HUMAN RESOURCE MANAGEMENT

International Industries Ltd.

HR Audit

Submitted on
December 31st, 2012

Introduction
Mr. Tauseef Chinoy, started IIL in partnership with European Firm and initially rented its
facilities. From a very small subsidiary of another company, IIL moved from a small firm to
becoming a big manufacturer of steel pipes. Currently one of the leading manufacturers, it has
international sales record of exporting to countries like Afghanistan, Sri Lanka, USA and
European Markets as well.
International Industries Limited (IIL) is involved in the business of producing and marketing
steel and polyethylene pipes. 1Over the span of 40 years the Company has grown from a small
pipe manufacturer with equity of Rs 1.6 million to become Pakistan's largest pipe and tube
manufacturer with equity of Rs 5 billion. Domestically IIL has a market share of roughly 19
percent.

Human Resource Department Structure

The Human Resource Department Structure is as follows
Organizational
Health Safety,
Environment, OHSE

Recruiting,
Training and
development

Operational
and
Services

Industrial
Relations

Operation and Services Departments serves majority of the roles of Human Resource
Management. These include Administrative, Compensation and Benefits, Daily Routine
Operation, Appointments. Paper work is reduced greatly because of these functions.
However, the changes of organization and separation of tasks into hierarchy have been taken
recently. It just gave an organized look to the otherwise haphazard structure. Total number of
employees currently working in IIL is about 1400.
Human Resources Committee2
Amongst the Board Committees exists a special HR committee, and its main function is to
monitor, evaluate, and make decisions on behalf of the Board in coherence with policies and
strategic matters related to human resources of the company. It reviews and recommends the
salary framework of the employees and executives. It oversees the need for staff growth and
training. The need for compensation, remuneration, of the employees as well as senior executives
is also assessed by the committee. Meetings are conducted annually or on such times when
the Chairman wants to summon a meeting. It consists of one chairman, one member and one
non-executive independent director.
1
2

http://www.brecorder.com/component/news/0/1162341/
http://iilpipes.com/index.php?option=com_content&task=view&id=86&Itemid=75

Recruiting and Selection Practices

Recruitment is highly dependent of organization structure. Whenever there is a vacancy, the
department has to present to the HR department that there is a vacancy, which alerts the HR
department. The vacancy needs to be justified to the HR department. All competencies and job
vacancy are looked together to avoid overlap. Job Description is typically followed by CV
assessment criteria after which the CVs received are shortlisted. CV assessment is the procedure
of marking the specific skill sets against the vacant jobs criteria.
Typically 2 interviews are carried out to screen the applicants while technical jobs applicant is
typically tested based on an IQ test for all management positions, not for senior management
positions.
First Level Interview Panel
Vacancy Department head
Operation Head
Section Head
Secondary Level Panel
Function Head
HR Head
Another Cross Functional Head
Interview with CEO if the interview deals with a senior position.
Compensation
1. Fixed Pay is adjusted to inflation which is needed to remain competitive.
2. Unacceptable employees not given increment
a. 50% increase in fixed pay when inflation and some performance target goals are
achieved
3. Average pay out needs boards approval
a. Not given this year but this needs to be given on a priority basis
b. 10% pay out, from the board, min to max. [so that average needs to be deduced]
Fixed- Cash includes gross salary while non-monetary includes office workspace, cars, laptops
and holidays. International Industries Ltd used salary surveyors in May 2012 who helped
determine target percentiles of 4 positions. 12 comparators were selected by the salary surveyors.
Long Term Benefits include: 2 out of three are mainly what are at IIL. There is no cafeteria
approach, and IIL selects these benefits for these employees

Gratuity (main important feature)

Provident (taken)

Pension

Performance Appraisal
Performance Management is based on two factors below
Target that have to be achieved
Quantitative based
Functional Head and Sectional Head are involved while doing performance management
Strategic Heads, Line Managers find this difficult
Mid level Appraisal

Direct supervisor
Sectional head
In May, proposals, meeting at Department Head and Sectional Head Level
The joint effort to discuss reach a conclusion often becomes a ruckus.

For senior level appraisal

Management Committee
All person report to MD
MD and HR Head sit together to decide
HR committee and Board is also involved
Formal Performance Management is conducted yearly and a system of forced ranking is used.
Informal performance management involves feedback daily. First level PM is carried out at
department or sectional level. An informal counseling session may be conducted when set targets
are not met and are meant for employees to discuss their problems and for them to get their
performance to then preferred levels. If an employee doesnt perform to a level that is expected
of him, there is no probation period but rather time to find a new job since the company
understands that firing may hurt the career of its employee.
Potential Management
IIL does not have a formal potential management system since its all subjective and may lead to
wrong and improper decisions. Since its all based on judgments and with no proper potential
assessment system in place, IIL feels its best to not carry it out.
Training
Main feature of training includes On the Job Training especially in manufacturing and sales
departments. Since manufacturing is all about technical skills. When employees are hired, they
are under an apprenticeship program, under which the employees are given 2 years training.
Health Safety and Environment is crucial in this department. Sales department take the
3

capability of individual into account and senior managers go around training and helping the
employees under them.
Job Evaluation
There is no set job evaluation system in place currently.
Industrial Relations
Handled by the Industrial Relations department and conflicts resolved through bilateral negotiations.

Change Management
Currently the organizations owners have realized the importance of moving from a typical
family run business to a more corporate structure, especially in strategic relations. Without losing
the principal hold of the company, the organization is changing to a more decentralized form of
hierarchy.

Recommendations to Strengthen the HR function

While conducting our HR audit at IIL, we learnt that IIL is thorough in its HR practices given the
current organization of its HR department.
Since IIL does not currently have a potential assessment system, we would strongly recommend
that it implements one. This is imperative given the fact that the company is currently in the
middle of transition and determining which employees have high potential will provide solutions
to choose, evaluate and promote employees whose future performance contribution is crucial for
the long-term success of the company.
This could be done through a formal job rotation system that could be implemented both in the
offices and the factory premises as it would allow for supervisors to judge the potential of an
employee they feel have a long way to go and help in developing an alternate career path.
Through our audit, we also found that IIL does not currently have a job evaluation system which
would be beneficial as IIL operates in a competitive industry and a job evaluation system would
help maintain an external and internal parity. It would also help in setting compensation levels
and help in determining its place in the hierarchy of the organization.
This could be done by implementing the Hay Evaluation System which is one of the most widely
used systems by organizations everywhere. This too would prove beneficial during a time when
the company is going through a transition.

Likely Challenges to be Faced When Adopting Recommendations

The likely challenges faced by IIL when adopting out recommendations are not many. The
principal challenge is getting everybody over board for any changes. Both potential management
and job evaluation require support and cooperation from the board of directors and the higher
levels of management. Without their support, implementation of both these systems would be
difficult.
These decisions would also require financing and a part of the budget would also be allocated in
order to implement them. This is especially for the implementation of the job evaluation system
which will be done using the system developed by Hay Management Consultants.
Both these recommendations would also require increased communication especially on the HR
departments part. The HR department needs to insure that these objectives are clearly
communicated to the concerned parties and any issues raised such as time management are to be
addressed so that the objectives of conducting these activities are met in the truest sense.

How We Went About the Task

We had gone through our entire syllabus that weve done in HRM and compiled the list of topics
that we had covered. Our strategy was to get a little information about each topic in terms of how
IIL was conducting their HR functions.
We met up with the head of IILs Human Resources, Mr. Khalid Junejo who addressed each
topic with the way things were done at IIL. The meeting provided us with a very detailed picture
of the HR operations at the organization which made our job of coming up with
recommendations much easier.
While discussing Potential Assessment, Mr. Junejo told us that IIL did not have a potential
management system which led us to recommending that. This was further iterated by the fact
when Mr. Junejo told us that there is no formal system of job rotation that would help in
assessing potential of IILs employees both on the factory and the management level.
The recommendation for job evaluation first came up during the time we found out that there
was no job evaluation system in place. It also came up during the time change management was
discussed. As Mr. Junejo told us that IIL was a family owned business and while it did not have
a purely Seth culture, they are in the process of giving it a more corporate structure. We had
discussed in class once that companies may take up job evaluation during restructuring which is
why we recommended it.