Human resource management

Introduction
Voluntary Retirement Scheme (VRS) & Corporate Social Responsibilities (CRS) .Are these a boon or a curse to human factors? This would be broadly explained. In the present globalised scenario right sizing of the manpower employed in an organization has become an important management strategy in order to meet the increased competition. The voluntary retirement scheme (VRS) is the most humane technique to provide overall reduction in the existing strength of the employees. It is a technique used by companies for trimming the workforce employed in the industrial unit. It is now a commonly method used to dispense off the excess manpower and thus improve the performance of the organization. It is a generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. It is also known as the 'Golden Handshake' as it is the golden route to retrenchment. In India, the Industrial Disputes Act, 1947 puts restrictions on employers in the matter of reducing excess staff by retrenchment, by closures of establishment and the retrenchment process involved lot of legalities and complex procedures.

Human resource management

Also, any plans of retrenchment and Reduction of staff and workforce are subjected to strong oppositions by Trade unions. Hence, VRS was introduced as an alternative legal solution to solve this problem. It allowed employers including those in the government undertakings, to offer voluntary retirement scheme to off-load the surplus manpower and no pressure is put on any employee to exit. The voluntary retirement schemes were also not subjected to not vehement opposition by the Unions, because the very nature of its being voluntary and not using any compulsion. It was introduced in both public and private sectors. Public sector undertakings, however, have to obtain prior approval of the government before offering and implementing the VRS. A business firm may opt for a Voluntary Retirement Scheme under the following circumstances:-Due to recession in the business. -Due to intense competition, the establishment becomes unviable unless downsizing is resorted to. -Due to joint-venture with foreign collaborations. -Due to takeovers and mergers. -Due to obsolescence's of Product/Technology.

Through the eligibility criteria for VRS varies from company to

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company, but usually, employees who have attained 40 years of age or completed 10 years of service are eligible for voluntary retirement. The scheme applies to all employees who opt for voluntary retirement is entitled to get forty five days emoluments for each completed year of service or monthly emoluments at the time of retirement multiplied by the remaining months of service before the normal date of service, whichever is less. Along with these benefits, the employees also get their provident fund and gratuity dues. Compensation received at the time of voluntary retirement is exempt from tax under section 10 (10C) of the Income Tax Act, 1961 up to the prescribed amount upon fulfilling certain stipulated conditions. However, the retiring employee should not be employed in another company or concern belonging to the same management. The companies can frame different schemes of voluntary retirement for different classes of their employees. However, these schemes have to conform to the guidelines prescribed in rule 2BA of the Income-tax Rules. The guidelines for the purposes of section 10( 10C ) of the Income-tax Act have been laid down in the rule 2BA of the Income-tax Rules. The guidelines provide that the scheme of voluntary retirement framed by a company should be in accordance with the following requirements, namely:

-It applies to an employee of the company who has completed ten years of service or completed 40 years. -It applies to all employees (by whatever name called), including
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Human resource management

workers and executives of the company excepting Directors of the company. -The scheme of voluntary retirement has been drawn to result in overall reduction in the existing strength of the employees of the company. -The vacancy caused by voluntary retirement is not to be filled up, nor The retiring employee is to be employed in another company or concern belonging to the same management. -The amount receivable on account of voluntary retirement of the employees does not exceed the amount equivalent to one and one-half months salary for each completed year of service or monthly emoluments at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation. In any case, the amount should not exceed rupees five lacs in case of each employee, and -The employee has not availed in the past the benefit of any other voluntary retirement scheme.

Some companies offers very attractive package of benefits to the employees who opt for VRS. For example, the VRS scheme may also include providing counseling to employees about their
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Human resource management

future; managing of funds received under the scheme; offering rehabilitation facilities to them, etc. A company may make the following announcements while implementing a voluntary retirement scheme:-The reasons behind downsizing the organization. -The eligibility criteria for voluntary retirement scheme. -The age limit and the minimum service period of employees who can apply for the scheme. -The benefits that are offered to the employees who offer to retire voluntarily. -The rights of the employer to accept or reject any application for voluntary retirement. -The date up to which the scheme is open. -The income tax benefits and income tax incidence related to the scheme. -It should also indicate that the employees who opt for voluntary retirement and accept the benefits under such scheme shall not be eligible in future for employment in the organization.

Voluntary Retirement Schemes have been legally found to be Giving no problem to employers, employees and their unions. But, the retrenchment plans of an organization must be compatible to its strategic plans. Its procedure and reasons for introduction must be discussed with all management staff including top management. One need to identify departments or
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Human resource management

employees to whom VRS is applicable and thereby formulate its terms and conditions and also state the benefits that would be available to those who took VRS. Such information should be made available to every employee of the organization, mentioning the period during which the scheme will be open. Also, existing employees might face insecurity Because of fear of losing their job too. One of the possible drawbacks of the VRS is that the efficient employees would leave the company while the inefficient may stay back. Thus it is the /responsibility of the employer to motivate them and remove their apprehensions and fears.

What are voluntary benefits?

Voluntary benefits (also known as affinity benefits) are those products And Services that is available through an employer for purchase by Employees, usually at a discount, out of their own taxable income or Sometimes via salary sacrifice arrangements.
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Human resource management

The products and services available under VB schemes may be broadly Grouped into three categories: Health benefits for example discounted health checks and eye testing or private medical insurance financial benefits such as additional voluntary Contributions to pensions schemes or discounted household or holiday. Insurance Leisure/lifestyle benefits with examples including offers on gym Membership, holiday offers, discounted shopping in stores or online or Childcare vouchers. Flexible benefits (or flex) schemes, which also enable employees to choose from a range of benefits, differ from VB schemes as the employer, rather than .The employee pays for the cost of the benefits. Under VB schemes, the employer does not pay for the benefits provided. Although some costs may be incurred, for example in respect of the time Spent researching suppliers of services or for administration fees. The Employer simply arranges provision of the products or services, often Using its size as a leverage to Negotiate discounted rates, and employees

Done choose to pay for them if they so wish. This is sometimes via Payroll and this is particularly. Important in the case of
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Human resource management

benefits Attracting .Tax breaks where salary sacrifice arrangements apply (see Below). In practice, voluntary and flexible benefits schemes are often used on a Complementary basis. Employers that offer a flex scheme to the Workforce. Typically also offer a supplementary package of voluntary benefits. It is also often thought useful for firms contemplating the introduction Of Flex to begin by offering benefits on a voluntary basis albeit in Some Cases the planned move to flex never actually materializes. The Idea is .That this allows firms to test the water in terms of the relative Popularity of Various benefits and helps them design and finetune Their subsequent Flex Provision more accurately. The main aim of voluntary benefits schemes is to enable access to Additional employee perks which, as part of an overall package, can Help Enhance motivation and/or recruitment and retention at
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Human resource management

little or No cost to the employer. For employees, the approach helps ensure a Greater Degree of choice and Flexibility over their benefits package by Providing them with access to arrange of discounted products. Moreover, certain benefits are free of tax and/or national insurance When provided by an employer, hence in some cases, it is possible to Use salary Sacrifice arrangements to maximize the benefits. In this scenario, an Employee voluntarily gives up entitlement to a portion of their salary In Return for a benefit. Examples include the provision of childcare Vouchers, which are free of?

Human resource management

Corporate Social Responsibilities (CSR)

Corporate social responsibility (CSR) seems to have attained all the holistic mystery of a Hollywood new-age religion. And since there are almost as many definitions of CSR as there are companies who say they're doing it, the European Commission's take seems as good as any. Brussels bureaucrats define CSR as "a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment". CSR has also been described as business' contribution to sustainable development (meeting the needs of today without compromising the needs of future generations). The idea is the business has a duty to its wider community - beyond staying within the law and
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satisfying stakeholders. The story so far, the term CSR was coined in the 1950s in the US, although the concepts are age old. The Co-operative Bank, Ben & Jerry's and Body Shop have made their name on CSR-style ethical principles before the term was coined.

According to Business in the Community's definition, CSR covers: -Workplace issues (such as training and equal opportunities) -Human rights -The business' impact on the community -Reputation, branding and marketing -Ethical investment -Environment This has led to a myriad of CSR-related terms with which you should pepper your speech if you want to sound in the know. You can use the term 'Triple bottom line' to convey the idea that a company's overall performance should consist of its contribution to environmental quality and social capital as well as the financial bottom line. A related idea, 'corporate citizenship', is about managing all relationships between a company and its local, national and global host communities. "In a sense CSR formalizes what the best companies have been doing anyway," says Philip Goldenberg, a partner at city law firm SJ Berwin.
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CSR promises to improve profitability and enhance creativity. Consumers are become increasingly picky about the ethical values of the brands they buy, so the logic goes. CSR should help reduce staff costs and raise shareholder value because people prefer to work for ethical employers. And shareholder value should rise as investors

Indulge in 'ethical screening' - whereby they include or exclude shares From their portfolio on ethical, social or environmental grounds. One consumer in five claims they would pay more for products that are socially and environmentally responsible, according To MORI research carried out in 2000 for the business network CSR Europe. Seven in 10 European consumers say that a company's commitment to social responsibility is important when buying a product or service, found the poll of 12,000 consumers across 12 European countries. Case studies from Business in the Community and Harvard Business School back up the idea that responsible, ethical employers find it easier to attract and retain quality staff. So CSR should help lower recruitment costs and staff turnover.

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Human resource management

Pros and cons

It is difficult to distinguish between CSR and good business practice, but perhaps one upside of CSR's holistic approach is that it encourages businesses to safeguard their corporate reputation for the future. Responsible business practice could help protect a company from consumer boycotts such as those suffered by Shell, Nestl and Esso. It also encourages greater emphasis on people issues, which is good news for HR managers. Anne Watts, BITC's diversity and workplace director on secondment from HSBC, claims that CSR can help employers attract and retain graduate high-flyers. "People are making much more educated life choices about what they want from an employer and how they're going to be treated," she says. "And there's increasing evidence from employee surveys that a well motivated workforce is linked to satisfied customers." On the downside, CSR could be the victim of its own popularity. Campaign group Friends of the Earth sees some companies' interest in CSR as a cynical PR exercise it describes as "green washing" - self-styled ethical brands could suffer a backlash from their own CSR spin. Legislation is another danger as the EU gears up for a directive forcing organizations to report on their environmental, diversity and community relations record.
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Human resource management

Corporate governance expert Goldenberg of SJ Berwin suspects that business may have promoted CSR too well to EC bureaucrats and environmentalists who may try to legislate for it. "CSR is simply formalizing good business practice," he says. "The danger is that various non-governmental organizations have leapt on the CSR band wagon, thinking 'Yippee, we can tell companies what to do.'" Who's on board? More to the point, who's not? Everyone from big business to the UK government, the EC and environmental groups seems to be on side. Business in the Community is the key player in the UK. Set up in 1982 to promote corporate community involvement, BITC claims it was on the CSR campaign trail well before the term was coined. The network has 700 corporate members including 80 from the FTSE 100. The Department for Trade and Industry has a CSR minister and there's an all-party parliamentary group for CSR. Even fast food giant McDonald's, which has taken its fair share of flak on ethical grounds, unveiled its inaugural Social Responsibility report in April 2002. Verdict Used sensibly, CSR is a good idea, but don't get too carried away. It has to make good business sense and be woven into the corporate strategy.

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Human resource management

Conclusion
VRS & CSR can be a boon or curse to human factors. This is because of the scheme; the scheme is beneficial to both the employees and the employer's. It helps the employees enjoy the early monetary benefits and the employer's gets to enhance his company with advance and fresh manpower and human skills. Retrenchment is significantly beneficial to workers, the local economy, and communities, the greater degree of planning, review and forethought the Performance Standard requires. This will vary with the circumstances. The curse to the company can be when a skilled worker applies for to the voluntary route, this is because, he has faith in his skills that he will be able to find a new job after getting a VRS. Thus, VRS & CSR can be a boon or a curse to human factors.

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Reference
IFC (International Finance Corporation) Good Practice Note's, Business Portal of India, Ten Minute Tutorial, Business School Papers, Indiainfoline.com,

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