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
3
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..
4
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.
5
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.
6
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.
7
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.
8
Table 2 : 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 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
The company has attained an overall progress of 27.15% as against a planned
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.
Table 3 : 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 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
The company has attained an overall progress of 53.15% as against a planned
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.
Table 4 : 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 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
10
The company has attained an overall progress of 31.4% as against a planned
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.
11
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.
12
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.
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