Birla Sunlife Insurance 100

A REPORT ON

ORGANIZATIONAL STUDY IN

Birla Sun Life Lif e Insur ance Lim ited ited Submitted in partial fulfillment of the requirem requirements ents of the M.B.A Degree Course of Bangalore University By Mr. Rama Krishna Raju T Register Number: 06XQCM6101 Under the Guidance and Supervision Of Mr. Rudra Murthy

Professor

M.P.BIRLA INSTITUTE OF MANAGEMENT Associate Bharatiya Vidya Bhavan # 43, Race Course Road Bangalore-560001 July - August 2007

M P BIRLA INSTITUTE OF MANAGEMENT MANAGEMEN T

1

P R I N C I P A L ’S ’S C E R T I F I CA CA T E This is to certify that the organization study on Birla on Birla Sun Life Insurance, Bangalore has been prepared by Mr. Rama Krishna Raju T bearing the registration no. 06XQCM6101 under the guidance and supervision of Mr. Rudra Murthy, Professor, MPBIM, Bangalore.

PLACE: Bangalore DATE:


Dr. N S Mallavali (Principal)

2

P R I N C I P A L ’S ’S C E R T I F I CA CA T E This is to certify that the organization study on Birla on Birla Sun Life Insurance, Bangalore has been prepared by Mr. Rama Krishna Raju T bearing the registration no. 06XQCM6101 under the guidance and supervision of Mr. Rudra Murthy, Professor, MPBIM, Bangalore.



Dr. N S Mallavali (Principal)

2

G U I D E ’S ’S C E R T I F I CA CA T E

This is to certify that the organization study on Birla Sun Life Insurance, Bangalore,

prepared by Mr. Rama Krishna Raju T bearing the

registration no.06XQCM6101 no.06XQCM6101 is a bonafide work done, carried under my guidance and supervision during the academic year 2006-08 in partial requirement for the award of MBA degree by Bangalore University. To the best of my knowledge this report has not formed the basis for the award of any other degree or diploma.



Mr. Rudra Murthy (Professor)

3

CO M P A N Y CE R T I FI CA T E

Birla Sun Life Insur ance Lim ited

This is to certify that

has completed his

project, under my guidance during Jul& Aug 2007on the topic titled

“Organization study” His Conduct was

during this period.

Place: BANGALORE Date:

Signature Name Designation of the guide

Office Seal

M P BIRLA INSTITUTE OF MANAGEMENT

4

DECLARATION I hereby, declare that this internship report entitled . An Organization Study at Birla Sun Life Insurance Limited, Bangalore submitted in partial fulfillment for the award of Master of Business Administration of Bangalore University is a record of independent work carried out by me under the guidance of Prof. Rudra Murthy faculty member, M. P. Birla Institute of Management Studies, Bangalore.

I also declare that this report is a result of my own effort and has not been submitted earlier for the award of any degree or diploma of Bangalore University or any other University.

Place: Bangalore Date:


Rama Krishna Raju T REGD.NO: 06XQCM6101

5

A ck n o w le d g e m e n t

At the outset, I would like to express my deep sense of gratitude and sincere thanks to Dr. Mallavali, Principal, M.P.BIRLA INSTITUTE OF MANAGEMENT, Bangalore, for providing an opportunity to discover the corporate world, from a

close perspective. Prof. Rudra Murthy, my professor and internal guide for this project to whom I

am deeply grateful for his constant support and guidance without which it would not have been possible for me to complete this project in time. I take this opportunity to extend my sincere gratitude to Mr. Ranjan Anand, Agency Manager, BSLI for giving me an opportunity to undertake internship

training and the project on the topic .Competency Mapping. in the esteemed organization.

I would also like to express my heartfelt wishes to BSLI, for making these 2 months a stepping-stone for my career.

I convey my gratitude to all the staff members of Marketing Division for their kind cooperation through out my project.

Finally, I thank my dearest Parents for their continued support.


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E x e c u t iv e S u m m a r y Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance Solutions in India. BSLI has cemented its position as a leading player in the private life insurance industry within 4 years of its inception. Its main focus on investment linked insurance products supported its leadership in product innovation. Its multi-dimensional channels offered convenient channels for sale of the products to customers. It had been maintaining corporate governance and a high degree of transparency in all business practices and procedures. It had a strong fundamentals based on Aditya Birla Group’s local insight and sun life financials global expertise. The company chosen was Birla Sun Life Insurance ( BSLI) . The reason behind this was to understand the expertise it has developed and skills it has owned, especially in the field of marketing its products as it is the booming industries in India. Learning really takes place outside the classroom. I stand a witness to this statement. The in sight of knowledge that I acquired in the two months of internship with BSLI was quite impressive. The opportunity I received to apply my knowledge and skills in the organization gave me a practical view point to the whole system of learning.


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The main objective of the internship was to imbibe a practical approach in the students towards the knowledge gained at the classroom level. The internship at BSLI has given me the right perception and has had a positive effect on the kind of learning that I got at the M.P. Birla Institute of Management, Bangalore.

It was a very good experience for me to work during this tenure. I am glad that I have learnt so much in such little time. It has boosted my confidence and has raised my spirits. I can confidently say that my knowledge has improved in a very short time I would like to thank the entire Marketing department at the BSLI for their constant support.


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Contents

CHAPTER-1

THEORYTICAL SETTING

CHAPTER-2

ORGANISATION STRUCTURE

CHAPTER-3

OPERATIONAL FUNCTIONAL DEPAREMENTS AND PERFORMANCE EVALUATION

CHAPTER-4

AWARDS AND ACHIVEMENTS

CHAPTER-5

RECOMMENDATIONS AND SUGGESTIONS

CHAPTER-6

CONCLUSIONS


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Chapter 1 INTRODUCTION

O r g a n i z a t i o n s t r u c t u r e i n v o l v e s f o r m a l a n d r e c o g n i ze d s t r u c t u r e w h e r e i n e a c h a n d e v e r y i n d i v i d u a l a n d g ro u p have a definite relationship with each other, have a specified area to exist, function to perform, authority to m o b i l i z e r e s o u r c e s , o b l i g a t i o n t o a c t , r e s p o n s i b i l it y f o r a c h i e v i n g t h e o b j e c t i v e a n d a c c o u n t a b i l i t y f o r t h e ir performance.

It

is

arrangement

of

activities

and

assignment of personal to their activities in order to achieve the organizational goal. Organization structure encompasses six M a j o r a r e a s w i t h i n o r g a n i z a t i o n. T h e s e a r e Work specialization Departmentalization Chain of command Span of control C e n t r a l i z a t i o n a n d d e c e n t r a l i z a ti o n Objectives of the study:

1 ) T o u n d e r s t a n d t h e o r g a n i z a t i o n s t r u c t u r e / h i e r a r c hy o f the company 2) To identify various departments in the organization and the functioning of the same. 3) To understand the various responsibilities and duties carried out by each department.


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4)

The

study

is

aimed

at

understanding

how

an

o r g a n i z a t i on p r a c t i c a l l y w o r k s i n t h e r e a l s i t u a t i o n . 5)

T o u nd e r t a k e a s m al l a s s i g nm e n t i n o r de r t o k n o w

the perception and attitudes of the people towards Birla sun Life Insurance policies. 6) To offer suggestions based upon the findings. Scope of the study:

The

study

is

limited

to

Birla

Sun

Life

Insurance

Company Limited Bangalore branch. Source of data:

Primary data: One to one interviews with departmental heads and few subordinates. Secondary data: Secondary data are collected from the company’s website, newspaper articles and magazines. LIFE INSURANCE

L i f e i n s u r a n c e i s a c o n t r a c t p r o v i d i n g f o r a p a y m e nt o f a sum of money to the person assured or failing him to the

person

entitled

to

receive

the

same

on

the

happening of certain event. Uncertainty of death is herent in human life. It is this risk, high gives rise to the necessity

for

some

form

of

protection

against

the

f i n a n c i a l l o s s a r i s i n g f r o m d e a t h . I n s u r a n c e s u b s t it u t e s this uncertainty by certainty. The objective of insurance i s n o r m al l y t o p r o v id e : a . F a m i l y p r o t e c t i o n a n d b. Provision for old age.


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THERE ARE 3 TYPES OF LIFE INSURANCE POLICIES: i) Term insurance plans:

P u r e l i f e c o v e r s w h e r e p o l i c y h o l d e r p a y s f o r t h e ri s k cover and do not expect to receive anything else in return. Term insurance is now available in India. Opting for such policy will improve the efficiency of the policy premium and enable policy holder for a bigger risk cover for the same cost. These are term insurance plans without interest. ii) Whole life insurance plans:

W h o l e l i f e p o l i c i e s r e q u i r e t h e p o l i c y h o l d e r t o p ay premium throughout his/her life and cover risk for the w h o l e l i f e . T h e p o l i c i e s w i t h o u t p r o f i t s a r e c h e a p er . iii) Endowment insurance plan:

Endowment policies are costliest and among this group, money back policies involve paying highest premium. They give customers maturity benefits (normally, sum assured)

and

additional

profits

by

way

of

bonus,

guaranteed additions, loyalty bonus, etc


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DEFINITION OF SOME TYPES OF POLICIES : 1) Annuity

An annuity is a steady stream of equal payments that one receives every year, or every month either for life or a fixed number of years, as return after making an investment either as a lump-sum or through installments p a i d o v e r a c e r t a i n n u m b e r o f y e a r s , s p e c i f i c s u m Up o n the death of the annuitant, or at the expiry of the period fixed for annuity payments, the invested annuity fund is r e f u n d e d u s u a l l y a l o n g w i t h a s m a l l b o n u s . A n n u i t i es differ from all other forms of life insurance in one fundamental way. They do not provide any insurance cover but offer a guaranteed income for a certain period or for life. Typically

annuities

are

bought

to

generate

income

d u r i n g o n e ’ s r e t i r e d l i f e , w h i c h i s w h y t h e y a r e a ls o called Pension Plans. Annuities provide a solution to t h e b i g g e s t f i n a n c i a l i n s e c u r i t y o f o l d a g e a f t e r on e retires and the income from salary ceases. 2) Endowment:

Endowment policies cover the risk for a specified period at the end of which the sum assured is paid back to the p o l i c y h o l d e r a l o n g w i t h t h e b o n u s a c c u m u l a t e d d u r i ng M P BIRLA INSTITUTE OF MANAGEMENT

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the term of the policy. The payment of the endowment to the policy holder depends upon the completion of the policy’s term which rightly accounts for the popularity of endowment policies. Typically, one’s responsibility for the

financial

significantly

protection

once

independently

the

settled.

of

the

children The

family

are

focus

reduces

grown then

up shifts

and to

managing a smaller family perhaps only oneself and one’s

spouse

endowment.

after The

retirement.

original

sum

This

is

where

the

and

the

assured

accumulated bonus, received back comes handy. 3) Money back:

Unlike endowment plans, in money back policies, the policyholder gets periodic survival benefits during the term of the policy and a lump sum amount on surviving its term. In the event of death during the term of the policy,

the

beneficiary

gets

the

full

sum

assured,

w i t h o u t a n y d e d u c t i o n s f o r t h e a m o u n t s p a i d t i l l d at e , and no further premiums are required to be paid.


14

Industry Profile A brief history of the insurance industr y:

The insurance sector in India has become a full circle

from

being

an

open

competitive

market

to

n a t i o n a l i z a t i o n a n d b a c k t o a l i b e r a l i z e d m a r k e t a ga i n . T r a c i n g , t h e d e v e l o p m e n t s i n I n d i a n i n s u r a n c e s e c t or reveals the 360-degree turn witnessed over a period of almost two centuries. Life insurance industry:

The business of life insurance in India in its existing

form

started

in

the

year

1818

with

the

e s t a b l i s h m e n t o f t h e O r i e n t a l l i f e i n s u r a n c e c o m p a ny i n Calcutta. Important milestones in the life insurance business in India: 1912: The Indian life assurance companies’ act enacted

as

the

first

statute

to

regulate

the

life

insurance

business. 1928: the Indian insurance companies act enacted to

e n a b l e t h e g o v e r n m e n t t o c o l l e c t s t a t i s t i c a l i n f o r ma t i o n about both life and non life insurance businesses


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1938: Earlier legislation consolidated and amended to

by the insurance act with the objective of protecting the interest of the insuring public. 1956: 245 Indian and foreign insurers and provident

societies taken over by the central government and are nationalized. LIC formed by an act of parliament, which is LIC Act, 1956, with a capital contribution of Rs. 5 crore from the government of India. Insurance Sector Reforms:

In 1993, Malhotra committee, headed by former Finance secretary and RBI governor Mr. R.N. Malhotra, w a s f o r m e d t o e v a l u a t e I n d i a n i n s u r a n c e i n d u s t r y a nd recommend its future direction. The

Malhotra

committee

was

setup

with

the

objective of complementing the reforms initiated in the financial sector, the reforms were aimed at “creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the

structural

changes

currently

underway

and

recognizing that insurance is an important part of the overall

financial

system

were

it

was

necessary

to

address the need for similar reforms…”


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V) Customer service:

1. LIC should pay interest on delays in payments beyond 30 days. 2. Insurance companies must be encouraged to set up unit linked pension plans. 3 . C o m p u t e r i z a t i on o f o p e r a t i o n a n d u p d a t i n g o f technology to be carried out in the insurance industry. The committee emphasized that in order to improve the customer services and increase the coverage of the i n s u r a n c e i n d u s t r y s h o u l d b e o p e n e d u p t o c o m p l e t i on . But at the same time, the committee felt the need to exercise caution as any failure on the part of new p l a y e r s c o u l d r u i n t h e p u b l i c c o n f i d e n c e I t h e i n d us t r y . Hence, I was decided to allow competition in a limited

way

by

stipulating

the

minimum

capital

requirement of Rs. 100 cores, The committee felt the need

to

provide

greater

autonomy

to

insurance

companies in order to improve their performance and enable them to act as independent companies with economic motives .For this purpose, it had proposed s e t t i n g u p a n i n d e p e n d e nt r e g u l a t o r y b o d y .


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Life Insurance Industry: Present context :

The

life

insurance

industry

has

rebound,

demonstrating a growth rate of 51% in new business premium in the third year of privatization. Life insurance premiums rose to Rs 18,710 core ( R s 1 8 7 . 1 0 m i l l i o n ) i n f i s c a l 2 0 0 6 f r o m R s 1 2 , 3 0 0 co r e (Rs 123 billion) in 2004-05. The massive growth comes chiefly on the back of s a l e s o f u n i t - l i n k e d p l a n s , g r o u p p o l i c e s a n d p e n s io n plans. The Indian insurance sector has witnessed new p r e m i u m i n c o m e o f R s 3 4 , 8 2 8 c o r e ( R s 3 4 8 . 2 8 b i l l i o n) i n fiscal 2006. This reflects a growth rate of 33% over fiscal 2005’s aggregate figure of Rs 26,203.8 core (Rs 2 6 2 . 0 3 b i l l i o n ) . A g a i n s t a g r o w t h r a t e o f 5 1 % f o r li f e i n s u r a n c e b u s i n e s s , n o n - l i f e i n s u r a n c e p r e m i u m s r o se b y 1 6 % t o R s 1 6 , 1 1 8 c o r e ( R s 1 6 1 . 1 8 b i l l i o n ) i n f i s ca l 2006. A significant share of the new business has come on the back on sale of group policies. The Life Insurance Corporation of India, LIC, alone m o p p e d u p R s 2 , 3 3 2 . 8 5 c r o r e ( R s 2 3 , 3 2 b i l l i o n ) a s it insured over 30 lakh lives under the various group schemes. LIC’ s group business reached new heights during the year, recording a 119% growth in new M P BIRLA INSTITUTE OF MANAGEMENT

18

premium income and 50% increase in the number of lives covered. Today, the total foreign direct investment in the Indian insurance sector is pegged at Rs 1,021 crore (Rs 1 0 . 2 1 b i l l i o n ) w h i l e t h e p a i d - u p c a p i t a l o f t h e i n su r a n c e sector stands at Rs 5,518 crore (Rs 55.18 billion). Presently there are 13 Life Insurance companies in the Indian market, out of which, only LIC and SBI Life Insurance

are

government

organizations

and

the

remaining are private players. The following is the list of life insurance companies in the Indian market: 1) Life insurance Corporation of India 2) Allianz Bajaj Life Insurance 3) HDFC Standard Life Insurance 4) TATA AIG Insurance 5) ING Vysya Life Insurance 6) ICICI Prudential Life Insurance 7) Birla Sun Life Insurance 8) Met Life India Insurance 9) AMP Sanmar 10) SBI Life Insurance 11) Aviva Life Insurance 12) Max New York Life 13) OM Kotak Mahindra life Insurance


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The

Insurance

Regulatory

and

Development

Authority:

Reforms in the insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions take simultaneously to provide the supporting systems to the insurance sector and in p a r t i c u l a r t h e l i f e i n s u r a n c e c o m p a n i e s w e r e t h e l au n c h of the IRDA’s online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to a g e n t s h a s a l s o a s s u r e d t h a t t h e i n s u r a n c e c o m p a n i es would have a trained workforce of insurance agents in p l a c e t o s e l l t h e i r p r o d u c t s , w h i c h w e r e e x p e c t e d to b e introduced by early 2001. Since being set up as an independent statutory body the IRDA has put in a framework of globally c o m p a t i b l e r e g u l a t i o n s . I n t h e p r i v a t e s e c t o r 1 2 l if e insurance and 7 general insurance companies have been registered.


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Company Profile:

Birla Sun life Insurance Company is head quartered at Mumbai and has established a strong presence in the cities of Ahmedabad ,Baroda, Bangalore Chandigarh, Chenni,

Gurgaon,

Kanchipuram,

Hyderabad,

Kanpur,

Kolkata,

Indore,

Ja ipur,

Lucknow,

Meerut,

Mysore, New Delhi, Noida, Patna, Pune, Rajkot, Surat, V a r a n a s i a n d V i s a k h a p a t n a m.

Background and inception of company: Sun Life Financial

Sun

Life

Financial

is

a

leading

international

f i n a n c i a l s e r v i c e s o r g a n i z a t i o n. W i t h a h i s t o r y t h a t d a t e s back to 1871, Sun Life Financial has evolved from a s i n g l e m u t u a l l i f e i n s u r a n c e t o o n e o f t h e m o s t h i gh l y rated insurance and wealth management institutions in the world, Sun Life Financial knows its value lies in more than assets and history, It also lies in the culture of integrity and the pursuit of excellence that have marked all of the organization’s endeavors. Today, the sun life financial Group of companies and partners are represented globally in Canada, the United States, the Philippines, Japan, Indonesia, India and Bermuda. M P BIRLA INSTITUTE OF MANAGEMENT

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Sun Life in India:

Sun life’s Indian insurance operations with the the A.V. Birla group may be just four years young, but it was more than100 years ago---110years to be precise— t h a t s u n l i f e i n s u r a n c e a p p o i n t e d i t s f i r s t a g e n t in Mumbai

(then

of

course

known

as

Bombay),

a

gentlemen by the name of Ira B. Thayer. In May 1892, Sun Life issued its first policy, therein the policy number 23200, and soon opened its first office on Esplanade Road. The Canadian Company has never looked back ever since. The foundation of the aesthetic Canada Building was laid in May 1902, when the board of Directors approved the purchase of a building to house Sun Life’s operation in the subcontinent. A year later, Lot 71 on Horns by Road was purchased to build the structures. A popular

architectural

firm,

Gostling,

chambers

and

Fritchely, was pressed in to action and Canada Building w i t h i t s a w e - i n s p i r i n g y e l l o w a n d w h i t e s t o n e f a ç a de came into being in 1905.intricacies like the maple leaf, beaver and rising sun logo couples with the chariot of the

Sun

logo

added

to

the

beauty

of

this

grand

structure.


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Expansion Times :

When the Prince of Wales visited in 1921 it was the Canada

Building

that

greeted

the

royalty

in

regal

s p l e n d o r – t h e o f f i c i a l s h a d i l l u m i n a t e d t h e b u i l d in g a t a c o s t o f R s . 1 0 0 0 . I n 1 9 2 5 , S u n L i f e e x p a n d e d o p e r a t i on s by setting up district offices in Calcutta and Madras, in addition to the Bombay branch. Two years later, the L a h o r e o f f i c e i n t o b e i n g , f o l l o w i n g w h i c h o p e r a t i o ns a t D a c c a w e r e k i c k e d o f f . 1 9 2 9 s a w a n o f f i c e i n L u c k n ow , f o l l o w e d b y C o l o m b o a y e a r l a t e r . I t w a s o n l y i n 1 95 2 that the New Delhi office was established.

Aditya Birla Group – The Indian MNC:

Aditya

Birla

Group

is

India’s

second

largest

b u s i n e s s h o u s e . I t e n j o y s a d o m i n a n t p o s i t i o n i n a ll t h e s e c t o r s i n w h i c h o p e r a t e s . T h e A d i t y a B i r l a G r o u p is -

The worlds largest producer of viscose staple fiber

-

The largest single location refiner of palm oil,

-

The world’s largest producer of carbon black.

In India the group is the single largest producer of -

Viscose filament yarn

-

Aluminum

-

Grey cement


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-

White cement and

-

Rayon grade pulp

-

Petroleum (HINDALCO)

The group is also -

The only producer of linen in the textile industry in India.

-

The leader in the ready-to-wear branded apparel.

For several decades now, the Aditya Birla Group has won the trust and respect of its 72,000 employees and 8 lakh investors. The group’s turnover exceeds Rs.260 billion and has an asset base, which is in excess of Rs.257 billion. The Aditya Birla group has over 75 business units in India and overseas. It has operations in Canada, U . S . A ; U . K , T h a i l a n d , P h i l i p p i n e s , M a l a y s i a a n d E g yp t . Its international operations contribute greatly to India’s growth and to that of South East Asia, making it India’s first truly multinational conglomerate. The flagship companies of the Aditya Birla Group i n c l u d e s o m e o f t h e l a r g e s t a n d w e l l k n o w n c o m p a n i es in India such as Grasim Industries Ltd; Hindalco Industries

Ltd; Indian Aluminum Company

L t d ; I n d i a n R a y o n I n d u s t r i e s L t d , I n d o G u l f C o r p o r at i o n M P BIRLA INSTITUTE OF MANAGEMENT

24

Ltd, Global Finance Ltd. The group has forged power r e l a t i o n s h i p s w i t h l a r g e c o r p o r a t i o n s l i k e H i n d u s t an Petroleum, Tata and powergen PC and AT & T. Growing Financial Services Clout:

Birla

Sun

Life

joint

venture

partner,

Sun

Life

F i n a n c i a l i s o n e o f t h e l a r g e s t g l o b a l i n s u r a n c e a nd wealth management organizations. Sun Life has been offering life insurance in Canada since 1871, while MFS its subsidiary created the first US mutual fund in 1924. Sun Life has operations around the world in United States, United Kingdom, Canada, Philippines, Hong Kong, Bermuda and Indonesia and offices in 21 key markets throughout the world. I t h a s t o t a l a s s e t s u n d e r m a n a g e m e n t C D N $ 3 2 8 b i l l i on a s o n D e c e m b e r 3 1 , 2 0 0 2 . I t h a s e m p l o y e e s w o r l d w i de and

global

distribution

network

of

over

1,00,000

distributors. Sun insurers

with

Life

has

high

a

global

profitability,

reputation

as

persistency

top And

productivity ratios, which in turn reflect the underwriting expertise of the company. The turnover of the group is growing at a steady rate and is currently estimated to be in excess of M P BIRLA INSTITUTE OF MANAGEMENT

25

Rs.260 Billion. The group has a strong asset base v a l u e d a t R s . 1 8 0 b i l l i o n . T h e g r o u p i s w e l l r e s p e c te d i n the financial markets and all the group stocks command a

healthy

market

valuation

–

the

total

market

capitalization being nearly Rs.150 billion. Nature of business carried:

While

the

Aditya

Birla

Group

contributes

its

knowledge of the Indian market, Sun Life Financials offers its global expertise in the areas of protection of wealth management services. Both the partners are already engaged in the business of asset management, r e t a i l d i s t r i b u t i o n a n d s t o c k b r o k i n g . T h i s p a r t n e rs h i p has

been

now

extended

to

Life

Insurance

after

Privatization of this sector. A joint venture between the Aditya Birla Group and Sun Life financial, Birla’s sun life insurance forayed into the life insurance and retirement planning business by p i o n e e r i n g t h e u n i q u e u n i t - l i n k e d s o l u t i o n s i n I n d ia . I n just 2 years of its launch the company has catapulted to s e c o n d p o s i t i o n i n n e w b u s i n e s s p r e m i u m i n t h e h i g hl y c o m p e t i t i v e p r i v a t e l i f e i n s u r a n c e i n d u s t r y b a s e d on i t s strategy of unit-linked plans.


26

Vision ,Mission, Quality Policy: Vision:

“ T o b e p r o v i d e r o f f i n a n c i a l s e c u r i t y t o i n d i v i d u a ls a n d corporate”. Mission:

To be the first preference of our customers as a leading i n t e g r a t e d i n s u r a n c e p r o v i d e r o f I n s u r a n c e s o l u t i o ns superior value creation and technology. Quality Policy:

Birla Sun Life has put in carefully designed strategies to move to the leading position in the life insurance industry through product innovation, customer focus, and cutting edge technology.


27

Product Profile:

Birla Sun Life insurance was the first in India to introduce Unit –Linked Life Insurance plans. INDIVIDUAL LIFE PLANS 1) Flexi Life Line Plan 2) Flexi Save plus Endowment Plan 3) Flexi Cash Flow Money Back Plan 4) Birla Sun Life Term Plan 5) Classic Life Premier 1) Flexi Life Line Plan: Unique Features:

a ) T h e p l a n i s a u n i t l i n k e d n o n - p a r t i c i p a ti n g p l a n w h i c h gives efficient earnings in the long term. b) Lifelong Insurance cover till age 100 years in addition to other durations available. c) A choice of three Investment Fund Options: Protector, Builder and enhancer, with the freedom to switch between the Investment Fund options anytime during the policy tenure. d) Flexibility to make additional lump sum investments ( t o p u p s ) t o i n c r e a s e t h e s a v i n g s p o r t i o n o f p o l i c y. M P BIRLA INSTITUTE OF MANAGEMENT

28

e) Minimum Gu aranteed returns of 3% p.a. o n premium and any top up amounts, net of all Policy Charges. M o r e i m p o r t a n t l y t h e e n t i r e u p s i d e i n t h e p e r f o r m a nc e of the Investment Fund is passed on to customer. f ) O p t i o n s t o m a k e t a x f r e e P a r t i a l W i t h d r a w al f r o m f u n d Value anytime after three years. g) Surrender the policy without penalty any time after 4 policy years. h ) I n c r e a s e t h e S u m A s s u r e d d u r i n g t h e p r e m i u m - p ay i n g period depending on life insurance requirements. i) Convenient

premium

payment

options:

Short

or

Regular paying period. 2) Flexi Save Plus Endowment Plan: Unique Features:

a) The plan is a unit linked non participating plan giving efficient earnings in the long term. b)

A

choice

of

three

Investment

Fund

Options:

Protector, Builder and Enhancer, with the freedom to


29

switch between the Investment Fund Options anytime during the policy tenure. c ) F l e x i b i l i t y t o m a k e a d d i t i o n a l l u m p s u m i n v e s t m en t s ( t o p u p s ) t o i n c r e a s e t h e s a v i n g s p o r t i o n o f p o l i c y. d) Minimum Guaranteed returns of 3% p.a. on premium and any top up amounts, net of all Policy Charges. More importantly the entire upside in the performance of the Investment Fund is passed on to customer. e) Options to make tax free Partial Withdrawals from fund Value, any time after three years. f) Surrender the policy without penalty any time after 4 policy years. g) Increase the Sum Assured during the premium paying period depending on your requirements. 3) Flexi Cash Flow Money Back Plan: Unique Features: a) The plan is a unit linked non-participating plan to give

efficient returns. b) Tax free lump sum pay-outs, to take care of recurring needs.


30

c)

A

choice

of

three

Investment

Fund

Options:

Protector, Builder and Enhancer, with the freedom to switch between the Investment Fund Options anytime during the policy tenure. d ) F l e x i b i l i t y t o m a k e a d d i t i o n a l l u m p s u m i n v e s t m en t s ( t o p u p s ) t o i n c r e a s e t h e s a v i n g s p o r t i o n o f p o l i c y. e) Minimum Guaranteed returns of 3% p.a. on premium and any top up amounts, net of all Policy Charges. More importantly the entire upside in the performance of the Investment Fund is passed on to customer. f) Options to make tax-free Partial Withdrawals fund Value anytime after three years. g ) S u r r e n d e r t h e p o l i c y w i t h o u t p e n a l t y a f t e r 4 p o li c y years) Increase the Sum Assured during the premium paying period any time depending on needs. 4) Birla Sun Life Term Plan: Unique Features:

a ) T h e p l a n h a s b e e n d e s i g n e d f o r p e o p l e w h o w a n t to avail of the benefits of life insurance at low cost. It is a l o w p r e m i u m , p u r e r i s k c o v e r a g e p l a n w h i c h t a k e s c ar e


31

of financial commitments towards family or dependants, should anything unfortunate happen to customer. b) Riders - Accidental Death & Dismemberment Rider, Critical

Illness

Rider,

Waiver

Of

Premium

Riders

a v a i l a b l e a l o n g w i t h t h e p l a n , o n e c a n a v a i l o f r i de r s even in the case of Single Premium Policy. c)

Favorable

Female

Term

Clientsd)

-

Favorable

Age

Benefit

Premium -

Rates

Maximum

age

for for

maturity is 70 years

5) Classic Life premier: Unique Features:

a) The plan is a unit linked non participating plan b) One has the choice of six Investment Fund Options with the flexibility to allocate the premiums in varying proportions into the different Fund Options or even switch from one or more Investment Fund(s) to other Investment Fund(s). c) One

can

top

up

Fund

Value

whenever

one

has

additional savings. The minimum amount of top ups will be Rs. 10,000 d) The

plan

offers

further

benefits

in

the

form

of

additional units, which will be added to the Fund M P BIRLA INSTITUTE OF MANAGEMENT

32

Value at the end of the 10th policy year and at the ed of every 5th year thereafter e) There

is

high

liquidity

in

the

form

of

Withdrawals and surrender benefits.

Partial f)

D e a t h b e n e f i t s , w h i c h w i l l b e h i g h e r o f t h e F u n d V al u e or Sum Assured, reduced by the applicable partial withdrawals Areas of Operation:

Birla Sun life Insurance is present in India and spread across 1000 towns in India. Apart from this it’s doing business even in the rural segment. Ownership pattern:

The Aditya Birla group holds 74% of the equity in B i r l a S u n L i f e I n s u r a n c e w h i l e t h e S u n L i f e g r o u p ho l d s t h e b a l a n c e 2 6 % . B o t h t h e c o m p a n i e s a r e c o m m i t t e d to enhance the capital of the plan projections. Competitors’ information:

The company faces two types of competitors:

•

Direct Competitors

•

Indirect Competitors


33

Directly

the

company

shall

have

to

face

the

onslaught of LIC, the large customer base, accumulated funds, well-established marketing machinery etc. This is just one half of the story; there would be the recently “off – the- block insurers” who would be coming out with a variety of product variations and many of them with parallel financial activities and similar products. Just to name few: ICICI – Prudential, HDFC-Standard Life, TATA-AIG, OM-Kotak, Max-New York, SBI Life, etc. These

newer

competitors

are

likely

to

be

aggressive and innovative. This direct competition, on t h e f l i p s i d e , c o u l d r e s u l t i n m a r k e t e x p a n s i o n . T he Company shall also be facing competition is more d a m a g i n g . I n d i r e c t c o m p e t i t i o n s h o w s u p i n t e r m s o f other financial instruments like Bank FSs, PPF, NSCs, ULIP, Stocks land other similar savings instruments. In view of the changing scenario as well as the nature

of

the

market

we

operate

in,

the

task

of

e s t a b l i s h i n g a d y n a m i c , p r o g r e s s i v e a n d a s u c c e s s f ul c o m p a n y i s b o t h q u i t e d a u n t i n g a n d c h a l l e n g i n g . S o me of the challenges currently faced and to be faced in future are: 1. Finding a suitable, motivated team 2. Tailoring an innovative product mix 3. Identifying a potential market niche’ M P BIRLA INSTITUTE OF MANAGEMENT

34

4. Servicing

the

client

to

the

client’s

complete

satisfaction 5. Designing

a

highly

efficient

system

of

controls,

a n a l y s i s a n d t r o u b l e - s h oo t i n g 6. Managing the funds better to consistently outperform the market Infrastructure Facilities :

1.

All branches are computerized and linked in a wide

area network 2.

There

is

inter

branch

connectivity

a

well

as

connectivity with the head office 3.

The

main

back

and

policy

a d m i n i s t r a t i on

is a

Rs.6000 based COBOL-java system running on AIX with DB2 database and a HTML front end 4.

The sales illustration system is an interface system

with Java classes. The accounting system used is Sun Accounting system, which interfaces with the Rs.6000 5.

Birla

Sun

Life

would

provide Sales

Illustration

S y s t e m s t o e v e r y d i s t r i b u t o r a n d i t c a n b e l o a d e d on laptops also. 6.

BSLI would be harnessing the IT advantage for

improving

the

effectiveness

and

efficiency

of

its

distribution channels.


35

Chapter 2 Organizational structure: ORGANISATION CHART CEO

VP MKT DSF

CFO

VP

VP CHANNEL

GROUP

SALES

REGIONA L MANAGE

BRANCH

BRANCH

BRANCH

R

MANAGER

MANAGER

MANAGER

MARKETING

MARKETING

MARKETING

MANAGER

MANAGER

MANAGER

AGENCY

AGENCY

AGENCY

MANAGER

MANAGER

MANAGER


36

Work Flow Model:

APPLICATION ADDITION OF RIDERS

REQUIREMENT

ADDITION OF RIDERS

CHEQUE DISHONOUR

DISPATCH

REFUND

CLIENT SERVICES ID

COMMUNICATION CELL


37

1) Application:

It contains all the information of proposer. 2) Addition of riders:

The

customer

if

needed

can

take

additional

insurance cover by taking a term rider, if he wants extra c o v e r a g e f o r a c c i d e n t s h e c o u l d t a k e a c c i d e n t a l r i de r and if he wants to be covered for critical medical o p e r a t i o n s h e c o u l d t a k e c r i t i c a l i l l n e s s r i d e r . T hi s i s termed as addition of rider. 3) Requirement:

I t i s t h e j o b o f t h e u n d e r w r i t e r t h a t w h e ne v e r a n e w application

is

received

by

him,

he

evaluates

the

customer based on the information provided by him t h r o u g h t h e a p p l i c a t i o n a n d d e c i d e s w h e t h e r h e c o u ld be given insurance coverage or not. The information which he would closely observe is sum assured and premium proposes medical history, his habits, kind of organization he is working etc .If the underwriter is not satisfied with the available information he could demand f o r a d d i t i o n a l i n f o r m a t i o n b e f o r e i s s u i n g t h e p o l i cy .


38

4) Cheque Dishonor:

If due to insufficient funds or due to signature mistake or due to difference

between

words and

f i g u r e s , i f t h e c h e q u e g i v e n b y t h e c u s t o m e r b o u n c es t h e n or o r g a n i z a t i o n c a n n ot o t p r o c e ed e d w i t h i s s u e of of p o l i c y . T h e n i n t h a t c a s e a n e w c h e q u e n e e d s t o b e i s s u e d by customer along with certificate of insurability. 5) Dispatch:

When the underwriter is fully satisfied with the c u s t o m e r , h e d e c i d e s t h a t h e c o u l d b e g i v e n i n s u r a nc e cover. Then the policy document stating that client is insured by Sun Life is sent to the clients mailing address. This is termed as dispatch. 6) Refund:

Once the client receives the policy document he is g i v e n 1 5 d a y s o f t i m e c a l l e d “ F r e e l o o k p e r i o d ” , d ur i n g w h i c h h e c o u l d g i v e a s e c o n d t h o u g h t f o r h i s d e c i s io n and if he thinks that he doesn’t require the policy ,he could return back the policy document .Then his entire money that he ahs paid to the company would be returned to him .This is termed as refund.


39

7) Client Services ID :

If the customer doesn’t return the policy document within the free look period, then it means that he has accepted the policy and therefore his login ID and p a s s w o r d r e q u i r e d t o a c c e s s h i s p o l i c y d e t a i l s o n l in e i s sent to his mailing address. 8) Communication Cell:

Birla Sun Life has a call center which the customer can call anytime to get any information regarding his policy. Future Growth and Prospects:

The Birla Sun Life Company is expanding itself all over India through its branches. Its already present in more

than

1000

towns

recruitment

plan

to

manpower.

Through

in

meet the

India. its

kind

It

growing of

has

a

huge

demand

business

that

for the

company has done till now, it is becoming the first insurance company in India to achieve break even point.


40

Chapter 3 Operational

Departments &

Performance Evaluation Performance evolution of concerned departments

FUNDAMENTAL

DEPARTMENTS

OF

THE

ORGANISATION:

ACTUARY:

An efficient and successful life insurance business is dependent on key functions of risk management. Our team of professional actuaries is among the best in the industry

and

is

dedicated

to

create

sound

risk

assessment and pricing structure. MARKETING AND COMMUNICATION:

Its objective is to bring the latent need of life i n s u r a n c e i n t o t h e c o n s c i o u s a w a r e n e s s o f t h e I n d i an Diaspora and building a brand that people of India can trust and invest in.


41

UNDERWRITING:

The underwriting team performs the key function of assessing

the

risk

on

world

class

underwriting

standards. The team along with a nationwide panel of Medical Evidence Providers acts as the backbone of the company. CLIENT SERVICING:

It

services

policyholders

an

which

existing is

base

of

constantly

over

growing

1

lakh at

a

compounding rate. The team is continuously evolving efficiency

levels

n

order

to

meet

its

committed

standards. PRODUCT DEVELOPMENT:

A

team

dedicated

to

conceptualizing,

product

features, set up the implementation and lead it to the product launch with the active support of the other core functions. HUMAN RESOURCE:

In an ever growing and expanding company the key r o l e o f r e c r u i t i n g a n d r e t a i n i n g t h e r i g h t t a l e n t an d efficient performance management system is a crucial differentiator between a leader and any other company.


42

IMPLEMENTATION ADMINISTRATION & CONTROL:

BSLI is the first company in the insurance industry t o i m p l e m e n t “ B C P – B u s i n e s s C o n t i n u i t y P l a n ” t o t ak e care of any disaster which can strike the organization. Under this plan, all the critical business data is mapped off-site to another Birla Sun Life Insurance location in another city. In case of any disaster, the BSLI team can be up and running in less than 12 hours. INFORMATION TECHNOLOGY:

BSLI

boasts

of

the

most

advanced

software

technology in the Life Insurance industry. Being a unit linked

product

offering

with

customization,

the

technology and back- end processing is done on the u n i v e r s a l p l a t f o r m o n t h e w o r l d c l a s s i n g e n i o u s s y st e m . With this technology, customers can even track their policy and fund details on the internet. INVESTMENT:

The unit linked products offer the flexibility of choosing from various investment options. An efficient investment strategy within the frame work of the IRDA guidelines is a crucial factor contributing to the success of unit linked products in the market place.


43

LEGAL AND COMPLIANCE:

Being a good corporate citizen and being complaint is a work standard at BSLI. The compliance Process is embedded in the work flow across the company. FINANCE AND PLANNING:

A team dedicated to handle the day to day Finance & Accounts operations of BSLI, in addition to the crucial function of MIS and strategic planning enabled by the top three private life insurance companies in India. Skill: Off the job training:

In Insurance industry it’s the customer who is supreme and company’s revenue would directly depend on it. So it requires the Direct Sales force of the c o m p a n y t o h a v e g o o d c o m m u n i c a t i o n s k i l l s , s i n c e t he y directly interact with the customer. To cater to this need t h e o r g a n i z a t i o n p r o v i d e s f o r e x c l u s i v e c o m m u n i c a t io n s k i l l i m p r o v e m e n t t r a i n i n g f r o m r e p u t e d o r g a n i z a t i on s s o that their Direct Sales Force would interact in a better way with the customers and emerge successful in getting business from him. BSLI

would

improving

be

the

harnessing effectiveness


the and

IT

advantage

efficiency

of

for its 44

distribution channels. At the same time it uses IT technology to meet the people. This requires its direct sales force to be well versed in usage of computer and M i c r o s o f t o f f i c e p r o d u c t s . H e n c e a c o m p l e t e t r a i n i ng catering to the IT needs of Direct Sales force is provided by the organization. On the job training:

After

completion

of

off

the

job

training,

the

advisors would accompany agency managers for a few meetings with the customer, so that the advisor could understand the way he needs to put forth the product to the

customer.

In

the

same

way

the

new

agency

managers would accompany the senior managers in their client meetings to know how best they could sell the product. Style: Top down Participative Decision Making:

In Birla Sun Life the decision regarding products, company

policies

etc.

is

taken

by

the

top

level

m a n a g e m e n t w h i c h w i l l h a v e t o b e f o l l o w e d b y t h e l ow level

management

managers

and

namely

advisors

branch

in

all

mangers,

the

agency

branches.

The

decision could be taken at the start of every financial


45

year

and

also

whenever

a

crisis

arises

in

any

department. In Birla Sun Life the top level management, before taking the decision would conduct a lot of meetings i n v o l v i n g e m p l o y e e s f r o m a l l d e p a r t m e n t s w h i c h w o u ld be affected by the decision. From all these meetings t h e y w o u l d g a t h e r a s m u c h i n f o r m a t i o n a s p o s s i b l e an d later only top level management would come up with a final decision. Strategies:

Birla

Sun

Life

has

put

in

carefully

designed

s t r a t e g i e s t o m o v e t o t h e l e a d i n g p o s i t i o n i n t h e li f e insurance

industry

through

continuous

product

innovation, customer focus, cutting edge technology and pricing strategy. A. Product Innovation:

a) New product to be launched: Birla Sun Life is planning to Launch a product which as 100% equity exposure. b) Customization

of

products:

Birla

Sun

Life

has

undertaken Customization of products to meet the varying needs of diverse customers.


46

B. Customer Focus:

a) Medical underwriting: It comes under the basis of sum assured, premium, age, habit, medical history of the customer. Company may ask customers to go for medical check up. b) Automatic premium loan: Before 1st July, 2006 automatic

premium

loan

was

there.

But

now

according to new IRDA guidelines this feature has been removed. c) Anytime premium: During the first 3 years of the policy period the customer has to pay premiums regularly. But after 3 years he could pay premiums for every 2 years to keep the policy in force. d) Web based services: Birla Sun Life has its own website namely www.Birla Sun Life.com which c o n t a i n s a l l t h e i n f o r m a t i o n r e g a r d i ng i t s i n s u r a n c e products, the norms in the insurance industry, daily unit values of its various funds etc. Every customer is provided with a login id and password through which he could get to know his policy status any time any where in the world.


47

e) Call center based services: Birla Sun Life has their own call center known “TRANS WORKS” which handles all types of queries which could come from customer or office administration. This call center could be reached by dialing 1800227000. f) Free look period: Birla Sun Life was the first company in India to introduce the concept of free look period in which the customer upon receiving the policy document is given time of 15 days, during which he could return the policy to Birla Sun Life, if he changes his mind .In that case the entire money what the customer had paid to company will be paid back to him. g) Sales process safeguarding against wrong selling: Whenever an advisor from Birla Sun Life would meet the customer, he is expected to reveal all the information to the customer regarding the product, its charges, medical norms etc. He is also expected to show the policy illustration to the customer Later, the Agency Manager ,would check up with the customer to know whether his advisor has revealed him all the details or not. This is the measure taken to prevent wrong selling from the advisor. M P BIRLA INSTITUTE OF MANAGEMENT

48

C. The technology edge:

a) All branches are computerized and linked in a wide area network b) There

is

inter

branch

connectivity

a

well

as

connectivity with the head office c) Birla

Sun

Life

would

provide Sales

Illustration

Systems to every distributor and it can be loaded on laptops also. d) BSLI would be harnessing the IT advantage for improving the effectiveness and efficiency of its distribution channels. D. Pricing strategy:

a) Birla Sun life has introduced

a new product

called “Classic Life Premier” which has the least policy charges among all its competitors and hence the return from this product is very good. b) Birla Sun life products have the least mortality charges in the market. M P BIRLA INSTITUTE OF MANAGEMENT

49

c) Birla Sun life has the least Fund Management charges in the market. Systems in BSLI: Inventory control System in BSLI:

From the head quarters situated at Mumbai, to e v e r y b r a n c h i n I n d i a , i n v e n t o r y l i k e p r o d u c t b r o c hu r e s , applications, etc., are dispatched. At the local level a count of all these is maintained to minimize wastage. Merit Rating System in BSLI:

For each individual in the organization there is a particular team in Human Resource Department which monitors

every

individual

performance

on

certain

p a r a m e t e r s. B a s e d o n t h a t t h e i n d i v i d u a l i s p r o m o t e d o r demoted. Underwriting System in BSLI: Introduction:

To underwrite means to assess and approve an a p p l i c a t i o n f o r c o v e r a g e t h u s a c c e p t i n g l i a b i l i t y sh o u l d a loss occur? The first stage of Underwriting begins with class s e l e c t i o n , w h i c h m e a n s t h e i n s u r a n c e c o m p a n y d e c i d es to whom it is prepared to sell its products or how it


50

sells. For example the company may decide that it w o u l d c a n v a s s b u s i n e s s f r o m h i g h n e t w o r t h i n d i v i d ua l s or employees of corporate bodies. The second stage is when

the

agent

approaches

a

potential

client

and

completes the application for coverage which would i n c l u d e p e r s o n a l d e t a i l s o f t h e p r o p o s e d c l i e n t , p la n a n d a m o u n t a p p l i e d f o r ; d e t a i l s o f o c c u p a t i o n , a v o c a t i on , i n c o m e b e n e f i c i a r y , p l u s m e d i c a l i n f o r m a t i o n s u c h as build family history and medical history. The third stage is when the insurance company actually receives the application forms. The company may obtain detailed information about the life to be insured, his age, family history

of

illness

to

find

any

hereditary

disorders,

p e r s o n a l h e a l t h h i s t o r y a n d f i n a n c i a l i n f o r m a t i o n to check the appropriateness of the chosen life cover amount and other benefit cover sought. Based on the information, the insurance company may take the following decisions – 1. Accept the proposal at the company’s published rates for the plan and term OR 2. Accept on modified terms subject to additional financial or more detailed medical examination OR


51

3. Postpone

the

consideration

of

the

insurance

proposal OR 4. Decline the case.

Staff in BSLI: ACTUARY:

An efficient and successful life insurance business is dependent on key functions of risk management. Out team of professional actuaries is among the b e s t i n t h e i n d u s t r y a n d i s d e d i c a t e d t o c r e a t e s o un d risk assessment and pricing structure. UNDERWRITING:

The underwriting team performs the key function of assessing

the

risk

on

world

class

underwriting

standards. The team along with a nationwide panel of Medical Evidence Providers acts as the backbone of the company. CLIENT SERVICING:

It

services

policyholders

an

which

existing is

base

constantly

of

over

10

growing

lakh at

a

compounding rate. PRODUCT DEVELOPMENT:

A

team

dedicated

to

conceptualizing,

product

features, set up the implementation and lead it to the


52

product launch with the active support of the other core functions. HUMAN RESOURCE:

In an ever growing and expanding company the key r o l e o f r e c r u i t i n g a n d r e t a i n i n g t h e r i g h t t a l e n t an d efficient performance management system is a crucial differentiator between a leader and any other company. IMPLEMENTATION ADMINISTRATION & CONTROL:

BSLI is the first company in the insurance industry t o i m p l e m e n t “ B C P – B u s i n e s s C o n t i n u i t y P l a n ” t o t ak e care of any disaster which can strike the organization. Under this plan, all the critical business data is mapped off-site to another Birla Sun Life Insurance location in another city. In case of any disaster, the BSLI team can be up and running in less than 12 hours. INFORMATION TECHNOLOGY:

BSLI

boasts

of

the

most

advanced

software

technology in the Life Insurance industry. Being a unit l i n k e d p r o d u c t o f f e r i n g w i t h c u s t o m i z a t i o n, the technology and back- end processing is done o n t h e u n i v e r s a l p l a t f o r m o n t h e w o r l d c l a s s i n g e n io u s system. With this technology, customers can even track their policy and fund details on the internet.


53

INVESTMENT:

The unit linked products offer the flexibility of choosing from various investment options. An efficient investment strategy within the frame work of the IRDA guidelines is a crucial factor contributing to the success of unit linked products in the market place. LEGAL AND COMPLIANCE:

Being a good corporate citizen and being complaint is a work standard at BSLI. The compliance Process is embedded in the work flow across the company. FINANCE AND PLANNING:

A team dedicated to handle the day to day Finance & Accounts operations of BSLI, in addition to the crucial f u n c t i o n o f M I S a n d s t r a t e g i c p l a n n i n g t o e n a b l e B SL I i n the top 3 private life insurance in India. Shared Value:

Birla Sun Life Insurance was the first private life insurer in India to introduce Unit-Linked life insurance plans. A Unit-Linked plan is an auspicious coming together of security from life insurance and earnings from investments. Which means, apart from securing one’s future, it offers efficient returns.


54

4) Swot Analysis: Strengths:

1) Birla Sun Life Insurance is the only company to give 3% guarantee on investments in ULIPS. 2) The large product line of BSLI catering to the needs of customers of different age and risk appetite has been strength of BSLI For example, a) People who are looking for more returns can invest maximum percentage in equities. b) People who are looking for safe returns can invest into

govt.

securities

and

nominal

percentage

of

equities. c) As BSLI invest their fund in diversified portfolio so the risk is low. 3) Birla Sun Life is the only company to give ULIP policy for term of 100 years. 4 ) B i r l a Su n L i f e I ns u r a n c e i s t h e o n l y o n e c o m p an y i n INDIA to ask CRISIL to rate its funds.


55

5 ) T h e n a m e “ B I R L A ” i s a h o u s e h o l d n a m e i n I n d i a an d hence people have trust over here. 6) BSLI would be harnessing the IT advantage for improving

the

Effectiveness

and

efficiency

of

its

d i s t r i b u t i o n c h a n n e l s . A l l b r a n c h e s a r e c o m p u t e r i z ed and linked in a wide area network. There is inter branch connectivity a well as connectivity with the head office. This gives the company an added advantage to service its large customer base. Weaknesses:

1) In this industry customer is supreme and revenues are directly dependent on the number of customers BSLI can get insured. This requires BSLI to have very effective advertising strategy so as to popularize their products among the masses. BSLI is found lacking in this domain where even though their policies are as powerful as any other competitors, their advertising strategy is not at all effective. 2)

The

company

should

extend

their

services

to

c o r p o r a t e e m p l o ye e s w h e r e i t i s f o u n d t o b e l a c k i n g . 3) Birla Sun Life doesn’t have a fund that invests 100 percent into equities. So a customer who would like to M P BIRLA INSTITUTE OF MANAGEMENT

56

t a k e m a x i m u m a d v a n t a g e o f e q u i t i e s w o u l d f i n d i t h ar d to invest here. Opportunities:

1) Only 7% of Indian population is insured till now. This means that there is a great opportunity for the company in coming years to capture the market. 2) The growing IT sector of INDIA would provide for an e x c e l l e n t o p p o r t u ni t y f o r B S L I t o i n c r e a s e i t s s a l e s 3) The growing knowledge about ULIPS among people would only mean that BSLI has grater opportunities to grow in coming years. Threats:

1) Directly the company shall have to face the onslaught of LIC.The large customer base, accumulated funds, w e l l - e s t a b l i s h ed m a r k e t i n g m a c h i n e r y e t c . 2) This is just half of the story; there would be the recently “off – the- block insurers” who would be coming out with a variety of product variations. Many of them w i t h p a r a l l e l f i n a n c i a l a c t i v i t i e s a n d s i m i l a r p r o du c t s . Just to name few: ICICI – Prudential, HDFC-Standard Life, TATA-AIG OM-Kotak, Max-New York, SBI Life, etc. M P BIRLA INSTITUTE OF MANAGEMENT

57

These newer competitors are likely to be aggressive a n d i n n o v a t i v e . T h i s d i r e c t c o m p e t i t i o n , o n t h e f l ip s i d e , could result in market expansion. The Company shall a l s o b e f a c i n g c o m p e t i t i o n i s m o r e d a m a g i n g . I n d i r ec t competition

shows

up

in

terms

of

other

financial

instruments like Bank FSs, PPF, NSCs, ULIP, Stocks land other similar savings instruments


58

Learning Experience:

The in plant training gave me an opportunity to know about money saving instruments in INDIA, especially INSURANCE INDUSTRY.I could learn about formation of LIC, its hold on Indian market till year 2000.I came to know about the formation of IRDA and s u b s e q u e n t l y t h e a d v e n t o f p r i v a t e p l a y e r s i n t o I n di a i n 2 0 0 1 . I n p a r t i c u l a r I c a m e t o k n o w m u c h a b o u t S u n L if e Financial Inc., it’s operations around the world etc. I c o u l d a l s o l e a r n m u c h a b o u t B i r l a G r o u p , t h e v a r i o us fields into which they have entered and become market l e a d e r s i n t h o s e f i e l d s e t c . I n p a r t i c ul a r I c o ul d d e v e l o p a v e r y g o o d u n d e r s t a n d i n g o f B i r l a S u n L i f e I n s u r a nc e , its emergence in Indian market and also came to know that it was the first company to introduce ULIPS into Indian market. I could have a thorough understanding of how ULIPS operate and how they give better returns t h a n t r a d i t i o n a l p o l i c i e s b y t a k i n g t h e a d v a n t a g e of share market. I could gather a lot of information about the various products offered by Birla Sun Life to its c u s t o m e r s, t h e f e a t u r e s o f t h o s e p r o d u c t s . I c a m e t o know that many of the features introduced by Birla Sun Life to its products like:


59

Chapter 4 Achievements:

1)

Best

Private

Sector

Life

Insurer-outlook

money awards 2) Among Tops 5 Contenders for Life Insurance Company

of

the

year’

of

8

Asia

Insurance

Industry awards 3) Ranked 23rd in the best employer’s survey by Hewitt Associates among top 25 best places to work for 2nd year. 4) Among top 3 Contenders for `Strategy to Execution’ of the 5th Aditya Birla Awards for outstanding achievements, 2006.


60

M i c r o s c o p i c S tu d y O f Hum an Resource Department


61

HUMAN RESOURCE

Human Resource Department has multiple goals. These include employee competency and employee motivation and

organizational

climate

development.

Employees

require a variety of competencies to perform different tasks or functions required by their jobs. The nature of jobs is constantly changing due to changes in the environment, changes in organizational priorities, goals ands

strategies,

changes

in

the

profiles

of

fellow

e m p l o y e e s , c h a n g e s i n t e c h n o l o g y , n e w o p p o r t u n i t i e s, new

challenges,

changes

in

the

new nature

knowledge of

jobs

base require

etc.,

such

continuous

development of employee competencies to perform the job well. Human Resources Department also aims at preparing people for performing roles, jobs, tasks, functions which they may be required to perform in the future as they go u p o n t h e o r g a n i z a t i o n h i e r a r c h y o r a s t h e o r g a n i z at i o n t a k e s u p n e w t a s k s t h r o u g h d i v e r s i f i c a t i o n , e x p a n s io n , m o d e r n i z a t i on , e c o n o m i z a t i on e t c . H u m a n R e s o u r c e D e p a r t m e n t t r i e s t o d e v e l o p p o t e n t i al of employees for future likely jobs in the organization.


62

The

success

depends

very

of

any

much

organization on

the

in

quality

the of

long its

run

human

resources. Human Resources comprise the aggregate of employee

attributes

experience

and

potentially

available

including

health, to

which an

knowledge, are

presently

organization

skill, and

for

the

achievement of its goal. Of all the prime resources of an organization, men, materials, money and machine the human resources is recognized as the most vital and the most valuable .For it is the quality of manpower that u l t i m a t e l y d e t e r m i n e s t h e s u c c e s s o f a n o r g a n i z a t i o n. HRD provides the platform for superior performance in o r g a n i z a t i o n s i n c e t h e s u c c e s s o f o r g a n i z a t i o n d e p en d s u p o n i t s e m p l o y e e s a n d i t s r e l a t i o n w i t h i t s i n t e r na l a n d external customers, So HRD must keep all such factors insight before formulating any strategy. Human

Resource

Department

is

one

of

the

core

departments of an organization and it also plays a vital role in the development of the organization ICICI Prudential considers its human resource as the most v a l u a b l e a s s e t o f i t s o r g a n i z a t i o n. Human resource policies:

Policy is a course of action or statement of intention committing the management to general course of action when the management drafts a policy statement to M P BIRLA INSTITUTE OF MANAGEMENT

63

cover some features of its personal programme’s of the statement

may

often

contain

an

expression

of

philosophy and principle as W e l l I C I C I h a s s e v e r a l p o l i c i e s r e g a r d i n g t h e f u l f il l m e n t of goals set by the management such as: 1) Recruitment policies:

The recruitment is carried out from both external & internal are: 1. Present employees 2. Employee referrals 3. Former employees. External Sources:

The following external sources are: 1. Campus recruitment 2. Print media 3. Electronic media 2) Selection

Selection is carried out in three major stages: 1. Preliminary interview 2. Selection test 3. HR Interview


64

3) REMUNERATION AND INCENTIVES

The organization offers attractive remuneration and incentives to attract the budding youngsters and to maintain its present employees. 4) SALARY

Attractive salaries and other extra incentives based on t h e i r p e r f o r m a n c e. 5) Reimbursement policy

R e i m b u r s i n g t h e t e l e p h o n e a n d , e l e c t r i c i t y b i l l s et c . 6) Leave policy

G i v i n g l e a v e s i n c e r t a i n o c c a s i o n s a n d e v e n t o u r o ff e r s t o e m p l o y e e s t o f o s t e r i n t e r e s t i n t h e m f o r o r g a n i z a t i o n. OTHER HUMAN RESOURCE POLICIES

Goal setting Medi claim policy Company accommodation policy Mobile Phone policy Credit card policy Travel policy


65

Human Resource Planning

Human Resource Planning includes the estimation of how many qualified people to carry out the assigned task, how many people will be available, and what if anything ,must be done to ensure that personnel supply equals personnel demand at the appropriate point in future. Specifically Human Resource Planning is the p r o c e s s b y w h i c h a n o r g a n i z a t i o n e n s u r e s t h a t i t h as the right no. and kind of people, at the right place, at the right time, capable of effectively and efficiently c o m p l e t i n g t h o s e t a s k s t h a t w i l l h e l p t h e o r g a n i z a ti o n t o achieve

its

overall

objectives.

Human

Resource

P l a n n i n g t r a n s l a t e s t h e o r g a n i z a t i o n a l o b j e c t i v e s an d plans into the number of workers Needed to meet those objectives .Without a clear-cut planning

and

estimation

of

organization’s

human

resource need is reduced to more guesswork Recruitment process

Right people at the right place at the right time plays a major

role

in

the

recruitment

process

in

any

o r g a n i z a t i o n. B e c a u s e o f e x t r e m e c o m p e t i t i o n i n t o d a y ’ s world, organizations need to have a very efficient and effective recruitment process, which saves time and in t u r n r e s u l t s i n r e d u c i n g t h e c o s t o f r e c r u i t m e n t p r o c es s .


66

Many

Internal

and

External

Factors

govern

the

recruitment process. F i v e s t a g e s o f r e c r u i t m e n t p r o c e s s : are

1 Planning 2 S t r a t e g y D e v e l o p m e nt s 3 Searching 4 Screening 5 Evaluations and Control Methods of recruitment process like Web recruitment, Applicant Tracking system and Outsourcing can be used to cut down the cost and time involved. According

to

the

review

of

literature

successful

recruiting involves three steps: 1 Defining the needs 2 Spreading the word 3 Using the Internet. It is possible to improve the current status of the recruitment cycle time by 1 . C o n d u c t i n g a l l t h e i n t e r v i e w r o u n d s i n t w o o r t hr e e rounds 2. Making candidates to join early. 3. Improving the various steps in the process. 4. removing the non- value adding activities.


67

Type of recruitment:

How to look How to look refers to the methods or sources of recruitment. These are several sources and they may be broadly categorized into 1) Internal 2) External

Internal recruitment

I n t e r n a l r e c r u i t m e n t s e e k s , a p p l i c a n t s f o r t h e p o s it i o n s those who are currently employed. Internal sources i n c l u d e p r e s e n t e m p l o y e e s , e m p l o y e e r e f e r r a l s , f o r me r employees and former applicants . There

are

three

major

advantages

of

i nternal

recruitment. 1 Firstly, it is less costly that external recruitment. 2

Secondly,

knowledge abilities

organizations

of

the

internal

than

the

ones

typically

have

candidate’s

acquired

a

better

.skills

through

and

external

recruiting. 3 Thirdly, an organization policy of promoting from w i t h i n c a n e n h a n c e e m p l o y e e ’ s m o r a l e , o r g a n i z a t i o n al commitment and job satisfaction. Good performance is rewarded T h e r e a r e f e w d i s a d v a n t a g e s o f i n t e r n a l r e c r u i t m e n t.


68

1 One theory is that the method simply perpetuates the old

concept

of

doing

things

that

creative

problem

solving may be hindered by the lack of new talents. 2 S o m e o r g a n i z a t i o n s c o m p l a i n o f u n i t r a i d i n g i n w hi c h divisions compete for the same people. 3 Thirdly, politics probably has a greater impact on i n t e r n a l r e c r u i t i n g a n d s e l e c t i o n t h a n d o e s e x t e r n al recruiting. 4 Candidate’s current work may be affected. External recruitment

External sources far outnumber the internal methods. S p e c i f i c a l l y s o u r c e s e x t e r n a l t o a n o r g a n i z a t i o n a re professional or trade associations, ads, employment exchanges, services,

college/university/institute walk

ins

and

write

ins,

placement consultants,

c o n t r a c t o r s , d i s p l a c e d p e r s o n s , r a d i o a n d t e l e v i s i on , acquisitions and mergers and competitors. There are three advantages of external recruitment: 1 Benefits of new skills and new talents and new e x p e r i e n c e s t o o r g a n i z a t i o ns 2 Compliance with reservation policy becomes easy 3 Scope for resentment, jealousies and heart bum are avoided There

are

few

disadvantages

also

of

external

recruitment as: M P BIRLA INSTITUTE OF MANAGEMENT

69

4 B e t t e r m o r a l e a n d m o t i v a t i o n a s s o c i a t e d w i t h i n t er n a l recruiting is denied to the organization 5 It is costly 6 Chances of creeping in false positive and false negative errors. Adjustment of new employees to the o r g a n i z a t i o na l c u l t u r e t a k e s l o n g e r t i m e . Orientation

O r i e n t a t i o n i s a l s o c a l l e d i n d u c t i o n , i s d e s i g n e d to p r o v i d e a n e w e m p l o y e e w i t h t h e i n f o r m a t i o n h e o r sh e needs to function comfortably and efficiently in the o r g a n i z a t i o n. Purpose of orientation

Organizations are often known to spend few weeks or even months on orientation programme the idea is to make

the

employee

feel

at

home.

In

the

new

e n v i r o n m e n t i t i s w e l l k n o w n f a c t t h a t e m p l o y e e s f ee l anxious on entering in organization, induction is a method to reduce this anxiety. Training and development

I t w i l l b e c o m p a n y ’ s e n d e a v o r t o r e c o g n i z e t h e v a l ue o f its human resources for their growth. The company is committed

to

provide

adequate

opportunity

to

e m p l o y e e s t o n e i g h t h e i r k n o w l e d g e s k i l l s a t t i t u d e s, contributing

to

steady

growth


of

the

company

and 70

f e e l i n g p r o u d o f w o r k i n g f o r t h e c o m p a n y . M e t h o d i c al l y identifying

needs

knowledge

sharpen

improving

for

employees

skills

performance

at

and their

to

upgrade

improve

their

attitude

present

and

for

future

function. I m p a r t i n g s u c h t r a i n i n g t o e m p l o y e e s a f t e r a s s e s s i ng their

capabilities

and

potentials,

various

types

o f

training techniques are employed FEEDBACK is one significant method for evaluation. Training may be undertaken on the basis of career

development plans. Training can be part of Quality of Work Life programmers and organization Development. Training can be used as a reward. Inputs in training and development are 1 Skill 2 Educations 3 Developments 4 Business Ethics 5 Attitude change 6

Enhancement

of

decision-making

and

problem

-

solving skills. Methods of training: 1. Lecture 2. Audio-visuals 3 .  O n - t h e - j o b t r a i n i n g M P BIRLA INSTITUTE OF MANAGEMENT

71

4 .  P r o g r a m m e d i n s t r u c t i o n 5 .  C o m p u t e r a s s i s t e d i n s t r u c t i o n s i m u l a t i o n 6 .  C a s e s t u d y 7 .  R o l e p l a y i n g 8 .  V e s t i b u l e t r a i n i n g 9 .  S e n s i t i v e t r a i n i n g , e t c . Human Resource Development:

H u m a n R e s o u r c e D e v e l o p m e n t i s s a i d t o b e t h e c o r e of a larger system known as Human Resource System (HRS), wherein Human Resource Development is mainly c o n c e r n e d w i t h p r o v i d i n g l e a r n i n g e x p e r i e n c e f o r t he people

associated

with

an

organization

through

a

behavioral approach adopting various processes. In a broader sense, the term Human Resource Development means those learning experiences, which are organized for a specific time and designed to bring about the possibility off behavioral change. Human Resource Development goals include

1)  D e v e l o p t h e i n d i v i d u a l t o r e a l i z e h i s p o t e n t i a l a s a n individual to the maximum extent; 2)  D e v e l o p t h e i n d i v i d u a l ’ s c a p a b i l i t i e s t o p e r f o r m h is present job better; 3)  D e v e l o p t h e c a p a b i l i t i e s t o h a n d l e f u t u r e l i k e l y r ol e s ;


72

4)  D e v e l o p a n d m a i n t a i n a h i g h m o t i v a t i o n l e v e l o f t h e employees;

strengthen

superior.

Subordinate

relationships; 5)  S t r e n g t h e n t e a m s p i r i t a m o n g d i f f e r e n t t e a m s ; 6)  P r o m o t e climate

inter

team

development

collaboration: and

and

promote

organizational

health

development. 7) Human resource management views people as an important source or asset to be used for the benefit of

organizations,

employees

and

society.

It

is

emerging as a distinct philosophy of management aiming at policies that promote mutuality, mutual goals, mutual respect, mutual rewards and mutual responsibility. The belief is that policies of mutuality w i l l e l i c i t c o m m i t m e n t , w h i c h i n t u r n w i l l y i e l d b ot h better

economic

performance

and

greater

human

resource development. Though a distinct philosophy, human resource management cannot be treated is isolation.

It

is

being

integrated

into

the

overall

strategic management of business. HRD Instruments, Processes and Outcomes

There

are

facilitate

many Human

instruments Resource

that

can

be

Development.

used

to

These

instruments may be called sub-systems or methods or M P BIRLA INSTITUTE OF MANAGEMENT

73

techniques or aids. Each instrument or sub-system focuses

on

some

aspects

of

human

Resource

Development. To have a comprehensive HRD many of these

instruments

may

needed

to

be

used

simultaneously. Human Resource Development in the organization context refers to the process whereby the employees are continuously helped in a planned way to: Acquire or sharpen capabilities required to perform various

tasks

and

functions

associated

with

their

present or future expected roles;

Develop

their

general

enabling

capabilities

as

i n d i v i d u a l s s o t h a t t h e y a r e a b l e t o d i s c o v e r a n d ex p l o i t their

own

inner

potential

for

their

own

and

or

organizational development purposes;

Develop an organizational culture where superior. S u b o r d i n a t e r e l a t i o n s h i p s t e a m w o r k a n d c o l l a b o r a t i on among different sub-units are strong and contribute to t h e p r o f e s s i o n a l w e l l b e i n g , m o t i v a t i o n a n d p r i d e of employees. Human Resources Information System

Human

resources

Information

systems

information (MIS)

helps

or

Managemen t in

determining

o r g a n i z a t i o n ’ s m a j o r h u m a n r e s o u r c e s n e e d s s t r a t e g ie s and philosophies.


74

The instruments of Human Resources Development are many.

Human

Resource

should

lead

the

to

Development

generation

of

instruments

Human

Resource

Development processes like role clarity, performance planning,

and

dynamism

in

development employees.

climate,

Such

a

risk-taking

Human

and

Resource

Development process should result in more competent satisfied

and

committed

people

who,

by

their

contributions, would make the organization grow. A model explaining the linkages between Human Resource development

instruments,

processes

outcomes

and

o r g a n i z a t i o na l e f f e c t i v e n e s s i s p r e s e n t e d . HR PRINCIPLES

The organization believes that development of employee i s i n i t s o w n i n t e r e s t . T h e o r g a n i z a t i o n w i l l p r o v id e opportunities and conditions for the development and optimization of human resources. 1 . T h e m a n a g e m e n t i s w i l l i n g t o i n v e s t a d e q u a t e t i me and resources for the development of the employees and personally participate in the development. 2. Managers have concern for growth of subordinates. 3 . E m p l o y e e s a r e w i l l i n g t o a v a i l o f g i v e n o p p o r t u ni t i e s for growth and receive such help from the managers as may be necessary for this development and improving performance. M P BIRLA INSTITUTE OF MANAGEMENT

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The main objective of the HRD department is to create a learning environment and development climate in the organization.

By

learning

environment

is

meant

a

c u l t u r e w h e r e e m p l o y e e s c o n t i n u o u s l y l e a r n f r o m t h ei r o w n e x p e r i e n c e a n d t h e v a r i o u s l e a r n i n g o p p o r t u n i t ie s t h e o r g a n i z a t i o n p r o v i d e s . T h e H R D d e p a r t m e n t s h o u ld create an .enabling Culture called Appolo Culture where the employees are able to make things happen and in the process discover and utilize their potential. The most frequently used instruments are the following: Performance Appraisal

Performance Appraisal data forms basis for decisions f o r d e v e l o p i n g t h e p o t e n t i a l e m p l o y e e f o r h i g h e r . Le v e l jobs and is basis for feedback and counseling. P e r f o r m a n c e A p p r a i sa l d a t a i n d i c a t e s t h e j o b t r a i n i n g needs of each individual the main appraisal method used by Birla Sun Life is 360 degree There are two major ways of performance appraisal 1) Past-oriented methods 2) Future-orient ed methods Each group has several techniques. Some of them are explained in the following Section. The term used to describe a performance rating that focuses on specific behaviors or sets as indicators of effective or ineffective performance, rather than on M P BIRLA INSTITUTE OF MANAGEMENT

76

broadly

stated

adjectives

such

as

"average,

above

average, or below average". Other variations are: 1) Behavioral observation scales 2) Behavioral expectations scales 3) Numerically anchored rating scales System of appraisal

In 360 degree system of appraisal, rating is done by the e m p l o y e e ’ s i m m e d i a t e s u p e r v i s o r , h i s o r h e r i m m e d i at e subordinates etc., Arthur Anderson survey reveals that 20% of the organizations use the 360 degree system to a s s e s s t h e t a l e n t s , b e h a v i o r a l a s p e c t s , v a l u e s , e t hi c a l s t a n d a r d s , t e m p e r , l o y a l t y b y t h e p e o p l e w h o a r e t he best placed to do it. Employee benefits:

Employee benefits and services include any benefits that

an

employee

remuneration.

receives

Employee

in

benefits

addition

to

direct

a

broad

embrace

r a n g e o f b e n e f i t s a n d s e r v i c e s t h a t e m p l o y e e s r e c e iv e as a part of their local compensation package. Pay and d i r e c t l y c o m p e n s at i o n s i t i s b a s e d o n c r i t i c a l j o b f a c t o r s and performance. Benefits and services, however, are indirect

compensation

because

they

are

usually

intended as a condition of employment and or not M P BIRLA INSTITUTE OF MANAGEMENT

77

directly related to performances. Few benefits are as follows: 1) Leally required payments as un employment payment a n d w o r k e r ’ s c o m p e n s a t i on 2) Continent and deferred benefits as pension plans, group life insurance, prepaid legal plans, and military leave and pay. . Potential Appraisal Development (PAD)

Potential Appraisal Development is based on career plans and career plans are prepared by using Potential Appraisal Development data. Training may be provided to develop candidates with potential. Feedback Performance Coaching (FPC)

Feedback and Performance Data can be used to monitor i n d i v i d u a l d e v e l o p m e n t a n d t h e d a t a c a n b e u s e d f o r identifying

training.

Career

counseling

and

verbal

rewards can be part of feedback. Career Planning (CP)

Career Planning data are used for human resources audits and career planning and help in conducting research

on

promotion

patterns

for

Organization

Development programmers.


78

Employee Welfare and Quality of Work Life

Group efforts can be rewarded through quality of work life measurers. Quality of work life improvements can be p a r t o f o r g a n i z a t i o n D e v e l o p me n t a c t i v i t i e s . Rewards

Performance Data is used for rewards and reward data are entered for development Grievance

Grievance

procedure

is

one

of

the

techniques

of

r e s o l v i n g d i s p u t e s . A l l l a b o r a g r e e m e n t s c o n t a i n s om e form of grievance procedure. And if people follow it strictly any dispute can be resolved very easily. Terms which give rise to grievances is: 1) Violation of law 2) Violation of company rules 3) Violation of health and safety measures 4) A

change in

working

condition or

past

company

practices 5) Violation of the intent of the parties as stipulated during contract negotiations. T h e r e a r e f e w o t h e r t e c h n i q u e s a v a i l a b l e a s c o l l e c ti v e bargaining and code of discipline.


79

Challenges faced by Human Resource

In and organization like Birla Sun Life; it is a very big challenge to handle all the HR related issues. Here the role of a HR manger and his personal insight to tackle situation comes into picture. There are few challenges faced by the HR manger in Birla Sun Life 1 ) D e p a r t m e nt o u t s o u r c i n g H R a c t i v i t i e s 2) BPO and call centers 3) To balance workers work-life 4) To make HR activities ethical 5) To man age diversity 6) Attitude towards different work groups 7) Globalization 8 ) Or g a n i z a t i o n a l r e s t r u c t u r i n g 9) Changing demographics of work-force 10) Changed employee’s expectations 11) challenges PERFORMANCE APPRAISAL

P e r f o r m a n c e a p p r a i s a l m a y b e d e f i n e d a s a s t r u c t u r ed formal

interaction

between

a

subordinate

and

supervisor, that usually takes the form of a periodic i n t e r v i e w ( a n n u a l o r s e m i - a n n u a l ) , i n w h i c h t h e w o rk performance

of

the

subordinate

is

examined

and

d i s c u s s e d , w i t h a v i e w t o i d e n t i f y i n g w e a k n e s s e s a nd strengths as well as opportunities for improvement and M P BIRLA INSTITUTE OF MANAGEMENT

80

s k i l l s d e v e l o p m e n t . I n m a n y o r g a n i z a t i on s - b u t n o t a l l a p p r a i s a l r e s u l t s a r e u s e d , e i t h e r d i r e c t l y o r i n d ir e c t l y to

help

appraisal

determine results

reward are

outcomes.

used

to

That

identify

the

is,

the

better

p e r f o r m i n g e m p l o y e e s w h o s h o u l d g e t t h e m a j o r i t y o f a v a i l a b l e m e r i t p a y i n c r e a s e s , b o n u s e s , a n d p r o m o t io n s . By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. Whether this is an appropriate

use

of

performance

appraisal

-

the

a s s i g n m e n t a n d j u s t i f i c a t i o n o f r e w a r d s a n d p e n a l t ie s is a very uncertain and contentious matter. Basic Purposes

Effective performance appraisal systems contain two b a s i c s y s t e m s o p e r a t i n g i n c o n j u n c t i o n : a n e v a l u a t io n system and a feedback system. The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable. The main aim of the feedback system is to inform the employee about the quality of his or her performance.


81

( H o w e v e r , t h e i n f o r m a t i o n f l o w i s n o t e x c l u s i v e l y on e way. The appraisers also receive feedback from the employee about job problems, etc.) One of the best ways to appreciate the purposes of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization. E m p l o y e e V i e w p o i n t :

From

the

employee

viewpoint,

the

purpose

of

p e r f o r m a nc e a p p r a i s a l i s f o u r - f o l d : (1) Tell me what you want me to do (2) Tell me how well I have done it (3) Help me improve my performance (4) Reward me for doing well. O r g a n i z a t i o n a l V i e w p o i n t :

From the organization's viewpoint, one of the most important reasons for having a system of performance appraisal is to establish and uphold the principle of accountability. For decades it has been known to researchers that one of the chief causes of organizational failure is "nonalignment

of

Nonalignment

responsibility occurs

where

and

accountability."

employees

are

given

responsibilities and duties, but are not held accountable M P BIRLA INSTITUTE OF MANAGEMENT

82

f o r t h e w a y i n w h i c h t h o s e r e s p o n s i b i l i t i e s a n d d u ti e s are performed. What typically happens is that several i n d i v i d u a l s o r w o r k u n i t s a p p e a r t o h a v e o v e r l a p p i ng r o l e s . T h e o v e r l a p a l l o w s - i n d e e d a c t i v e l y e n c o u r ag e s each individual or business unit to "pass the buck" to the others. Ultimately, in the severely non-aligned system, no one is accountable for anything. In this event, the principle o f a c c o u n t a b i l i t y b r e a k s d o w n c o m p l e t e l y . R g a n i z a t i o n al failure is the only possible outcome. Formal versus Informal appraisal

Formal

appraisals

usually

occur

at

specified

time

periods-once or twice a year. Ormal appraisals are most often required by the organization for the purpose of employee evaluation. Informal performance appraisal can occur whenever the supervisor feels the needs for communication. Many organizations encourage a fixture of both formal and informal appraisals. The formal appraisal is most often seed as primary evaluation. However, the informal appraisal is very helpful for more performance feedback. Informal appraisals should not take place of formal Performance evaluation


83

Whose performance should be rated?

To the question as to whose performance should be rated, the answer is obvious employees. When we say e m p l o y e e s , i s i t i n d i v i d u a l s o r t e a m s ? S p e c i f i c a l l y, t h e team may be defined as the individual, work group, d i v i s i o n , o r o r g a n i z a t i o n . I t i s a l s o p o s s i b l e t o de f i n e the rate at multiple levels. For example, under some conditions, it may be desirable to appraise performance both at the work-group level for merit-pay increases and at the individual level to assess training needs. Who are raters?

Raters can be immediate supervisors, specialists from the HR department, department, subordinates, peers, committees, clients, self .appraisals, or a combination of several. Problems of rating

P e r f o r m a n c e a p p r a i s a l s a r e s u b j e c t t o a w i d e v a r i e ty o f i n a c c u r a c i e s a n d b i a s e s r e f e r r e d t o a s . r a t i n g e r r or s . . These

errors

judgments,

occur and

in

the

information

rater’s

observations,

processing,

and

ca n

seriously affect assessment Results: The most common rating errors are 1) Leniency or severity 2) Central tendency M P BIRLA INSTITUTE OF MANAGEMENT

84

3) Halo effect 4) Rater effect 5) Primacy and Regency effects 6) Perceptual set 7) Performance dimension behaviors 8) Spill over effect 9) Status effect Solving raters problems

The

best

way

to

overcome

these

problems

is

to

providing training to the raters. From a practical point of view, several factors, including the extent to which pay is

related

to

performance

ratings,

union

pressure,

turnover rates, time constraints and the need to justify r a t i n g s m a y b e m o r e i m p o r t a n t t h a n t r a i n i n g , i n f l u en c i n g the ratings that raters actually give. This means that improving rating systems involves not just training the raters but rectifying outside factors such as union pressure. And it means that a rater training, to be e f f e c t i v e , s h o u l d a l s o a d d r e s s r e a l - l i f e p r o b l e m s su c h as

the

fact

that

union

representatives

will

try

to

i n f l u e n c e s u p e r v i s o r s t o r a t e e v e r y o n e h i g h . T r a i n in g helps to improve the appraisal system by overcoming distortion that occurs due to the raters, errors such as halo, leniency, central tendency and bias. Training of raters must help strengthen the factors that tend to M P BIRLA INSTITUTE OF MANAGEMENT

85

improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement. W h a t s h o u l d b e r a t e d ?

O n e o f t h e s t e p s i n d e s i g n i n g a n a p p r a i s a l p r o g r a m me is to determine the evaluation criteria. It is obvious that the criteria should be related to the job. The six criteria for assessing performance are: 1) Quality 2) Quantity 3) Timeliness 4)  C o s t e f f e c t i v e n e s s 5) Need for supervision 6 ) I n t e r p e r s o na l i m p a c t Methods of Appraisals

The last to be addressed in the process of designing an appraisal

programme

is

to

determine

method(s)

of

evaluation. Numerous methods have been devised to measure the quantity and quality of employee’s job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they


86

relate to particular type of employees. Broadly all approaches can be classified into: 1) Past-oriented methods 2) Future-orient ed methods Each group has several techniques. Some of them are explained in the following section. Behavioral Anchored Rating Scales

The term used to describe a performance rating that focuses on specific behaviors or sets as indicators of effective or ineffective performance, rather than on broadly

stated

adjectives

such

as

"average,

above

average, or below average". Other variations are: 1 .  B e h a v i o r a l o b s e r v a t i o n s c a l e s 2. Behavioral expectations scales 3 .  N u m e r i c a l l y a n c h o r e d r a t i n g s c a l e s Checklists

The

term

descriptive

used

to

define

statements.

If

a the

set

of

rater

adjectives believes

or the

employee possessed a trait listed, the rater checks the item; if not, the rater leaves him item blank. Rating score from the checklist equals the number of checks. Critical Incident Technique

The term used to describe a method of performance appraisal

that

makes

lists


of

statements

of

very 87

effective and very ineffective behavior for employees. The lists are combined into categories, which vary with the

job.

Once

statements provided,

the

of the

categories

effective evaluator

and

are

developed

ineffective

prepares

a

log

and

behavior for

each

e m p l o y e e . D u r i n g t h e e v a l u a t i o n p e r i o d , t h e e v a l u a to r records examples of critical behaviors in each of the categories,

and

the

log

is

used

to

evaluate

the

employee year end. Forced Choice Method

This appraisal method has been developed to prevent evaluators from rating employees to high. Using this method, the evaluator has to select from a set of descriptive statements, statements that apply to the employee. The statements are weighted and summed to at, effectiveness index. Forced Distribution

The term used to describe an appraisal system similar to grading on a curve. The evaluators are asked to rate employees in some fixed distribution of categories. One way to do this is to type the name of each employee on a card and ask the e v a l u a t o r s t o s o r t t h e c a r d s i n t o p i l e s c o r r e s p o n d in g t o rating. M P BIRLA INSTITUTE OF MANAGEMENT

88

Graphic Rating Scale

The term used to define the oldest and most widely used performance appraisal method. The evaluators are given a graph and asked to rate the employees on each of the characteristics. The number of characteristics can vary from one to one hundred. The rating can be a matrix of boxes for the evaluator to check off or a bar g r a p h w h e r e t h e e v a l u a t o r c h e c k s o f f a l o c a t i o n r e la t i v e to the evaluators rating. Narrative or Essay Evaluation

T h i s a p p r a i s a l m e t h o d a s k s t h e e v a l u a t o r t o d e s c r i be strengths and weaknesses of an employee's behavior. Some companies still use this s method exclusively, whereas in others, the method has been combined with the graphic rating scale. Management by Objectives

The management by objectives performance appraisal method has the supervisor and employee get together to set

objectives

in

quantifiable

terms.

The

appraisal

m e t h o d i s w o r k e d t o e l i m i n a t e c o m m u n i c a t i o n p r o b l e ms b y t h e e s t a b l i s h m e n t o f r e g u l a r m e e t i n g s , e m p h a s i z in g results, and by being an ongoing process where new objectives have been established and old objectives are modified as necessary in light of changed conditions.


89

Paired Comparison

The term used to describe an appraisal method for ranking employees. First, the names of the employees to be evaluated are placed on separate sheets in a p r e d e t e r m i n e d o r d e r , s o t h a t e a c h p e r s o n i s c o m p a r ed with all other employees to be evaluated. The evaluator then checks the person he or she feels has been the better of the two on the criterion for each comparison. T y p i c a l l y t h e c r i t e r i o n i s t h e e m p l o y e e s o v e r a l l ab i l i t y to do the present job. Ranking

The

term

ranking

has

been

used

to

describe

an

a l t e r n a t i v e m e t h o d o f p e r f o r m a n c e a p p r a i s a l w h e r e th e supervisor

has

been

asked

to

order

his

or

her

employees in terms of performance from highest to lowest. Weighted Checklist

The term used to describe a performance appraisal method

where

supervisors

or

personnel

specialists

f a m i l i a r w i t h t h e j o b s b e i n g e v a l u a t e d p r e p a r e d a la r g e list

of

descriptive

statements

about

effective

and

ineffective behavior on jobs.


90

Performance Interview

P e r f o r m a n c e I n t e r v i e w i s a n o t h e r s t e p i n t h e a p p r a is a l process.

Once

the

Appraisal

has

been

made

of

employees, the raters should discuss and review the performance with the rates, so that they will receive feedback about where they stand in the eyes of the superiors. Feedback is necessary to effect improvement in

performance,

especially

when

it

is

adequate.

Specifically Performance Interview has three goals 1) To

change

behavior

performance

does

of

not

employees. meet

Whose

Organizatio nal

requirements or their own personal goals? 2) To maint ain t he behav ior of employees who per form in an acceptable manner, 3) To recog nize s uperior performance behavior so th at they will be continued. Use of appraisal data

The final step in the evaluation process is the use of evaluation data. The HR department must use the data and

information

evaluation. information

In

generated

one

outputs

way of

or a

through the

performance

other,

performance

data

and

appraisal

p r o g r a m m e c a n c r i t i c a l l y i n f l u e n c e e m p l o y e r - e m p l o y ee reward opportunities.


91

S p e c i f i c a l l y t h e d a t a a n d i n f o r m a t i o n w i l l b e u s e f ul i n t he 1) Following areas of HRM 2) Remuneration administrat ion 3) Validation of selection programs 4) Employee tr aining and development programs 5) Promotion, transfer and lay-off decisions 6) Grievance and discipline programs 7) HR planning Performance

Management

verses

Performance

Appraisal

The shift from performance appraisal to performance management requires a shift in focus from a single event to a continuous process. The process provides employees with direction and support via a detailed performance plan composed of goals, action steps, measurements, and coaching throughout the yearlong cycle. Performance management is different from the single appraisal because it: 1) Begins with planning at the beginning of the year to c l a r i f y j o b e x p e c t a t i o n s a n d a c c o u n t a b i l i t i e s b e t w ee n employee and manager 2) Eliminates

current

employee

concerns

that

expectations are vague or not articulated


92

3) Turns th e apprai sal doc ument and appraisal meeting into the year-end feedback summary and previous meetings on performance

Findings of the S tudy 1) It can be i nferred by t he study tha t the employe es are aware of the present Performance appraisal System followed in the company. 2) Most

of

the

performance

executives appraisal

are

satisfied

system

followed

with

the

in

the

company. This shows that the present performance appraisal system is satisfactory 3) Further improvement in th e sys tem c an be made i n order

to

attain

full

satisfaction

of

the

e m p l o y e e s / e x ec u t i v e s o f t h e c o m p a n y . 4) Greater part a grees t hat th e perfo rmance s tandards set are clear and achievable.. 5) Majority of the employees favored training for the a p p r a i s e r s t o c a r r y a p p r a i s a l p r o g r a m m e. . 6) In response to the company spending of considerable time

and

attention

for

the

performance

appraisal

system, most of the employees felt that the company s p e n d s t h e n e c e s s a r y t i m e a n d a t t e n t i o n i n f o l l o w i ng the Performance appraisal System,


93

7) Most of the executives surveyed are satisfied with the Self-Appraisal

process

being

followed

in

the

company. 8 ) I t c a n b e s a i d t h a t t h e p r e s e n t s y s t e m o f p e r f o r m a nc nc e a p p r a i s a l i s e f f e c t i v e i n b r i n g i n g o u t t h e p e r f o r m an c e f e e d b a c k b y t h e r e v i e w i n g a n d r e p o r t i n g o f f i c e rs rs . 9) Most of the employees agree that the help and guidance provided is sufficient indicating that the management spends considerable time on providing employees with help and guidance.


94

Chapter 5 Recommendations & Suggestions:



IRDA use traditional mode of training and marketing which should be replaced with the use of l a t e s t e m e r g i n g t e c h n o l o g i e s. s.



R e g u l a r f e e d b a c k i s r e c o m m e n de de d t o k n o w t h e l i k e & dislike and also expectations of the Customers.



Proper weightage should be given to improve the c o m m u n i c a t io io n s k i l l o f t h e a d v i s o r s s o a s t o improve customer relations.



During training to advisors importance should be given to provide the most important information to them like making well aware about the products of t h e i r o r g a n i z a t i o n. n.



Marketing materials received before the advisor reaches the customer should add value to the product preparing more awareness in customers.


95

Chapter 6 Conclusion In present scenario, there is a cut-throat competition among the companies to get more and more prospects to buy their various products. The only way to achieve the target is train the insurance advisors in the best possible way. Birla Sun Life Insurance uses all those possible

tools and latest techniques like software for calculating premiums, etc which helps their insurance advisors to sell more of their products. They have shown a lot of c r e a t i v i t y a n d i n n o v a t i o n i n t h e i r t r a i n i n g p r o g r a ms a n d have succeeded in achieving the desired outcome.


96

Birla Sunlife Insurance 100

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