Shoddy Defence deals and their impact

The Indian Army is known for their honesty, integrity and professionalism yet the stigma of corruption has touched the defence sector many a times. Starting from the Jeep scam to the Augusta Westland helicopter scam; taxpayer’s money has been spent on middleman, which could otherwise be utilised for improvement in the defence sector.

The money that goes in these deals in the form of kickback is recovered by these supplier companies by increasing the cost of equipments purchased. A Coffin which was priced at 172 $ was bought at 2500$. This extra money outflow from the company increases the import cost to the country and affect the current account deficit (CAD). This money can be recovered to reduce the substantial burden on the economy. For the perusal of corruption case a lot of time and money of the government is also wasted. The court proceedings in the Bofors scam burdened 250 crores rupees to the exchequer.. The result; no conclusive evidence was found against the offenders. The cost of court time and the delaying cost of other cases can only be speculated. The GNP of the country from the expenses side has a component of government spending. If the money that is lost from the economy can be recovered and invested in good investments, which leads to increased wages, increases consumption of goods and services, then the GNP will improve which in turn is a good indicator for economical growth.

To curtail the menace of corruption, various policy recommendations have been made. Offset production which is a measure to strike a balance of trade between two countries in which the seller agrees to buy 30 % of the foreign exchange value from the government. In a bid to bring structure and transparency to the procurement process, the Defence Procurement Procedure (DPP) was established in 2002 according to the recommendations of the GoM ( group of ministers ) committee which was also revitalised in its functioning by the recommendation of the Kelkar committee. In this period the DPP has facilitated the signing of offset contracts worth of 4.3 Bn $. Although most of the purchases in India are inter Governmental but there has been a gradual shift to the competitive pricing model like in the case of Dassaults Rafaele jets for the Air force. This will spur the domestic defence production too and chances of money out flowing will reduce.

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The changing times requires HR professionals to shift their focus; where it was largely viewed as a cost centre. HR professionals need to be proactive in its bid to be recognised as a strategic partner. The answer to this can be obtained by reducing the overall cost of the organisation in terms of HR activities and investing smartly on processes which creates long term value for the organisation.

One of the very basic functions of the HR department is Hiring. Segregating hiring to its components gives us Recruitment, Selection, On boarding and Probation. From the time there is a vacancy in the organisation; technology will help you to understand which source has the best yield ratio and which candidates shall go through the next round of the process. HR personnel are involved with the advertisement process.  Advertisements in the company`s social platform is a must in today`s internet world. Sourcing of passive candidates which can be defined as candidates who aren`t desperate for a job change, but are talented and looking for the right call is a very important aspect. These candidates which aren’t actively in the job market but can add immense value to an organisation can be sourced from social platforms like LinkedIn. Screening of candidates via the social platform can also be done. Though the job screening process via Facebook may inadvertently consists of personal moments of the candidate; other networking sites like Twitter, LinkedIn may be used to assess the interests. Legal complications can be avoided by researching about the candidate before extending an offer. The HR department will know better which information to look for than the line manager. Like for the post of a sales person; understanding the person better for his social networking skills can be a good indicator of his job success rate. Using the social media platform for on boarding can reduce the recruitment cost.  Outsourcing the on boarding process to consultancy firms like Towers Perrin are practices nowadays where they focus on the on boarding of the selected candidate. The on boarding process is totally done by the consultant whereby it prepares the new employee about the organisational culture.

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Prime Minister Mr. Narendra Modi had launched the “MAKE IN INDIA “campaign on the 25^th of September,2014 in the presence of eminent Indian industrialist. The initiative taken by him has been to promote a culture of trust, transparency among industrialist so as to facilitate the process of doing business in the country.  This initiative bolsters to put India in the global manufacturing map, help in the inflow of technology, capital and in the process create millions of job for the Indian youth.

In order to establish itself firmly as a superpower and be self reliant, India needs to be committed to the cause of Indian manufacturing. Like the initial few years after Independence, the current government has to focus heavily on improving the quality of Indian made goods to compete in a world which is becoming increasingly competitive. This is the right opportunity as after two decades a party has come into power with absolute majority.

When we look at other   developed countries like Germany, Japan, USA the industry and the services sector contribute roughly 25% and 70% respectively. In comparison the contribution of the industry and services sector is around 16% and 64% respectively. Out of the 487 million labour force in the country, industry and services sectors contribute 20% and 31% respectively. Compare this with China which with its huge workforce population of 786 million people has roughly 30% contribution from the manufacturing industry. Every year 10 million people join the workforce and to provide them with jobs is a mammoth task in itself. The answer can only be provided by the manufacturing sector.

According to the latest World Bank reports India stands at a dismal 142 out of 184 countries surveyed in terms of ease of doing business. Even in Mumbai the trade capital of the country required 13 procedures to start a business, and it took 30 days to accomplish this, compared to an average of 4.8 procedures and 9.2 days in advanced economies. This easily highlights the mammoth task in front of the Government. The Government has identified 25 sectors to like textiles, leather, hardware  mining ,aerospace ,defence, military which are strategic as well as a large number of people are employed. This policy comprehensively tries to address the issues like regulation, skill development, technology inflow, infrastructure, capital inflow, taxes and exit mechanisms.

In a bid to make India attractive to the outside world the Prime Minister has lifted caps on various sectors like defence, insurance telecom, and power. India is the largest military equipment purchaser in the world. Last year India spent 6 billion US$ on purchasing military equipments. This deals with a lot of commissions and kickbacks for the middleman and leads to corruption and beauracracy in the government. In a bid to compete with USA and China in its military might, India`s defence outlay is going to increase substantially. Even with such a favourable market existing there is absolutely no supply from the local markets barring some local made ballistic missiles. This is an ideal time to establish India as an alternate location for defence equipment manufacturing. The role of the private players is critical and they have shown a keen interest in investing. Companies like Tata group, Reliance, Punj Lloyd and Mahindra which were facing problems following government norms has now with the new norms invested heavily in weapons manufacturing. The focus has been given to manufacture rocket launchers, combat vehicles, torpedoes, submarines. One of the big ticket moves was the making of submarines by Larsen and Toubro at a cost of 50,000 crore in India, which otherwise would have to be imported from outside.

One more major sector to be benefited from the reforms will be the oil and gas sector. India imports most of its fossil fuel consumption from the outside world and this puts a huge burden on the economy. Strategic investing in new technologies and newer methods of oil and gas drilling can help India to reduce its dependence on foreign imports. Venturing into unconventional energy sources like coal bed methane will also help.

The current account deficit which is forever increasing and is a burden on the economy will substantially be reduced by these steps.

In order to compete with the rest of the world our Prime minister has talked about the three “D “s which India has: Democracy, Demographics, and Demand. Our country is in dire need of employable people as the industry leaders often points it out. Many of the youth are not industry ready because they do not have a practical knowledge of the industry. Although we have a vast pool of engineers and technical scholars and researchers, the amount of technical innovation emancipating from our country is very low. The education system is to be revamped in order to promote a culture of practical, in-hand learning, rather than learning only from books. The complete lack of apathy and lethargy of the private/public sector is also to be blamed for the lack of employable skills in today’s youth.  The number of apprentices, in India is abysmally low compared to the number of apprentices in global manufacturing hubs like Germany. Having a practical training parallel with the theoretical learning will help in a better understanding of the concepts. In order to fully utilise the huge demographics of 65% population below the age of thirty five, reforms in education sector is must. Only then India will be able to provide quality product and workforce to the world.

One of the major obstacles faced in India by any industry is labour problems and land acquisition. While there is no doubt in my mind that promoting Indian manufacturing is the way forward for the economy, one often ponders how the government is going to tackle these sensitive issues. Certain archaic laws needs to be changed, but the worker class needs to be made a part of this change. They should not be left out while framing the laws that are going to affect them the most. The worker class with their collective bargaining techniques and sometimes militant attitudes have only thought about the social upliftment of the poor. While militant outlook cannot be encouraged for a healthy work environment, they need to be made shareholder in progress and educated about the pros and cons of successful business. Private organisations and trade union can take a leaf out the page of trade union of Bajaj Auto movers. The trade union has decided that whatever is the problem with the management, work should not stop and the brand image should not be tarnished. Even sensible people who are righteous in their work are only elected as trade union representatives.

Our country has democratic style of governance and hence it becomes much more crucial to ensure holistic development of the society. Unlike China we cannot go ahead with an iron fist, we need to be sensible while going for land acquisitions and ensure that the final yield of a project supersedes the loss to the land looser or the environment. Having a suitable and uniform land acquisition policy and creating a land bank according to the fertility of soil nature will help reduce a lot of problems. Many a times industry personnel are not ready to go to remote places; connecting these remote barren lands and providing the suitable infrastructure for industry becomes the responsibility of the Government.

According to Arvind Subramanian, the Chief Economic Adviser India needs to grow at the rate of 8 % for the next twenty years to provide jobs for the entire population. This is not a small task and requires far sightedness from the current and subsequent governments. To ensure long term growths and build a nation which is sustainable as well as self reliant, India needs to take strong measures.  “MAKE IN INDIA” is one of the correct initiatives undertaken in this respect. Whether this will just remain a slogan or will we see real concrete commitment from the government will be a thing to be seen in the future.

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 Labour Reforms and Make in India

The present government has decided to amend the archaic labour laws of the country which resembles the colonial mindset of yester years; it is important to understand what the subsequent governments of our country have done for the millions of workers who drive the country. The fact that India is focussing on MAKE IN INDIA products to give impetus to its economy and improve the financial health of the country makes the issue of labour reforms much more significant. Among the laws that are under the scanner are the Factories Act, 1948; Apprentice act 1961; Contract Labour Act 1970 and Child Labour Act 1986.

One of the major problems plaguing the manufacturing industry as well as the other industries is the employability of people. Employability doesn’t reflect the technical qualification but also on the first hand industry experience. The industry people in India employ only 300000 apprentices, which is substantially low for a country like us. They want to remove the hassle of documentation for these apprentices and often employ them as substitutes for works which is done by permanent workers. If the young people are not given first hand experiences then they will never deliver good outputs.

In the name of employer flexibility many organisations use a contractual workforce and exploit them by giving them the same work as permanent workers. The disparity in the payment has to be removed .Proper implementation of the current contract Law provisions has to be followed which explicitly states that contract workers doing perennial job or job performed by permanent workers are not contract workers. The unfortunate death of the HR manager was due to this same issue. Many a times the contractors pay less to the workers even though there is a provision for payment to be done in the presence of a representative of the management. There needs to be proper communication regarding the contract labourers’ dues from the management side as their well beings affects the production also. Proper grievance system regarding less payment has to created to avoid exploitation of workers.

The end to the “Inspector Raj “has been projected as a means to Easy-Governance. This doesn’t mean that they cannot have the right to inspect the plants at a reasonable time. The inspection schedule dictated by Centre will lead to bureaucracy and this is in contravention the International Labour Organisations rules. One thing that can be done is to monitor the Inspectors actions through the Central Vigilance Commission

The issue raised by employers is of Trade Union problems. One cannot deny the fact that the constitution of the country gives the right to each one of us to form groups. The days of militant trade unionism is past and it should be kept that way only by aligning the objectives of the organisation with the individual’s goals. In countries which have established itself as manufacturing hubs like Germany and Japan, workers feel a part of the organisation. The quality of product is reflected from their love for their work. Accountability for the work has to be promoted and a proper benchmark has to be set for judging performance. Till date the trade unions has been crucial in looking after the health and welfare of the workers of the countries and involving them in the holistic development run will only boost the efforts.

The efforts of the present government in creating a favourable atmosphere for business are commendable; but one thing the government needs to remember is that laws without their proper implementation are nothing. Efforts like PPF portability is well appreciated and leads to utilisation and easy access of money to all. In order to be a manufacturing country India also needs to ensure that the workforce is properly trained , well represented in decision making processes regarding themselves and involved to take the country ahead.

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Succession planning can be defined as a process of identifying, training and developing people within an organisation so that they can fill key business positions in the company. In a world where people are shifting from one industry to industry, and specialised workforce agencies like Egon Zehnder being used to identify top position professionals, it might seem succession planning is redundant.

It cannot be over emphasised that a person like Mr. A.M. Naik who started his journey a junior manager would know about the company proceedings better than most people outside the organisation. Hence when such a person takes on the baton of the company, he can provide a fine balance between change and successful existing practices. Promoting talent is an art which organisations need to muster as providing a flexible yet reliable career path would not only increase in employee satisfaction but also profits. Employees focus more on self actualisation and self esteem rather than compensation only.

Labour demand forecasting is about finding the right number of people, with the right skills, at the right time .Growth of an organisation, keeping in sync with technological skills of the market scenario, attrition rates are the major factors to be kept in mind while doing labour demand forecasting. Absence of right employee can lead   to reduced productivity, performance and profitability. It is to be kept in mind that Human resource is an inimitable resource. It is the key differentiator in organisations and the key driver of business. Hence people without the right skills or inadequate people can lead to loss of competitive advantage. A case study of a gas plant which is a real life story elaborates the point of adequate number of people. Six operators are required for running of six machines. Unplanned leave plans or absenteeism of any one of these workers lead to more pressure on the others. Work fatigue hampers the productivity of the workers and they in their turn remain absent from job. This lack of manpower puts the total plant at risk; hence any manufacturing plant has to keep a note of this absenteeism before implementing workforce planning.

One of the key drivers of an economy is the manufacturing sector. The lack of industry ready skill among the youth of India has been a deterrent for the economic growth. Better industry-education interface has to be created to help in recruitment of industry ready people. Incentivising these employees by providing a definite career plan would enable innovation as well as productivity from them. Attracting, retaining and developing top talent in the market is of utmost importance for a Human resource manager.

It has to be a business strategy and all the employees in an organisation need to be included for the same. An example of talent management can be seen in TCS where if an employee gets bad rating, he is sent for training in the same profile in which he was working. This is known as Proactive Employee Engagement Program (PEEP).  A second chance is provided to employee to improve their skill set as per the required standards. A  proper skills inventory for employees enable managers across all functions to identify the right person for the right job at the right time  within the organisation. In larger organizations, talent management requires Human Resources Information Systems (HRIS) that track the career paths of employees and manage available opportunities for talented employees. Organisations multi-skill with the intention of removing functional barriers and increasing the flexibility of an organisation. Employees can assume other tasks when there is absenteeism and  can be moved into other positions at peak operational time.

It can be concluded that a robust yet flexible workforce can only be made available to an organisation if  it is strategically designed to meet the global changing trends and in synergy with the objectives of the organisation.

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