular method is LAPP method and the next one is most widely known and age old method is four cs of credit. Whatever may be the basis of evaluation the two major considerations in credit analysis are the applicants business ability and his general financial position. That means it concentrates on financial as well as non financial aspects of the applicant. The most important non-financial aspects of the applicant in credit analysis were and still are managerial capability of the applicant or the men who actively operate the applicants business. In analysing financial factors, credit analysts generally judge the liquidity and debt paying ability of a credit applicant. We know the absolute figures presented in the financial statement do not measure the managerial ability applied to a business or the soundness or its weakness of its financial position. Thus, before determining what data is to be in the credit analysis the figure presented in the financial statement have to be quantified and subject to adjustment as per requirement. After that the analyst must apply certain analytical procedure to the financial figures to judge the creditworthiness of the applicant. The development of different sophisticated financial as well as statistical are fairly recent and still in the process. At present widely used financial tools are, Ratio analysis, sources and uses of fund analysis, Trend analysis, common size statement and perhaps other analysis to determine the ability to pay and financial position of the applicant . Mercantile credit men soon realized that financial statement analysis provides them with element of knowledge about their customer. The scope of financial statement analysis is vast and the experienced credit analyst must be capable of appraising credit risk involved there, with a degree of accuracy. Analysis of financial statement for credit purposes is a complex process. It is a major consideration in any credit decision. The absolute data presented in the financial statement provides the credit manager invaluable information that can be helpfully combined with the information derived from other sources. Use of financial statement for the purpose of credit extension is not a recent phenomenon. As early as 1870s mercantile credit agencies were able to obtain some neatly arranged financial statement from customers/ credit applicants. With the pressure from of those agencies the practice of issuing financial statement as a basis for credit extension was developed through the 1870s and 1880s12. In 1895 the executive council of New York State Banker Association adopted a resolution recommending that loan applicant be requested to submit financial statement13. It is not possible to determine exactly when individual seller first started asking their credit applicant for financial statement. In United States the National Association of credit men from its very inception, insisted that the credit manager should ask for the financial statement of their customers and for this purpose, in 1898, they published standard Property Statement (blanks balance sheet) form for the use of its members. The practice of requesting financial statement from the customer was prevalent from that time but it was not so wide spread. With the passage of time, the credit managers realized the necessity of their customers financial statement which was supposed to be useful source of credit information and even many of the customers came to realize that their suppliers were entitled to ask for and receive their financial statement as a basis for granting credit to them.
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Though invaluable information is available from the financial statement, still there are some problems arising in using financial statement as sources of information. At present credit managers like to consider audited accounting data only. But audit impose undue cost on small businesses. The level of cost is said to be a matter of concern for many firms. Audited information is held to be of questionable value, as in the case of small firms because the auditor has had to get much information supplied by the manager on trust. Secondly some concerns are still reluctant to submit copies of their financial statement and reveal the bare minimum only. To sum up, we can say that, the credit executive must appraise or evaluate the position of the credit applicant to reach a credit granting decision. For the purpose of such appraisal credit department should possess pertinent credit information about their credit applicant. The evidence shows that a principal cause of credit losses is a decision based on inadequate credit information. Thus, credit management must recognize the basic importance of establishing effective method and procedures for obtaining, assimilating and analyzing essential credit information.
DATA SOURCE
To develop a credit evaluation model from the financial statement of the selected companies, we used Bathorys risk description model. For the purpose of our study cement companies are selected following purposive sampling procedure. The data of cement companies used in this study have been collected from secondary sources The Stock Exchange official Directory of Bombay Stock Exchange. Capital line 2006, the official data base of Capital Market publishers limited, Mumbai.
METHODOLOGY
For this purpose we prepare a modified balance sheet of the selected. The model is prepared for one year as a sample. If the model is prepared on the basis of three to four years data, it will be more predictive in nature. At the time of selecting data, for the purpose of calculating Ratios, we mainly concentrate on firms liquidity, profitability and capital adequacy. Eight Ratios selected to prepare the model .
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Source: Capital line 2006, the official data base of Capital Market publishers limited, Mumbai. At the time of selecting data, for the purpose of calculating Ratios, we mainly concentrate on firms liquidity, profitability and capital adequacy. From the risk description model, scores are calculated individually for each of the companies. The model clearly showed that how the profitability, liquidity and capital adequacy factors influenced the score of individual companies. In case of the companies, where all the factors were good, they obtained high score. On the other hand, the companies where two factors are good but the impact of one bad factor outweighed the influence of good factors. This model is self explanatory in nature. Our objective in this case just gives an idea to the credit analyst, about extracting best result by using financial statement. The score revealed that highest score was obtained by the Decan (111.18) and lowest by Dalmiya (41.83). This Risk Description model showed that profitability and current debt paying capacity in most of the cases was more or less same. The main influencing factors in this model are the accumulated profitability and the inventory. If we further analyse the inventory status of the individual selected companies the picture will be clearer. Elements Inventories Total Current Assets Stock as a % of CA CL as a% of CA CORRELATIONS Stock as a % of CA Pearson Correlation Sig. (2-tailed) N CL as a % Of CA Pearson Correlation Sig. (2-tailed) N NWC/ Cr.exp. Pearson Correlation Sig. (2-tailed) Stock as a % of CA 1 . 8 .579 .132 8 -.714(*) .047 CL as a% of CA .579 .132 8 1 . 8 -.984(**) .000 NWC/Cr.Exp. -.714(*) .047 8 -.984(**) .000 8 1 . ACC 600.95 1421.16 0.423 0.866 MADRAS 100.95 327.07 0.309 0.699 AMBUJA 46.9 105.99 0.442 0.784 SHREE 112.94 273.65 0.413 0.763 DECAN 5.58 40.5 0.138 0.294 KAKA 28.58 65.37 0.437 0.235 DALMIYA 191.68 456.28 0.420 0.518 INDIA 213.82 1512.42 0.141 0.256
N 8 8 8 * Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed). The correlation analysis in table shows that stock as a percent of current assets and Liquidity ratio(X4) has strong negative correlation (-.71)and it is statistically significant at a 5% level. On the other hand, current liabilities as percent of current assets and Liquidity ratio(X4) has very strong negative relations (-.984) and it is even statistically significant even at 1% level. If we analyse the credit score table, it is revealed that the credit score of the selected companies is mainly influenced by two ratios. Liquidity ratio(X4) and Comfort margin (X6). In-depth analysis of the individual companys credit performance on the basis of above credit score table shows that in case of ACC, liquidity ratio (-31.01) is negative because its current liabilities consists of 86.6% of current assets and at the same time only inventory covers 42.3% of current assets. Another dominating factor of the score depends upon the cumulative profitability (X2) of the company which is moderate (X6=516.70) in case of ACC that helps to improve credit performance but not sufficient enough to get a good rating. Overall credit rating of ACC Company is below average as per our analysis because the positive impact of moderate cumulative profitability ratio is outweighed by the adverse inventory position as well as very high proportion of current liabilities (86.6%) as a percent of current assets. On the contrary in case of Ambuja its liquidity ratio (-2.264) is negative because its current liabilities consists of 78.4% of current assets and at the same time only inventory covers 44.2% of current assets. Still Ambuja managed to achieve nearly highest score (110.1188) due to its high cumulative profitability (X2) ratio (2.669) and capital adequacy ratio (X5) which leads to reach very high comfort margin (864.653). So in case of Ambuja negative impact of liquidity ratio is outweighed by the strong positive influence of profitability ratio. Again in case of Decan (111.18), India (90.109) and Kakatiya (85.99) cement companies; their credit score is very high. As we mentioned earlier, there is a high probability of negative score coming out in case of Liquidity ratio(X4) but current liabilities as a percent of current assets 29.4%, 25.6% and 23.5% respectively for those three companies. These proportions are genuinely low for those three companies in comparison to other companies selected in our study. This leads to very high positive Liquidity ratio(X4) for those three companies. As we see in the correlation table there is strong negative relation between current liabilities as a percent of current assets (-.984), naturally low proportion of current liabilities helps to achieve very high liquidity score for those companies. At the same time the profitability ratio for those companies is also quite impressive that make them good credit rated companies. The strong equity base of those companies leads to a very high comfort margin and helps to increase their credit rating. The same result shows in case of Shree cement also though the fourth ratio (-88.42) came out with strong negative balance as a substantial portion of its current assets consists inventory, still the company able to manage a gentle credit score only because of their strong equity base. . Dalmiya Cement (41.83) is the lowest credit scored Company in our study. Though the liquidity position of the company is not so bad but its very poor equity base made it a poor credit rated company.
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CONCLUSION
At the time of selecting data, for the purpose of calculating Ratios, we mainly concentrate on firms liquidity, profitability and capital adequacy. From the risk description model, scores are calculated individually for each of the companies. The model clearly showed that how the profitability, liquidity and capital adequacy factors influenced the score of individual companies. In case of the companies, where all the factors were good, they obtained high score. On the other hand, the companies where two factors are good but the impact of one bad factor outweighed the influence of good factors. After collecting information from different sources a creditor firm must make credit analysis of the applicant and determine whether the credit applicant fall above or below the minimum quality standard. The objective of credit analysis is to assess the credit worthiness of the credit applicant. Credit worthiness is concept related with to the positive and negative aspects of granting credit to the applicant. The creditors firm will be particularly interested in applicants liquidity and ability to pay bill on time. Spreadsheet data for risk description model should thus be based upon profitability, capital adequacy and liquidity together with credit exposure from several standpoints.
REFERENCES
1. NACM Credit Research Foundation, Credit Management Handbook Richard d. Irwin,Inc. Homewood Illinois,1958, 2. James C. Van Horne, Financial Management & policy, Pretice Hall. Inc. New Delhi, p.442 3. Burt Edward, Credit Management Hand Book, Jaico Publishing House, New Delhi, 4. Richard p. Ettinzer & David E. Golieb, Credit & Collection, Prentice Hall, Inc. Englewood Cliffs N.J. 1962. 5. Theodore N. Beckman, Credit and Collection, Mcgraw Hill Book Cmpany, New York, Inc. 1960. 6. Eric .N. Compton, Credit Analysis Is Risk Analysis, The Banker Magazine, March- April 1985, pp.49-54. 7. G.V.Benz, International Trade Credit Management, Grower Press, 1975, 8. Alexander Bathory, The Analysis of Credit, Mac-Graw Hill Book Company, New York, Inc., 1987, pp.75-120. WEBSITE www.capitalline.com
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ENHANCING STUDENT EMPLOYABILITY: HIGHER EDUCATION AND WORKFORCE DEVELOPMENT HEMANT CHAUHAN ASST. PROFESSOR (MANAGEMENT STUDIES) B.R.D. COLLEGE ROORKEE PALKI SETIA SR. LECTURER (MANAGEMENT STUDIES) DISHA INSTITUTE BIJNOR ABSTRACT
Universities and industry, which for long have been operating in separate domains, are rapidly inching closer to each other to create synergies. The constantly changing management paradigms, in response to growing complexity of the business environment today have necessitated these two to come closer. Higher education institutions not only contribute skilled human resources to business, but also in various intangible ways. The intersecting needs and mutually interdependent relationship requires identifying means of further strengthening academia-industry partnerships. This paper attempts to explore how business schools can work closely with industry, study the dimensions of academia-industry partnership, and identify possible areas where industrys contribution to academia would be most effective. This Exploratory study involves first hand information from faculty and heads of business schools on this issue, and focuses on the Indian scenario.
KEYWORDS
Student, Academia, Industry, Career.
INTRODUCTION
xtremely dynamic business world and the rapidly developing knowledge based service economy have put in an increased demand for professionals to manage the business effectively. And this is precisely the reason why amongst various other fields of knowledge, desire for acquiring management qualifications is growing, both amongst the fresh graduates and working executives. India has also not remained untouched with management degree bug and business education in India has been on a rapid rise in last one decade. In India, before the 60s, business education was not offered as a separate area of specialization. Employees in the businesses were mostly graduates or postgraduates in Commerce stream. In the 1960s, business education formally starting gaining importance in India with the establishment of two Indian Institute of Management; IIM Calcutta in association with Sloan School of Management and IIM Ahmedabad with Harvard Business School. After that there has been a relatively slow but steady growth in number of schools and popularity of business education in India. A massive upsurge in the number of business schools was observed post 1991 when India was liberalized and opened to the global world. Many multi-nationals entered India bringing with them increased demand for professionals. Business education now moved beyond the domains of government control with establishment of many private institutions. Indian economy was being integrated into the world economy. As any other ambitious society, India also started placing great importance on commercial activities as a catalyst to socio-economic development. Resurgent India sees wealth creation as a great equalizer amongst all sections of the society. In such a scenario a knowledge worker who can work at the cutting edge of technology, add value to the bottom-line, and provide competitive advantage to industry has become a hot commodity to acquire. In tandem with such rapidly escalating demand for business education, in year 2004, the number of business schools in India has grown to 1320 from just 130 in the year 1991, offering more than 75,000 seats. More than 80% increase in number of business schools is coupled with increase in number of students competing for admission to the above. Each year more than 1.5 Lakh students in India compete for admission to prestigious business schools. Though the very advent of business schools in India was to cater to the demands of the industry, the two entities have traditionally been operating in separate domains and as more or less isolated islands. There partnership is only episodic and accidental, and without any strategic intent. According to Friga, Bettis and Sullivan (2003) the trends of evolution of management education indicate that knowledge creation is becoming more students based. This will usher in a variety of changes including paradoxically a trend towards close interaction among students, industry and the faculty.
MODES OF INTERFACE
For the above reasons, Industry rather than just being the customers of business school output today have become stakeholders and partners in progress. Industry on the other hand has also discovered the advantages of collaborative learning opportunities. Corporations seek to play increasingly important role in
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activities of academic institutions to incubate the talent they need. The shift towards the short-term performance metrics and shareholders interest has led to a number of changes in conduct of business, which has translated its effect on business schools. Beard (1994) has a number of recommendations towards increasing and enhancing academia-industry interface, which include: Greater degree of industry-school collaboration to integrate employers needs into the programmes on offer; Real involvement with industry to allow students to gain valuable practical experience and also to facilitate development of business; Improve the programmes by encouraging the participation of a number of guest speakers who can offer their own practical experiences; Academic staff should be encouraged to keep their skills updated by undertaking practical consultancy on regular basis. There are a number of avenues, through which business schools collaborate with industry. Some of the commonly used avenues are: 1. Guest Lectures by industry representatives. 2. Suggestions in curriculum and content designing. 3. Executive Education and Management Development Programmes. 4. Joint seminars by academia and industry both for executives and students. 5. Consulting on management and related issues by academia; 6. Academia generating ideas and acting as incubators to new business. 7. Inclusion of industry experts in governing councils and other board of studies. 8. Industry providing financial and infrastructure support to business schools for their development. 9. Funding academic and applied research. In addition to the above, business schools have taken innovative steps towards strengthening this relationship. According to an article published in Economic Times (November 2004), Management Development Institute (MDI) as a matter of policy has 20% faculty from corporate who has served in top management positions for more than 15-20 years. IILM has formed joint advisory groups with corporate for collaborative consulting and organizing management development programmes. Students are assigned Industry mentors for two years, with an objective to groom them for the future challenges. In spite of the various modes of Academia-Industry Interface, it is still unclear whether this relationship is substantial or only superficial in nature.It is observed that the major objective of academia-industry partnership and initiatives taken in this direction revolves around getting lucrative and better job opportunities for graduating students. sharma (1991) says that companies demand more relevance today. He adds that MBA programmes provide less relevance with the job, are felt to be too long and insufficiently flexible. To improve the quality of output, more and more business corporations are looking to collaborate in more detail with business schools to create programmes, which can be customized according to companys individual needs and requirements. According to Elliot et al. (1994) MBA programmes place too much emphasis on quantitative and analytical skills and neglect human skills and do little to produce managers who are capable of meeting challenges of global business environment and cope with increasingly diverse workforce. Academics have been including the industry inputs into their curriculum and course designing without assessing the effectiveness of such corporate representatives to these committees. Today it is just a matter of pride for these schools to adorn their councils with big names from industry, with an objective to score high on Industry Interface parameter in the ratings and rankings being done by every other business magazine in India. Executives from corporates are invited to take up an entire course or few lectures with prime objective of getting them on campus for placements, but the learning, students accrue from these lectures is not evaluated. Similarly, there is not enough evidence available in India of the benefits to business corporations from the research done in business schools. Since most of this research is exploratory rather than innovative, the utility of the same to the industry is rather low. According to chauhan (2003), Academia-Industry collaboration is a must if industry has to benefit from research and development activity at business schools, and such a relationship should be encouraged across cultures for the benefit of global business. More and more opportunities need to be provided to the faculty through applied research, and case writing to keep them abreast of changes in the business world and hence enhance the overall teaching-learning experience. depsikha (2004), says that In most cases industry use business schools as recruitment centres. The right interface can develop only when they approach business schools for help, for which the latter has to equip them to understand business situations in depth and those useful to industry komal (2004) in his report on Management Education in India states that development of industry interactions is an evolutionary process. The main strength of top business schools like Kellogg, Harvard, Sloan, Wharton etc. is their strong relationship with industry through teaching, research, student placements, problem solving and case study preparations. For Indian business schools, an institutional mechanism for developing liaison between industry and each business school and evaluating its impact, need to be established. In our view, in the present day world, the entire concept of working with employers is a relatively narrow understanding of this association. Multi-level collaboration is needed so that the two entities can contribute to each others growth. It is important to identify these areas where optimum collaboration is possible rather than giving business corporations a carte blanc in this matter.
OBJECTIVES
To identify the areas where academic institutions include industry participation; To assess the perceived benefit accrued from this partnership in specific areas and incidences;
METHODOLOGY
Primary data has been collected from Deans and Directors of 30 Business Schools in India. The administrators of these business schools were personally interviewed and sent across a structured questionnaire. They were asked to rate the extent of their business schools collaborating with industry on 23 listed areas on a scale of 1 to 5. (1 being the lowest level of collaboration/ or the benefit accrued and 5 being the highest degree of collaboration/ or benefit accrued). The mean of the responses were taken to get degree of collaboration and the perceived benefit in specific areas.
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TABLE 2 S. No. Areas of collaboration Mean score Standard Deviation 1 Faculty selection 1.5 1.08 2 Joint community development services 1.7 1.30 3 Helping industry in training and selection of their staff 2.0 1.51 4 Financial support from industry for academic activities 2.2 1.55 5 Providing incubator services for start up companies/ ideas 2.2 1.40 The inclusion of executives in the Governing Councils and Board of Studies in business schools is yet another preferred mode of collaboration. The objective of having industry representation is to include the latters view in governance and other activities of business schools. Adorning these councils with the known names in industry is perceived to enhance the image and recall value of the institution, which not only attracts prospective students, donors and other stakeholders but also work in favour of business schools during ratings and rankings. Executive Education (long-term management training programmes for working executives) transpires to be the fourth most preferred mode of academiaindustry partnership. Palki and chauhan (2009) conducted a study on Management Education in India, which elucidates that there is a fundamental shift in business school offerings away from traditional MBA programmes to more part-time and executive education programmes. Indian Institute of Management (IIMs) has been extending their domains to executive education on modular classes to facilitate executives involvement and strike relationship with organizations. XLRI (India) among others have created a Partnership Model with organizations for Executive Education initiatives. Management Development Institute (MDI), one of the top business schools in India was established with the prime objective of imparting management education to executives and government officials. Today, even after expanding itself into other forays, it still conducts six month to one year National Management programmes (NMP) for company sponsored executives and civil services officials. These initiatives besides increasing the industry mind-share also fetch revenue to business schools. Finally, the business school faculty is slowly integrating the industrys views into their curriculum. Miller (2010) identifies significant revisions in curriculum and contents, which are undertaken in business schools, with an objective of including industry recommendations. Many business schools in India have been inviting suggestions from industry to update their curriculum and include the topics of present day relevance. This is done with a view of imparting the knowledge and skills set, needed by graduating students in constantly changing global business environment. Table 2 gives a brief summary of the least preferred modes of collaboration. It is clearly evident that business schools do not wish to collaborate with industry on their internal issues. Faculty & staff selection, training and development are viewed as in-house activities, where industrys participation is not invited. In view of governments increased interest in education and the latter being included as crucial issues in WTO debate, there has been increased spending on development of higher education in India. The cash rich private institutions are today less dependent on industry for funding and infrastructure support. They not only have donors but also generate income from consulting, executive education initiatives to support their functions. Academia-Industry interface has not been considered through providing of incubator services to industry for new start-ups by commercializing the ideas given by academic fraternity and helping corporate grow in initial years. Industry has shown limited interest in including academia into their strategic decisions regarding new business ideas, decreasing the chances of partnerships in this area. B. EXTENT OF PERCEIVED BENEFIT FROM THE MENTIONED PARTNERSHIP METHODS The highest perceived benefit is from following modes of partnerships: TABLE 3 Areas of collaboration Joint Seminars Case writing Guest Lectures Management Development Programmes Training and Internships
S. No. 1 2 3 4 5
TABLE 4 Areas of collaboration Faculty Selection and Induction Helping corporate in selection of their staff Involvement in student selection Outsourcing complete courses Joint community development services
The second question seeks the respondents view on the perceived benefits of various collaboration modes for their business schools. Joint Seminars are considered to be an effective mode of not only cross-branding but also strengthening the academic relationship between business school and the industry. They are an opportunity for students to gain an understanding of the latest industry trends and industry a chance to gauge the institute and its students for prospective placements. Symbiosis Institute for International Business (SIBM) organizes regular workshops for students to keep them abreast of latest industry trends. The respondents perceive this particular mode, as one of the most effective collaboration tool. Case writing, which is one of the most important aspect of B-school research not only adds to current knowledge pool but also enhances the learning experience of students. It serves as a benchmark study for business corporations who are either in same stage of business cycle similar business. Innovations in management teaching can only be brought about by in-depth understanding of business processes by academicians and thought leaders. Formal relationship between industry and academia can definitely add to the research and knowledge generation. Industry, therefore has taken up an initiative of generating knowledge by funding business and academic research. CII has collaborated with many business schools to support both academic and applied research initiatives. Though this has been perceived as one of the best ways of collaboration, considerable steps have not taken up by business schools in this direction. Case writing and Applied Research, therefore does not figure in the top five preferred modes of academia-industry interface
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Similarly, the Management Development Programmes (MDP) is perceived to be among the top five most effective modes. MDP, though quite similar to executive education programmes are short-duration capsule courses, which focus on a particular area or topic. Very few institutions in India are taking the necessary steps to develop the MDP network, benefiting both academia and the industry. MDI conducts more than hundred MDPs every year for executives either as open programs and customized company programs. . It has formal contracts with organizations, which invest in their human capital through continuous or formal training. The perceived benefit accrued from having a guest lecture is quite high (though less than collaborative research initiatives. It is interesting to note that this mode figures on the top in table 1). Administrators regard these as great value addition to student learning. Similar is the thought for Executive Education, with perceived benefit score being 3.9, indicating the effectiveness of this tool to build industry partnerships. Training and internships are also perceived quite high on their effectiveness in building long term enduring relationship between industry and business schools. Table 4, gives the overview of those collaboration modes, which are perceived quite low on their effectiveness. Contradiction arises in the case of inclusion of industry in Councils and Boards of studies. Though, considered as a preferred partnership mode, (figuring at third rank in Table 1) the perceived benefit from this is average (3.2). Administrators have varied view of this kind of association. The remarks by respondents in this study makes it evident that this mode is effective when the executives actively contribute into institutions operations and development rather than playing a passive role of attending scheduled meetings and chairing important events. The low mean score of benefits of industry involvement in faculty and student selection is definitely in line with the results in table 2, where the this is considered among the least preferred modes. Business schools have their own policy and rules on recruitment and selection of students and faculty members. Outsourcing the entire course has been perceived quite low on its effectiveness. Academicians feel that this particular mode is not able to impart the conceptual underpinnings of the issue, as practitioners tend to deal with the issue at only the practical level from their own perspectives, thus reducing the possibility of its general application across situation. Thus practitioners though bring a different perspective to the class yet do not emphasize upon understanding of basic concepts and underlying theories. Though joint community development services and partnerships for providing incubators services are not preferred interaction modes, they are perceived higher on their effectiveness (3.2 and 3.4 respectively). Both academia and industry are not exploring the right strategy to make this kind of alliance work towards their mutual benefit.
FUTURE RESEARCH
Academia-Industry Interface is a less researched area specifically in management education in India. Though regarded as a critical challenge to management education in India (palki & chauhan, 2010), less has been suggested on the right path and strategy of cashing on this partnership and aligning it for the benefit of both business and the academics. Each of the above-mentioned potential areas of collaboration needs to be explored in detail to identify the nitty-gritty of the association and developing a right strategy to make them work. Every business school follows a different model and hence need to adopt the Industry partnership model, which best suites their academic model and objectives. One cannot do everything but need to concentrate on some areas to derive the best of them. Researchers can formulate the hypothesis to test the suitability of various modes for different academic models and develop a flexible Industry Partnership model, which can be adapted by business schools according to their own set-up. In the words of Cameron Fincher, learning can be defined as a process of progressive change from ignorance to knowledge, from inability to competence, and from indifference to understanding. In much the same manner, instruction-or education-can be defined as the means by which we systematize the situations, conditions, tasks materials, and opportunities by which learners acquire new or different ways of thinking, feeling, and doing. This systematization can be brought about in Management education only through right synergy between Academia and the Industry.
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REFERENCES
Altbach Philip G., Higher education and WTO: Globalization Among, International Higher Education no.3, The Boston College Center for International Higher Education. Palki & chauhan I.A & Popli S. (2004), Global Branding of Business Schools: An Indian Perspective, Welingkars Research Journal, Volume II, Issue-4, pp 2-31. Beard C., (1994) Educating the star fleet captin-making business schools more relevant to their stakeholders:, Working paper, University of Paisley, June 1994. Bhada Yezdi K. (2002), Top of the Class, Bized November/ December 2002 AASCB Publication pp.22-27 Bisoux Tricia (2003), New Directions in Global Education, Bized January/ February 2003 AACSB Publication, pp34-37 Bisoux Tricia (2003), B-Schools with Global Perspective, Bized September/ October 2003, AACSB Publication pp 28-39 Byrne J.A, (1991) Back to School, Business Week, October 1991, pp 94-9-39. Byrne J.A (1993), Business Weeks guide to the Best Executive Education programmes, McGraw Hill, New York. Powar K.B & Bhalla Veena, International providers of Higher Education in India, AIU newsletter sharma & Bowondor B. (2008), Management Education in India, its evolution and some contemporary issues, Research paper published by All India Management Education. chandan & Popli S. (2010), Models of Excellence in Business, Chapter 7, edited book by Institute of Directors. Starkey Ken & Tempest Sue (2000), The World- Class Business Schools: A U.K Perspective, Council for Excellence in Management and Leadership. Business Schools at Risk, a report published by AACSB, Bized May June 2002. The World of B-Schools: Indias top ten B Schools, Business Standard Publication Vol 1 Issue 1, March 2003, pp.16-31 Planning and Management of Technical Education in India, All India Council for Technical Education (1996) Management Education: Today and Tomorrow Chapter 7 pp.536-580 Business Schools making Big in the marketplace, Economic Times, November 22, 2009.
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IMPACT OF PHYSICAL ENVIRONMENT IN CUSTOMER RETENTION AND RELATIONSHIP BUILDING: A CASE STUDY OF HOTEL INDUSTRY DR. DEEPAK JAIN LECTURER SCHOOL OF BUSINESS COLLEGE OF MANAGEMENT SHRI MATA VAISHNO DEVI UNIVERSITY KATRA 182 320 ABSTRACT
Individual in a modern society are without a doubt an experienced service consumer. On daily basis, a number of services may be used, ranging from getting a haircut, to using a credit card or talking on the phone. Many services are produced and consumed simultaneously at the service's providers facility. Therefore, the physical environment becomes an important tool for communicating the quality of the service, setting customers expectations, influencing customer and employee productivity; and creating the service experience. The purpose of this study is to provide a better understanding of the importance of managing the physical environment called as servicescapes and its role in services settings in order to create a relationship between customers and employees, increasing customer loyalty and retention and reducing customer defection rate. The study focuses mainly on the servicescape as perceived from a management perspective. A literature review was conducted which resulted in a conceptual framework that supported the data collection. A qualitative, single case study of Hotel Asia of Jammu was carried out in obtaining primary data. The results of the study indicated that a carefully managed physical environment can attract potential, and maintain previous customers. Furthermore, the commitment and motivation of the employees can also be achieved and maintained. In order to create a correlation between customers and employees, both parties' needs and requirements have to be met with and addressed as in form of Servicescapes.
KEYWORDS
Loyalty, Retention, Servicescapes, Customers, Relationship, and Employees
INTRODUCTION
s an individual in a modern society are without any doubt experienced service consumers. The services industry has shown a tremendous expenditure growth during the past decades resulting in increased importance to many of the world economies (Zeithaml and Bitner, 1996, pp. 7-8). This trend can be caused by a number of reasons, for instance advances in technology leading to more maintenance, production and design services. Moreover, manufacturer uses outsourcing in larger extend to buy services outside their core competence. Another factor is an increasing spending on luxuries which are services intensive e.g. restaurant meals, and vacations abroad (Jobber, 2004, p. 792). Majority of service providers engaged in distributing information, sharing knowledge, use of creativity and technology that consumers sought. The intense growth of the services industry has resulted in drawing attention to issues and problems associated with this Industry (Zeithaml and Bitner, 1996, p. 10). According to Jobber (2004, p. 792) the nature of services separates it in several aspects from physical goods. Services should be considered as a special product, which may need special understanding and marketing efforts. Quester and McOmish (2005) explain that the services offering often are difficult to evaluate prior purchase, after purchase and use. The difference between services offering and goods are more a matter of degree than in absolute terms. A product can be considered as pure goods e.g. clothing which does not involve any specific service, other products requires services as a complement to the product like installation of fully automatic generator or software, and finally the offering can be regarded as a pure service such as psychotherapy. In general, services are recognized by its dominance in intangible attributes, making the services an action or performance oriented, and hard to evaluate. Moreover, services characterizes by variability meaning that standardization is difficult to achieve and the employees plays a great importance in the service delivery process. Inseparability, simultaneous production and consumption, is another issue to be considered together with perishability, the fact consumption cannot be stored and problems in matching supply and demand (Jobber, 2004, pp. 792-893). These characteristics of services results in unique management challenges for all services providers (Zeithaml and Bitner, 1996, p. 18). On a daily basis a number of services may be used like trains, mobile, Internet and many more but most of them are used without any specific thought. There are some services that demand more involvement and interaction from a consumer side. Getting a haircut, purchasing a tour pack, receiving financial advice or spending a night in a hotel is all examples of such services which involves high-contact between individuals. The consumer in these circumstances has to interact with the services provider in order to obtain the service (Lovelock and Wirtz, 2007, p. 4) and to create a perception about service provider. Bitner (1992) discusses that since services in general are produced and consumed at the same time, resulting in customer to experience the service within the service providers physical environment. Lovelock and Wirtz (2007, pp. 288-289) claims that the physical environment communicate and decide the positioning of the service provider, it also influences the employees and consumers productivity, and act as an aid customers through the effective delivery system, and can function as a tool to develop competitive edge over competitors. Moreover, the physical service environment including the atmosphere plays a key role in building customers perception based on service encounters they receive from service providers. Bitner (1992) further states that environment influences the behaviour of not only the customers but also of employees. Service providers can influence the perception and behaviour of the customers through surroundings in many ways. For instance, the nature and quality of the services can be distinguished by symbols; and the environment can be differentiated from competition by using attributes such as colours, sounds, scents and textures e.g. Archies Gallery. In other words, the services environment can be used as a proxy for image building and quality indicator. A bank through its physical environment can send out a message to customers and employees about their positioning as an exclusive firm by using. For example, lavish dcor and furnishing designed to make an impression (Lovelock and Wirtz, 2007, pp. 289-290). Clarke and Smidt (1995) define servicescape as a place where interaction between customers and employees take place. The servicescape includes all tangible elements that assist the process of delivering the services. Reimer and Kuehn (2005) clarify the servicescape includes both the interior and exterior environment within a service setting. The authors further contrast the servicescape with the packaging of a product. Today, all of the service organizations, especially high-contact services, such as restaurants, hotels, and hospitals have realized the importance of the service environment, and as a result the services environment has become a central part in their value proposition and marketing mix (Lovelock and Wirtz, 2007, p. 288). Previous studies concerning the servicescape have primarily focused on customer behaviour and perception as a result of the surroundings (Countryman and Jang, 2006; Reimer and Kuehn, 2005). Limited research has been conducted to understand the importance of the physical environment. Though, management can use the services environment to affect both customers and employees, in order to establish relationship. Jobber (2004, p. 117) defines relationship as a process of creating, maintaining and enhancing strong relations with customers and stakeholders.
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PROBLEM DISCUSSION
According to Bitner (1992) the servicescape plays an important role in affecting both customers and employees. However, the importance of recognizing the effects of the servicescape on employees and customers have previously been viewed tangential compared to other organizational variables used to attain and motivate customers as well as employees. Motivational factors such as salary, promotions and other benefits have been given attention in retaining and creating relationships with employees. Price levels, promotion and special features have similarly been focused regarding the customers. The accomplishment of organizational goals can be benefited or hindered by the physical environment. Even if the nature of services offerings varies, then also servicescape influences services provider and customers as both of them are present within the firms surroundings during a service encounter. Many evidences in form of research are present that proves that potential customers before purchasing anything search for apparent cues to determine the ability and quality of the service provider in satisfying his / here requirements. Customers perception about the final outcome of the service is solely depended on the servicescape. Moreover, the employees in the firm perceive the service environment divergently compared to the customers. Organizational behavioural studies have proved that employee satisfaction, productivity, and motivation can be derived by the physical environment. As a result of services being purchased and produced simultaneously the firm should fulfil the requirements of both customers and employees (Bitner 1992). Gremler and Gwinner (2000) states, service evaluation is influenced by the employee-customer relationship and mainly in situations where interaction between employee-customer happens most of the time like banks, restaurants, hotels, mobile service, education and many more. This increases the importance of firms physical environment in achieving organizational goals and in maintaining healthy employee-customer relationship (Bitner, 1992). Gremler and Gwinner (2000) state that healthy relationships between service providers and customers is the only factor that will keep service providers in business, and without these solid connections, the company would have difficulties in surviving in the long-run. From marketing aspects, it is necessary for services providers to pay close attention in establishing relationship with customers. Jobber (2004, p. 797) claims that in recent years focus lay on retaining customers than solely attracting new ones. The length of any relationship and its development can be derived by the perceived quality of the offering. Maintaining a healthy relationship between service organization and its customer and employees is necessary for service providers to generate true loyalty of customers towards them in long run (Kasper, Van Helsdingen and De Vries, 1999, p. 139). Furthermore, a strong relationship requires commitment, trust, satisfaction of interaction and different kinds of bonds. Strong relationship between the customers and the service providers depends on level of customer expectations fulfilment, and on quality of services delivered, which can further change purchase, re-purchase pattern of customers and exploits word-of-mouth network (Kasper et al, 1999, p. 228). Employees in a service organization play an important role when providing services for customers and fulfilling their expectations (Zeithaml and Bitner, 2000, p. 37). Employees interacting directly with customers have deeper knowledge about customers requirements and expectations. A customer oriented firm must customize service delivery as per customers requirements and expectations. The customers can acquire satisfaction when their expectations about services are met. Since the position of the employees is significant, the firms need to maintain long-term relationship with the right employees (Kasper et al, 1999, p. 450). The impact of physical environment on peoples behaviour and image building is apparent within the hospitality industry. In such type of interpersonal environments, the servicescapes affects level of interaction between and among customers and employees (Bitner, 1992). In the service setting of a hotel, the customers' perceptions are not only driven by the service of the front desk, but also from other physical environment settings such as furniture, music, lighting, interiors, facilities, and colours (Lin, 2004). Countryman and Jang (2006) explain that within any hotel there exist various physical environmental settings. Furthermore, the servicescape in a hotel has great impact on the customers as it gives the first impression to the visitors of the hotel. The authors also mention that it is possible to meet the expectations and satisfaction of the customers by evoking a positive impression to the customers. According to Bitner (2000, p. 138) the focus in services marketing now-a-days is to opt for a shift from transaction oriented services to relationship oriented services due to consideration of the cost to attract potential customers compared to retain the current ones. Any organization needs to focus on acquire potential customers to exploit and expand their business, but also to keep and improve the relationship between the current customers.
PURPOSE OF STUDY
Based on the problem discussion, the purpose of this research paper is to gain better understanding of physical environment and its importance in services settings to create and maintain relationship with customers and employees. Research Question 1: How does the servicescape affect the relationship between customers and the service organization? Research Question 2: How does the servicescape affect the relationship between employees and the services organization? Research Question 3: How does the services organization construct the servicescape in order to optimize the interaction between customers and employees?
LITERATURE REVIEW
The term servicescape is defined as "the environment in which the service is delivered and in which the firm and the customer interact, and any tangible commodities that facilitate performance or communication of the service" (Zeithaml, Bitner and Gremler, 2006, p. 317). According to Zeithaml et al (2006, p. 317) as services are intangible, the physical evidence is used to evaluate the service prior to purchase, and evaluate the outcome of the service during and after consumption. General elements of the physical evidence involve all aspects of the organizations like physical facility and other tangible communication as shown in Table-1. More specific, servicescapes involves both the services providers' exterior and interior attributes, as well as other tangibles to be found within the physical facility. Table-1: Elements of Physical Evidence Servicescape Other Tangibles Facility exterior Exterior design Business cards Signage Stationery Parking Billing statements Landscape Reports Surrounding environment Employee dress Facility interior Uniform Interior design Brochures Equipment Web pages Signage Virtual servicescape Layout Air quality/ temperature Source: Zeithaml, Bitner and Gremler, 2006, p.317
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Zeithaml et al (2006, p. 321) claims, depending on the type of organization, the servicescape differ in terms of who actually will be affected. To be more specific, which group of individuals will get influenced because of physical environment? i.e. customers, employees, or both. Bitner (1992) categorize services into three different types: a) self-service, b) interpersonal services and c) remote services (Table-2). Self-service environments are to be considered as one extreme, in which the customers carry out most of the activities on its own and involves no, or few, employees. In addition, the selfservices organization can plan their physical environment to focus on achieving marketing goals such as making the environment easy to use and pleasant, reaching the targeted market segment, and creating the desired services experience. At the other extreme of services organizations is the Remote Service, which has no or little customer involvement with the physical environment. These services can be provided without the customer even attending the services facility (Bitner, 1992). According to Zeithaml et al (2006, p. 322), the design of the physical facility can be used to keep the personnel motivated and productive, enable teamwork, and operational efficiency. As the customers will never see the physical environment, only consideration to the personnel and their requirements will be needed. Between the two extremes are the Interpersonal services, including both customers and employees, in which the both groups are present and active in the servicescape. In these situations the servicescape should simultaneously attract, satisfy, and facilitate the activities of both customers and personnel. According to Zeithaml et al (2006, p. 322) the physical complexity of the servicescape will affect the management of the physical environment. Services that are recognized as very simple, with few elements, and few pieces of equipment are termed Lean. The servicescapes of lean services are relatively straightforward, in particular in self-service or remote service situations in which there are no interaction between customers and personnel. The opposite to lean services are termed Elaborate and are to be considered as complicated with a number of elements or forms. In an elaborate environment marketing and organizational objectives can be reached through careful management of the servicescape. TABLE-2: TYPOLOGY OF SERVICE ORGANIZATIONS BASED ON VARIATIONS IN FORM AND USE OF THE SERVICESCAPE Complexity of the Servicescape Elaborate Lean Self-service (customer only) Golf course, eBay ATM, Car wash, Simple Internet Services, Express mail drop-off Interpersonal service (both Hotel, Restaurant, Hospital, Health clinic, Bank, Airline, School Dry cleaner, Retail cart, Hair salon customer and employee) Remote service Telephone, Insurance, Transport, Many professional services Telephone mail-order desk, Automated voice, Messaging services (employee only) Source: From M.J. Bitner, "Servicescapes: The Impact of Physical Surroundings on Customers and Employees", Journal of Marketing 56 (April 1992), pp. 57-71 as adapted by Zeithaml, Bitner and Gremler, 2006, p.321. FRAMEWORK FOR UNDERSTANDING SERVICESCAPE EFFECT ON BEHAVIOR Bitner's framework for understanding environment-user relationships in service organizations (Figure-1) addresses the effect of the atmospherics, the design and decor elements on employees and consumers within the servicescape. Framework explains the role of the physical environment in services firms, more specific what behavior can be influenced, the cause and how to use knowledge to plan and design an environment to reach the firm's objectives. Moreover, the model explains a number of environmental factors that both consumers and employees may respond to the servicescape cognitively, emotionally, physiologically. As a result, the behavior of both consumers and employees and their interaction between and among the groups are affected by the servicescape. Servicescape Usage FIGURE-1: FRAMEWORK FOR UNDERSTANDING ENVIRONMENT-USER RELATIONSHIPS IN SERVICE ORGANIZATIONS
BEHAVIOUR AND SOCIAL INTERACTION IN THE SERVICESCAPE Bitner's servicescape framework (1992) assumes that elements of the firm's servicescape influence consumer and employee behavior. Individuals respond to the physical environment with either approach or avoidance behavior. Approach behaviors involve all positive responses; whereas, opposite responses are referred to avoidance behavior. Many services organizations use environmental cues, such as music to change the behavior of the consumers. In addition to attract customers, the physical environment can influence the degree of success consumers experience in carrying out their intentions in the store. Customers visit a service organization with the purpose or goal that may be aided or hindered by the servicescape. For instance, a traveler at the airport may be hindered by
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different type of servicescapes like: entering the airport, finding the way to the gate. Factors such as lack of signage, crowds or high temperature can cause the traveler to become emotionally distressed. In this situation the traveler is hindered by the servicescape and constrains the fulfillment of the customer's goal. Employees within service organizations may in the same way be constrained doing his or hers work as result of the physical environment. Services firm strives to discourage avoidance behavior, and at the same time encourage approach behavior to make both customers and employees to carry out their plans. The positive or negative responses from the employees or customers are determined by individual internal responses (cognitive, emotional, and physiological). The assumption is that positive responses lead to approach behavior, and in the same way, negative lead to avoidance behaviors (Bitner, 1992). Bitner (1992) further states the nature and quality of customer and employee interaction are affected by the servicescape, particular in interpersonal services. It is stated that the so-called physical container influence all social interactions in terms of the progression of events and duration of interaction. For instance, environmental variables such as seating arrangement may intervene and limit social episodes, between and among customers and employees. The servicescape and recurring social patterns are two variables closely connected, when people encounter typical settings, their behavior can predicted. THE SERVICESCAPE AND INTERNAL RESPONSES The physical environment does not directly cause individuals to behave in a certain ways. The perceptions of the physical environment lead to specific emotions, beliefs, and physiological responses which in turn affect behaviors. In other words, behaviors are a result of an individual's internal reposes to the place. The internal responses may be divided into: 1) Cognitive 2) Emotional and 3) Physiological responses. As seen in Figure-1, the perceived servicescape may cause Cognitive Responses that influence people's beliefs about a place, and also the products and people found in that place. The servicescape can be seen as a form of nonverbal communication. It may send out messages to customers about, for instance, the positioning of the firm, price and quality. Environmental cues can also influence employees' belief for example, the office size and appearance. The employee can create beliefs about the importance of his / her function with the organization in comparison to other employees. Other cognitive responses are categorization and symbolic meaning. Categorization is the process in which people assign a label to an object. Therefore, the overall perception of the services environment allows customers and employees to categorize the organization mentally. For instance, "fast-food" restaurant or "up-scale sit-down restaurant. As most services are intangible in nature, people tend to evaluate services through extrinsic cues, such as the servicescape, as a quality indicator (Bitner, 1992). According to Bitner (1992) internal responses may in addition elicit Emotional Responses which influence individuals' behavior. Customers and employees emotional responses to the physical environment can be explained by two dimensions - pleasure and arousal. Positive behaviors, approach behavior, are created through pleasure and arousal. Further, both of these factors increases approach behavior. Pleasure can be achieved through perceptions of greater personal control (e.g. clear signage, good ventilation and adequate space). Emotional arousal on the other hand can be created through complexity, such as visual richness and ornamentation, in the servicescape. Compatibility which is the presence of natural elements and the lack of environmental "Nuisances" (e.g. in an urban setting such objects as poles, wires and vehicles) in the servicescape may further enhance pleasure. The overall perceptions of the physical environment and associated responses, negative or positive, will be used to evaluate the organization, its people and products. The third factor included in internal responses is Physiological Responses. People may react purely physiological to the servicescape. Air quality, loud noise and temperature may cause discomfort if these factors are not adjusted to the individuals. The physical responses can affect how long people stay in and enjoy a particular service setting. The environmental design can further affect the employees and their ability to perform his / her job (Bitner, 1992). DIMENSIONS OF THE SERVICESCAPE The environmental dimensions of Bitner's servicescape framework (1992) are ambient conditions, space / functions, and signs, symbols and artifacts. Lovelock and Wirtz (2007, p. 295) explain ambient conditions refer to those characteristics of the environment that affects the five senses. All design elements and details must be compatible in order to create the desired service environment. Ambient conditions include everything from lighting, color, sounds, temperature, and fragrance. All above factors can be perceived both separately and holistically. Well thought out design of these conditions can create desired behavioral responses among customers and employees. Bitner (1992) pointed put that the effects of ambient conditions are noticeable when they are extreme, for e.g. loud music, and high temperature. The extreme conditions may elicit negative responses when the customer or the employee spends a considerable time in the service setting, and when they conflict with expectations. Spatial layout and functionality of the physical environment are especially important as services environments in order to fulfill purposes and needs of customers. Machinery, equipment, and arrangement, size and shape of furnishings, and the way they are arranged is referred to spatial layout. Functionality refers to the ability of using those items to facilitate achievement of customer and employee goals (Zeithaml et al, 2006, p. 336). The visual and functional environment for delivery and consumptions are enabled trough the spatial layout and functionality. These factors determine efficiency of the services operation, user-friendliness and shape the customer experience (Lovelock and Wirtz, 2007, pp. 300-301). Signs, symbols, and artifacts sends out explicit and implicit signals to communicate the organization's image, simplify customers to find their way, and to follow the service script. Signs are one example of explicit signal and can be used by the firm as a label (name of department etc), giving directions, communicate the service script (e.g. queuing systems), and behavioral rules (e.g. non-smoking area). Signs are frequently used as a tool to teach and reinforce behavior in a services setting (Lovelock and Wirtz, 2007, p. 301). Symbols and artifacts give more implicit signals about the meaning of the place, norms and behavioral expectations in the environment. A symbolic meaning and aesthetic impression can be communicated, for e.g. artwork, certificates, floor coverings, and personal items. Symbols and artifacts are usually culturally embedded in its meanings. Moreover, these environmental dimensions are truly important in making a first impression and for sending out service concepts (Zeithaml et al, 2006, p. 336). CONCEPTUAL FRAMEWORK Miles and Huberman (1994, p.18) describes a conceptual framework as either graphically or in narrative form, the most important factors to be investigated. Moreover, the authors suggest that it is easier to generate a conceptual framework if the research questions have been presented, as is the case in this research. With the purpose of answering the three stated research questions, the literature found most appropriate to support our data collection will be clarified. CONCEPTUALIZATION OF RESEARCH QUESTION NUMBER: 1 The purpose of the first research question is to gain a better understanding of how the servicescape affect the relationship between customers and the service organization. According to Bitner, customers respond to the environment cognitively, emotionally, and physiologically. CONCEPTUALIZATION OF RESEARCH QUESTION NUMBER: 2 The purpose of the second research question is to provide a better understanding of how the servicescape affects the relationship between employees and the service organization. Theories suggest physical environment also impacts employees' behavior, their reaction and response pattern towards customers as well as towards organization. CONCEPTUALIZATION OF RESEARCH QUESTION NUMBER: 3 The purpose of the final research question is to gain better understanding how the service organization constructs the servicescape in order to optimize the interaction between customers and employees. The research question is supported by the behavior dimension in Bitner framework for understanding environment - user relationships in service organization. The theory connects customers and employees responses, leading to social interaction between and among the both parties.
METHODOLOGY USED
TYPE OF RESEARCH a) Exploratory Research, as paper aimed to define and formulate problems related to servicescape and its affects. b) Descriptive Research, as researcher tries to portray how previous mentioned variables affect a services organization. Descriptive study of how a services organization manages and experiences servicescapes' issues was conducted. RESEARCH APPROACH
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Approach used in this paper is qualitative in nature in order to gain a deeper and reflective understanding concerning the purpose of study. Moreover, this approach allows categorization of data acquired in real-life setting. As the topic of the study concerns the servicescape and how it influences employees and customers as perceived from a management perspective, a qualitative data approach was most appropriate one. RESEARCH STRATEGY: CASE STUDY Hair et al (2007, p. 203) state that a case study can be defined as a study which focuses on gathering necessary information considering particular events or activities. Furthermore, a case study can be utilized in order to obtain a complete view of the entire circumstance. As this study aimed to seek how the servicescape may affect relationships with both customers and employees within a service organization as seen from management perspective, a case study was the most appropriate strategy. By using a case study, it was possible to investigate whether the theoretical framework can be implemented in a real - life situation or within organization or not. DATA COLLECTION METHOD: PERSONAL INTERVIEW Considering the objectives of this study, semi structured personal interview was conducted with a representative from an organization offering services as their core product. This form of interview provides flexibility concerning the order of putting questions. Another advantage is that the interviewee is given the opportunity to express his ideas and speak more freely. The interview lasted for one hour. Secondary data was also used in order to carry out the study. Articles and books discussing theories related to our subject were utilized. QUESTIONNAIRE DESIGN The structured format of questionnaire was constructed keeping the research purpose and research questions in mind. SAMPLE SELECTION: THE HOTEL INDUSTRY When choosing the most suited sample selection for this study, a number of aspects were taken into consideration. Firstly, the chosen services provider need to involve both customers and employees in the service environment. Secondly, to select a service organization were the servicescape plays a large impact of the services perception from both customers and employees. Thirdly, the services organization must be situated in our immediate surroundings to make it possible to carry out a face-to-face interview. Emphasis to understand how physical environment affects customers and employees is highest within hospitality industry, being the industry as highly service-oriented. In order to select the relevant sample for study, several factors were taken into consideration such as history, size of the organization, organizational goal, location, and adaptation to modern technology, as these factors will help in extracting valuable information for analysis. More significant was that the selected hotel must be willing to participate in our study and cooperate in an interview. With all these aspects in consideration, we chose to conduct a case study of Asia Hotel of Jammu. Prior to personal interview, a copy of questionnaire was sent to hotel manager in advance for his review and query (if any). DATA ANALYSIS Miles and Huberman (1994, pp. 1011) illustrate that the procedure of the data analysis can be divided into three periods; data reduction, data display, and data drawing/verifying conclusions. Date reduction: involving selecting, simplifying and transforming the data to make them more manageable and understandable for each research object. Data display: goes beyond data reduction by organizing the information in a way that facilitates drawing conclusion. Data drawing and verifying conclusions: the explanation of the suitable responses, which includes noting regularities, patterns, explanations, possible configurations, casual flows and propositions. When performing the data analysis of the obtained data, above mentioned procedure were taken into consideration. The information derived from the interview was written down to make them more manageable and organized, which enable the researcher in drawing conclusions from findings. Used documentation, such as theories and frameworks, helped in comparing findings with previous research and even in verifying conclusions.
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perspective, in meeting customer demands. Details may easily be overlooked from personnel. Interior decoration and design are therefore important in his opinion, as it retains customers. Manager believes that the physical hotel environment affects the customers' satisfaction. Previously the hotel received complaints in respect to basic facilities like bathrooms and the lack of light. Women in particular thought the bathrooms were too dark when putting on make-up. As a result of the complaints, all of the bathrooms have been renovated. Today they are much lighter and more lavish with marble details. Furthermore, the overall impression of the physical hotel environment impacts on how the customers perceive the overall quality of the services rendered by the hotel. Mr. Manager says that first impressions are important, such as the appearance of the lobby and the reception. A nice, tidy/clean surrounding gives inspiration to both the personnel and customers. The services provided will be perceived better if the hotel environment and atmosphere is nice, welcoming, and bright. Manager further claims that you then become more positive towards the service in general. Moreover, Hotel Asia works constantly to make improvements with the customers in mind. Mr. Manager states that they have to keep up with local competitors. The owner of Trans Asia group has a deep concerned with the servicescape and appearance of the hotels. According to Mr. Manager, the servicescape is not adapted according to certain groups of customers in mind. All customers should feel comfortable, for instance the lobby has been furnished for the customers comfort. The reason why no customer group is considered as more worthy than others is because all guests are paying customers. However, the environment in the hotel is somewhat adjusted for the business clients as they are the largest customer group. It should be possible to work in comfortable surroundings. THE SERVICESCAPE AND INFLUENCE ON EMPLOYEES To some extent it is likely that the servicescape influences the loyalty of the personnel towards their employer says the Manager. The respondent further states that you say the employee / staff is proud of selling a hotel room at Hotel Asia. The personnel can offer the customers more options, for instance rooms toward the park, pool etc. This can be seen as a motivation tool for the personnel. There is no doubt that the servicescape matters, because it is more pleasant to work in a neat surrounding. An advantage with satisfied personnel is that they are more likely to be retained for longer, as it is costly to hire and train new employees. The company works constantly to improve the physical hotel environment from the personnel's point of view, by receiving suggestions from the employees and the safety representative. Manager believes the personnel are satisfied with the working environment; however improvements can always be made. For example one improvement is that now-a-days smoking is not allowed inside the hotel. THE SERVICESCAPE AND INTERACTION BETWEEN CUSTOMERS AND EMPLOYEES The physical environment is constructed so as to make it easy for customers and personnel to interact, for example to check in-and-out or at storing the guests' luggage. However all hotels have to be cautious regarding security issues. Safety matters can cause a dilemma in making the surroundings easy for both employees and customers, but at the same time there is a need to create a secure and safe environment. Over the past years a number of improvements have been made to make the hotel more secure. For instance the hotel has a key card system for using the elevators, which prevents intruders. Mr. Manager claim that conflicts may rise when uniting customers and employees requests, however in Hotel Asia this situation rarely occurs. Many of the improvements make it better for both personnel and customers at the same time, for instance new ventilation systems. The hotel does not only focus on customers, but the personnel must also be taken into account. It is not a larger conflict making both groups satisfied with the servicescape. As seen from a management perspective, investments beneficial to both groups have to be done correspondingly to one another by carefully planning the company's activities regarding the servicescape. He explains, for instance, if changes have been made in the hotel rooms, the next improvements may concern the working environment for the personnel. However, both personnel and customers have to be aware of financial restrictions. Mr. Manger enhances the importance of living up to expectations promised via the homepage, agents or brochure. The service provided should be delivered without any mistakes involved. He further believes the hotel industry tends to be highly influenced by recent trends in the shape of the physical hotel environment. One present trend is the socalled unique eco-hotels, concept hotels, or design hotels, which are becoming increasingly more popular. These kinds of hotels did not exist 5-10 years ago. It is rather revaluating says the manager. The respondent further acknowledges that this trend may influence Hotel Asia in the future, but that the hotel's classical appearance should be kept. The most crucial part for any hotel is that the interior must be clean and inviting; however, above all, the personnel must treat the guests in a friendly and welcoming manner. DATA ANALYSIS The primary data collected through a case study will be compared with the theoretical framework presented earlier. The data will be analyzed based on the order of the research questions. The framework for understanding the servicescape by Bitner (1992) addresses the connection between customers and employees responses with the physical environment. The servicescape consists of environmental dimensions, which creates the holistic environment as perceived by the customers and the employees. Individuals within the servicescape react with internal and behavioral responses. THE SERVICESCAPE AND CUSTOMERS The servicescape model by Bitner (1992) explains that the customers respond to the environment cognitively, emotionally, and physiologically. In addition, the servicescape responds either with proactive behavior (attraction, stay / explore, spend money, and carry out plan) or with the opposite, avoidant behavior. The primary data indicated that the physical hotel environment has a significant impact on the customers of the hotel in several different ways. The servicescape may affect customers overall perception of the hotel, and whether or not the customer whishes to return to the establishment. The Indian tourists or business travelers are in generally interested in interior design, which the Hotel Manager believed affects the customer behavior. The physical environment should live up to customer expectations and management needs to be coherent to customer suggestions. The primary data revealed that the management needs to recognize that customer demands may be difficult to achieve. Hotel Asia has made a number of improvements for the customer's comfort, safety and accessibility to modern technology. The hotel has, for instance, recently renovated hotel rooms and bathrooms, made improvements on hotel security, as well as establishing wireless internet access throughout the hotel. Competitive advantage over local competition is achieved partly through the servicescape in the investigated service firm. Customers may apprehend the experienced services quality through the appearance of the physical hotel environment. The first impression of the servicescape affects the customers overall perception of the services encountered. A nice and welcoming environment gives stimulation to customers and completes their experience. The respondent further claimed that the customers are therefore more positive towards the service in general. All guests of Hotel Asia, both business and leisure guests, should experience quality and hospitality through the services environment. The respondent believed the servicescape influences customers' repurchasing behavior. As a result of customers' repurchasing behavior, a long-term relationship with the hotel may emerge. However, the respondent enhanced the importance of fulfilling expectations promised by the internet webpage, agents or brochure. The service provided should be delivered without any mistakes involved. A trend in the hotel industry affecting the demand and buying behavior of potential customers is so-called the eco-hotels, concept hotels and design hotels. These kinds of hotels have a business concept built on offering a unique surrounding to the guests. According to the respondent it is possible that this trend may affect Hotel Asia in the future. Respondent has already initiated towards this new concept of Eco-friendly hotels. They stopped using poly bags, planted trees in and around hotel area, and water treatment plant is already been installed. Being aware of current trends and other demands from the customer is of importance in order to keep up with competitors. THE SERVICESCAPE AND EMPLOYEES One important contribution of Bitner's servicescape model (1992) is inclusion of employees' responses to the service environment. Employees react with internal responses and proactive/avoidant behavior. Employee proactive behavior includes affiliation, exploration, employment longevity, commitment and carry-out plan. Opposite responses occur with avoidant behavior. According to the respondent the employees are definitely influenced by the physical hotel environment. For example, proud employees are able to offer guests a variety of options concerning the hotel rooms. In addition, this can be seen as a motivational tool for the employees. Moreover, the loyalty of the personnel
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can to some extent affected by the servicescape. If the employees work in neat and comfortable surroundings, they will be more positively disposed towards the job in general. An advantage with satisfied personnel is that they are more likely to be retained for longer, as it is costly to hire and train new employees. The employer has responsibilities toward the personnel regarding the design of the servicescape according to the respondent. For an employer, it is important to consider the physical working environment, to make the servicescape ergonomically correct and not only regard esthetical aspects. Hotel Asia improves the working environment on a regular basis in order to fulfill requirements and concerns on the behalf of the personnel. The hotel has engaged a safety representative, to see over the employees work situation. The personnels are satisfied with the working environment. However improvements can always be made to make enhancements, and adapt to needs and requests. THE SERVICESCAPE AND INTERACTION BETWEEN CUSTOMERS AND EMPLOYEES The social interaction between and among customers and employees is another dimension in Bitner's framework for understanding environment - user relationships in service organizations. Services organizations, particular interpersonal services firms, and the nature and quality of the customer and employee interaction are influenced by the servicescape. The physical container affects all social interactions in terms of the progressions of events and duration of interaction. Hotel Asia has constructed the servicescape in order to enable customer and employee interaction. In a hotel it is important to make the customer's experience as smooth and uncomplicated as possible. Check-in and out procedures, or storage of luggage are examples of customer and employee interaction that should not be hindered by physical environmental restraints. Safety matters are one factor that can cause a dilemma in making the surroundings easily accessible for both employees and customers, but at the same time there is a need to create a secure and safe environment. Hotel Asia over the past few years made a number of improvements to increase the security and prevent intruders entering the facility. Many services organizations may be affected by conflicts when uniting customers and employees requests. However, according to the respondent, in Hotel Asia these situations rarely occur. From management perspective investments beneficial to both groups have to be done in parallel. If changes are made to enhance the customers experience regarding the surroundings, the next step may concern the working environment for the personnel. However, both customers and employees must be aware of financial restrictions. Making both parties satisfied with the environment is not necessarily difficult to achieve. A number of improvements concern the mutual environment for all individuals in the hotel, not just too solely benefit one party. The focus point should not only lay on the customers needs, the employees are just as equally valued and important.
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IMPLICATIONS
Implications to practitioners are regarded as proposals and suggestions to managers supported by our data and findings. All managers must realize the importance of managing the servicescape to communicate the desired image of the organization. All individuals are affected by the physical evidence as it creates cognitive, emotional, and physiological responses. This study does not solely concern hotel managers, but also all managers in interpersonal services organizations as all services are intangible in nature. By a careful management of the servicescape the service organization can create and maintain relationship between both customers and employees. The implications of theory concern towards contribution of the topic's viewpoint. The intention of this research was to reveal management perspective regarding the servicescape issues. Hence, previous studies have focused mainly on customer perceptions and importance of the environmental dimensions. The findings of the study did not indicate any conflict with the servicescape framework used. Implications to research are regarded as suggestions to be studied in the future. This study does not give a comparison between different services providers within the same industry. Results of a cross study would be relevant in order to reveal whether the servicescape is viewed as an important factor to create relationships with customers and employees.
REFERENCES
Bitner, M. J. (1992) Servicescapes: The physical Surroundings on Customers and Employees. Journal of Marketing 56 (2), 57-71. Clarke, I., & Schmidt, R. A. (1995) Beyond the Servicescape: The Experience of Place. Journal of Retailing and Consumer Services 2(3), 149-162. Countryman, C. C., & Jang. S. (2006) The Effects of Atmospheric Elements on Customer Impression: The Case of Hotel Lobbies. International Journal of Contemporary Hospitality Management 18(7), 534-545. Gremler, D. D., & Gwinner, K. P. (2000) Customer-Employee Rapport in Services Relationships. Journal of Service Research 3(1), 82-104. Hair, J. F., Money, A. H., Samouel, P., & Page, M. (2007). Research Methods for Business. Chichester: John Wiley & Sons Ltd. Jobber, D. (2004). Principles and Practices of Marketing. Maidenhead: McGraw-Hill. Kasper, K., Helsdingen, P., & De Vries. W. (1999). Services Marketing Management: An International Perspective. Chichester: John Wiley Lin, I. Y. (2004) Evaluating a Servicescape: The Effect of Cognition and Emotion. Journal of Hospitality and Management 23, 163-178. Lovelock, C., & Wirtz, J. (2007). Services Marketing: People, Technology, Strategy. Pearson International. Miles, M. B., & Huberman, M. A. (1994). Qualitative Data Analysis. London: Sage Publication Inc. Quester, P. G., & McOmish, M. A. (2005). Perceived Risk and Servicescape: The Importance of Managing the Physical Evidence in Services Marketing. ANZMAC Conference, New Zealand, 205-212. Reimer, A., & Kuehn, R. (2005) The Impact of Servicescape on Quality Perception. European Journal of Marketing 39(7/8), 785-808. Saunders, M., Lewis, P., & Thornhill, A. (2003). Research for business students. Harlow: Financial Times / Prentice Hall. Tombs, A., & McColl-Kennedy, J. R. (2004). The Importance of Physical, Social and Contextual Elements of the Social - Servicescape on Consumer Affect and Repurchase Intentions. ANZMAC Conference, New Zealand.1-9. Yin, R.K. (2003). Case Study Research, Design and Methods. California. Sage Publications Inc. Zeithaml, V.A., & Bitner, M. J. (1996). Services Marketing. McGraw-Hill. Zeithaml, V.A., Bitner, M. J., & Gemler, D.D. (2006). Services Marketing: Integrating Customer Focus Across the Firm. The McGraw-Hill Companies. Zikmund, W.G. (2000). Business Research Methods. Harcourt Inc.
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CONSUMERS PERCEPTION TOWARDS ORGANIZED AND UNORGANIZED RETAIL: A COMPARATIVE STUDY DONE IN PUNE CITY, INDIA. MUKTA SRIVASTAVA LECTURER ALLANA INSTITUTE OF MANAGEMENT SCIENCES PUNE ABSTRACT
Consumers are the end beneficiary of all retail activities. No matter what type of format a retailer is using, whether organized or unorganized, it has to satisfy the consumers needs. Keeping this in mind, an attempt has been made to examine the factors influencing the consumers to choose the retail outlet, their satisfaction level and the current loopholes in the Indian retail industry have been highlighted. The present study is purely based on the primary data and is confined to Pune City, India. Consumers shopping both at organized retail outlets and unorganized outlets were interviewed using interview schedule to collect the data. For analyzing the data, T-test, Percentage Analysis, Garrett Ranking Analysis, and Chi-square test were applied. It is found that different set of factors are responsible for drawing a customer in a retail store (organized or unorganized). Poor co-operation, poor after sales service and inconvenient location are the major problems faced by the consumers in case of organized retailing while selling expired products, unavailability of goods and inconvenient parking facilities have been ranked as the topmost difficulties in case of unorganized retail stores. Since the study is conducted on the end users, it is very beneficial for the retailers (both organized and unorganized) as they will be able to understand the psyche of consumers and can build their products and policies accordingly. The study will work as a basis for future research as well.
KEYWORDS
Organised, Unorganised, Retailing, Patronage, Satisfaction.
INTRODUCTION
he emergence of organized retail is an important characteristic of the current economic scenario in India. The organized retailing business has been growing substantially in the recent years and is on the edge of much faster growth in future. Major industrial houses like Reliance Group, Bharti Group, Pantaloon Retail India Limited, RPG Group, Tata Group and Raheja Group etc. have already entered this area and are growing day by day. Transnational corporations like Wal-Mart, Carrefour, Metro AG etc. have also jumped into the wholesale space to get a toehold in Indias $400 billion annual retail market thats growing at 25%-35% a year (Bailay, 2010). According to the ICRIER Retail Report, 2008 the total retail business in India will grow at 13% annually from US$ 322 billion in 2006-07 to US$ 590 billion in 201112. The unorganized retail sector is expected to grow at approximately 10% per annum with sales rising from US$ 309 billion in 2006-07 to US$ 496 billion. Organized retail, which constituted a low 4% of total retail in 2006-07, is estimated to grow at 45-50 per cent per annum and attain a 16 per cent share of total retail by 2011-12 (Mathew et al., 2008). In a nutshell, both organized and unorganized retail developments are not only going to coexist but also attain rapid and relentless growth in the future. This is apparently not a case of a zero sum game as both organized and unorganized retail will see a massive leveling up of their actions. In fact if the retail sector is left completely unorganized, it may come out as a major tailback to the economic growth. Nevertheless, opinions are divided on the impact of the growth of organized retail in the country. It has frequently been argued that the growth of organized retailing may have an adverse impact on retailers in the unorganized sector. On the other hand, it has also been said that the growth of organized retailing will yield efficiencies in the supply chain, facilitating better access to markets to producers (including farmers and small producers) and permitting higher prices, on the one hand and, lower prices to consumers, on the other. Much has been talked about all these issues viz. future of organized retail in India, the impact of organized retail on the unorganized retail, farmers, intermediaries, manufacturers, and even consumers. But we should not forget that consumers are the end beneficiary of all the retail activities. No matter what type of format a retailer is using, whether organized or unorganized, it has to satisfy the needs of the consumers. No retailer can ever be successful until and unless he is able to meet the perceptions and needs of the end users. Hence, it becomes really very necessary to find out the perception of consumers towards the organized and unorganized retail developments. By considering this, in the present study, an attempt is made to analyze the consumers perception towards organized and unorganized retail developments in Pune city, India.
REVIEW OF LITERATURE
1. 2. Paco Underhill (1999) in his book Why we buy -The Science of Shopping brings out a key fact that most purchasing decisions are influenced and made on the shop floor itself. Various aspects like sign ages, shelf position, display space and fixtures all influence the shopper in his buying decision. Thirumoorthi, P. (2006) studied in his research about A study on retailers and customer attitude towards P&G detergent powder, it can be concluded that the company must concentrate more on high margin to create a better performance. Importance must be given to sales promotion. The retailers must also be asked to give more displays and discounts. Thus it can be concluded that the customer and retailer attitude towards the P & G detergent powder is positive. Tamilarasan, R. (2007) in his study A study on retail store service quality dimensions in selected retail stores of Chennai, after an in depth analysis of a variety of store dimensions and service quality dimensions, reveals that all these dimensions have to be improved to earn a competitive edge and survive in the retail business in view of the changing and emerging retail scenario in India with the possible advent of the MNCs in the Indian retail market.
3.
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5.
6. 7.
Malliswari, M.s (2007) study about Emerging trends and strategies in Indian retailing indicates that the demanding ascertain Indian consumer is now sowing the seeds for an exciting retail transformation that he already started bringing in larger interest from international brands /formats. With the advent of these players, the race is on to please the Indian customer and its time for the Indian customer sit back and enjoys the hospitality of being treated like a King. Ashokan, C. (2008) in his study Profile and perception of retail consumers analyzed the consumers perception towards retail in Palakkad, Kerala. Visiting retail outlets has become a group activity. Most of the shoppers are influenced by as well as accompanied by colleagues, friend and relatives. Majority of the people who visit do not shop at all. The hang around meet friends, do window shopping and spend time leisurely. Joseph Mathew et al. (2008) in their ICRIER Retail Report Impact of organized retailing on the unorganized sector found that; Proximity is a major comparative advantage of unorganized outlets. Unorganized retailers have significant competitive strengths that include consumer goodwill, credit sales, amenability to bargaining, ability to sell loose items, convenient timings, and home delivery. The emergence of organized retail undoubtedly gives consumers a wider choice of goods, more convenience, and a better shopping environment, among other benefits. According to Chopra, K. (2011), as she has mentioned in her paper Wal-Mart: Can it succeed in India?, consumers in India select a store for shopping based on traveling time, range of products offered, services offered and their socio-economic background.
HYPOTHESIS
FOR RESEARCH OBJECTIVE 1. H0: There is no significant difference between organized and unorganized retail customers perception of various factors influencing retail patronage. FOR RESEARCH OBJECTIVE 2. H0: There is no significant relationship between the socio-economic characteristics of the sample respondents and their satisfaction level.
RESEARCH METHODOLOGY
SAMPLE DESIGN: The present study is based on the primary data. The primary data were collected from 100 sample respondents (50 shopping at organized retail store and 50 shopping at unorganized retail store). These 100 respondents were selected by using convenience sampling technique. DATA COLLECTION: The present study is purely based on the primary data. Consumers shopping at organized retail outlets and also consumers shopping at unorganized outlets were interviewed using interview schedule to collect the data. AREA AND PERIOD OF THE STUDY: This study is confined to Pune city (Maharashtra, India). The study was conducted in the organized as well as unorganized retail stores of various prominent locations of Pune like Koregaon Park (KP), Mahatma Gandhi Road (MG Road), Fatima Nagar, Hadapsar and Lakshmi Road during the months of January-February 2011. FRAMEWORK AND TOOLS FOR ANALYSIS: Data collected through interview schedule were presented in a master table and required sub-tables were prepared. For analyzing the data, T-test, Percentage Analysis, Garrett Ranking Analysis, and Chi-square test were applied. Statistical calculations and computations were done through IBM SPSS statistical package (version 19.0).
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The socio economic characteristics of consumers play a very important role so far as their satisfaction level is concerned. Consumers needs, wants and judgment are based on their socio-economic characteristics. In the present study, it is decided to analyze the socio-economic characteristics of sample respondents and their satisfaction level towards the organized and unorganized retail outlets. Satisfaction level of respondents with respect to various socio-economic factors like age, gender, income, educational qualification, occupation, marital status and number of members in the family has been depicted in Table II1, Table II2, Table II3, Table II4, Table II5, Table II6 and TableII7 respectively. RELATIONSHIP BETWEEN SOCIO-ECONOMIC CHARACTERISTICS AND LEVEL OF SATISFACTION: TESTING OF HYPOTHESIS The hypothesis was tested with the help of Chi-square test. The formula for chi-square is given below: X2= (O-E)2/E Where O refers to Observed frequency and E refers to Expected frequency. The results of chi-square analysis have been represented in Table III. PROBLEMS FACED BY CUSTOMERS AT ORGANIZED AND UNORGANIZED RETAIL STORES There are various problems faced by the customers while they shop either from organized or unorganized retail stores. In order to find out them, the problems have been categorized in three categories viz. problems from retailers and employees, in terms of product accessibility and physical appearance and the respondents are asked to assess each problem on its own significance. Each respondent is instructed to indicate the problem by giving Rank I to the most important problem, Rank II to the second most and so on. Table IV shows the problems of customers from retailers and employees, in terms of product accessibility and physical appearance both at organized and unorganized retail stores after applying Garrett Ranking Analysis.
FINDINGS
The findings of the study can be summarized as follows: 1. Since there is significant difference between the organized and unorganized retail customers perception towards various factors responsible for retail patronage, we may conclude that different set of factors are responsible for drawing a customer in a retail store (organized or unorganized). 2. Status, range of merchandize, shopping environment, parking space, entertainment and variety of modes of payment are the factors responsible for patronage towards an organized retail store (From TableI1). 3. Factors like goodwill, proximity, billing duration, loose items, bargain and credit availability are responsible for attracting a customer towards an unorganized retail outlet (From TableI2). 4. For the factors like goodwill, status, range of merchandize, shopping environment, parking space, credit availability and variety of modes of payment, significant value for equal variances assumed has been considered. 5. For the factors like proximity, billing duration, loose items, entertainment and bargain, we consider significant value for equal variances not assumed. 6. In case of organized retail services, 46.15% of respondents belonging to the age group below 30 years are highly satisfied, 26.31% of the respondents belonging to the age group of 30-50 years are less satisfied, whereas only 20% of the respondents belonging to the age group of above 50 years are highly satisfied. 7. In case of unorganized retail services, 53.84% of the respondents belonging to the age group below 30 years are less satisfied, 43.75% of the respondents belonging to the age group of 30-50 years are moderately satisfied, whereas only 9.52% of the respondents belonging to the age group of above 50 years are less satisfied. 8. 35% of females are highly satisfied while 20% of males are less satisfied from the organized retail developments. While in case of unorganized retailing, 40% of both males and females are less satisfied. 9. In case of organized retail services, 35.29% of respondents having annual income below Rs. 1, 00,000 are highly satisfied. It is also found that 23.53% of the respondents from the same group are less satisfied. While in case of unorganized retail, no respondent having income above Rs. 10, 00,000 is highly satisfied. On the contrary, 43.75% of the respondents having annual income below Rs. 1, 00,000 are highly satisfied. 10. 33.33% of the respondents with professional degree and 35.29% of respondents with college level education are highly satisfied while 60% of the respondents with school level education are less satisfied in case of organized retail services. 11. In case of unorganized retail services, 66.66% of illiterate respondents and 68.28% of respondents with school level education are highly satisfied. Whereas 46.15% of respondents with professional degree were less satisfied. 12. 45.45% professionals are highly satisfied while 40% students are less satisfied from the organized retail services. On the other hand, 50% of the Government employees are highly satisfied and 43.75% of Private employees are moderately satisfied from the unorganized retail development. 13. If we take the case of organized retail services, 42.85% of married respondents are highly satisfied while 50% of unmarried respondents are moderately satisfied. On the contrary, 53.84% of unmarried respondents are highly satisfied whereas 54.16% of married respondents are moderately satisfied. 14. 44.44% of respondents having 1-2 members in their family are highly satisfied while only 9.09% of the respondents with 2-5 members in their family are less satisfied with the organized retail developments. And in case of unorganized retail services, 45.45% of the respondents having more than 5 persons in their family are highly satisfied. 15. By applying Chi-square test, it is found that there is no significant relationship between any of the socio-economic factor and the satisfaction level of the customers in case of organized retail services. But in case of unorganized retail services, there is a significant relationship between the age of the respondents and their satisfaction level. 16. In case of organized retailing, Poor cooperation is the major problem faced by the consumers from the retailers or employees followed by lack of knowledge, poor reply on enquiry, selling expired products and adulteration. Poor after sales service is the key problem faced by the consumers in terms of accessibility followed by no home delivery, unavailability of goods and unavailability of branded products. In terms of physical appearance, inconvenient location is the foremost difficulty which the consumers face followed by improper arrangement of goods, improper space management, Improper cleaning and inconvenient parking facility. 17. In case of unorganized retailing, Selling expired products is the topmost trouble faced by the consumers from the retailers or employees followed by adulteration, lack of knowledge, poor reply on enquiry and poor cooperation. In terms of accessibility, unavailability of goods is the major difficulty faced by customers followed by unavailability of branded products, no home delivery and poor after sales service. In terms of physical appearance, inconvenient parking facility is the key problem which the consumers face followed by improper space management, improper arrangement of goods, improper cleaning and inconvenient location.
SUGGESTIONS
Based on the findings, following suggestions could be made both for the organized and unorganized retailers: FOR ORGANIZED RETAILERS 1. They should try to earn goodwill.
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They should build their outlet in major residential areas in order to make them most accessible. They should try to reduce the billing duration as the customers get irritated and sometime they leave the store without buying anything. They should also keep loose items as some of the customers may be willing to buy them. Although bargain and credit availability is not possible in an organized retail store, they should try to adopt it to some extent. They should train their employees to be cooperative with the customers as this is found to be the major problem faced by the customers in case of organized retailing. 7. They should redefine their after sales service strategies. FOR UNORGANIZED RETAILERS 1. The unorganized retailers should keep variety of products both branded and unbranded as unavailability of goods is the major difficulty faced by customers in terms of accessibility. 2. They should introduce better shopping environment by making it clean, hygienic, and entertaining. 3. It is found that most of the respondents are suffering from the problem of inconvenient parking facility in terms of physical appearance; therefore the unorganized retailers must look for parking area near their stores. 4. They should also keep the card swapping machine in order to increase the variety of modes of payment. 5. They should cater to the needs of different age groups by keeping variety of products for each age group. They should redefine their strategies for the young generation customers to increase their satisfaction level. 6. They should have a check on the quality and expiry dates of the products as this is the major problem faced by the consumers.
CONCLUSION
In India, organized retailing is a new concept and is still evolving. Fifteen years ago, if a consumer wanted to buy bread, he has to go to the local bania (see Note 1) or the corner grocer guy or to the Sahakari Bhandar (see Note 2). But today, the scenario is totally different. He can still buy the pack of bread from the same places, but also has an option of visiting Big Bazaar, Food Land, More, Reliance Mart, Vishal Mega Mart or the neighborhood bania who has developed an all new self service store. Where will he go? What are the reasons for his choosing one store over the other? Understanding the reasons for consumers choosing or patronizing one store over the other is important for both the organized and unorganized retailer. An insight into what provokes a customer to visit and patronize a store helps the retailer in strategy formulation. Based on the findings of the study, various suggestions have been made both for the organized and unorganized retailers. If they will be properly considered and executed by the retailers, preferred results could be accomplished.
NOTES
1. 2.
A TRADER OR MERCHANT BELONGING TO THE INDIAN BUSINESS CLASS. CO-OPERATIVE STORE.
TABLES
TABLE I1*: FACTORS INFLUENCING THE CONSUMERS TO CHOOSE THE RETAIL OUTLET (ORGANIZED) Factors Goodwill Proximity Status Range of Merchandize Shopping Environment Parking Space Billing Duration Loose Items Entertainment Bargain Credit Availability Variety of Modes of Payment Extent of Agreement Strongly Agree Agree 4 (8%) 7 (14%) 7 (14%) 12 (24%) 24 (48%) 14 (28%) 25 (50%) 11 (22%) 21 (42%) 9 (18%) 13 (26%) 12 (24%) 17 (34%) 10 (20%) 23 (46%) 19 (38%) Neither Agree Nor Disagree 2 (4%) 3 (6%) 7 (14%) 1 (2%) 6 (12%) 11 (22%) 6 (12%) 8 (16%) 6 (12%) 3 (6%) 5 (10%) 2 (4%) Disagree 21 (42%) 17 (34%) 4 (8%) 8 (16%) 8 (16%) 9 (18%) 19 (38%) 14 (28%) 9 (18%) 13 (26%) 16 (32%) 6 (12%) Strongly Disagree 16 (32%) 11 (22%) 1 (2%) 5 (10%) 6 (12%) 5 (10%) 25 (50%) 28 (56%) 8 (16%) 34 (68%) 29 (58%) Total 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%)
* The numbers given in the table are responses out of a sample size of 50 respondents shopping at organized retail stores. TABLEI2*FACTORS INFLUENCING THE CONSUMERS TO CHOOSE THE RETAIL OUTLET (UNORGANIZED) Factors Goodwill Proximity Status Range of Merchandize Shopping Environment Parking Space Billing Duration Loose Items Entertainment Bargain Credit Availability Variety of Modes of Payment Extent of Agreement Strongly Agree Agree 21 (42%) 17 (34%) 33 (66%) 11 (22%) 4 (8%) 11 (22%) 7 (14%) 11 (22%) 8 (16%) 15 (30%) 11 (22%) 19 (38%) 12 (24%) 26 (52%) 15 (30%) 24 (48%) 17 (34%) 5 (10%) Neither Agree Nor Disagree 5 (10%) 3 (6%) 11 (22%) 11 (22%) 3 (6%) 12 (24%) 9 (18%) 8 (16%) 13 (26%) 4 (8%) 7 (14%) 5 (10%) Disagree 5 (10%) 3 (6%) 17 (34%) 10 (20%) 13 (26%) 11 (22%) 8 (16%) 6 (12%) 18 (36%) 5 (10%) 2 (4%) 18 (36%) Strongly Disagree 2 (4%) 22 (44%) 14 (28%) 16 (32%) 19 (38%) 7 (14%) 5 (10%) 19 (38%) 22 (44%) Total 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%) 50 (100%)
* The numbers given in the table are responses out of a sample size of 50 respondents shopping at unorganized retail stores.
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50 3.26 1.411 unorganized 50 1.52 .863 organized unorganized 50 1.88 1.062 50 4.22 .790
Status
Range of Merchandize
organized
50 2.14 1.443 unorganized 50 3.38 1.323 organized unorganized 50 2.38 1.469 50 3.40 1.485
Shopping Environment
Parking Space
organized
50 2.62 1.323 unorganized 50 3.82 1.119 organized 50 4.38 .697 unorganized 50 2.62 1.427 organized unorganized 50 4.40 .756 50 2.32 1.362
Billing Duration
Loose Items
Entertainment
organized
50 2.62 1.510 unorganized 50 4.12 .799 organized unorganized 50 4.62 .602 50 1.76 .981
Bargain
Credit Availability
organized
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Sig. (2-tailed) Mean Diff. Std. Error Diff. 95% Confidence Interval of the Difference Lower Upper 2.240 2.240 2.204 2.205 -1.969 -1.968 -.691 -.691 -.434 -.434 -.714 -.713 2.206 2.208 2.517 2.519 -1.020 -1.019 3.183 3.184 3.033 3.034 -1.933 -1.933
Goodwill
7.282 Equal variances not assumed 7.282 Equal variances assumed 7.437 Equal variances not assumed 7.437 Equal variances assumed -12.5 Equal variances not assumed -12.5 Equal variances assumed Equal variances not assumed
1.760 1.760 1.740 1.740 -2.340 -2.340 -1.240 -1.240 -1.020 -1.020 -1.200 -1.200 1.760 1.760 2.080 2.080 -1.500 -1.500 2.860 2.860 2.700 2.700 -2.320 -2.320
.242 .242 .234 .234 .187 .187 .277 .277 .295 .295 .245 .245 .225 .225 .220 .220 .242 .242 .163 .163 .168 .168 .195 .195
1.280 1.280 1.276 1.275 -2.711 -2.712 -1.789 -1.789 -1.606 -1.606 -1.686 -1.687 1.314 1.312 1.643 1.641 -1.980 -1.981 2.537 2.536 2.367 2.366 -2.707 -2.707
Proximity
Status
Range of merchandize
Shopping Environment
-3.453 98 .001 Equal variances not assumed -3.453 97.989 .001 Equal variances assumed -4.896 98 .000 Equal variances not assumed -4.896 95.378 .000 Equal variances assumed 7.837 Equal variances not assumed 7.837 Equal variances assumed 9.443 Equal variances not assumed 9.443 Equal variances assumed 98 .000 71.101 .000 98 .000 76.576 .000
Parking space
Billing duration
Loose items
Entertainment
-6.207 98 .000 -6.207 74.432 .000 Equal variances not assumed Equal variances assumed 17.572 98 .000 Equal variances not assumed 17.572 81.370 .000 Equal variances assumed 16.082 98 .000 Equal variances not assumed 16.082 87.361 .000 -11.882 98 .000 Equal variances not assumed -11.882 97.979 .000
Bargain
Credit availability
*After applying IBM SPSS package (version 19.0). TABLE II1*: AGE AND SATISFACTION LEVEL Organized Unorganized Age Low Moderate High Total Low Moderate High Total Below 30 yrs. 6 (23.07%) 8 (30.77%) 12 (46.15%) 26 (100%) 7 (53.84%) 5 (38.46%) 1 (7.7%) 13 (100%) 30-50 yrs. 5 (26.31%) 8 (42.1%) 6 (31.6%) 19 (100%) 5 (31.25%) 7 (43.75%) 4 (25%) 16 (100%) Above 50 yrs. 2 (40%) 2 (40%) 1 (20%) 5 (100%) 2 (9.52%) 9 (42.86%) 10 (47.62%) 21 (100%) Total 13 (26%) 18 (36%) 19 (38%) 50 (100%) 14 (28%) 21 (42%) 15 (30%) 50 (100%) * The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their age and satisfaction level. TABLE II2**: GENDER AND SATISFACTION LEVEL Organized Unorganized Gender Low Moderate High Total Low Moderate High Total Male 6 (20%) 13 (43.33%) 11 (36.66%) 30 (100%) 6 (40%) 4 (26.66%) 5 (33.33%) 15 (100%) Female 5 (25%) 8 (40%) 7 (35%) 20 (100%) 14 (40%) 12 (34.29%) 9 (25.71%) 35 (100%) Total 11 (22%) 21 (42%) 18 (36%) 50 (100%) 20 (40%) 16 (32%) 14 (28%) 50 (100%) ** The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their gender and satisfaction level. TABLE II3*: INCOME AND SATISFACTION LEVEL Organized Unorganized Annual Income Low Moderate High Total Low Moderate High Total Below Rs. 1,00,000 4 (23.53%) 7 (41.17%) 6 (35.29%) 17 (100%) 4 (25%) 5 (31.25%) 7 (43.75%) 16 (100%) Rs.1,00,000-10,00,000 7 (31.81%) 9 (40.90%) 6 (27.27%) 22 (100%) 7 (25.92%) 11 (40.74%) 9 (33.33%) 27 (100%) Above Rs.10,00,000 2 (18.18%) 6 (54.54%) 3 (27.27%) 11 (100%) 2 (28.57%) 5 (71.43%) 7 (100%) Total 13 (26%) 22 (44%) 15 (30%) 50 (100%) 13 (26%) 21 (42%) 16 (32%) 50 (100%) * The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their income and satisfaction level.
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TABLE II4**: EDUCATIONAL QUALIFICATION AND SATISFACTION LEVEL Organized Unorganized Educational Qualification Low Moderate High Total Low Moderate High Total Illiterate 1 (100%) 1 (100%) 2 (33.33%) 4 (66.66%) 6 (100%) School Level 3 (60%) 1 (20%) 1 (20%) 5 (100%) 2 (14.28%) 3 (21.42%) 9 (68.28%) 14 (100%) College Level 2 (11.76%) 9 (52.94%) 6 (35.29%) 17 (100%) 3 (17.64%) 8 (47.05%) 6 (35.29%) 17 (100%) Professional Degree 6 (22.22%) 12 (44.44%) 9 (33.33%) 27 (100%) 6 (46.15%) 3 (23.08%) 4 (30.77%) 13 (100%) Total 12 (24%) 22 (44%) 16 (32%) 50 (100%) 11 (22%) 16 (32%) 23 (46%) 50 (100%) ** The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their educational qualification and satisfaction level. TABLE II5*: OCCUPATION AND SATISFACTION LEVEL Organized Unorganized Occupation Low Moderate High Total Low Moderate High Total Business People 2 (20%) 5 (50%) 3 (30%) 10 (100%) 1 (33.33%) 2 (66.66%) 3 (100%) Govt. Employee 2 (22.22%) 4 (44.44%) 3 (33.33%) 9 (100%) 2 (20%) 3 (30%) 5 (50%) 10 (100%) Private Employee 3 (20%) 7 (46.66%) 5 (33.33%) 15 (100%) 3 (18.75%) 7 (43.75%) 6 (37.5%) 16 (100%) Professionals 1 (9.09%) 5 (45.45%) 5 (45.45%) 11 (100%) 2 (22.22%) 4 (44.44%) 3 (33.33%) 9 (100%) Students 2 (40%) 2 (40%) 1 (20%) 5 (100%) 1 (8.33%) 6 (50%) 5 (41.66%) 12 (100%) Total 10 (20%) 23 (46%) 17 (34%) 50 (100%) 9 (18%) 22 (44%) 19 (38%) 50 (100%) * The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their occupation and satisfaction level. TABLE II6**: MARITAL STATUS AND SATISFACTION LEVEL Organized Unorganized Marital Status Low Moderate High Total Low Moderate High Total Unmarried 2 (9.09%) 11 (50%) 9 (40.9%) 22 (100%) 4 (15.38%) 8 (30.77%) 14 (53.84%) 26 (100%) Married 6 (41.43%) 10 (35.71%) 12 (42.85%) 28 (100%) 6 (25%) 13 (54.16%) 5 (20.83%) 24 (100%) Total 8 (16%) 21 (42%) 21 (42%) 50 (100%) 10 (20%) 21 (42%) 19 (38%) 50 (100%) ** The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their marital status and satisfaction level. TABLE II7*: NUMBER OF MEMBERS IN THE FAMILY AND SATISFACTION LEVEL Organized Unorganized Members in the Family Low Moderate High Total Low Moderate High Total 1-2 4 6 8 18 2 6 5 13 (22.22%) (33.33%) (44.44%) (100%) (15.38%) (46.15%) (38.46%) (100%) 2-5 2 12 8 22 7 10 9 26 (9.09%) (54.54%) (36.36%) (100%) (26.92%) (38.46%) (34.61%) (100%) Above 5 3 3 4 10 2 4 5 11 (30%) (30%) (40%) (100%) (18.18%) (36.36%) (45.45%) (100%) Total 9 21 20 50 11 20 19 50 (18%) (42%) (40%) (100%) (22%) (40%) (38%) (100%) * The Table shows the categorization of respondents (shopping at organized and unorganized retail stores) according to their family size and satisfaction level. TABLE III: RELATIONSHIP BETWEEN SOCIO ECONOMIC CHARACTERISTICS AND SATISFACTION LEVEL- CHI-SQUARE ANALYSIS Socio-Economic Characteristics Degree of Freedom Table Value Organized Unorganized Calculated Value Result Calculated Value Result 1 Age 4 9.49 1.967 NS** 10.239 S*** 2 Gender 2 5.99 0.177 NS 0.408 NS 3 Annual Income 4 9.49 1.182 NS 4.863 NS 4 Educational Qualification 6 12.59 8.225 NS 9.967 NS 5 Occupation 8 15.51 2.520 NS 3.64 NS 6 Marital Status 2 5.99 1.781 NS 5.783 NS 7 Members in The family 4 9.49 3.599 NS 1.033 NS ** NS- Non Significant; ***S- Significant; Level of Significance= 5% S. No.
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TABLE IV: PROBLEMS FACED BY CUSTOMERS AT ORGANIZED AND UNORGANIZED RETAIL STORES- GARRETT RANKING ANALYSIS Problems of Consumers Organized Unorganized Total Score Mean Score Rank Total Score Mean Score From Retailers/ Employees Poor reply on enquiry 2989 59.78 III 2713 54.26 Poor co-operation 3411 68.22 I 2655 53.1 Lack of knowledge 3019 60.38 II 2756 55.12 Selling expired products 2865 57.3 IV 3324 66.48 Adulteration 2675 53.5 V 2994 59.88 In terms of Accessibility Unavailability of goods 2345 46.9 III 3235 64.7 Unavailability of branded products 1898 37.96 IV 3098 61.96 No home delivery 2935 58.7 II 2655 53.1 Poor after sales service 3059 61.18 I 2476 49.52 In terms of Physical Appearance Inconvenient location 3645 72.9 I 2365 47.3 Inconvenient parking facility 2675 53.5 V 3449 68.98 Improper cleaning 2889 57.78 IV 2979 59.58 Improper arrangement of goods 3367 67.34 II 3115 62.3 Improper space management 3016 60.32 III 3218 64.36
REFERENCES
BOOKS 1. Gilbert, D. (2003), Retail Marketing Management, Prentice Hall, United Kingdom, UK. 2. Kothari, CR. (2004), Research Methodology, New Age (P) Limited, India. 3. Pradhan, S. (2009), Retailing Management, Tata Mc-Graw Hill, India. 4. Underhill, P. (1999), Why We Buy: The Science of Shopping, Simon & Schuster, New York, NY. JOURNALS 1. Ashokan, C. & Hariharan, G. (2008), Profile and perception of retail consumers: an empirical study in Palakkad district, Indian Journal of Marketing, Vol. 38, No.2, pp. 24-29. 2. Chopra, K. (2011), Wal-Mart: Can it succeed in India? Indian Journal of Marketing, Vol. 41, No. 1, pp. 56-61. 3. Malliswari, M. (2007), Emerging trends and strategies in Indian retailing, Indian Journal of Marketing, Vol. 37, No.11, pp. 21-27. 4. Tamilarasan, R. (2007), A study on retail store service quality dimensions in select retail stores of Chennai city, Indian Journal of Marketing, Vol. 37, No.7, pp. 43-53. 5. Thirumoorthi, P. & Kartikeyan, P. (2006), A study on retailer and customer attitude towards P&G detergent powder in Coimbatore city, Indian Journal of Marketing, Vol. 36, No.9, pp. 26-31. RESEARCH REPORT 1. Mathew, J., Soundararajan, N., Gupta, M. & Sahu, S. (2008), Impact of Organized Retailing on the Unorganized Sector, ICRIER Retail Report, pp 2, 8, 60. WEBSITES 1. Bailay, R. (2010), Carrefour announces first wholesale outlet in India, available at: http://www.livemint.com/2010/05/11141616/Carrefourannounces-first-whol.html [accessed 28th March 2011]. 2. Kuncheria, CJ. (2011), India says no decision yet on opening retail sector, available at: http://www.reuters.com/article/2011/03/25/india-retail-easingidUSSGE72O07120110325 [accessed 28th March 2011].
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BREAKTHROUGH MANAGEMENT STRATEGY: EMERGING NEW INNOVATION THINKING IN INDIAN MANUFACTURING INDUSTRIES RAVEESH AGARWAL RESEARCH SCHOLAR CCS UNIVERSITY MEERUT ABSTRACT
Now a days most of the top management understands that if they fail to face rapidly changing realities, it's highly probable that their capacity to maintain business will diminish in the future. It indicates the need for a new approach to management to sustain in the future. It is evident that the traditional methods for running a successful business frequently fail to produce results as they once did. This puts a different spin on an old question: Should companies look narrowly at their role or be concerned with broader social issues? So they must discover the approach required for a radically changed future. There are no magic formulas that guarantee success in the future. Fortunately, there's another way of looking at the future and the choices ahead of us. It isn't rooted in yesterday, and it's desperately trying to shape tomorrow. The new design approach is called Breakthrough Management Strategy. The objectives of writing this research paper are to study the Breakthrough Management Strategy in Indian Manufacturing Industries and find out the applications to enhance companys innovation efforts for their future. This paper is based on secondary research. This paper also portrays few cases of manufacturing companies who embarked the breakthrough journey. These companies are focusing systematically and simultaneously on both the present and the future by adopting Breakthrough Management Strategy.
KEYWORDS
Breakthrough Management Strategy, India, Innovation, Manufacturing Industries, Visionary Leadership.
INTRODUCTION
here is a fundamental transformation of business underway. Forged by digitization, ubiquitous connectivity and globalization, this transformation radically alter the vary nature of the firm. No industry is immune to this trend. It completely changed traditional industries as well as emerging industries. We know that everything changes, change itself must change. Change is the window through which the future enters our life but we find change disorienting, creating an anxiety within us. As the saying goes, the only people who like change are busy cashiers and wet babies. If we wish to succeed in this rapidly changing new world we must learn to look on change as a friend one who presents us with an opportunity for growth and improvement.[5] In other words, we must learn to see change as a means of achieving our goals, not a barrier preventing us from reaching them. Yet this restructuring of our perspective on change can take some time, some efforts. Since there are some bumps along the road, we shouldn't expect all of the changes ahead to be painless, demanding only minimal sacrifice, cost, or effort. In fact, coping with change follows the some steps. But what are these steps in changing world? How these steps can help us to survive in the fast changing scenario by solving our problems in advance? There are numbers of models and approaches advocated by many Management Gurus but the magnitude of todays environment and global market change is unprecedented. In these circumstances, there is no room for error.[1] This had put a great emphasis on getting the right strategy and getting the strategy right. Many managers are looking for the one great panacea that new strategy or piece of management thinking that can address all of, or at least their main problems. At the same time, there is no solid and proven method that would help us to prepare in advance. In search for a solution more and more business people turn their attention to Breakthrough Management Strategy.
RESEARCH OBJECTIVES
Due to the paucity of data, there are very few empirical studies on the breakthrough management on the developing countries. It shows that breakthrough literature related to India is seriously lacking. Viewing this important yet largely ignored research gap, the objective of the study was framed as follows: To study the Breakthrough Management Strategy in Indian Manufacturing Industries and find out the applications to enhance companys innovation efforts for their future.
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Breakthrough Management has three aspects - Opportunity Focus (to create new customers), Total Dedication (to make the required big jump) and Continuous Unlearning (to forget traditional past). In Indian companies, the chief executive officer has a strategic vision for his business, but this is lacking in the next levels of management. The second and third levels of management have achieved operational excellence, but are weak in strategy. This gap between operational excellence and business excellence needs to be filled through preaching the concept of breakthrough management.[9] It is based on 3-Not Principles. The project must not yield any immediate results; the project must not have clear focus and should be an exercise in exploration. The project should not relate to any current business. Typically at the start of a breakthrough, there is high optimism but this is followed by a slowdown as further results become difficult to obtain but this is only temporary phase. The natural inclination for top managers should be to put more effort in this stage, while doing so the top management needs to build a dream team, led by a person having an emotional bonding with the breakthrough idea. The purpose of Breakthrough Management Strategy is to change our thinking and improve our imagination. Since most ideas in breakthrough management rejected immediately as they are closely related to our daily work life, again we have to think deeper, to come up with something that is more exciting more radical, more innovative. By continuous repeating the process of idea generation and idea rejection, Managers can learn how to steer their minds in a new direction.[10]
STAGES OF BREAKTHROUGH
There are basically three stages of breakthrough. The first two stages happen within the organization; the third includes people from out side the organization. The stages are Initiators Breakthrough, Entrepreneurial Groups Breakthrough and Development Partners Breakthrough. The Initiators Breakthrough is sensing the problem or opportunity, coming up with new idea, and resolving to push ahead with the idea. The Entrepreneurial Groups Breakthrough is demonstration of the technical or operational feasibility of the concept. The Entrepreneurial Group actually develops the product by creating a detailed business plan and applying essential human resources from all departments. The breakthrough with the development partners is demonstration of the market feasibility of the product. Development Partners Breakthrough is related to launching the product in the market, focusing the target market, creating development partnership with some efficient companies in the market, gathering the information from the world and applying same by focusing again on key features of own business.[12]
CYCLES OF BREAKTHROUGH
We can not cross all stages of breakthrough until there is a mental block, hence it is necessary to achieve mental breakthrough before a new stage is fully deployed. Each stage of breakthrough involves a three phase cycles. The three phase cycle for breakthrough involves dedication, a mental breakthrough, and a technical breakthrough. It is dedication which is very necessary to make real change. The dedication necessary for breakthrough will come from different sources for different people. However dedication alone is not enough. It is necessary to achieve mental breakthrough through unlearning the past learning. There are three important areas of knowledge that need unlearning: our culture or functional background, our past experience, and our current business. Similarly breakthrough requires technical feasibility also to be met. A technical breakthrough is achieved when the scientific methods and tools are used to make the change.[11] It is the CEO's initiative to obtain outside information and establish technical feasibility for an idea to take the company into the future. It is for the CEO/leader of the organization to ensure that the breakthrough project is given the right kind of impetus, since many are unable to foresee the benefits from such a project while still under development. Often a project idea may be laughed off as a crazy one, but breakthrough ideas cannot be normal ideas; they have to be somewhat crazy, only then they can lead to a real breakthrough.
OBSTACLES TO BREAKTHROUGH
The leaders of breakthrough change are bound to face resistance and hurdles of many kinds. Generally two kinds of obstacles affect breakthrough innovation in nearly every organization. The impediments are roadblocks and speed bumps. Roadblocks are cultural norms, which mean, they are created by groups of people. Because these are group based, these are more difficult to identify and more challenging to eradicate. Speed bumps, on the other hand, are individual behaviors that directly affect the ability of any new idea to move forward. Speed bumps can be very destructive if not addressed properly, but these are easier
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to recognize and overcome than roadblocks.[2] Besides it, breakthrough innovators face many other obstacles like inadequate funding, risk avoidance, time commitments, incorrect measures, etc. Since breakthrough is a serious and risky process, while the chances of failure are high, but for those who succeed, the rewards are handsome.[6]
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the first company to introduce this innovative concept (FWF) in its factory in India. The synergy obtained is reflected in the results. The company is meeting 100 per cent delivery performance with less effort, less cost and less management. The feeling of ownership among employees is much higher, a result of a customer-centric process. Most important, the company has achieved a more satisfied customer and top managements focus towards future business whether the company is growing or going through a flattening phase, breakthrough will always be important for them.
FINDINGS
In India, Manufacturing Industry has seen three eras of change and management - Process Control, Incremental Improvement (Kaizen), and Breakthrough Management. Few years ago Indian manufacturing companies focused only on production - the small 'm' concept. However, to compete globally, Indian manufacturing companies now focusing on the BIG 'M' concept. BIG M concept is related to enlarging our perspective and developing an integrated thinking capability to improve quality in every field. Indian Manufacturing started its quality journey in the early 1985s. Confederation of Indian Industry took the initiatives to lead the Indian Manufacturing Sector. ISI, Indian Quality Council, NIQR, NASSCOM, QAI, TQMI, KPMG, etc. also played an important role in this journey. By adopting different quality improvement techniques, many Indian companies received various prestigious quality awards from world class quality institutions. Another very prestigious award, received by more than fifteen Indian companies is Deming Prize from The Japanese Union of Scientists and Engineers (JUSE), Japan. Sundaram-Clayton Ltd., Brakes Division, TVS Motor Company Ltd., Brakes India Ltd., Foundry Division, Sona Koyo Steering Systems Ltd., SRF Ltd., Lucas TVS Ltd., Indo-Gulf Fertilizer Ltd., Krishna Maruti Ltd., etc are few Deming Prize winners from India. This is a reflection of the increasing quality consciousness of Indian Manufacturing Industries. To take India to the next leap of manufacturing revolution, some Indian manufacturing companies decided to adopt some innovative techniques. Breakthrough Management is one of such innovative technique which was introduced in India 2004 by Prof. Shoji Shiba form Japan. Professor Shiba initiated the first CII Learning Community with six Indian companies in July 2004 for learning about Breakthrough Management and applying this in the Indian context. Sona Koyo Steering System Ltd, TechNova Imaging Systems Ltd, UCAL Fuel Systems Ltd, Godrej & Boyce Manufacturing Co Ltd, TVS Motor Co. Ltd, Lucas TVS, Brakes India Ltd - Foundry Division, Bharti, etc. are the member companies of this community. Breakthrough Management theory rests on the premise that every organization goes through a lifecycle, there comes a tipping point when the business starts waning. This is when businesses must reinvent themselves, and necessarily kill old businesses and find new avenues. Breakthrough Management is all about creating new markets in the fast changing environment. The idea is to create a consumer segment where it didnt exist earlier. There are six distinctly different breakthroughs which must occur before an organization will sustain its results: Breakthroughs in Leadership, Breakthroughs in Organization, Breakthroughs in Current Performance, Breakthroughs in Culture, Breakthroughs in Management, and Breakthroughs in Adaptability. Firms financial resources as well as human resources have direct impact on breakthrough management. Unless the firm is willing to sacrifice major sums and not to question those who are engaged in developing and marketing the perceived breakthrough, the breakthrough project cannot be successful. The first CII Learning Community has achieved many breakthroughs over the past seven years. After the success of the first CII-LC, Prof. Shiba set up the second Learning Community with another five companies. All those companies who adopted breakthrough practice, it experienced both tangible and intangible benefits. Although there are many benefits of Breakthrough Management, there are lots of barriers. Barriers and breakthroughs are connected and closely related. Barriers may exist as structure, orthodoxy, constituency for change, turbulence, and mindset, to name several. Hence the role of the breakthrough management model is to identify the barriers in terms of how they are perceived and how they are overcome. Having realized current need of the Indian manufacturing sector, Prof. Shiba along with CII decided that it is time to take the successful Learning Communities concept to a National Level. Thus the first steps were taken towards the creation of a National Level Learning Community through the Visionary Leaders for Manufacturing Programme (VLFM). The initial objective of the programme was to create a critical mass of Visionary Leaders to lead Indias manufacturing sector in to future growth. Today, the programme is focusing on building a shared dream for Indias manufacturing sector that fuel the growth of the individual, the organization, the industry and the economy.
CONCLUSION
Finally, it can be concluded that in this era characterized by intense competition and change, Breakthrough Management is one of the strategy which can help organizations to prepare for future. After understanding the mechanism of breakthrough management, it can help organisations to redefine their strategic plans based on systematic approach rather than on guesses, trails and errors. Few Indian Manufacturing Industries already embarked this journey and took many initiatives in the form of VLFM programme, the researcher sense that the teams of enlightened leaders coming out of the VLFM programme and adopting Breakthrough Management Strategy have the capacity to change future outlook of manufacturing in India. Let us say, todays Breakthrough Management in India is like a car which can bring us too many destinations. No doubt, one day we will have Indian spaceship.
SUGGESTIONS
If we want to stay in business of tomorrow, we need to proactively improve our organizations breakthrough innovation effectiveness. The bad news is that there is no magic bullet to doing so and it cant be done overnight. The good news is that few companies have succeeded in building breakthrough innovation competence. Conducting a breakthrough innovation diagnostic and acting on its results is a proven way to get started. Acting systemically on all the root causes of breakthrough blockages will help companies to complete the job.[3] Starting a new breakthrough requires building new combinations of people, ideas, and objects. Hence it is important that the team for new breakthrough should be selected carefully. The purpose of Breakthrough Management process is to change our thinking and improve our imagination. Some CEOs have the intuitive capability to spot a good business opportunity, so it is better to make the CEOs interested in the proposal. It is necessary that top management supports the breakthrough team from the start of the process to the end and should be given the sufficient time and resources. Breakthroughs usually take the sweat and tears of many people. But those efforts won't bear fruit unless the right mix of skills and experience is involved, properly directed by exceptional leaders and by the right thought process. For successful breakthrough, it is important to bring positive change in the organizational culture and it may be possible through visionary leadership. Be wise in the same way by picking the right time and place to pursue breakthroughs. Know well your strengths and weakness and do not change just because everybody else is doing. It is imperative for the manufacturing sector to imbibe a culture of innovation and integrate it into their DNA. Some of the manufacturing industries are already working in this direction and achieving breakthrough results. Now its time for all other industries to join this initiative, continue to work towards building a competitive, innovative and vibrant India.
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REFERENCES
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