hr audit on international industries

8/10/2019 HR Audit on International Industries

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HUMAN RESOURCE MANAGEMENT

International Industries Ltd.

HR Audit

Submitted on

December 31st

, 2012


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IntroductionMr. Tauseef Chinoy, started IIL in partnership with European Firm and initially rented its

facilities. From a very small subsidiary of another company, IIL moved from a small firm to

becoming a big manufacturer of steel pipes. Currently one of the leading manufacturers, it has

international sales record of exporting to countries like Afghanistan, Sri Lanka, USA andEuropean Markets as well.

International Industries Limited (IIL) is involved in the business of producing and marketing

steel and polyethylene pipes.1Over the span of 40 years the Company has grown from a small

pipe manufacturer with equity of Rs 1.6 million to become Pakistan's largest pipe and tube

manufacturer with equity of Rs 5 billion. Domestically IIL has a market share of roughly 19

percent.

Human Resource Department StructureThe Human Resource Department Structure is as follows

Operation and Services Departments serves majority of the roles of Human Resource

Management. These include Administrative, Compensation and Benefits, Daily Routine

Operation, Appointments. Paper work is reduced greatly because of these functions.

However, the changes of organization and separation of tasks into hierarchy have been taken

recently. It just gave an organized look to the otherwise haphazard structure. Total number of

employees currently working in IIL is about 1400.

Human Resources Committee2

Amongst the Board Committees exists a special HR committee, and its main function is to

monitor, evaluate, and make decisions on behalf of the Board in coherence with policies and

strategic matters related to human resources of the company. It reviews and recommends the

salary framework of the employees and executives. It oversees the need for staff growth andtraining. The need for compensation, remuneration, of the employees as well as senior executives

is also assessed by the committee. Meetings are conducted annually or on such times when

the Chairman wants to summon a meeting. It consists of one chairman, one member and one

non-executive independent director.

1http://www.brecorder.com/component/news/0/1162341/

2http://iilpipes.com/index.php?option=com_content&task=view&id=86&Itemid=75

Organizational

Health Safety,

Environment, OHSE

Recruiting,

Training and

development

Operational

and

Services

Industrial

Relations


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Recruiting and Selection Practices

Recruitment is highly dependent of organization structure. Whenever there is a vacancy, the

department has to present to the HR department that there is a vacancy, which alerts the HR

department. The vacancy needs to be justified to the HR department. All competencies and job

vacancy are looked together to avoid overlap. Job Description is typically followed by CV

assessment criteria after which the CVs received are shortlisted. CV assessment is the procedure

of marking the specific skill sets against the vacant jobs criteria.

Typically 2 interviews are carried out to screen the applicants while technicaljobs applicant is

typically tested based on an IQ test for all management positions, not for senior management

positions.

First Level Interview Panel

Vacancy Department head

Operation Head

Section Head

Secondary Level Panel

Function Head

HR Head

Another Cross Functional Head

Interview with CEO if the interview deals with a senior position.

Compensation1. Fixed Pay is adjusted to inflation which is needed to remain competitive.

2. Unacceptable employees not given increment

a. 50% increase in fixed pay when inflation and some performance target goals are

achieved

3. Average pay out needsboardsapproval

a. Not given this year but this needs to be given on a priority basis

b. 10% pay out, from the board, min to max. [so that average needs to be deduced]

Fixed- Cash includes gross salary while non-monetary includes office workspace, cars, laptops

and holidays. International Industries Ltd used salary surveyors in May 2012 who helpeddetermine target percentiles of 4 positions. 12 comparators were selected by the salary surveyors.

Long Term Benefitsinclude: 2 out of three are mainly what are at IIL. There is no cafeteria

approach, and IIL selects these benefits for these employees

Gratuity (main important feature)


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Provident (taken)

Pension

Performance Appraisal

Performance Management is based on two factors below

Target that have to be achieved

Quantitative based

Functional Head and Sectional Head are involved while doing performance management

Strategic Heads, Line Managers find this difficult

Mid level Appraisal

Direct supervisor

Sectional head

In May, proposals, meeting at Department Head and Sectional Head Level

The joint effort to discuss reach a conclusion often becomes a ruckus.

For senior level appraisal

Management Committee

All person report to MD

MD and HR Head sit together to decide

HR committee and Board is also involved

Formal Performance Management is conducted yearly and a system of forced ranking is used.

Informal performance management involves feedback daily. First level PM is carried out atdepartment or sectional level. An informal counseling session may be conducted when set targets

are not met and are meant for employees to discuss their problems and for them to get their

performance to then preferred levels. If an employee doesnt perform to a level that is expected

of him, there is no probation period but rather time to find a new job since the company

understands that firing may hurt the career of its employee.

Potential Management

IIL does not have a formal potential management system since itsall subjective and may lead to

wrong and improper decisions. Since its all based on judgments and with no properpotential

assessment system in place, IIL feels itsbest to not carry it out.

Training

Main feature of training includes On the Job Training especially in manufacturing and sales

departments. Since manufacturing is all about technical skills. When employees are hired, they

are under an apprenticeship program, under which the employees are given 2 years training.

Health Safety and Environment is crucial in this department. Sales department take the


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capability of individual into account and senior managers go around training and helping the

employees under them.

Job Evaluation

There is no set job evaluation system in place currently.

Industrial Relations

Handled by the Industrial Relations department and conflicts resolved through bilateral negotiations.

Change Management

Currently the organizations owners have realized the importance of moving from a typical

family run business to a more corporate structure, especially in strategic relations. Without losing

the principal hold of the company, the organization is changing to a more decentralized form of

hierarchy.

Recommendations to Strengthen the HR functionWhile conducting our HR audit at IIL, we learnt that IIL is thorough in its HR practices given the

current organization of its HR department.

Since IIL does not currently have a potential assessment system, we would strongly recommend

that it implements one. This is imperative given the fact that the company is currently in the

middle of transition and determining which employees have high potential will provide solutions

to choose, evaluate and promote employees whose future performance contribution is crucial for

the long-term success of the company.

This could be done through a formal job rotation system that could be implemented both in the

offices and the factory premises as it would allow for supervisors to judge the potential of an

employee they feel have a long way to go and help in developing an alternate career path.

Through our audit, we also found that IIL does not currently have a job evaluation system which

would be beneficial as IIL operates in a competitive industry and a job evaluation system would

help maintain an external and internal parity. It would also help in setting compensation levels

and help in determining its place in the hierarchy of the organization.

This could be done by implementing the Hay Evaluation System which is one of the most widely

used systems by organizations everywhere. This too would prove beneficial during a time when

the company is going through a transition.


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Likely Challenges to be Faced When Adopting RecommendationsThe likely challenges faced by IIL when adopting out recommendations are not many. The

principal challenge is getting everybody over board for any changes. Both potential management

and job evaluation require support and cooperation from the board of directors and the higher

levels of management. Without their support, implementation of both these systems would bedifficult.

These decisions would also require financing and a part of the budget would also be allocated in

order to implement them. This is especially for the implementation of the job evaluation system

which will be done using the system developed by Hay Management Consultants.

Both these recommendations would also require increased communication especially on the HR

departments part. The HR department needs to insure that these objectives are clearly

communicated to the concerned parties and any issues raised such as time management are to be

addressed so that the objectives of conducting these activities are met in the truest sense.

How We Went About the TaskWe had gone through our entire syllabus that weve done in HRM and compiled the list of topics

that we had covered. Our strategy was to get a little information about each topic in terms of how

IIL was conducting their HR functions.

We met up with the head of IILs Human Resources, Mr. Khalid Junejo who addressed each

topic with the way things were done at IIL. The meeting provided us with a very detailed picture

of the HR operations at the organization which made our job of coming up with

recommendations much easier.

While discussing Potential Assessment, Mr. Junejo told us that IIL did not have a potential

management system which led us to recommending that. This was further iterated by the fact

when Mr. Junejo told us that there is no formal system of job rotation that would help in

assessing potential of IILs employees both on the factory and the management level.

The recommendation for job evaluation first came up during the time we found out that there

was no job evaluation system in place. It also came up during the time change management was

discussed. As Mr. Junejo told us that IIL was a family owned business and while it did not have

a purely Seth culture, they are in the process of giving it a more corporate structure. We haddiscussed in class once that companies may take up job evaluation during restructuring which is

why we recommended it.

hr audit on international industries

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