RELEVANCE OF HRM IN BUILDING INDUSTRY – A CASE STUDY

RELEVANCE OF HRM IN BUILDING INDUSTRY – A CASE

STUDY

Abstract

Effective Human Resource Management (HRM) plays a major role in the

success and profitability of organizations and the construction industry is no

exception to this rule. Survival of construction companies in a competitive

environment depends on the company’s ability to ensure timely completion of

projects, adhering to the stipulated quality norms and estimated costs. Sustenance of a

migratory labour force is therefore crucial for timely completion of projects.

Exploitation of the economic conditions of labourers is an impediment to the growth

and survival of a construction company. Sound HRM practices and a sympathetic

handling of the labourers ensures a motivated labour force which enhances

productivity, yields tangible and intangible profits and contributes to the growth of the

company.

Introduction

SScciieennttiiffiicc MMaannaaggeemmeenntt eennddeeaavvoouurrss ttoo iiddeennttiiffyy aanndd aappppllyy tthhee ffaaccttss aanndd llaawwss tthhaatt

uunnddeerrlliiee eeffffiicciieennccyy,, eemmbbrraacciinngg tthhee ffoolllloowwiinngg iinn iittss aannaallyyssiiss11::

BBeesstt ssiittuuaattiioonn aanndd ccoonnssttrruuccttiioonn ooff wwoorrkk ppllaacceess,,

MMoosstt eeffffeeccttiivvee cchhaarraacctteerr aanndd aarrrraannggeemmeenntt ooff mmaacchhiinneess,, ttoooollss aanndd

mmaatteerriiaallss,,

MMoosstt eeffffeeccttiivvee pprroodduuccttiivvee pprroocceesssseess,, bbeesstt mmeetthhooddss ooff sseelleeccttiinngg aanndd

ttrraaiinniinngg mmeenn,, aanndd tthhee nnaattuurree aanndd aammoouunntt ooff wwoorrkk tthhaatt oouugghhtt ttoo bbee ppeerrffoorrmmeedd bbyy

eeaacchh,, aanndd,,

MMoosstt ssuuiittaabbllee mmeetthhoodd ooff ppaayymmeenntt iinn tthhee iinntteerreessttss ooff tthhee iinnddiivviidduuaallss aanndd

tthheeiirr eeffffiicciieennccyy..

SScciieennttiiffiicc mmaannaaggeemmeenntt,, tthheerreeffoorree aaiimmss aatt ccoooorrddiinnaattiinngg tthhee eeffffoorrttss ooff mmeenn aanndd

mmaacchhiinneess aanndd eeffffiicciieenntt uuttiilliissaattiioonn ooff mmaatteerriiaall wwiitthh tthhee hheellpp ooff aann oorrggaanniissaattiioonn..

““OOrrggaanniissaattiioonn aass aann aaccttiivviittyy iiss,, iinn ffaacctt,, aa mmeecchhaanniissmm ooff mmaannaaggeemmeenntt””..22

2

Human Resource Management : A Brief

OOff aallll tthhee rreessoouurrcceess ooff aann oorrggaanniissaattiioonn,, hhuummaann rreessoouurrccee iiss tthhee mmoosstt vveerrssaattiillee

aanndd mmoosstt eesssseennttiiaall rreessoouurrccee.. AAss eeaarrllyy aass 44tthh

cceennttuurryy BB..CC..,, KKaauuttiillyyaa iinn hhiiss ““AArrtthhaassaattrraa””

hhaadd eemmpphhaassiisseedd tthhee ssuupprreemmee iimmppoorrttaannccee ooff llaabboouurr ppoowweerr iinn pprroommoottiinngg pprroossppeerriittyy aanndd

ssttrreennggtthh iinn tthhee ccoouunnttrryy..

MMaannaaggiinngg hhuummaann rreessoouurrcceess iiss oonnee ooff tthhee kkeeyy eelleemmeennttss iinn tthhee ccoooorrddiinnaattiioonn aanndd

mmaannaaggeemmeenntt ooff wwoorrkk iinn oorrggaanniissaattiioonnss.. WWhhaatteevveerr mmeeaannss aarree uusseedd ttoo eennssuurree tthhee ccrreeaattiioonn

aanndd ddeelliivveerryy ooff sseerrvviicceess aanndd ggooooddss iinn mmooddeerrnn eeccoonnoommiiccss,, tthhee rroollee ooff tthhee iinnddiivviidduuaallss

aanndd tthhee aabbiilliittyy ooff mmaannaaggeemmeenntt ttoo eeffffeeccttiivveellyy ddeeppllooyy ssuucchh aa rreessoouurrccee iiss vviittaall ttoo tthhee

iinntteerreessttss ooff bbootthh eemmppllooyyeeee aanndd oorrggaanniissaattiioonn aalliikkee..33 TToo aa llaarrggee eexxtteenntt,, tthhiiss aass aa

ffuunnddaammeennttaall iissssuuee,, iiss aass iimmppoorrttaanntt aann iissssuuee ffaacciinngg oorrggaanniissaattiioonnss aass tthhoossee ooff ssttrraatteeggyy,,

ffiinnaannccee,, aanndd mmaarrkkeettiinngg.. FFoorr tthheessee rreeaassoonnss,, tthhee qquueessttiioonn ooff hhooww ttoo mmaannaaggee eemmppllooyyeeeess

hhaass rreemmaaiinneedd aa bbuurrnniinngg ssuubbjjeecctt ooff oorrggaanniissaattiioonnaall aanndd mmaannaaggeerriiaall tthhoouugghhttss aanndd

pprreessccrriippttiioonnss..

EEddwwiinn BB FFlliippppoo hhaass aappttllyy ddeeffiinneedd HHRRMM aass tthhee ““ppllaannnniinngg,, oorrggaanniizziinngg,, ddiirreeccttiinngg

aanndd ccoonnttrroolllliinngg tthhee pprrooccuurreemmeenntt,, ddeevveellooppmmeenntt,, ccoommppeennssaattiioonn,, iinntteeggrraattiioonn,, mmaaiinntteennaannccee

aanndd sseeppaarraattiioonn ooff hhuummaann rreessoouurrcceess ttoo tthhee eenndd tthhaatt iinnddiivviidduuaall,, oorrggaanniizzaattiioonnaall,, aanndd ssoocciiaall

oobbjjeeccttiivveess aarree aaccccoommpplliisshheedd””..44

TThhee tteerrmm HHuummaann RReessoouurrccee MMaannaaggeemmeenntt ((HHRRMM)) iiss uusseedd wwiitthh iinnccrreeaassiinngg

rreegguullaarriittyy aass aa ddeessccrriippttiioonn ooff tthhee mmaannaaggeemmeenntt ooff eemmppllooyyeeeess.. TThhee bboouunnddaarriieess ooff HHRRMM

oovveerrllaapp tthhee ttrraaddiittiioonnaall aarreeaass ooff PPeerrssoonnnneell MMaannaaggeemmeenntt,, IInndduussttrriiaall RReellaattiioonnss,,

OOrrggaanniissaattiioonnaall BBeehhaavviioouurr aanndd SSttrraatteeggiicc aanndd OOppeerraattiioonnaall MMaannaaggeemmeenntt.. TThhee

ccoonnvveennttiioonnaall ffuunnccttiioonnss ooff HHRRMM ssuucchh aass hhuummaann rreessoouurrccee ppllaannnniinngg && ffoorreeccaassttiinngg,, jjoobb

ddeessiiggnn,, rreeccrruuiittmmeenntt aanndd sseelleeccttiioonn,, ddeevveellooppmmeenntt ooff hhuummaann rreessoouurrccee iinncclluuddiinngg ttrraaiinniinngg,,

ddeevveellooppmmeenntt,, rreemmuunneerraattiioonn aanndd rreewwaarrddss aarree nnoott eexxhhaauussttiivvee.. AAnnyy aarreeaa wwhhiicchh iinnvvoollvveess

hhuummaann bbeeiinnggss ccaann bbee tteerrmmeedd aass aa ffuunnccttiioonn ooff HHRRMM..

TThhoouugghh tthhee pprriimmaarryy oobbjjeeccttiivvee ooff HHRRMM iiss ttoo eennssuurree tthhaatt aa ccoommppeetteenntt aanndd wwiilllliinngg

wwoorrkkffoorrccee iiss aavvaaiillaabbllee ffoorr tthhee oorrggaanniizzaattiioonn,, tthhee ootthheerr oobbjjeeccttiivveess tthhaatt aarree iinntteennddeedd ttoo bbee

aacchhiieevveedd bbyy eeffffeeccttiivvee HHRRMM aarree55::--

PPeerrssoonnaall,,

FFuunnccttiioonnaall ,,

OOrrggaanniizzaattiioonnaall,, aanndd

SSoocciieettaall

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TThhee CCoonnssttrruuccttiioonn IInndduussttrryy

CCoonnssttrruuccttiioonn aaccttiivviittyy iinn IInnddiiaa iiss tthhee sseeccoonndd llaarrggeesstt ooccccuuppaattiioonn aafftteerr aaggrriiccuullttuurree,,

pprroovviiddiinngg lliivveelliihhoooodd ttoo aallmmoosstt 1100 ppeerrcceenntt ooff tthhee ccoouunnttrryy’’ss ppooppuullaattiioonn aanndd yyiieellddss aann

aannnnuuaall ttuurrnnoovveerr ooff aallmmoosstt RRss 22,,4400,,000000 ccrroorreess.. TThheerree aarree aabboouutt 7700 llaarrggee aanndd 330000

ssmmaalllleerr ccoonnssttrruuccttiioonn ccoommppaanniieess iinn tthhee ccoouunnttrryy..66 TThhee ttyyppiiccaall ccoommppoossiittiioonn aanndd

cchhaarraacctteerriissttiiccss ooff tthhee wwoorrkkffoorrccee ooff tthhee ccoonnssttrruuccttiioonn iinndduussttrryy wwhhiicchh hhaass aa bbeeaarriinngg oonn tthhee

eeffffeeccttiivvee iimmpplleemmeennttaattiioonn ooff HHRRMM pprriinncciipplleess,, ccaann bbee bbrrooaaddllyy ccllaassssiiffiieedd aass ::--

SSuuppeerrvviissoorryy SSttaaffff -- 22 --55%%

AAddmmiinniissttrraattiivvee SSttaaffff -- 11-- 22 %%

LLaabboouurr FFoorrccee -- 9933 –– 9977%%

SSuuppeerrvviissoorryy aanndd AAddmmiinniissttrraattiivvee SSttaaffff..

-- PPeerrmmaanneenntt iinn nnaattuurree,,

-- QQuuaalliiffiieedd aanndd ttrraaiinneedd

-- CCaarreeeerr aanndd ggrroowwtthh oorriieenntteedd

-- AAvvaaiillaabbllee bbuutt pprriiccee pprrooppoorrttiioonnaattee ttoo qquuaalliittyy ooff eexxppeerriieennccee..

LLaabboouurr FFoorrccee..

-- MMiiggrraattoorryy

-- UUnneedduuccaatteedd,, bbuutt bbootthh sskkiilllleedd aanndd uunnsskkiilllleedd

-- AAvvaaiillaabbllee cchheeaappllyy aanndd iinn aabbuunnddaannccee..

TThhee llaabboouurr ccoommppoonneenntt,, wwhhiicchh iiss llaarrggeellyy uunnoorrggaanniizzeedd,, ccoommpprriisseess tthhee mmaajjoorr

ppoorrttiioonn ooff tthhee wwoorrkkffoorrccee.. TThheerreeffoorree,, tthhee aapppplliiccaattiioonn ooff tthhee ffuunnccttiioonnss ooff HHRRMM ttoo tthhiiss

wwoorrkkffoorrccee iiss nnoott oonnllyy cchhaalllleennggiinngg bbuutt aallssoo ggeenneerraallllyy iiggnnoorreedd.. TThhee eeffffeecctt ooff tthhiiss

uunnoorrggaanniizzeedd nnaattuurree wwhhiicchh hhaass ttuurrnneedd oouutt ttoo bbee iimmppeeddiimmeennttss iinn tthhee ggrroowwtthh aanndd

ppeerrffoorrmmaannccee ooff tthhee ccoonnssttrruuccttiioonn iinndduussttrryy aarree77::--

-- LLooww pprroodduuccttiivviittyy

-- SSuubb SSttaannddaarrdd qquuaalliittyy ooff wwoorrkkmmaannsshhiipp

-- AAcccciiddeennttss

-- DDiissppuutteess aanndd aabbaannddoonnmmeenntt ooff ccoonnttrraaccttss..

TThheerreeffoorree,, aann eennddeeaavvoorr hhaass bbeeeenn mmaaddee ttoo ssttuuddyy tthhee cchhaalllleennggeess ffaacciinngg tthhee

iimmpplleemmeennttaattiioonn ooff tthhee tteecchhnniiqquueess ooff HHRRMM oonn tthhee llaabboouurr ffoorrccee iinn tthhee ccoonnssttrruuccttiioonn

iinndduussttrryy..

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Objectives of the study

The objectives that are intended to be achieved by this study are:-

Examine the feasibility of implementing the principles of HRM in the

construction industry.

Evaluate the implementation of HRM principles in selected

construction companies.

Assess the advantages of good HRM practices.

Suggest recommendations for improving HRM in the construction

industry.

Implementation of HRM Principles in Construction Industry

Though all the principles of HRM as applicable in a conventional and

organized industry cannot be applied in the construction industry, there are a few

principles that can be applied and followed. They are:-

Planning manpower requirements. With the help of various

planning and scheduling techniques like Bar charts, PNA, CPM, PERT and

LOB methods, the requirement of manpower at various stages of a construction

activity can be accurately planned and forecasted. One of the major pitfalls in

this process is the tendency to reduce costs by employing less manpower and

attempting to attempting to increase output by stretching working hours.

Employee Remuneration. Wage and salary administration is a very

critical activity in the construction industry. In most of the companies labour

force is hired through labour contractors, who do not pass on the full wages to

the labourers. This has an adverse effect on the productivity levels of the

labourers and effects the time schedule of projects.

Under the provisions of The Minimum Wages Act, 1948, the minimum

wages to be paid for each category of worker is notified by the Labour

Commissioner’s office every quarter. However, by employing the labourers

through the contractor it is not ensured that these wages are paid. Also, blatant

violation of the provisions of the Equal Remuneration Act, 1976, occurs as the

female workers are paid a lesser wage as compared to the male workers.

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Similarly, under the provisions of The Payment of Wages Act, 1936, it

is the responsibility of the Principal Employer to disburse the wages and

maintain records of the same, which is seldom done by any Principle

Employer.

Incentive Payments. The planning and implementation of

incentives for the construction labourers is another aspect which is feasible to

achieve the targeted output. Some contractors implement such schemes by

linking performance and outputs to incentives. The cost savings which they

accrue by saving on the establishment charges is partially passed on to the

labourers. Such practices yield better productivity from the labourers.

Employee Benefits, Welfare and Services. There are various

statutory regulations, a few of which are listed below, that govern the

implementation of various benefits and welfare schemes and services for the

labourers. They are:-

- The Contract Labour (Regulation and Abolition) Act, 1970

- Inter State Migrant Workmen (Regulation of Employment and

Conditions of Service) Act, 1979

- The Building and Other Construction Workers (Regulation of

Employment & Conditions of Service) Act, 1996

- The Building and Other Construction Workers Cess Act, 1996.

- Child Labour (Prohibition and Regulation) Act, 1986

- The Workmen’s Compensation Act, 1923

Unfortunately, there are very few construction companies who comply with the

provisions of these regulations. The reasons for the non compliance of these

provisions are:-

- Schedule of Rates of published by various agencies does not

cater for these costs in the labour component.

- Inclusion of these costs removes the competitiveness from the

bids due to the large financial commitments required.

- Contractor Labour Department officials nexus provides for

shortcuts to avoid these commitments at a small cost.

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Safety and Health. This is a key area of HRM which the contractors

have to concentrate. In government contracts the safety and health conditions

that have to be adhered to during the period of the contract form a part of the

Contract Agreement, but it is seldom adhered to. Companies which have safety

policies also follow it as a ritual than as a procedure that has to be adopted and

implemented realistically in accordance with the requirement of the ground

conditions.

Motivation. The needs of the labourers in the construction industry is

restricted to the first two levels of the Maslow’s Need Hierarchy, i.e.,

Physiological and Safety needs. To this end, any construction company that can

satisfy the aspirations of its labour force in this direction by providing them a

fair wage structure and continuous employment will have a reasonably

motivated labour force. The advantages of having a motivated labour force

are:-

- Better productivity and output.

- Improved quality workmanship.

- Reduced wastage of construction material.

- Enhanced goodwill in the market, which is essential for

augmentation of manpower for short durations to meet the

demands of the task.

- Better labour relations.

Methodology

The objective of HRM being optimum output from the human resource

employed, assessment of the effectiveness of the HRM practices can be derived from

the analysis of the progress achieved and the motivational level of the work force. For

the purpose of this study four companies executing housing projects for defence forces

in Delhi with different management profiles have been selected. The progress during a

period of 10 - 12 months has been correlated with the HRM practices adopted by these

companies and conclusions derived. Data presented is based on CPM charts that were

prepared for all the projects before commencement of the work and used to manage

resources and monitor the progress.

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Company 1. A family held company, managed by technocrats and

professionals with the help of a core of dedicated administrative staff. The supervisory

staff for this project was recruited after the commencement of the project. The duration

for completion of the project is 24 months. Table 1 below summarizes the labour force

deployed for the work and the progress attained.

Table 1 : Details of Average daily labour force required & deployed

Quarter Labour required Labour Deployed Progress cumulative

(in Rs crores)

Skilled Unskilled Skilled Unskilled Planned Achieved

1 105 145 89 113 2.50 0.35

2 173 277 90 185 6.25 2.70

3 190 310 120 231 10.75 5.72

4 190 310 123 225 17.85 10.25

5 285 465 225 399 28.31 13.89

6 330 520 268 471 32.70 20.23

7 350 550 304 525 36.67 24.46

The company has attained an overall progress of 60.7% as against a planned

progress of 91.2%. The shortcomings of this company from the HRM angle are as

under:-

- Plants and machinery considered while planning not provided which

reduced productivity, and indicates poor manpower planning.

- Poor wage administration. Wages paid after ten to fifteen days, which

increased labour turnover and reduced output.

- Inadequate safety and welfare measures magnified into accidents and

reduced productivity.

Company 2. A Pvt Ltd company, which has an international presence in the

construction industry, is managed by a well organized team of professionals. The team

of supervisory staff for this project is full time employees of the company. The

duration for completion of the project is 24 months. Table 2 summarizes the labour

force deployed for the work and the progress attained by this company.

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(in Rs crores)


1 72 175 27 75 0.88 0.49

2 175 430 38 116 3.80 1.61

3 170 410 49 150 7.09 2.46

4 140 340 71 197 10.54 5.35


progress of 53.5%. The shortcomings identified are:-

- Frequent change in supervisory staff leading to poor implementation of

the work plan.

- Erratic payment schedules adversely effected availability of labourers

for hiring.

- Involvement of labour contractor resulted in reduced productivity due

to:-

Reduced wages paid to the labourers.

Non involvement of the company in labour welfare activities

leading to unhygienic living conditions and migration of labour force.

Inadequate safety precautions led to accidents at site and post

accident, poor handling of labor welfare led to labour problems.

Company 3. A Pvt Ltd company, which is active in the Western region of the

country, is managed by one man with the help of a core of administrative and

supervisor staff. The duration for completion of the project is 24 months. Table 3

summarizes the labour force deployed for the work and the progress attained by this

company.



(in Rs crores)


1 50 200 38 214 2.70 1.20

2 80 383 97 242 5.5 7.73

9

3 100 350 160 267 10.4 14.84

10 100 350 86 181 12.1 16.06


progress of 40.04%. The HRM practices of this company that has given positive results

are:-

- Permanent labour force of the company which was augmented with

local labourers and inducted in a phased manner commensurate to the work and

the plant and machinery mustered.

- Motivated labourers with the following, which has magnified into better

productivity even with reduced manpower:-

Performance linked incentives.

Provision of better and hygienic living conditions.

Medical facilities at site.

Timely payment schedules.

Payment commensurate with the skill and output of the labourer.

- Better working conditions at site which facilitated working around the

clock in shifts.

- Excellent leadership of supervisory staff ensured better results.

Company 4 A Delhi based Pvt Ltd company which has been executing group

housing contracts, and managed by a non professional MD with a core of

administrative staff and a skeleton supervisory team. The duration for completion of

the project is 18 months. Table 4 summarizes the labour force deployed for the work

and the progress attained by this company.



(in Rs crores)


1 70 200 30 80 1.5 0.25

2 100 333 90 190 4.7 2.34

3 103 322 100 185 10.1 6.70

4 113 322 105 200 16.4 10.12

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progress of 50.1%. The shortcomings in the HRM practices are:-

- Manpower planning not commensurate to the work involved.

- Availability of resources like machinery and building material at

appropriate time not coordinated.

- Poor payment schedules and low wages resulted in frequent turnover of

labour and reduced output.

- Indiscriminate penalties on labourers resulted in reduced productivity.

- Lack of dedicated supervisory staff for planning the task at hand.

Advantages of good HRM practices.

The advantages that a construction company gains due to sound and good

HRM practices are:-

Better productivity of labourers.

Lesser wastage of building materials.

Reduced accidents at site.

Timely completion of projects leads to saving of fixed establishment

charges.

Quality workmanship which enhances the reputation of the company.

Better labour relations and increased market reputation which ensures

supply of labourers to meet varying demand.

Better credibility rating which facilitates material supply on credit.

Cordial user interaction.

Suggestions for improving HRM practices in Construction Industry

Some suggestions to ensure better HRM practices in the Construction Industry

are:-

Diligent planning of manpower should be done using the planning tools

available.

Correct assessment of job requirements and employing the right man

for the right job.

Coordination of availability of required machinery to ensure better

employability and productivity from the labourers.

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Improve wage administration, welfare measures and implement

performance linked incentives to motivate the labourers to perform better and

also improve the quality of work.

Avoid exploitation of the labourers and adopt a humane approach in the

dealings with them.

Ensure increased and direct management participation towards labour

welfare issues and avoid/reduce involvement of labour contractors.

Impress on the Government and concerned agencies through a

collective forum to:-

o Revalidate the planning parameters of the labour components

given in the various Schedule of Rates to include the financial burden of

the numerous statutory requirements of labour welfare.

o Have better transparency in the utilization of the funds collected

for labour welfare to infuse confidence in the contractor community, so

as to ensure willing compliance of various statutory requirements.

Conclusion

HRM is a fast growing concept which has gained importance in all spheres of

business and the construction industry is no exception. The importance and

contribution of HRM in enhancing organizational effectiveness in a highly competitive

environment is unquestionable. Aspirations of the labourers can be satisfied with

minimum effort and costs by a deliberate and conscious implementation of fairness in

wage administration and welfare measures at site. Companies which have good HRM

practices tend to benefit in the long run by maintaining a motivated workforce who not

only enable them to increase productivity and profits, but also generate additional

business. The tendency to increase profits by exploiting labourers due to their poor

economic conditions does not pay dividends and can be catastrophic for the

construction companies.

(Total word count 2,982)

1. Tara Chand, Industrial Organisation and Management, Volume II, Nem

Chand & Bros., Roorkee (UP), 1965. Page 63.

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2. DS Kimball and DS Kimball Jr., Principals of Industrial Organisation,

McGraw – Hill Book Co. Inc., Bombay, III Edition, 1967, page 157.

3. Ian Beardwell and Len Holden, Human Resource Management, Macmillan

India Ltd., 1996, page 6.

4. Edwin B Flippo, Personnel Management, McGraw Hill, New York, Fourth

Edition, 1984, page 5.

5. William B Werther, Jr and Keith Davis, Human Resources and Personnel

Management, McGraw Hill, New York, Fourth Edition, 1993, page 11.

6. Prof H S Mejie and others, Strategy to Enhance the Standing of India’s

Construction Industry : Review of Strengths and Weaknesses of Existing

Systems and Technology, Civil Engineering and Construction Review, New Delhi,

Feb 2005, page 27.

7. Ibid, page 28.

RELEVANCE OF HRM IN BUILDING INDUSTRY – A CASE STUDY

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