Saturday, August 6, 2011

What ails HR ? --- A view from within



HRD  -- the flavour of the season, the  new  mantra, the new panacea,  the  new status symbol.  Where once the Personnel (or its earlier avatar, the Welfare Dept) department  was  a necessary appendage due to statutory requirements, its modern day counterpart  --  HRD Department is an indispensable part of any organisation structure today.  Heady days indeed, for the HR Professionals.


What does  this  mean for the HR Manager.  More status,  more pay,  more job offers   ?  Certainly.   But the silent implication is more subtle  viz.,  more responsibility.


Organisations first exploited  raw materials. Next was the turn of machinery,  to produce finished products.  This was followed by selling abilities and distribution and reach.  Soon followed marketing  including packaging,  advertising,  image (brand)  building. Thereafter came finance. Today it is information. Tomorrow it will be people.


So while clearly the HR function and its practitioners are on an ascending curve,  the  moot question is,   are they also climbing the learning curve  ?  If not,  then it only takes a flip for the ascending curve to become a descending one and all will fall flat on their faces, with their noses rubbed in the mud.




What will be the expectations from HR  tomorrow  ? Before we take up this question, it may be worthwhile to examine,  what is HR doing today and what are the areas which are often today not being catered to fully or properly.


During the course of my consultancy and training work,  I have found that the following are the major concerns of the HR People, where they spend maximum time and effort :


*    Recruitment

*    Salary Structure framing and  re-framing

*    Pleasing the boss  ---  be it the CEO or MD  or some functional Head

*    Grabbing Power,  particularly  tightening hold on Administration

*    Keeping close track of vacancies arising in  Personnel / HRD in other organisations

*    Looking for another job



Recruitment


The search for people is continuous, never-ending  and always a major pre-occupation.  This is perhaps to be expected.    Expansions mean more people are needed.  Change of technology means new people are needed.  Competition means more aggressive people are needed.  Customers mean more friendly people are needed.  Globalisation means  people with broader outlook and richer / wider  exposure are needed.  Specialisation means people with narrower focus and niche capabilities are needed. The list goes on and indeed is endless. 

The HR chief continually bemoans how difficult it has become to get good people and, even more difficult,  to retain them.

Of course,  this makes him very important and visible in the organisation.  All this is of course true and understandable.  The question, however, that needs to be asked is why does this  have  to be a continuous exercise.

Why should people also have to be found  ? Why can’t  they be developed ?  Why has management development become such an alien concept  ? Whatever happened to the management trainee who was trained and supported to become the company’s future manager ?  Until a decade ago,  it was not uncommon to hear of Chief Executives who had joined their respective companies as Management Trainees.  Today,  whenever  a new CEO takes over,   the inevitable  question  is  --  who is he  ?  Where has he come from,  which is usually from outside.

Look at the last few months.  Dr. Manu Seth has resigned from Tata Chemicals  and  his  successor  has come from outside. The chief of IDBI bank has retired and his  successor has come from outside.  Mr. Tobaccowalla retired from  Voltas and his successor, Mr. N. D. Khurody came from  Merind.  These  are only the visible cases.  But this is happening at  many  senior levels,  in practically all organisations. 

So the question is,   are the HR people really doing their job well in recruitment if they have  to  continuously recruit people from  “outside”.  "What can we do,  we simply don’t have the kind of people we need for this new business or the changing markets"    is  the  bemoaning response.  That is because you have never tried to anticipate  your requirements in advance nor have you anticipated the inevitable changes in your  product - market scope and the kind of people they will require

Why  have  you  not  tried  to  train,   re - train  your people for the new requirements.  Recruiting people from outside to fulfil your requirements is like chasing your own shadow  ;  you will never catch up because every time there is a new requirement,  you are having to go outside instead of tapping the resources within.

On the other hand, if management development is a carefully planned and sincerely executed aspect of your HR management,   you can meet such requirements without difficulty from within and only go out for the rare exceptions that arise from time to time. 

This is,  of course,  not to decry outside recruitment.  pers se.   Indeed,  not only is  “recruitment”  from outside  necessary,   it is clearly desirable for bringing in the whiff of fresh air that any organisation needs at regular intervals. It also helps to benchmark your own organisation vis-à-vis   what is happening outside.  Most important,  it helps the organisation prevent  in - breeding and  a certain staleness of ideas by bringing in   fresh  ideas  and  a  new outlook from outside.

So then why all this fuss  about “getting people from outside”.  The issue is not so much  about getting people from outside ;    rather, the  question is about  the proportion  of development needs that are met from outside and within. And successful HRD  practitioners,  who are at pains to emphasise the  “development” aspect of    HRD,    will make sure that existing people get a chance to  “develop”  themselves by getting  opportunities  to  fulfil  bigger roles and challenging tasks.

It is important to understand the difference between  existing people fulfilling  newer bigger and more challenging roles that arise in an organisation versus outsiders continuously being tapped for such cases.

When an outsider does so,  it is only his development that takes place ;  when an insider takes on a new role,  it is not only his development but the “development”  of the entire organisation because the organisation has now acquired  a new level of managerial competency  which is capable of fulfilling the newer,  more challenging and demanding role.



Salary Structure


The next major pre-occupation of  HR managers today is the Salary structure ;  the playing around with it never seems to end.  They are forever,  exchanging notes with their counterparts on what they are paying,  how much and,  most important,  in  "what manner"  i.e. under what narration in the voucher so that the tax man cannot extend his reach.  Is this really  an integral  part of  HRD  activity  ?   Does it deserve the time that is being spent on it at the highest levels  by some of the best minds in the profession  ?




Pleasing the Bosses


This is, unfortunately,  a most unseemly and unbecoming aspect of an  HR manager’s functioning.   Most  HR managers practice this to have their way with the Boss,  instead of boldly relying on the logic of their argument and strength of their convictions. 

At many senior management meetings,  the HR Chief remains quiet when the loud-mouthed and aggressive marketing or finance head is demanding / proposing  something which is detrimental to human relations or against established company policy.  However,  at the end of the meeting,  he inevitably stays back to  “privately”  advise the MD,  in hushed conspiratorial tones,   about the “ill effects”  of his colleagues  suggestions and how it would harm the CEO and his image. 

The tragedy  is that most  CEO’s  seem to encourage such a way of working and often give rulings in favour of the advice tendered by the HR Chief in this manner.  This is why many HR Chiefs have built for themselves an unhealthy image of being a  “politician”  rather than  a good,  strong and effective manager ;  indeed,  it is not unusual for people from other functions like marketing, finance or manufacturing to label all Personnel / HR  managers  as  being of  “that type”  who cannot be fully trusted and with whom one should be careful as whatever you tell him can reach the CEO’s  ears  !!  Pity,  isn’t it,  but true.




Grabbing  Power


HR Managers love to have to have the power to say no, or be in charge of those areas where people have to come to them for permissions and sanctions.  In typical,  IAS bureaucratic fashion,  they are quick to point out why any proposed action  “cannot be done”  as it might have undesired ramifications in some other case or place and by doing so continuously,  project  themselves  as  the  guardians  of  the  company’s well - being  and  legal/moral  correctness. 

The result is that the CEO feels that the best way to tackle this is to make the HR Chief the  “sanctioning” authority for all such  controversial cases,  much to the delight of the former.  Sooner than later,  all case of  room allocation,  company  flat  allotment,  furniture repair/ replacement,  car/driver allotment,  tea service priority,  etc.  come in the domain of the Personnel/HR  Manager.  He then remains merrily busy in handling these matters, doling out favours and extracting  “other favours”  in return. 

The biggest advantage of all this is, of course,  is that he remains terribly busy and therefore legitimately has no time for true  HR development activities which is his real mission.   Rather neat,  is it not  ?  It, of course, means a lot of power  ;   if anybody needs anything in the organisation,  be it tea for visitors,  the services of a peon or a driver,  a car for an outdoor trip, he has to come to the  Personnel/HR  Manager who then acquires the image of being a very helpful and resourceful man !

It is true that he acquires a lot of power,   but  it is a big  under - utilisation,   for this whole job could have been done by a much junior person under some “broad decision rules”  whereas the Personnel Manager could have concentrated on his principal role of attending to people problems  and  their resolution,  anticipation of grievances and their solution,  identification of development needs and their fulfilment and so on.




Keeping  track  of  vacancies


Whenever they are free  from their busy schedule of tackling administrative duties,  their favourite job is to ring up colleagues in other companies to keep abreast of the latest in “who has left which organisation”  and who is joining where”.  the IT people are today talking of  networking and e-mail and video conferencing.  The management gurus are today talking of networking with friends and business associates for personal and corporate success.  Personnel managers in India have been practising this for years.  They are one of the rare  group  of  managers who take their professional organisations seriously,  attend all meetings and annual conferences.  The pity is that such meetings debate very little of advancement in  their professional technique and practices.  The major data shared is vacancies,  movements and at best new salary structures.




Looking  for  another  job


Finally,   the  entire community of  HR  Managers   are forever ready to make a change or consider one.   No matter how serious the nature of the task  they are  currently involved in,  no matter that they have changed just some months ago,  no matter that they are doing extremely well where they are,  if there is a better offer (essentially this means more money or more administrative authority),   they are  gracious enough to consider.

It will,  of course,   be unfair  and  untrue,   if I do not state that there are many exceptions.  Surely all Personnel Chiefs are not like this.  Absolutely.  There are many who are quite different and quite the opposite.  However, my experience is that a majority are like what I have described, which I feel is the biggest challenge facing the profession today.

In all the activities mentioned above, you will note that there is not even a faint trace or hint of anything  remotely connected with  manpower development.


  • I do not see any HR manager pre-occupied with training or concerned about it or searching for new, better trainers or designing any training programme or reviewing the evaluation of a previous one.
  • I do not ever see any HR manager discussing the improvements required in the existing Appraisal system.
  • I do not ever see an HR manager trying to develop a mentoring  system.
  • I do not ever, absolutely never,  see an HR manager concerned about trying to improve his MIS or demanding a software for himself and his function from the  EDP department.
  • I do not ever see the HR managers trying to develop a carer development plan or approach for people who have joined  the company at entry levels.


Let me illustrate with some examples from my own personal experience.   A very well known company n the FMCG sector whom we had approached to sell our HRIS Software took us through 4 demonstrations,  2 to their HR people and 2 to their IT Chief (because he had forgotten the first demo),  and finally decided to buy the software  after  2 years  !! 

Today,  2 years  after the purchase of our software they have entered only about 50 persons'  data in the software.  Some  2 months ago their  VP - HR called me to say that his people were experiencing difficulty in doing data entry. We offered to send someone to their office to sort out the problem. He said,  "Please wait, my secretary is compiling the problems and we will get back to you "    ---  it is 2 months since,  and we have yet to hear from him.  In  2 year interval since they installed the software,  we must have chased their HR departments at least half-a-dozen times to get their data entry done. We also offered to do it for them (at a fee) but there was simply no response  !

An MNC software company approached us  about 6 weeks  back for an urgent requirement of conducting a training programme on “Training the Trainers”.  Within 2 days we had sent to them the detailed outline of the programme, its proposed content and coverage and asked for their response.  Despite 3 follow-ups  the standard response has been, we have not yet had time to sit down and discuss the programme. 

At an  MNC Pharmaceutical company  we conducted 4 training programmes for all their factory personnel.  The programme was very well received and being of a workshop nature a number of action plans were decided upon.  We made a detailed report on each of the programmes  and  a  consolidated report for all the  4 programmes  with a view to facilitating the post-programme implementation activities that had been agreed upon during the programme. 

Close to 9 months later,  the copy of our report (of which we had submitted 2 copies)  has not yet been forwarded to the respective manufacturing GM’s  for their action  !!

At yet another  MNC Pharma company we conducted a 2 module Programme for their senior managers with, once again,  each module culminating in an agreed action plan,  At the end of the second programme which was also partly attended by the board of Directors for listening to the participant presentations,  a  “delayed Post Evaluation Form”  was handed over to the Company for getting a feedback on the change if any that the bosses saw in the behaviour or approach of the participants as a result of their learning from the programme.   7 months later,  the form is yet to be circulated.

How can anyone believe that today’s  HR managers are serious or even conscious of the “development” as aspect of their  role  ?

Whenever we have gone for demonstration of our  HRIS Software, in 70 %  of the cases  we have found that the HR Chief does not attend the demonstration ; he  “delegates it to his assistants who are very often young HR executives with less than 2 years of experience.  In one bizarre case some 5 years ago, I went to Delhi after a prior appointment done through exchange of faxes and telephonic conversations for a demo to VP - HR of a company.   When I arrived at his office,  he pleaded another engagement and directed me to show the software package to  an HR trainee who had joined the company   that morning  !! 

Are the HR managers not concerned about developing the MIS in their departments ? Are they not concerned about servicing the other departments through better organised, speedier,  more accurate information so that ultimately better quality and timely decisions can be made  ?

Yet  another very unfortunate and disturbing trend amongst the vast majority of  HR managers is their discourteous behaviour towards visitors and guests.   HR Managers never reply to a letter or fax or e-mail.  They never,  absolutely never return a telephone call.  That would lower their prestige and standing. 

As a consultant, I have been at the receiving end of such behaviour  from managers in the most "professional (!?)  of organisations with alarming regularity.  Just because I am seeking work does not mean that they are entitled to  ill-treat me.   I have  yet  to meet an HR manager who did not keep me waiting, despite my coming to meet him on a date,  time and place of his choosing.   Is this the way they seek to gain importance or  respect  ?   How can they ever set an example to other  employees in the company  ?  What  kind of ambience are they building in an era that swears by customer satisfaction  and building of relationships with all business associates for enhancing business success  ?  

It is clear that despite all the pontification about  how HRD is different from personnel management in that that while Personnel management has a maintenance focus and reactive stance, HRD has a development focus and pro-active stance,  the truth is quite the opposite.  The mindset continues to be  reactive,  boss - oriented,  power - seeking  and  “chalta hai”.

If HR wants to make a difference in the new  millennium this is what it must do.  It must make a complete somersault,   a   180 degrees about -turn from its present way of working and adopt the following approach :



  • Get rid of its Administrative baggage,  not worrying about the loss of power ;  rather think about the gain of time for doing something more constructive, innovative and contributing.
  • Catch  management development by the horn and take it up as a mission.
  • Work to develop an effective management trainee scheme wherever recruitment of trainees happens in batch.
  • Else develop a structure for management development and career development of entry level and junior level managers.
  • Don’t  work from the confines of your cabin or the protection of your desk.  Move out and mix with all employees in different locations to get a first hand feel of what is happening and thus be forewarned of any brewing crises or grievance.
  • Look at some small but visible and important indicators of organisation vitality  e.g.  housekeeping,  courtesy to visitors,  telephone and reception room behaviours of company employees,  and correct the same where necessary.
  • Work with all employees to  develop,  refine and chisel the appraisal system into an effective input tool for working out management development activities.
  • Start and sustain management training as an ongoing exercise for “developing” the employees into becoming better and more rounded managers and not merely as a budget fulfilment exercise for satisfying the KRA figure on your Annual target sheet.
  • Take up strongly with all other functional chiefs the necessity to support employees when they want to try out something new on return from a training programme instead of  the bosses fobbing them off with he promise that  “‘yes yes we will do it but first you finish  the work on hand”.
  • Get rid of the garb of superiority complex that presently blurs your vision and look at the rest of the world with an attitude to serve and not an ambition to rule.  
  • Practise common courtesies like receiving visitors on time,  escorting them out when they leave,  replying to letters and returning telephone callsThis can never diminish your stature nor waste your time ;  on the contrary this will build your reputation and enhance your company's standing in the community of  business associates as the  company that treats people as people and not commodities.
  • Work at your own  self -development never being shy to learn, or unlearn. Attend training programmes  --- yes,  you, too can learn from some of these programmes and get a brush with new ideas and thinking if only you will unlock the doors that shield your mind from the tremendous changes that are sweeping the world.  Never imagine or believe that  you know it all and learning is for others !
  • Work consciously at manpower planning so that the problems of having to go out for manpower every time something new starts is minimised.  For this they will need to work closely  with the business divisions of the company to  know what is happening,  what is likely to happen,  what kind of people we should be training/developing,  and  what kind   we  should keep  on stand-by.
  • Work  sincerely  to   improve the functioning of the HR function  for servicing the rest of the organisation speedily and effectively by drastically reducing the response time to anything requested from them,  be it information,  clarification, any physical assistance,  or any other type of service.  This can only be done if a strong information data base is built and a an effective HRIS software is put in place for quick and easy retrieval of vital and regular information.
  • Finally, retrieve prestige and standing for the HR function by taking the path of  open and firm  tackling of issues,   face - to - face  in a transparent manner  rather than furtively getting things done by  “managing the ear of the boss”.

 

It is essential that the HR manager understand the true meaning of his function and his role in the shaping of the corporation tomorrow where despite it sounding like a cliché it is absolutely true that only  “people will make the difference”. 

While he must,   therefore,   do his best to service his people,  he must not hesitate to stand firm if he finds  “bull - in - china shop behaviour syndrome”  from some  “technical darlings”  in the organisation be they the favourite sales person or the outstanding finance whiz kid  or the brilliant programmer.  Welding a team together and ensuring  organic growth of its members  is his number one priority and in this he should not feel scared of or  obeisant to any other colleague,  no matter how strong or powerful  the latter  otherwise is.

At the same time he must learn to stand up to his boss,  not for the sake of argument or conflict,   but for the sake of professional principles that he holds dear.   He   should  never  hesitate to express his mind and voice his opposition to what he clearly sees to be wrong or illegal or immoral or unethical.

One test of his success will be the proportion of time that his CEO spends with him as compared to his other colleagues,  not  merely in checking about the latest status of  “new recruitment’s”   or the release of the increment  letters,  but about  manpower  development and long-term activities that are being carried out  by his function.

He must strive to be helpful but not seek popularity. He must be accommodative but  not   overlook  policy violations. He must strive, not for power,   but  for  respect.  He need not dazzle,  but he must perform.  He must be articulate but not be verbose.  He must aim to get along but not aim to pleaseHe must not be merely  hard - working ;  in the final reckoning,  he must be effective.  Then,   and only then,   can he claim to have arrived.

TOWARDS INTEGRATED DECENTRALISATION


One of the biggest problems we have been facing in Thana Works is that despite achieving the production targets on a number of occasions,  the net working results leave us in the red at the end of any reckoning period.  The reasons for this is not far to seek.  Production at any cost is demanded and production at any cost,  literally,  is what we get.  And our systems of feed back and control are such that wer realise the cost of the production only after the same is made,  when it is too late to do anything about it. 


There  are  a  number  of  reasons  for  this  ---  primary  among  which  is the  over - centralisation  of  accountability  coupled with diffusion of responsibility.   As  a result the person who does that job is not accountable and therefore does not feel fully involved or committed or even motivated.  On the other hand,   the person who is accountable is not fully responsible,  having to depend on many others,  with the result that  “what is happening”  is neither fully known nor clearly discerned.


The ideal situation would be to have each manufacturing unit set-up as completely independent plants,   with only certain services like Accounts,  Planning,  Welfare,  IRD and Administration etc.  centralised.  This could be done in 3 phases as outlined below:


Phase   I :   Materials  Accountability placed under Unit Head


1.   The unit Stores should come under the Unit Head.





(2)






2.  Based  on  the  production  budget,   the  material  budget  should  be arrived  at  and  then  taking  stocks  into  consideration,    the  net  amount  of  purchases  to  be  made  during  the  year  should  be  arrived  at. 

This amount should then be put at  the disposal of Unit Head and he would be authorised to indent for material of  the value not exceeding this amount during the entire year. 

At the end  of  the year,  the value of material consumed in production plus   the  material   lying  in  stores  and   shop floor  should  be  equal  to the  opening  stock  plus  net  purchases  made  during  the  year.



The following results are expected to be achieved as a result of the above procedure :


a)   Owing to a limit on purchases that will be allowed to be made,  for a certain expected production level,  there is bound to be much greater care about material consumption by the unit resulting in reduction in excess consumption due to spoilage.,  less etc.


b)   While  the  Unit  Manager  will  have  considerable  flexibility  of  operation  in terms of  what to procure,  when and how much,  because of the constraints  on  overall  purchases,   he will procure only that material which is  required for production.   This  will  help in controlling the inventory  level  as  well  as  reducing  chances  of  un-required  material  flowing  in  or excess material flowing in,   due to errors in indenting,  delayed information  to   WPD   regarding  cancellation  of  items  rendered  obsolete due  to  changes  in  design or not required due to change  in  production  plan.

(3)






Phase  II :   Quality  Accountability  placed  under  Unit  Head



1.   The next step in decentralisation of accountability would be to place the unit Q.C.  i.e.  line inspection,  under the charge of the Unit Head.  Coupled with the responsibility of material accountability placed on the Unit Head,  as above,  the responsibility for quality would further ensure reduction of scrap,  spoilage etc.  as well as make the individual units more  quality - conscious  since they would now be asked not only to account for the physical production,  but its quality too.


2.   Under  the  present  set- up,   the  production  man  right  from  the shop floor to  the  highest  level  thinks  that  his  job  is  only  to  produce  and the quality is someone  else’s look out. 

By   the  same  token,    the  Quality  Control  man  works  within  the narrow confines of only checking the components/products for conformance  to design specifications  and  is  least  concerned  about how production  is  getting  affected  as  a  result of his actions,  much  less  about  what  he  can  do  to  help  reduce  the  rate  of  rejections,   if  not  prevent  them  altogether. 

By  making  quality of  the  product  the  responsibility  of  Unit  Manager,   a  lot  of   “quality problems”  would get sorted out at the early stages owing to greater inter-actions at the operating level instead of  at  much higher  levels  as  today,  where  more  often  not,   the  problems  recedes  to the background  and  prestige  takes  over.






(4)






Phase  III :   Purchase Accountability placed under  Unit  Head



1.  The final step in decentralisation would be to place all component purchases under the Unit Head.  With this,  the unit would become an integrated profit centre. 

2.  The Unit Manager should be given a production budget  (so many units of expected quality),  a material budget (purchases not exceeding a specified amount)  and a target of not working results to be achieved..  For the latter,  he will be free to make his  ‘Make/Buy’ decision as well as do necessary price negotiations/vendor development to ensure that

(a) he does not exceed the budgeted amount,
(b) achieve the working result target. 

Any funds saved by him,  after budgeted production,  may be carried forward to his account for succeeding year for use at this discretion on capital expenditure over and above the sanctioned amount.



The proposed decentralisation is expected to have following advantages :


1.   Responsibility and accountability will be brought to one point leading to establishment of clear cut goals and thus initiate  clear-cut lines of action.


2.   Total job responsibility to a Unit Head will allow him considerable degree of freedom of action,  which would encourage initiative and innovation and help to bring out the best in people.

(5)






3.   Efficient units will no longer need to be saddled with the lead of inefficient units,  nor will inefficient units be able to any longer shield their performance under that of the efficient one.  The grain will get sifted from the chaff.


4.   By making Production, Quality Control,  Stores & Purchase,  the responsibility of the Unit Head,  the endless (and unavoidable) disputes and arguments between these departments would now get resolved at the operating level.  This would mean raking quick decision since the concerned people would be involved,  instead of the bosses,  who each,  separately,  need to be briefed by their assistants.





The  above  is  only,    of  course,    an  outline  of  this  idea  and,   naturally,     far  greater  details  would  have   to  be  gone into,   once  it  is  decided  to implement  this.





(Hemendra K. Varma)
July  1979
VL - Thane

A PROPOSAL ON BONUS


Ever since the Bonus Act has come into being, ostensibly to put an end to bonus disputes, the number of bonus disputes has multiplied geometrically.  The chief reason for the disputes on bonus has been the inherent suspicion in the minds of the workmen when-ever
               
                (1)   a management declares 8 1/3% as per the Bonus Act, and
               
                (2)   whenever the management declares 20% as per the Bonus Act.


In the first instance, the misgivings on the part of the workmen relates to the feeling that the management has doctored the figures, to be able to pay only the minimum stipulated under the Act.  In the second instance, i.e. payment at the maximum rate of 20 % the feeling is that the company is certainly able to pay more but is taking cover under the provisions of the Act.


This is not to say the there is no dispute or less dispute when the bonus rate declared lies between the minimum and maximum.  The point being made is that any bonus rate  -  minimum, maximum or in between, is inherently suspected as being unfair if it has been worked out as per the Bonus Act.


Management’s grouse against both the minimum and maximum provisions are -

                (a)           that the minimum is enforced even in case of loss-making compaines, which

                                (I)  does not make economic sense, and
               
                                (ii)  is a heavy burden on such companies which to a certain extent influences the                                                     subsequent year’s working result adversely.

                (b)           In case of the maximum provision, their grouse is that the workmen never accept
                                that limit and always press for more.


On the part of the workmen, the single most important reason for their distrust of the Bonus Act is the suspicion which has been built up and strengthened over the years, that its provisions are too complicated and allow the management to fudge figures and thus pay them a low rate of bonus.  On the other hand, in case of loss-making companies, the workmen themselves take shelter of the Act to demand their pound of flesh,  viz. the minimum bonus.  Similarly, while management complain about the provision for payment of minimum bonus even for a loss making unit, they also take recurs to the Act whenever they find that they are in a position to pay more bonus and therefore would like to restrict their payment only to the maximum of 20% stipulated under the Act.


What it boils down to is that there is a great degree of mututal suspicion and distrust between employees and the employers, chiefly on the evaluation of the year’s profit performance and its manipulation under the provisions of the Bonus Act to arrive at the allocable surplus which, in turn, determines the rate at which Bonus can be paid.  There are many instances of a Company making very handsome profits but owing to carry-forward losses and other deductions allowed under the Bonus Act, it is liable to pay only the minimum bonus.  No doubt, some set-off and set-on provisions are also provided but they do not seem to satisfy the workmen.  Whenever the management of a company works out a figure as per the Bonus Act which is either low or lower than what the workmen have been expecting or have been promised by their Union leaders, the reaction of the workmen in usually to reject the working as bogus and agitate for a much higher rate of payment.  The dispute, therefore, primarily centers around the proper evaluation of profit.


There has been an oft expressed viewpoint that bonus must be linked to productivity i.e. a company which performs better would be in a capacity to pay more