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Align discipline with HRM principles and philosophy

by K. A. I. Kalyanaratne, Head - Human Resources & Administration Merchant Bank of Sri Lanka Limited (MBSL)

All agencies responsible for elevating the human factor should declare that enterprises having only disciplinary procedures sans grievance - handling procedures, are not genuine in the management and development of their human resources. The state should make it compulsory for organisations to maintain a balance between disciplining and attending to the grievances of their employees.

To give effect to this requirement the organisations should formalise grievance handling procedures in their management-structures.

Those who have experiences of the pre-HRM era, when personnel management was the order of the day, would remember well that the managers who inflicted the most number of punishments (and harsh as well), were considered as the most successful and efficient. It so happened that in the Ceylon Transport Board, this was an important parameter in gauging the efficiency of a manager.

Those who were more considerate and humane in their approach to labour issues and discipline were branded as incompetent. This essay, while viewing discipline and punishments in a purely reinforcement perspective, will directly impress upon the reader the complete change the subject has undergone during the short course of HRM development. Punishment and discipline are now considered as a means of weakening undesired behaviour; which means acts and activities impeding individual and overall productivity and development.

Discipline and its impact on management

In our society discipline is normally interpreted as punishment.

It has, therefore, been accepted in almost every recognized institution to have a disciplinary procedure setting out the steps to be followed in the event of a breach of discipline and the offences against which disciplinary action is to be initiated and also stipulating the punishment(s) to be imposed depending on the severity/graveness of the offence(s) proved to have been committed.

Isn't this a 'tit-for-tat' approach found more often among children? This is the imbalance that causes irritation - frustration - resentment - and an antagonistic view among the employees and the trade unions. Disciplining employees is a sensitive aspect of management, and if not carefully handled, it would for certain upset the apple-cart.

Imbalance is caused by most of the managements thinking more of retribution and less of restitution. Discipline should not be regarded as a means whereby employees are coerced, punished, or eventually dismissed but rather as a way of helping the employee to be able to meet the requirements of the organisation.

HRM - Definition

William Osgood, in his 'Basics of Successful Business Management' provides a near comprehensive definition of HRM. He says:

"Because of the critical importance of employees to organisations, the name of the functional activities involved in their administration has been changed from personnel to Human Resource Management. This is more than a matter semantics. It represents a conceptual shift from taking care of the worker-oriented paperwork to treating these people as an important organisation asset or resource, one that must be managed with the same degree of optimisation as is applied to cash or any other organisation asset. This represents quite a change in thinking for most organisations, which are beginning to realise that varying their style or approach could enhance productivity without increasing costs".

HRM - Principles and Philosophy

This definition succinctly embodies the following HR principles and its philosophy, viz.

1. Employees should be treated as a valued asset as committed people are the root of organisational success.

2. As people at all levels must be treated with respect/dignity, employees and the organisation should tread on a mutually beneficial course of action.

3. Organisational values and beliefs are crucial for gaining commitment and quality. People policies must, therefore, be integrated with organizational objectives to ensure common purpose.

4. People possess a largely untapped fund of goodwill and desire for personal fulfilment and success. A climate of consent should feature prominently, and the organisation should win that trust and confidence.

5. 'Staff is the organisation' and organisational viability is achieved through committed people.

6. People are creative and responsible and, therefore, they should not be treated like any other resource.

7. There should be a coherent set of personnel policies aimed at a mutually beneficial corporate culture.

In short, winning through people by developing peak-performance teams and eliminating all obstacles hindering the achievement of this main objective is and should be the prime objective of HR.

Discipline without punishment (DWP)

The traditional approaches to handling problem - employees do not work for a simple reason. One may think it is possible to punish employees into compliance, but we cannot punish them into commitment. It is commitment (or dedication) what today's organisations require.

More enlightened organisations have now resorted to 'discipline without punishment' (DWP) as an HRM compatible management technique for handling the routine problems of absenteeism, incongruous attitudes and poor performance. This innovative technique replaces punitive action with one that;

* Make problem employees take personal responsibility for their actions

* Avoid confrontational, anger-provoking situations that can damage relationships and sometimes lead to violence.

* Salvages potentially good- ployees who have gone off track. Some of these managements have proceeded to the extent of following a further progressive step of imposing a disciplinary suspension with pay.

However, when such employees resume duties it must be with the firm decision that they would make a total commitment to acceptable performance in every area of his job. This approach, in short, is constructive discipline. In other words it is totally aligned to the principles and philosophy of HRM; in that people are treated as a valued asset.

HRM aligned discipline eases manager's job

Disciplining and punishing employees is an unpalatable job managers are compelled to perform.

Apart from such action leaving a scar in the minds of the two parties - the punisher and the punished, it is common knowledge that such instances, more often than not, also creates a dent in the relationship between the management and the employees' lot.

It is needless to say that any resultant friction between the two major stake-holders (the management and the employees) will stand to the detriment of both the parties. The humane approach HRM has bestowed on modern management, and specifically in the area of discipline is, therefore, a blessing in the maintenance of industrial harmony, and ultimately in the endeavour to enhance overall quality and productivity.

Two approaches - Punishment-centred vs problem-solving

Experience has proved that there are two approaches to dealing with Employee-centred problem-situations. One is punishment-centred, the other is problem-solving. The punishment-focused approach is person-centred and it is retributive (i.e. to punish). The problem-solving approach is action-centred and it is restitutive (i.e. to restore). One may argue whether the problem-solving approach could be adopted/applied for acts committed deliberately. (acts of commission). Experience has revealed that in many instances acts have been committed deliberately to bring to attention of those concerned a grievance or felt injustice. Such instances, for certain, manifest that there is a need for problem diagnosis. Application of punitive action in such circumstances would obviously aggravate the issues.

Inadequate systems and procedures

A closer observation of incidents of breach of discipline will highlight that a fair number of disciplinary cases had been the result of inadequate systems and procedures and ineffective supervision.

Many a manager appears to have faith in the person than in the system. This incorrect approach is either due to the limited capacity of those responsible for the formulation of systems and procedures or their sheer negligence of duty.

Employees who are normally accountable (mainly for cash or stores items) have become victims of this 'inadequacy - syndrome'. This is not an attempt to cover those who would deliberately and willfully cheat the organisation. But in many such cases the facts indicated that those subjected to discipline had been either victims of circumstances or the fraudulent intent had later crept into them as a result of the inadequacy-syndrome.

Reviewing of breaches of discipline

Considering these lapses in the systems and personnel it is extremely useful to review at least the major instances of breach of discipline. Introducing such a system will stand in good stead for the organisations to rectify their lapses/deficiencies so long as they are ever prepared to admit faults and correct them. This approach will definitely receive the fullest backing and appreciation from all the quarters and more specifically from the trade unions. Complicated systems often need reviewing and correction. The basic virtues of such an approach are (a) willingness to review (b) accept faults and lapses and (c) the sincere intent to rectify the deficiencies.

Role of Trade Unions in creating an H.R. environment

Aligning discipline with H.R. principles and philosophy would be a harbinger of peace and harmony, all enlightened trade unions and managements would aspire to have in their organisations.

In this context, the role of the trade unions would be to assist the management to establish the desired H.R. environment in which the employee would be looked after and cared for, as the most valued resource. As the final objective of both the institutions, viz. the trade union and the management, is to get positively involved in a gain-sharing process, the trade union should assist the management in establishing the desired grievance-handling system.

The objective of this article is to impress upon all concerned, including the trade unions, the relevance and the importance of providing both Discipline and Grievance Procedures in the enhancement of productive work-relationships by providing established and logical means for dealing with problems as they arise, whether from the employer or employee's point of view. In such environment the issues could be dealt with quickly and amicably before mountains are made out of molehills.

Such a structural framework is only possible if the managements take the initiative to establish a harmonious HR environment by aligning discipline with the aforesaid HRM principles and philosophy. In this context, the following words of Francis Bacon would invariably reverberate in our ears and minds: 'When all is done, the help of good counsel is that which setteth business straight'.

Laboratory accreditation

by S. Ganewatte, Asst. Director (Laboratory Accreditation), Sri Lanka Standards Institution

Testing and me-asurement are invariably undertaken in order to provide data upon which a decision will be made; Decisions are of considerable economic significance. Decisions relate to legal and regulatory matters. Decisions affect the environment and community health and safety are frequently made upon the basis of data presented in laboratory test reports. It is not surprising, therefore that decision makers demand accurate and reliable test data from laboratories.

The formal recognition of laboratories that maintain appropriate standards is a great help to the industry and commerce in today's demanding and competitive market. Good product design and efficient production must be supported by authenticated measurement and testing to achieve quality standards expected by the customer.

There is a wide range of organizations both national and international which require access to laboratories of recognized competence. These are Government departments and Statutory bodies, Manufacturers, Procurement bodies, Certifying bodies, Importers, Exporters, Project evaluators etc. These organizations are to satisfy the competence of laboratories which provide them with testing and related facilities.

For many years laboratory users have sought to identify laboratories of recognized competence. This has led to the development of Laboratory Accreditation.

Laboratory Accreditation is a technique for certifying competent testing laboratories. The term Accreditation is taken to mean a formal recognition that a laboratory is competent to carry out specific tests or types of tests. Laboratories can have either all or part of testing and/or calibrations accredited. Such an accreditation is granted only after a laboratory has been assessed by an independent authority capable of carrying out an impartial evaluation of the laboratory's capabilities. To maintain this recognition, laboratories are re-evaluated periodically by the Accreditation Body. Laboratory accreditation provides formal recognition to laboratories, thus providing a ready means of customers to identify and select reliable testing, measurement and calibration services. Laboratory accreditation is being used successfuly to provide users of laboratory services with extra confidence in the reliability of test results internationally.

Assessment criteria based on International Standard ISO/IEC 17025 (formally ISO/IEC Guide 25) "General requirements for the competence of calibration and testing laboratories" is used for evaluating laboratories throughout the world.

Australia was the first country to recognize this need and introduce a comprehensive national laboratory accreditation system, launched in 1946.

The system is now known as the National Association of Testing Authorities - NATA.

Since 1973 similar systems have been introduced in many other countries.

HongKong-HOKLAS, India-NABL, Japan-JCSS, Malasia-DSM, New Zealand-IANZ, Singapore-SINGLAS, Sweden-SWEDAC, United Kingdom-UKAS, Sri Lanka-ASTEL.... etc.

Recognition of accredited laboratories seldom crosses national boundaries and there is a reluctance to accept tests carried out in other countries. This leads to wasteful duplication of work and in many cases resulting significant barriers to trade.

The need for some mechanism for recognition of testing laboratories of different countries has been recognized by the International Laboratory Accreditation Conference - ILAC. Many laboratory Accreditation Bodies around the world participate in the activities of ILAC. 40 laboratory accreditation bodies signed multilateral recognition agreement called ILAC agreement. Mutual Recognition agreements (MRAs) between accreditation bodies have enabled accredited laboratories to achieve international recognition and allowed data accompanying export goods to be more readily accepted on overseas markets.

The harmonized criteria for accreditation, developed initially by ILAC after appropriate review, became the standard ISO/IEC 17025.

Laboratory accreditation is now a well accepted technique all over the world.

ASTEL

The ASTEL is the Accreditation Scheme for Testing Laboratories being operated by the Sri Lanka Standards Institution through an independent National Laboratory Accreditation Committee. The criteria for ASTEL Accreditation is the ISO/IEC 17025.

The National Laboratory Accreditation Scheme, ASTEL, is voluntary. It is open to any laboratory that wishes to recognize as competent to carryout specific calibration or test, if it is able to demonstrate that it operates in accordance with the requirements of the ISO/IEC 17025.

Under ASTEL Laboratory Accreditation Scheme nine laboratories in the fields of Chemical Testing, Mechanical Testing and Biological Testing have been accredited.

Benefits of accreditation Benefits to the laboratories:

* Assurance of competence to its own staff

* Greater confidence in results

* Recognition and status within the testing community

* An independent technical audit of its operations and management

* Regular monitoring provides continued assurance of acceptable standards

* Enhanced marketing options

Use of Accreditation Body's logo on test reports covering accreditation.

Benefits to customers:

* Improved confidence in the accuracy and reliability of results

* Means of eliminating or reducing expensive re-testing

* Results acceptable within countries and abroad

* Greater acceptance by Government Departments

Against these benefits must be weighed the factors affecting the costs of operating an accredited laboratory:

* Higher costs for laboratory and the customer

* Slower sample through put due to increased number of quality control samples and checking procedures.

* Accreditation fees

* Costs associated with improving the quality system after installation.

Many decision are based on test data. Unreliable or wrong data naturally lead to wrong decisions usually with cost consequences. It is essential therefore that both the users of the laboratory services and the laboratories providing them are assured and confident of the reliability and accuracy of the calibration and testing services. Accreditation should not therefore be seen as an unwelcome additional cost to the operational expenditure of a laboratory, but as a mens of improving operational efficiency.

Since ASTEL Scheme and SLSI Laboratories are both operated by the SLSI it was not proper for SLSI laboratories to seek ASTEL accreditation. SLSI has taken initiative to establish an independent body called the National Accreditation Board (NAB) to operate accreditation and to seek international accreditation for SLSI Laboratories until such time the NAB is established.

SLSI Chemical and Microbiology Laboratories awarded SWEDAC Accreditation

SLSI Chemical and Microbiology Laboratories have been awarded accreditation by SWEDAC in compliance with ISO/IEC 17025: 1999, in August 2002.

The SLSI Microbiology Laboratory became the first Microbiology Laboratory in Sri Lanka to be awarded international accreditation for testing in compliance with ISO 17025.

The scope of accreditation of Chemical Laboratory covers ten (10) tests for the products Mixed Fertilizer, Urea Fertilizer, Ammonium Sulphate Fertilizer, Triple Super Phosphate Fertilizer, Muriate of Potash Fertilizer and Rock Phosphate Fertilizer.

The scope of accreditation of Microbiology Laboratory covers twenty seven (27) tests for products Canned Fish, Milk Powder, Margarine, Carbonated Beverages, Ready to Serve Fruit Drinks, Beer, Bottled Natural Mineral Water, Bottled Drinking Water, Potable Water, Process Water, Ice for processing Water and Ice for processing of EU requirements, Tomato Sauce and Chilli Sauce.

UNIDO, under the "Integrated Industrial Development Support Programme for Sri Lanka" with significant donor contribution from NORWAY, assisted the strengthening of the testing capabilities of two SLSI laboratories. In addition support was provided to establish laboratories as per requirements of ISO 17025 and also to seek international accreditation from Swedish Board for Accreditation and conformity Assessment (SWEDAC).

The test report issued by the SLSI Chemical and Microbiology Laboratories bearing SWEDAC logo for the tests covering accreditation would be accepted internationally.

Meetings

by V. T. Sivalingam (Attorney at Law and N. P, MIPM) , Management consultant

Meetings no one really likes them but they are a necessary evil in business, and the good manager must be able to make meetings work for him and his employees.

As organiser and/or conductor of a meeting, the manager must be prepared to be both an active listener and a catalyst for making things happen. How effectively he can listen or make things happen depends on two key factors:

How well the meeting is planned and executed.

How effectively the manager presents or coordinates activities.

Regardless of the subject of a proposed meeting, the first and foremost question that must be answered is. "is this meeting necessary"? The manager should determine if there is another, more practical way to accomplish the meeting objective without taking employees away from their jobs.

Also managers should realize that employees are inclined to listen only tentatively when they feel the meeting they're attending has little value.

A successful meeting - one that is timely, informative and results oriented - meet these criteria: It is held when the manager, or other person conducting the meeting, really has something to say or needs the input of the attendees,

The meeting leader announces the meeting subject, date, amount of time allotted, and place well enough in advance so that all invited persons are able to attend.

It has written agenda that includes the meeting purpose/objective, topics, and other pertinent information that will help the leader stay on target and serve as a guide for the attendees.

It has one primary objective.

Its format lends itself to obtaining the best results.

At participatory meetings, managers should use probes to get persons talking.

It is important to prepare and distribute written summaries as soon as possible after the meeting. The most effective summaries identify the meetings highlights and spell out any necessary follow-through. The managers ability to structure and organise a meeting helps attain the desired objective.

Of equal importance is a manger's effectiveness at getting and holding the audience's attention when performing as the principal speaker or session leader. Participants will feel they are a part of the action and listen more attentively when the manager involves the audience through eye contact, body language, and or use of voice and language to convey meaning and generate interest.

The major difference between body language in one-on-one listening situations and what happens at meetings is that more people are influenced at one time through this method of communication. Speakers cannot afford to neglect the significance their posture and bodily movements as a means of gaining and keeping audience interest.

The way a manager uses his voice also is important in conducting meetings: tone, pitch, and modulation-even pleasentness or authority inherent in the quality of the voice-help make the presentation flow and create the kind of variety and pace that sustains audience interest.

There are times when the manager functions as a meeting's chairperson. In such situations the manager arranges, organizes, and coordinates the meeting's activities.

Typical situations:

A committee, perhaps one appointed by the manager, meets to discuss the outcome of a project.

A panel of experts, often when differing viewpoints, addressees a group on a given subject. A conference with invited speakers who address a broad spectrum of items.

The managers main task as chairperson is to set the stage for the discussion or presentation. As a part of the introduction he clarifies his role and goes over the ground rules for group participation. The manager comments on what he will or will do and what is expected of the attendees. The alert manager also will comment on the direction the meeting is taking by identifying issues, clarifying viewpoints expressed by speakers/attendees, crystallizing points of agreement/disagreement, and summarizing at appropriate times in order to keep focus on the major topic.

The managers ability to listen is fully tested by this role. In a practical sense, the manager must be conscious of everything that happens (or dosen't happen) in order to keep the meeting moving. The manager/chairperson must act when:

The group attempts to come to a decision or draw certain conclusions, but gets hung up on a side issue that seems to throw things off center.

An attendee has unnecessarily diverted the attention of the speaker or members of the group. An emotional situation develops, or one appears to be developing, that could be disruptive.

In these situations, the managers step out to get things back on track or lend assistance. At all times he maintains an objective posture, demonstrating through his behaviour total support for the group and its individual members. In effect, the manager's neutrality acts as a stabilizing influence.

Chairpersons also know when to remain silent on the sidelines, encourage attendees to contribute ideas and information, and compliments persons for particularly meaningful contributions.

When a manager runs a meeting he must put to practical use all the methods for encouraging attendees to listen, participate, and take action. Besides considering what must be accomplished at the meeting, the manager should give consideration to what ought to be avoided: boredom, resentment, time-wasting. By controlling listening through well run meetings, the manager gets the kind of feedback that promotes understanding and teamwork, and gets the job done in the most professional manner.

The good manager makes meeting work.

Persistence of the informal sector

by R. Suntharalingam

Banks have bee-n established for well over 100 years. Indigenous banks have been in existence since the 3rd decade of the 20th century. State banks have been in existence since the 60s. Yet the dependence on the informal sector has not even been halved.

Rural Indebtedness:

The survey of Rural indebtedness of 1957 places the dependence on informal sources as high as 92.2%, that of 1969 at 75.0% and that of 1986/87 places it as 60%. The role of informal sector defined "as any enterprise or service activity that is not registered is considered to belong to the informal sector (1) is still large and the reasons are not far to seek.

Employment gap:

The major reason for the presence of a large informal sector at this stage of Sri Lanka's economic development is the inability of the organised sector to fully absorb the growth of the labour force. Those who fail to get formal sector employment must perforce turn to informal sector activity for employment and income.

Administrative constraints:

In recent years decentralised administrative authorities have been placing unnecessary emphasis on the formal registration of many previously informal sector activities. Nevertheless certain factors such as the extensive use of family labour, the desire to avoid payment of taxes and social security contribution, the hassle of complying with various government regulations and the illegal nature of some transactions provide a strong basis for the informal sector activities to remain under informal arrangements and outside public scrutiny. (1) Presidential Commission on Banking Sessional paper xiii of 1893.

m1 composition:

Indeed the high and rising proportion of currency in narrow money (m1) in recent times is suggestive of the growth of the black money sector as black money operators usually need a currency float pending the deposit of funds in formal financial institutions.

In recent times efforts have been directed not so much to containing the accumulation of black money but to directing it to the formal financial system through instruments such as certificates of deposits, numbered accounts and residents' foreign currency accounts, all of which are tax exempt and the first two also safeguards the anonymity of the depositor. Similar safeguards were offered when invested in housing development.

Inaccessibility:

Low social status, lack of collateral, ignorance of banking procedures, absence of legal recognition through registration and failure to establish the credentials through formal records such as audited statements of accounts and tax returns prevents many informal sector entrepreneurs gaining access to formal financial sources. These enterprises continue to depend on informal financial sources as a more flexible and convenient though often a more expensive avenue of raising the required financial resources.

In both sectors:

The informal sector is there in both urban and rural sectors. In the urban sector it is the 10% per day source. At the smaller end is the small vendors and at the larger end is the Pettah market. In the rural sector the sources are enumerated as under -

A. Direct money lenders:

1.Professional money lenders (interest as much as 70% p.a.)

2.Semi-professional money lenders.

3.Personal sources (84% of the interest free loans).

B. Indirect money lenders.

C. Voluntary credit groups.

Comparative advantages:

The persistence and dominance could be due to the comparative advantages manifest. Accommodation could be sought for any purpose at short notice.

with little or no collateral or the need for observing elaborate procedure and repayment also could be arranged or adjusted according to convenience. The essence of informal finance is the complete flexibility the lender has in his decision making. He is responsible only to himself. Whatever conditions he lays down are requirements he considers necessary.

None are mandatory.

He can vary his interest rate and requirement of collateral depending on the nature of each risk. His is a personal relationship with the borrower which itself ensures a minimum of wilful defaults.

Transaction Cost:

Transaction cost in the formal market tends to be high due to factors such as elaborate documentation, stamp duties and other charges and extended waiting time imposed on many borrowers by formal institutions.

It may be appropriate to quote a source other than the Banking Commission report cited above to show the persistence of the informal sector.

Dr. Sandaratne states (2) "Despite all those efforts the poor are ineffectively reached and informal sources meet most needs of small borrowers whether they be self-employed entrepreneurs, petty traders, farmers or craftsmen. The reasons for this are manifold. Poor customers find it difficult to complete the necessary forms, get guarantors, provide documentary evidence and convince the bank of the viability of their projects. Past experience of high rates of default discourage managers to lend to small borrowers.

The work load of lending to a large number of small borrowers is greater than in lending to a few large borrowers and the supervision of lent funds is difficult.

Managerial Reluctance:

'Managers take a risk of having a large rate of default in their loan portfolio. Since the performance of a branch is judged by its profits these factors discourage managers from increasing their lending to poor customers.

It is easier to lend to bigger customers who may also reciprocate the assistance they have received with gifts and other favours. To be effect in this type of lending bank staff would require to be especially committed to this type of lending."

One of the disadvantages of the large informal sector is the shrinking of the tax base which is already narrow.

This accumulations of financial resources in the informal sector would lead to mis-allocation of resources.

(2)Sanderatne Nimal, Banking for the poor, Economic Review Volume 17 Nos 4 and 5 July/August 1991, vitiate the operation of financial markets and set up harmful pressures in various sectors such as the market for housing in which escalating prices of houses may largely be a reflection of the availability of black money.

While the informal financial markets have a role to play in the development of the economy and should be made as far as feasible to harness their potential, steps should however to taken to arrest their growth.

Other Forms:

Two of the methods of rural financing in addition to the informal persona loans are (A) pawning referred to as the cottage industry in Sri Lanka and (B) Cheetu a group scheme controlled and managed mostly by money lenders, landlords and boutique keepers. The effectiveness of the role of People's Bank in indulging in pawnbroking activities has been one of the major causes for the reduction of the dependence on the informal sector. Most of the banks have now commenced this lending activity.

Another area worthy of entering into is the Cheetu.

This has been recommended as far back as the 30s by the first banking commission.

At attempt has been made to enter into the personalised small or even large need based loans freely available in the informal sector viz. 'Aththmaru or Kaimaththu'. Unfortunately incorrect understanding of its role and implications has resulted in its ending up as another schematic loan fiasco.

What is expected is to insurrect same and inculcate proper understanding of its need and the dispensation method by the staff. There has to be a correct assessment of the individual need and be the affordable alternative source first and a deposit base progressively.

Whither Lanka:

Banking industry has to turn inwards and concentrate on penetrating the sectors successfully dominated by the informal sector, more than endeavouring to introduce or familiarise the already banked/over banked clientele with sophisticated products and services.

These are more end products of developed economies. We have a long way to go to be considered even as and adequately banked economy. Our banking density is only around 5 and the penetration if we are to go by the clarion call for privatisation is only skin deep.

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